Golf Club Atlas
GolfClubAtlas.com => Golf Course Architecture => Topic started by: cary lichtenstein on December 13, 2008, 09:26:15 AM
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I've been reading about Bernie Madoff's $50 billion dollar Ponzi Scheme and it makes for fascinating reading.
Phones are ringing off the hook in New York, Palm Beach, Boca, etc.
He belonged to 6 Country Clubs and used those memberships, golf games, lunchs, to meet people and get investors:
Palm Beach CC
Boca Rio
Old Oaks CC
Atlantic CC
2 more I forgot already
People begged him to take their money
Can someone post a link please
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Cary,
See my post on Old Oaks
Here's one of the NYTimes many articles:
www.nytimes.com/2008/12/13/nyregion/13madoff.html
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Just read that article. My post was not appropriate.
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In the same vein, how about having him head up the SEC?
Nothing like having a criminal with an adroit mind fix something he took advantage of. They know all the tricks.
He could run it during the day and serve his time at nite and share a cell with the Illinois Governor.
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In the same vein, how about having him head up the SEC?
Nothing like having a criminal with an adroit mind fix something he took advantage of. They know all the tricks.
He could run it during the day and serve his time at nite and share a cell with the Illinois Governor.
I thought we already had criminals running the bailout?
Or is it just foxes running amuck in the henhouse?
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"In the same vein, how about having him head up the SEC?"
I hope you're not completely joking about that because I think there's some actual precedence for it, as, for instance, when FDR made Joe Kennedy the first head of the SEC or the organization that preceded it. Many said back then it was a brilliant move because FDR had put a guy in an oversight capacity over the manipulative minds in stocks and the market who understood their games every bit as well or better than they did.
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Madoff might even be considered as an appropriate replacement for the recently disgraced Illinois Governor.
Tom-
"Disgraced" in New York/New England is calling "doing your job" in Chicago Politics ;)
Madoff had a lot going for his payola scheme...mostly that he was the old head of the Nasdaq I believe which would add some credibility to his abilities. However a payola can never end well, no matter how smart and well conected the trader.
You could make the point that all Hedge Funds are glorified Payola schemes...look at Citadel; they aren't letting their investors to take out their money until April. Doesn't sound like an investment to me.
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Pat:
Perhaps you mean ponzi not payola. In my experience a ponzi scheme was essentially using some investor money to pay off other investors (earlier investors) to make it look like the underlying nominal business was in some way profitable or would be.
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Sadly, many extremely well compensated individuals in the financial services industry have forgotten that there is a difference between risk and fraud.
There will be repurcussions for a long time in this on going litany of nonsense. I do not see any one advocating the privatization of social security anymore.
The Wall Street Journal in their Journal Report Section had some interesting retirement investment alternatives.
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Cary,
See my post on Old Oaks
Here's one of the NYTimes many articles:
www.nytimes.com/2008/12/13/nyregion/13madoff.html
Steve can you lin the thread? Thanks.
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This blurb from today's Wall Street Journal hits home:
"In Minnesota, he attracted investors from Hillcrest Golf Club of St. Paul and Oak Ridge Country Club in Hopkins, investors say. One of them estimated that investors from the two clubs may have invested more than $100 million combined."
http://online.wsj.com/article/SB122914169719104017.html
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Looks like it might touch the NY Mets as well...
http://www.nytimes.com/2008/12/14/sports/baseball/14wilpon.html
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I think this is the start, the tip of the iceberg. Expect many many more scams like this will soon come to light.
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Jim Nugent,
In terms of the Madoff fraud being the tip of the iceberg, I have to disagree. What sets this scandal apart is that Madoff was the manager of the invested assets and custodian of the assets. It was Madoff's word that the assets were there. His auditors were not exactly a household name either. It will probably come out that his communications to his investors (the trade confirmations and the like) were bogus. I also expect to hear he didn't act alone.
Standard operating procedure of most, if not all, legitimate investment partnerships is the existance of a "prime brokerage" agreement with a Goldman Sachs or some other recognized financial institution. They function to clear trades and warehouse the partnerships assets. They also provide a credible paper trail of the transactions for auditors who specialize in reviewing these types of partnerships. The Goldmans and Morgans make money from lending these partnerships money, providing them leverage and making a spread - a separate conversation - and charging them commissions to execute trades. It's a good business when their clients don't blow them up. They have risk management systems in place for the clients they clear, which in hindsight, they should have paid more attention to themselves. Though many hedge funds have gotten annihilated in this market, and managers are going to have a difficult time justifying an arrangement that charges "2 and 25" in the future, they operate honestly.
