Bernie Madoff's $50 Billion Fraud thru country clubs

[Lou_Duran]

Nick,

You are absolutely right about money and power.  The latter is what we all seek.  The former is a conduit.

Charlie Rangel has been in Congress for nearly 40 years.  As chair of probably the most important House committee, Ways and Means, he is arguably one of the most powerful men in our country.  Among other things, that committee writes tax legislation and bills for social security, medicare, and other entitlement programs.

Charlie somehow rents three or four properties in NY under rent control at greatly reduced rates, though his legal domicile for tax purposes is in D.C. (I suppose it is okay for a "tax and spend" advocate to minimize his own taxes).  Not so long ago, the Congressman was photographed in the Carribean relaxing with a cocktail in hand, apparently in a rental property that he owns off the books for which he has not paid any income taxes.

Obviously, Charlie is a very frugal man, maybe a disciplined saver and savvy investor, to live so well on his congressional salary.  That he in effect controls the financial spiggot to our economy may be of solace to some on this site, afterall, if he can live so well on his modest congressional income, perhaps he can do the same for our country.

For those who may be scratching their heads and wondering if I've taken the final step off to the deep end, you may wish to click on the following:

http://www.cnn.com/2008/POLITICS/10/06/walker.bailout/index.html

There is no question that Madoff and his types deserve to spend a few eternities in hell.  His Ponzi scheme cost $50 billion and an incalculable amount of harm and anguish, mainly to well-off people who might or should have known better.  To be crude in order to make a point, at least many of Bernie's victims still have a pot to piss in.  $50 billion is an unfathomnable amount, but in a $14 trillion economy (< .4%), the loss can be overcomed.

Contrast this to the $53 trillion fraud that the politicians, mostly of the liberal, "spread the wealth" variety, have perpetrated on the American public.  And consider who the pipe dreams were sold to.  Rich folks with access to financial professionals?  Yes, but it was primarily aimed to the masses who either don't have the wherewithal to hire or do their own research, and often not the inclination to even bother to entertain the rather simple, relevant questions (like who in the hell is going to pay for all this?).  Having placed their faith on the explicit promises of their "public servants", many of these folks are fully expecting to be taken care of by government during their "golden years", and have not prepared to do so on their own.

Now, I pose this to you, in this context, who is/are the real criminal (s)?  Bernie screwed rich people who may have known better.   His crime can be overcomed for the most part and the misery controlled.  $50 billion vs. $53 trillion.  Can we conclude that in this range, Bernie is but a mere amateur, a petty thief?  And Rangel, Dodd, Frank, Kennedy, et. al.?  Honorable, respectable, worthy of our trust to turn things around?

Perhaps we should watch Senator Thompson's "Holiday Cheer" once again, this time toning down its hilarity and irony and pondering on the message.  It really is pretty simple- understanding the mess we got ourselves into and the necessay action steps that we must take, painful as they might be, to climb out of it.

For those who may be so inclined:  http://blip.tv/file/1528079

May the God of our forefathers guide us and bless us during these very bleak times.       

And happy holidays.

[Jeff Fortson]

Nick,

You are absolutely right about money and power.  The latter is what we all seek.  The former is a conduit.

Charlie Rangel has been in Congress for nearly 40 years.  As chair of probably the most important House committee, Ways and Means, he is arguably one of the most powerful men in our country.  Among other things, that committee writes tax legislation and bills for social security, medicare, and other entitlement programs.

Charlie somehow rents three or four properties in NY under rent control at greatly reduced rates, though his legal domicile for tax purposes is in D.C. (I suppose it is okay for a "tax and spend" advocate to minimize his own taxes).  Not so long ago, the Congressman was photographed in the Carribean relaxing with a cocktail in hand, apparently in a rental property that he owns off the books for which he has not paid any income taxes.

Obviously, Charlie is a very frugal man, maybe a disciplined saver and savvy investor, to live so well on his congressional salary.  That he in effect controls the financial spiggot to our economy may be of solace to some on this site, afterall, if he can live so well on his modest congressional income, perhaps he can do the same for our country.

For those who may be scratching their heads and wondering if I've taken the final step off to the deep end, you may wish to click on the following:

http://www.cnn.com/2008/POLITICS/10/06/walker.bailout/index.html

There is no question that Madoff and his types deserve to spend a few eternities in hell.  His Ponzi scheme cost $50 billion and an incalculable amount of harm and anguish, mainly to well-off people who might or should have known better.  To be crude in order to make a point, at least many of Bernie's victims still have a pot to piss in.  $50 billion is an unfathomnable amount, but in a $14 trillion economy (< .4%), the loss can be overcomed.

Contrast this to the $53 trillion fraud that the politicians, mostly of the liberal, "spread the wealth" variety, have perpetrated on the American public.  And consider who the pipe dreams were sold to.  Rich folks with access to financial professionals?  Yes, but it was primarily aimed to the masses who either don't have the wherewithal to hire or do their own research, and often not the inclination to even bother to entertain the rather simple, relevant questions (like who in the hell is going to pay for all this?).  Having placed their faith on the explicit promises of their "public servants", many of these folks are fully expecting to be taken care of by government during their "golden years", and have not prepared to do so on their own.

Now, I pose this to you, in this context, who is/are the real criminal (s)?  Bernie screwed rich people who may have known better.   His crime can be overcomed for the most part and the misery controlled.  $50 billion vs. $53 trillion.  Can we conclude that in this range, Bernie is but a mere amateur, a petty thief?  And Rangel, Dodd, Frank, Kennedy, et. al.?  Honorable, respectable, worthy of our trust to turn things around?

Perhaps we should watch Senator Thompson's "Holiday Cheer" once again, this time toning down its hilarity and irony and pondering on the message.  It really is pretty simple- understanding the mess we got ourselves into and the necessay action steps that we must take, painful as they might be, to climb out of it.

For those who may be so inclined:  http://blip.tv/file/1528079

May the God of our forefathers guide us and bless us during these very bleak times.       

And happy holidays.

Lou,

Do we really need to get into the "which party and its members abuse their office more" debate?  I could sit here and write out a long list of Republicans that have abused their office for personal gain to counter all your digs at Democrats.  It's an endless blame game and I have finally seen how unproductive it is.

However, one of your key points needs editing, IMHO.  You claim that...

"Obviously, Charlie is a very frugal man, maybe a disciplined saver and savvy investor, to live so well on his congressional salary.  That he in effect controls the financial spiggot to our economy may be of solace to some on this site, afterall, if he can live so well on his modest congressional income, perhaps he can do the same for our country."

Charlie Rangel, while closer than a mere fraction of people in this country to having the controls of the "financial spiggot", is virtually powerless over the Fed and its member banks as it currently stands.  The Fed, a PRIVATE INSTITUTION, is in near total control of our currency, its circulation and the credit it backs.  Our own government borrows money from the Fed to print its own currency!  How ridiculous is that? 

The currency of the United States should belong to its rightful owners, the citizens of this country.  We should not be held hostage by the whims of a board of 7 governors and their member banks and investors.  Nor should we pay interest to have some banks print our currency out of thin air.  These banks get to literally create money out of nothing and then charge interest on it.  We should do what Lincoln did in the Civil War and tell the banks to take a hike, stop borrowing money from those banks and simply print it ourselves with the full backing of our government and pay off our debts forever.  After that we should repeal the Federal Reserve Act and forever be free of the control of money changers.  Many of our politicians are either puppets or were propped up by these same people and the few that aren't in bed with these people are simply not knowledgeable of what is going on or too afraid to do anything about it.

Why should we guarantee bonds and not guarantee our own currency?  How is it not the same, with the one exception, that we have to pay more for the bond?  My recent research is taking me into an area of knowledge that will leave many of you thinking I am some sort of conspiracy theory, wack-job.  That is fine.  I know I am not and I don't believe in 9/11 conspiracy level stuff.  The stuff I have found is hard to swallow.  The depth of damning facts against centralized, private banking is stunning and I refuse to turn my head the other way anymore.  We have been dumbed down by Dancing With the Stars and American Idol, etc. and our people are perfectly positioned and sedated to have the wool pulled completely over their eyes forever.

Sorry for the diatribe people.  I am just sick of the mindless bickering, that admittedly I have taken a massive part in, of Rep vs. Dem and Con vs. Lib.  We're all on the same team ultimately, and we need to wise up to what is truly going on around us.  Obviously, I understand if you disagree but this is what I am finding out and I am starting to see stuff very differently.


Jeff F.

[james soper]

 Bloomberg states that he has a 9.8 handicap. Any bets on how honest that handicap is?