Who knows what was going on in Madoff's mind. It's possible he thought, or deluded himself, into believing he was going to make everyone's money back over time. (If only he didn't get hit with $7 billion of redemptions - unlucky!) When the book is written on this period, his story will be a big ugly chapter. His actions have harmed so many individuals on so many levels, including charitable endowments, and even here in White Plains, NY, my synagogue. It's really so sad. We humans have the potential to do so much good, but also such evil.
To me, what's truly remarkable is how the guy could sleep at night.
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Michael,
As you say...so many of these guys think they will "pay it back " with future trades etc.
I had a client 15 years ago ...president of a bank.....no one knew he had been making loans in the names of his friends but using the proceeds personally and the friends had no idea the loans existed....he always paid the interest but the loans were now over 1.5 million. He decided to build a golf course and got another bank to finance about 4.5 millon of the project.....yet he had a deal with us for 2.5 million for the course.....things were proceeding nicely and he had everything under control.....paying the notes down and clearing things up.....THEN...his bank was sold....the audit picked it al up immediately and he went to jail for 7 years....he was one of the nicest guys I knew or know...he always pad me ;D He told me he knew he was done when the owner died and the bank went up for sale.....BUT if he had had one more year....it would have all been paid back and never found.....
I would bet anything this happens everyday and is never found in all types of transactions....especially some of these big golf developments......
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Pat:
Perhaps you mean ponzi not payola. In my experience a ponzi scheme was essentially using some investor money to pay off other investors (earlier investors) to make it look like the underlying nominal business was in some way profitable or would be.
Tom-
You're right, I got the P words mixed up.
I understand the scheme, I was only saying that the amazing thing is that because of his good reputation he was able to prolong the inevitable.
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There are some major "chickens" out there that will come home to roost in the next 12-18 months....it will not be pretty....and there will be nowhere near enough money to "bailout" any of it.
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Agree with Michael Moss, it's unlikely that there are more than a tiny handful of bad actors like MadeOff left to come clean. There is a very simple due diligence checklist that investors and their reps use when evaluating a manager. I'm posting the list below with a brief comment on what may have gone wrong this time. I'm also sincerely sorry for those who were taken by this dirtball.
This list is from a CFA Institute textbook titled "Alternative Investments Portfolio Management". Most portfolio management texts will have similar lists. The bracketed comments are mine...
1. Assess the market opportunity offered - [Madoff was using routine stock strategies with overlying options strategies. Nothing special. Should have been a red flag considering the returns he created with this strategy.]
2. Assess the investment process - [trap, Madoff was assumed to have special knowledge of the market via his complementary market making activity.]
3. Assess the organization - [trap, appearances were good.]
4. Assess the people - [trap, Madoff's reputation was good.]
5. Assess the terms and structure - [trap, Madoff charged less than most.]
6. Assess the service providers - [HUGE RED FLAG, almost everything was done internally so there were few checks and balances. The auditor was practically non existent.]
7. Review documents - [This is an unknown to anyone except those involved.]
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There are some major "chickens" out there that will come home to roost in the next 12-18 months....it will not be pretty....and there will be nowhere near enough money to "bailout" any of it.
Nostradamus, will the world end in 2012 as well?
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Here's the latest from Palm Beach:
www.palmbeachpost.com/localnews/content/local_news/epaper/2008/12/12/1212madoff.html?imw=Y
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rboyce and Michael Moss, as Jim Rogers (co-founder of the Quantum Fund) said a few days ago, most big U.S. banks are bankrupt. Hedge funds, IMO, are in even worse shape. I hope you are right, but believe I am. We'll see soon enough what happens.
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It is said that if ethics are poor at the top of any organization, institution or government, the rot will filter down through the entire ranks.
Who is left to argue that ethics in American government and business has not rotted pervasively? I disagree with those who say this is the exceptional case. Ethics and greed have proven themselves as the hallmark of Wall Street, and this is being proven every day, even now. Bailout gifts by insider cronies like Paulson to and for his compatriots to "loosen credit" and get the banks moving again; and what did they do? Yeah, you know, whether you are ready to admit it or not. At the most critical time when people in power and influence at the top of these financial institutions need to step up, be ethical, loyal, and patriotic Americans, they screwed us again with greed and mismanagement with our taxpayer insured TARP funds. And, you expect something different? That is the definition of crazy.