Mayday,

I'll bet you it's honest.

What do you want to bet ?

patrick, i'll bet you some commercial paper i have lying around the office.

[Jason Topp]

Now, I pose this to you, in this context, who is/are the real criminal (s)?  Bernie screwed rich people who may have known better.   His crime can be overcomed for the most part and the misery controlled.  $50 billion vs. $53 trillion.  Can we conclude that in this range, Bernie is but a mere amateur, a petty thief?  And Rangel, Dodd, Frank, Kennedy, et. al.?  Honorable, respectable, worthy of our trust to turn things around?

Lou -

I agree that government deficits are a horrific crime but I also think to attribute it to liberals is more than biased. 

These obligations have never been secret.   The fact that the obligations would pose a huge problem when baby boomers retire has also never been a secret.  Most people my age I know (I'm 42) have assumed since college we would never see a dime of social security. 

One can debate whether government should be providing such benefits.  Regardless of what side you take in the debate we needed to either fund them or cut them long ago.  For that, I hold the public responsible for not demanding that their government address the issue and I hold politicians from each party responsible for having neither the political will nor skill to address the issue.

To my mind, that failure lies at least as much with the Republicans as the Democrats.  Robert Rubin pointed out the golden opportunity that existed in the late 90's and early 2000's to solve these issues.  He stayed on with the Bush administration in hopes of doing so.

Rather than tackle these issues, the GW administration took the short term politically expedient tack of cutting taxes without cutting government and thereby increased deficits to never before seen levels.

[Richard Choi]

And with that, this thread has officially outlived its usefulness...

Perhaps we should have a Godwin rule around here, except we should replace Nazi with "Democrat/Republican".

It was good while it lasted.

[RJ_Daley]

Lou, while that is a nicely packaged piece of sophistry by Senator "Cornpone" that the average angry conservative leaning guy wants desparately to believe, perhaps a look at Thompson's legislative lobbying history and voting record on some key legistation related to our financial meltdown might be in order. 

Thompson is given most credit as a lobbiest for the S&L industry in early 80s (which you always say you know so much about) to have basically written the verbage of the Garn-St. Germain Depository Institutions Act.  That is what most financial experts after the fact attribute as the S&L swindler's keys to the henhouse that cost the U.S. taxpayer some 125 Billion to resolve (which I beleive you said you were an employee of that RTC function)

Then as a Senator, Thompson was a close ally and staunch supporter of Gramm-Leach-Bliley, FINRA which pretty eviscerated the Fed Reserve and its "mission" within the scope of the Federal Reserve Act. 

I know you don't like to read this stuff Lou, but try it just once...
http://www.dailykos.com/story/2008/10/13/173421/72/1014/629528

Fred Thompson the actor could just as easily play the Grinch that stole Christmas as any he accuses...

[Lou_Duran]

Jeff,

I can't help what you assume or read into my writing.  Please show me where I wrote Democrat other than to use Charlie Rangel (D-NY) as a key person in this crisis.  Many country club Republicans share in the blame.  Both Bushes, populists at heart, aided and abetted.

Now, I understand that there is nothing that I can say that will persuade you otherwise.  If you want to keep making the point that monetary policy and the Federal Reserve system is the problem, please continue to your heart's delight.  And if you think that House and Ways is near "powerless" over the Fed, well, I won't try to convince you otherwise.  

Milton Friedman believed that monetary policy was an important key in the economy and that the politicians could not be trusted to influence or control it.  I am fairly sure he recommended a consistent, predictable small increase in the money supply to accomodate real growth.

Jude Wanniski was a proponent of the gold standard as a way to control the currency and guard its value from the politicians.  Both of these highly learned men are ridiculed and called cranks and quacks by some fairly smart people on this site.

You say we are all on the same team.  What if 10% to 20% are getting tired of carrying the load, keep getting hit on the side of the head for not doing enough, and then when the shit hits the fan because that playbook just can't work, the solution offered by the 80% is for the 20% to tighten up the saddle and ride harder?

I've played some organized baseball and basketball, and unless there is some concensus on the objectives and the load is distributed so that everyone is carrying their weight, the teams don't succeed.  We used to hide a poor player in right field. We might protect a poor shooter if he could at least play good defense by keeping him outside and only go low to rebound.  But never two or three players.

Go ahead and blame Greenspan, Bernanke, the big city banks, investment banks, hedge funds, financial investors, and even that crook Bernie Madoff.  It may give you some emotional satisfaction but it will not do anything to correct the problems of the economy or golf.  In reality, the problems are much closer to home.

Jason,

Had Bush not cut taxes post 9/11 we would now have been in the 7th year of a depression.  You may not remember, but immediately after 9/11, the economy came to a ginding halt.  His spending though modest by present standards came from a page of the same playbook the new administration is using.  Bush is highly culpable for abandoing conservative principles on spending, but those of us who knew him well in Texas knew that he was never a fiscal conservative.  For us he was just a far superior choice than Gore or Kerry.

The problem with the entitlements, particularly social security, is that they were never meant to become what they are.  FDR thought SS as a temporary program until a pension system with current contributions paying future benefits would be instituted.  If he is watching from his resting place, I suspect that he is apoplectic.

It is a sad commentary that we have allowed this farce to go on this long.  If we knew we won't be seeing a dime of our 12% plus contributions, then why are we just playing along with the farce?  Is it similar to knowing that cigarettes kill than suing the tobacco companies with complete indignation when the eventually ensues?  Is it as simple as eating our cake and wanting it too?

Richard Choi,

With all due respect, I know of no less qualified person on this site than you who has earned the right to call time-out.  By all means, please go crunch the numbers.  

Dick,

Is sophistry one of your favorite words?  Why not just consider the message on its own merits without trying to denigrate and minimize the messenger?  Some very excellent insights and advice have come from people whose background may not be ideal.   "Ask Not What Your Country Can Do For You, Ask What You Are Required To Do For Your Country" is but one example.

As to my involvement in the S & L industry, I was never an RTC employee, and what I do know about that industry is from doing not reading left-wing propaganda.  Oh, did you know the S & Ls were created by mostly "spread the wealth" politicians largely to make homeownership easier?  Do you remember regulation Q?  It really is all part of the same slippery slope that we're still in.  Barney Frank's current legislation to modify delinquent loans and avoid foreclosures which has resulted in a grand total of ZERO modifications in a few months is part of the same trying to pound a square peg into a round hole mentality.

Dick, you can gooble to your heart's delight.  You can recite the poetry of egalitarianism, "we are all in this together", and world peace.  Not meaning to be cruel, but this "Money for nothing and the chicks for free" stuff only works in a Dire Straites song.

As an early Christmas gift to my friend Richard Choi, this will be my last post on the subject.  As always, it has been interesting.

[Patrick_Mucci]

 Bloomberg states that he has a 9.8 handicap. Any bets on how honest that handicap is?

Mayday,

I'll bet you it's honest.

What do you want to bet ?

patrick, i'll bet you some commercial paper i have lying around the office.

Sounds like a deal.

Who knows, if I hang on to it long enough it might be worth something.
Now, I have to figure out what property of equal value I might offer up from my side.
Would Confederate currency suffice ?

Richard Choi,

If a female, single parent of three, who worked on Wall Street and had a contract with her employer indicating that her compensation/bonus was tied to production goals, and she met those production goals, are you saying that she's not entitled to receive her contractually guaranteed pay ?

If so, why not ?

Heard that some more clubs have lost 40 out of 220-250 members, which means that assessments will probably be levied for 2009, which means that more members will leave.

With real estate prices low and credit difficult to obtain, will real estate developers with ample cash own these clubs by 12-31-09 ?

[Jeff Fortson]

Jeff,

I can't help what you assume or read into my writing.  Please show me where I wrote Democrat other than to use Charlie Rangel (D-NY) as a key person in this crisis.  Many country club Republicans share in the blame.  Both Bushes, populists at heart, aided and abetted.

Here is a quote from your last post...

"Contrast this to the $53 trillion fraud that the politicians, mostly of the liberal, "spread the wealth" variety, have perpetrated on the American public.  And consider who the pipe dreams were sold to."

Is that not an attempt to place blame on Democrats?  Last time I looked not many Republicans were "liberal".

Now, I understand that there is nothing that I can say that will persuade you otherwise.  If you want to keep making the point that monetary policy and the Federal Reserve system is the problem, please continue to your heart's delight.  And if you think that House and Ways is near "powerless" over the Fed, well, I won't try to convince you otherwise.  