Madoff is a no different than most everyone else in the funny money creation world who are greedy investors who prop up or invent other schemes like Credit Default Swaps and all the other exotic leverage and bundling paper money vehicles, scheming arrangements that no sane or even trained mind can fully understand, let alone an ethical mind. They are all slight of hand financial tricks to create an illusion of wealth based on leverage, without anything more than speculation based on greed behind them.
And, isn't it curious that Madoff has so many clients that are private golf clubs or he schmoozed clients through associations in select private clubs. Talk about the ultimate access seeker or multiple club member guy that arranges access for others more focused on being somewhere and being somebody and in a small but illustriative way, covetting golf as they covet money and prestige.
If this whole bundle of scandals keeps up, while not only hating us, and desiring to collapse our way of life, our enemies will probably even pity us for how this last 30 years generation has mucked up a noble country and what was once our American ideal. The root of it all our problems is lost 'ethics' from the top filtered down. IMHO
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I'm talking credit default swaps...huge amount of money at risk here...
From Bloomberg.com in Nov.08...
"Even the size of the market is up for debate. ISDA says more than $47 trillion of contracts are outstanding, while the DTCC puts the figure closer to $35 trillion."
These people that created the various instruments are not stupid,but they let greed totally blind them to the consequences of being wrong....no over sight...little regulation. Even Greenspan was shocked by the abuse....
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Whoa, whoa, guys. I am saying that there are not too many ponzi schemes like MadeOffs out there because the vast majority of investors conduct serious due diligence. You are saying the market and economy are a wreck and there are crazy things going on. See how these are totally different topics?
Also, it is common to extrapolate the recent past into the future. Example - things are bad and they're gonna get worse. In good times it's a new era or different this time. We all fall into this behavioral trap.
Right now I'm taking a cup half full approach. Times like this weed out the bad actors and set a foundation for more honest and practical economic activity.
I've read all Jim Rodger's stuff from "Investment Biker" to "Bull in China" to "Hot Commodities" and he is brilliant. But, he makes mistakes too. For example, did he ever stop pounding the table on commodities as they plunged the last six months?
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Craig,
Yes, CDS are scary, but put them into perspective. The notional amount is very different that the net amount of money at risk. Even when the market got completely blindsided by Lehman paper going to zero the CDS contracts settled out <10% of the notional value.
Otoh, I totally agree that there should be a clearinghouse for CDS contracts just like other derivatives. The private derivative market is a wild west that has created way too much risk.
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Rboyce, you figure the cup is half full. I wonder if there even is a cup, and what it is half full of, whose cup is it, who is holding the cup, who can drink?
When you say investors need to do due diligence, I ask based on what data do you trust to do due diligence? The credit rating agencies are all under investigation and suspicion of gross incompetence, using phoney models to analyse the soundness of these financial and stock and bond entities. How does even a little feller do due diligence. Should one be prohibited from investing unless they have a minimum of an MBA or advanced financial analyst training? People of great wealth presumable hire highly trained accountants, analysts and such to help them place their multi millions. Yet, those people are duped as well, due to phoney data and accounting.
It seems that when even highly educated and trained professionals can't actually fully explain the machanisms of things like Credit Default Swaps, then we have a serious problem with data, reality, and no one can do due diligence.
I don't know what you do for a living, but, if you are going to tell me that you 'knew' based on advanced education and work in these financial areas, that these vehicles were vapid, vacuous and phoney, where were you?
Not to single out "you", but I ask this in the general sense, where were those that could have known, if there is such a educated person? If they were around, then they also have a serious lack of ethics if they didn't shout "fire".
You really don't expect the average retired investor to do real and effective due diligence, do you? With what credible information and data?
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as the banks were announcing all the "billion dollar" losses over the last year or so I started trying to get my mind around how big a "billion" really is.
if you went back a billion seconds in time, it would take you back to 1976.
a billion minutes would take you back to the time Jesus lived.
in the last year Citigroup has announced losses = to $70+ per second, every second, back to 1976 (and they are not done).
the $50bn number being thrown around on the Madoff thing seems a bit excessive, but clearly it is multiple billions none-the-less.
I suspect that by June 30th only a handful of private clubs in this country will have any waiting list whatsoever...
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I'm talking credit default swaps...huge amount of money at risk here...