Could you spell out how I am wrong?  I never said Charlie Rangel or the House and Ways are totally powerless.  I claim that relative to the power of the Fed they are nearly powerless.

Milton Friedman believed that monetary policy was an important key in the economy and that the politicians could not be trusted to influence or control it.  I am fairly sure he recommended a consistent, predictable small increase in the money supply to accomodate real growth.

How has the Fed done over the last 15 years?  They flooded the market with liquid via low interest rates and blind prosperity.  They set up a massive avalanche of collapse by creating massive market bubbles.  Our government aided this in massive deregulation.

Jude Wanniski was a proponent of the gold standard as a way to control the currency and guard its value from the politicians.  Both of these highly learned men are ridiculed and called cranks and quacks by some fairly smart people on this site.

Going back to the Gold standard would be catastrophic.  Why would we back our currency with a limited commodity that few really own any amount of?  It's like basing our currency on the hairs on your head.  Everyone would be hovering around you in hopes that you cut your hair or pulled a strand or two out for them.  The Gold Standard would consolidate power even more than it is now.  A fiat currency publicly owned and run by the people of the United States is the way I think we could ensure that those that produce receive their fair share.

You say we are all on the same team.  What if 10% to 20% are getting tired of carrying the load, keep getting hit on the side of the head for not doing enough, and then when the shit hits the fan because that playbook just can't work, the solution offered by the 80% is for the 20% to tighten up the saddle and ride harder?

Taxes would drastically reduce if we printed our own currency as our debt could be eradicated fairly quickly and in return our taxes would drop.  Even under the current situation Obama is looking like he is not going to start repealing the Bus tax cuts, at least for a while.  People need liquid and the ability to spend in order to create jobs and wealth.

I've played some organized baseball and basketball, and unless there is some concensus on the objectives and the load is distributed so that everyone is carrying their weight, the teams don't succeed.  We used to hide a poor player in right field. We might protect a poor shooter if he could at least play good defense by keeping him outside and only go low to rebound.  But never two or three players.

I was an All-Star centerfielder and a starting guard in basketball when I played organized sports as a kid.   I carry my weight to the best of my ability.  This argument over taxes could be heavily alleviated with the repeal of the FRA.

Go ahead and blame Greenspan, Bernanke, the big city banks, investment banks, hedge funds, financial investors, and even that crook Bernie Madoff.  It may give you some emotional satisfaction but it will not do anything to correct the problems of the economy or golf.  In reality, the problems are much closer to home.

I don't blame individual investors or smaller banking institutions for this mess.  I place the blame mainly on a group of individuals that have the power to create currency without any say from the people of this country.  They can flood the markets or retract them at will.  There is ZERO regulation in this and it can be done at will.  That seems a little scary to put all of our financial stewardship in the hands of people that make money off it, and lots of it.

[Steve_ Shaffer]

CNBC will be showing a 1 hour special on Madoff tonight at 10pm EST

[Richard Choi]

Richard Choi,

If a female, single parent of three, who worked on Wall Street and had a contract with her employer indicating that her compensation/bonus was tied to production goals, and she met those production goals, are you saying that she's not entitled to receive her contractually guaranteed pay ?

If so, why not ?

I wasn't going to post anymore on this thread, but Pat's challenge is just too tempting...

Pat, I believe your hypothetical situation is missing some details to make it REALLY equivalent to what happened on Wall Street, so let me add some details.

Let's say there is a female, single parent of three, who has a contract with you, Pat, where you lend her a million dollars. She flies down to Vegas the next day and bets all the money on the black on a roulette table. If she wins, she pays you 20% interest (heck of a lot better than what you get on Wall Street), if she loses, you get to fire her but your money is gone.

Does she really deserve to get to keep the winnings if the roulette table happens to come up black?

If no, why not?

These guys were nothing more than gamblers in expensive suits. These guys were paid obscene amount of money to know whether or not their investments were sound or not. But it turned out what they were investing were junk and they had no clue about it. And now we are all paying for the losses while these guys collected billions while things were good.


I see very little difference between what these guys did at Merrill Lynch (and every other Wall Street house) and what Madoff did. Both gambled with other people's money and when they lost, everybody else ended up paying for it. Only difference I see is that Madoff hid the facts longer than the guys on Wall Street did.

P.S. Lou, if your idea of respected authority are Arthur Laffer, Rush Limbaugh, and Sean Hannity, I am quite delighted to be on your ignoramous list. I am sure I am among most excellent company (including our President-Elect).

[Mike Sweeney]

I see very little difference between what these guys did at Merrill Lynch (and every other Wall Street house) and what Madoff did. Both gambled with other people's money and when they lost, everybody else ended up paying for it. Only difference I see is that Madoff hid the facts longer than the guys on Wall Street did.

Richard,

I have avoided this thread for a bunch of reasons. In my opinion what Madoff did was a thousand times worse. I can guarantee you that Madoff started out putting in his own money with that of his early investors in the money management business. That is the way that Jewish syndicates work in New York. I have no idea when or how things went bad, but we will eventually find out.

Cheers.

[Norbert P]

   This woman will save the world. 

 

Susie Gharib.   

Seems that when I watch her tell how Wall Street is falling apart, somehow, I don't care too much.     (That's for you Susie)



"Give me some sugar"  "Hail to the king."

[Doug Siebert]

It is a sad commentary that we have allowed this farce to go on this long.  If we knew we won't be seeing a dime of our 12% plus contributions, then why are we just playing along with the farce?  Is it similar to knowing that cigarettes kill than suing the tobacco companies with complete indignation when the eventually ensues?  Is it as simple as eating our cake and wanting it too?

I'm in the same age group as Jason, and like him I pretty much assume I will see little or none of what I put into SS.  My dad the PhD economist thinks I'm crazy, but I think it makes perfect sense.  If I act like I believe I won't get anything, and I end up getting some, then its a bonus.  But meanwhile I plan for my retirement assuming the government won't do anything for me.

You ask why we play along....I wasn't aware it was optional.  If there's a checkbox on my 1040 where I can opt out of the SS system permanently, please point it out to me!  Its the same thing with income taxes, even though I don't like contributing to pointless wars in Iraq, bridges to nowhere or government guarantees of subprime mortgages to unemployed deadbeats, I don't have much more choice.

The way I see it, SS is a ponzi scheme no different than what Madoff was running, with one important difference:  Everyone is forced to participate.  Its big failing is that it has more and more people collecting than contributing over time, because the politicians are too afraid of the AARP to do what makes sense and raise the retirement age to account for the difference in life expectancy.  Either that, I guess, or allow the country to revert to third world status so the life expectancy drops back to where it was in the 30s.

[Doug Siebert]

Taxes would drastically reduce if we printed our own currency as our debt could be eradicated fairly quickly and in return our taxes would drop.  Even under the current situation Obama is looking like he is not going to start repealing the Bus tax cuts, at least for a while.  People need liquid and the ability to spend in order to create jobs and wealth.

Is this serious or are you just being a smartass?  Our debt is the result of our government spending more money than is collected in taxes, not because the Fed is hugely profiting.  Almost all the Fed's "profits" are returned to the US Treasury by statute, something conveniently overlooked by the conspiracy theorists you seem to be listening to.

If we did as you suggest and print an extra few hundred billion each year to "balance" our budget it will depress the value of the dollar because who wants to hold a currency where the government prints as much of as it needs to cover any deficit.  What would be the restraint for any politician to say "no" to anything if they can just tell the guys manning the printing presses to take a bit more overtime next weekend and get that bridge to nowhere?

When the dollar falls against other currencies and commodities as a result of this, anything we import like oil, Chinese goods (i.e., pretty much anything you can buy at Walmart) and so on would become more expensive, meaning higher inflation.  Thus your taxes go up, your wages increase as a result and eventually we live in the Weimar Republic and everyone has to reprogram the computers dealing with bank accounts and credit cards to deal with the number of zeroes we'd need just to buy groceries!

[Craig Sweet]

Current Fed. policy is killing the dollar, and is going to lead to hyper inflation within the next few years....

[Craig Sweet]

I see some of Madoff's investors are looking for SIPC to bail them out...the only problem is SIPC doesn't have enough money to bail these people out....oh boy...what a mess!

[Jeff Fortson]

Taxes would drastically reduce if we printed our own currency as our debt could be eradicated fairly quickly and in return our taxes would drop.  Even under the current situation Obama is looking like he is not going to start repealing the Bus tax cuts, at least for a while.  People need liquid and the ability to spend in order to create jobs and wealth.

Is this serious or are you just being a smartass?  Our debt is the result of our government spending more money than is collected in taxes, not because the Fed is hugely profiting.  Almost all the Fed's "profits" are returned to the US Treasury by statute, something conveniently overlooked by the conspiracy theorists you seem to be listening to.

No doubt we are spending more than we collect.  What's the difference between issuing a bond and a dollar bill?   They are both promises to pay.  One we pay interest on and the other goes to those providing real services and goods.  Those are the sentiments of Thoams Edison.  By not paying interest from "borrowing" money from people that are making it out of nothing we will have less debt.  It's simple math...  (the numbers I am using are not accurate, I am using these for simplicity)  For example, let's pretend it costs the taxpayers $1.50 to borrow $1.00 from the Fed and it costs $1.00 to print $1.00 of our own currency. That would mean we owe $0.50 less for printing our own money out of thin air instead of paying more for someone else to print it out of thin air.  I hate to say it but that helps reduce debt. 

If we did as you suggest and print an extra few hundred billion each year to "balance" our budget it will depress the value of the dollar because who wants to hold a currency where the government prints as much of as it needs to cover any deficit.  What would be the restraint for any politician to say "no" to anything if they can just tell the guys manning the printing presses to take a bit more overtime next weekend and get that bridge to nowhere?

If you haven't noticed the dollar has been losing value for @ 10-15 years.  Much of it can be associated to the Fed.  I am not suggesting that the we just print money to cover any bill we may have.  I am suggesting that we not let a few men in the private banking world have the reigns on our economy.  They can choose to retract or expand our economy and money supply at will.  The people of the United States should own that right.  Something this major should be HEAVILY regulated and run by the government for its people.  It should not be a money maker for investors.

When the dollar falls against other currencies and commodities as a result of this, anything we import like oil, Chinese goods (i.e., pretty much anything you can buy at Walmart) and so on would become more expensive, meaning higher inflation.  Thus your taxes go up, your wages increase as a result and eventually we live in the Weimar Republic and everyone has to reprogram the computers dealing with bank accounts and credit cards to deal with the number of zeroes we'd need just to buy groceries!

This Weimar Germany, wheelbarrow full of cash scare tactic is effective but not true in our case.  If anything, we are headed toward needing wheelbarrows full of money for bread right now.  I am not suggesting that we print money at will.  I am suggesting taking it away from people that charge interest on printing it and then control the flood gates of the currency and directly control growth and contraction.  The Fed has the keys to prosperity and depression.  They can create prosperity and then crush it with a depression and consolidate more wealth into the hands of the very lucky few on the inside.

[Adam Clayman]

This just in.

If it wasn't bad enough that the 1992 SEC investigator married Bernie's daughter. This hard working guy figured it out in 1999.

His repeated warnings that Wall Street money manager Bernard Madoff was running a giant Ponzi scheme have cast Harry Markopolos as an unheeded prophet.

But people who know or worked with Markopolos say it wasn't prescience that helped him foresee the collapse of Madoff's alleged $50 billion fraud. Instead, they say diligence and a strong moral sense drove his quixotic, nine-year quest to alert regulators about Madoff.

http://www.msnbc.msn.com/id/28310980/

I love that then, no one would listen. Now, he's laying low and for good reason.

[Richard Choi]

Richard,

I have avoided this thread for a bunch of reasons. In my opinion what Madoff did was a thousand times worse. I can guarantee you that Madoff started out putting in his own money with that of his early investors in the money management business. That is the way that Jewish syndicates work in New York. I have no idea when or how things went bad, but we will eventually find out.

Cheers.

It looks like I am not the only who sees very little difference between Madoff and rest of Wall Street. Paul Krugman has an almost exact same quote:

http://www.nytimes.com/2008/12/19/opinion/19krugman.html?_r=1&hp

"Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?"

"Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.

O.K., maybe my example wasn’t hypothetical after all."

"So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear."

P.S. About Markopolos, he deduced that Madoff was a crook based on mathematical analysis of Madoff's returns. Math said it was not possible to have the kind of steady returns that Madoff reported, but no one listened. If anyone was wondering why math/science education is so important, this is exactly why. When people don't understand math, they lose.

[Patrick_Mucci]

Richard Choi,

If a female, single parent of three, who worked on Wall Street and had a contract with her employer indicating that her compensation/bonus was tied to production goals, and she met those production goals, are you saying that she's not entitled to receive her contractually guaranteed pay ?

If so, why not ?

I wasn't going to post anymore on this thread, but Pat's challenge is just too tempting...

Pat, I believe your hypothetical situation is missing some details to make it REALLY equivalent to what happened on Wall Street, so let me add some details.

I'm not missing any details.

There are thousands and thousands of hard working individuals who performed their jobs and met their goals, who are entitled to bonuses.  That's a fact.

Wall Street salaries have typically been low with the bulk of the compensation coming from performance bonuses.

When hard working people met their objectives, they were entitled to the compensation tied to those objectives.

You, the media or some in Washington, who never held a job in the private sector, want to deprive them of the pay they deserve, the pay they're entitled to because you choose to focus on a particular and expand it to a generality.

Let's say there is a female, single parent of three, who has a contract with you, Pat, where you lend her a million dollars. She flies down to Vegas the next day and bets all the money on the black on a roulette table. If she wins, she pays you 20% interest (heck of a lot better than what you get on Wall Street), if she loses, you get to fire her but your money is gone.

You're saying that everyone on Wall Street engaged in that practice.
That's more than disengenuous, it's intellectually dishonest to the nth degree, and a total misrepresentation of the facts.  Either you're not familiar with compensation on Wall Street or choose to believe what you hear on TV.

Does she really deserve to get to keep the winnings if the roulette table happens to come up black?

If no, why not?

These guys were nothing more than gamblers in expensive suits. These guys were paid obscene amount of money to know whether or not their investments were sound or not. But it turned out what they were investing were junk and they had no clue about it. And now we are all paying for the losses while these guys collected billions while things were good.

You keep refering to "these guys".
Could you identify "these guys" ?
This nebulous but pervasive group you allude to.

Thousands upon thousands of hard working people on Wall Street worked long, hard hours in 2008 with the understanding that if they met their targeted goals they would receive their bonus and now you want to deprive them of their sacrifices and labors.   WHY ?
They did NOTHING wrong.

I see very little difference between what these guys did at Merrill Lynch (and every other Wall Street house) and what Madoff did. Both gambled with other people's money and when they lost, everybody else ended up paying for it.

Oh really ?
So the employees at Bears Stern, Merrill and Lehman who had all their money tied up in the company's stock didn't lose anything ?

People who toiled for 10, 20, 30 and 40 years and kept their money, personal and 401K in the company's stock didn't get burned ?

Why don't you examine, carefully, the fate of the thousands of employees at those firms.

Stop basing your opinion on what you hear on TV every night and instead, talk to people who no longer have a job who lost their life's savings when those firms went under.

Only difference I see is that Madoff hid the facts longer than the guys on Wall Street did.

What "guys" ?
Could you identify the culprits ?
Or do you prefer to make wild, irresponsible generalizations absent any facts ?

[Jeff Goldman]

Patrick,

Don't you find it rather....nauseating that these huge financial entities were brought down by a small number of their leaders and individuals who essentially bet their companies on ONE thing?  Regardless of the fact that there is plenty of blame to go around, it really is a stunning, disgusting, basically unprecedented failure of leadership across the board. 

Jeff

[C. Squier]

I see some of Madoff's investors are looking for SIPC to bail them out...the only problem is SIPC doesn't have enough money to bail these people out....oh boy...what a mess!

The $500,000 SIPC coverage per account is pennies to probably almost all of these investors.  I'd guess it wouldn't even cover some of the future lawyer fees that many will incur fighting this thing. 

I do believe that if it is found that the SIPC needs to pay out, they'll find a way to make sure every investor who qualifies gets their full $500,000.  Like the FDIC, the US hangs it's hat on their promises....no way they don't follow through, no matter how short the fund may be today. 

[David_Elvins]

If a female, single parent of three, who worked on Wall Street and had a contract with her employer indicating that her compensation/bonus was tied to production goals, and she met those production goals, are you saying that she's not entitled to receive her contractually guaranteed pay ?

If so, why not ?

Pat,

When it comes to Wall St, should not "production goals" be in inverted commas? 

Isn't a large part of the problem that with the absence of any product actually being produced, incentives were paid for meeting short term financial targets that could be manipulated with accounting at the expense of the company's long term stability. 

[Chris Kane]

Patrick, who do you hold responsible for the collapse of Bears, Lehmans and others?