These people that created the various instruments are not stupid,but they let greed totally blind them to the consequences of being wrong....no over sight...little regulation. Even Greenspan was shocked by the abuse....
Grennspan sounds like Claude Raines in 'Casablanca.'
Bob
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I'm talking credit default swaps...huge amount of money at risk here...
These people that created the various instruments are not stupid,but they let greed totally blind them to the consequences of being wrong....no over sight...little regulation. Even Greenspan was shocked by the abuse....
Grennspan sounds like Claude Raines in 'Casablanca.'
Bob
Rick had his roulette table rigged. Remember?
Plus ça change...
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Don't know much about it other than what's in the press. Strikes me as though it's a pretty common story of a crook duping gullible investors. Difference is the scale and the fact that lots of the gullible investors were supposed to be knowledgeable and competent. One thing I have to believe is that he couldn't have been acting alone - the auditor had to know.
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Another NYT article. This one focuses on Palm Beach CC:
www.nytimes.com/2008/12/15/business/15palm.html?ei=5070
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There are some major "chickens" out there that will come home to roost in the next 12-18 months....it will not be pretty....and there will be nowhere near enough money to "bailout" any of it.
Nostradamus, will the world end in 2012 as well?
And if it does, will Obama get re-elected?
Actually, I agree pretty much with Craig on this one.
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For all you who think this is a rare, isolated event, Bloomberg.com just reported:
"Almost a third of hedge funds will shut or merge after the $1.5 trillion industry posted its worst ever performance this year, according to IGS Group, which advises hedge funds on raising money.
“The failure rate is going to go up, the closure rate is going up, and the merger rate is going up,” IGS Chief Executive Officer John Godden said in an interview in London. “It’s going to be a 30 percent wipe out.”
I personally think Godden's estimate is real conservative. Madoff only got caught because too many investors wanted redemptions. Bet a ton of other hedge funds are in the same boat. i.e. if many investors demand redemptions, they, too would go under. Also many big banks and mutual funds.
Like I said earlier, I hope you guys are right, but I fear you are not.
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For all you who think this is a rare, isolated event, Bloomberg.com just reported:
"Almost a third of hedge funds will shut or merge after the $1.5 trillion industry posted its worst ever performance this year, according to IGS Group, which advises hedge funds on raising money.
“The failure rate is going to go up, the closure rate is going up, and the merger rate is going up,” IGS Chief Executive Officer John Godden said in an interview in London. “It’s going to be a 30 percent wipe out.”
I personally think Godden's estimate is real conservative. Madoff only got caught because too many investors wanted redemptions. Bet a ton of other hedge funds are in the same boat. i.e. if many investors demand redemptions, they, too would go under. Also many big banks and mutual funds.
Like I said earlier, I hope you guys are right, but I fear you are not.
Hedge funds close because the managers can't make money when they're in the red, not because they're insolvent or fraudulent. Big difference. Why would a mutual fund close? If anything, this may help bloated mutual funds shrink down to a size that's actually managable.
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Clint is right-many hedge funds close simply because if they have a negative return they just close up and reopen under a different name.
That's one of the reasons you see so few hedge funds (or mutual funds) showing a losing track record.
Trust me, most of these guys aren't geniuses-they were just in the right place for the past 20 years and now the chickens are coming home to roost.
Sadly most of the country bought into performance chasing and will suffer without the upside these guys enjoyed with your money and leverage.
When they made it , it was their money-when they lose it, it's your money.
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You really don't expect the average retired investor to do real and effective due diligence, do you? With what credible information and data?
Don't invest in a strategy that you can not understand. Make sure that your investment manager uses an independent broker or custodian to value and hold your assets. These basic pillars of due diligence won't help you determine who is skilled enough to outperform markets, but they will protect you from fraud in nearly all cases. Madoff's investors completely ignored these gigantic red flags.
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I completely understand how some of his investors were so effectively duped over the years. People want to believe that their winning investments are all on the up and up. They want to believe that somebody like Madoff is different, just because of his own innate skills. They can be mollified by anecdotal information, like the oft-told tales that Madoff would refuse to take people's money, even though they clamored to be included in his fund.
But, for the life of me, I cannot understand how these big banks and hedge funds would invest with this guy. He never revealed his method for the consistent returns that he got, despite the market conditions. His books only reflected 1 billion shares when he was said to be managing 20 billion or more. His accountant was a man well into his seventies with an office that only employed a couple people. Some investors might not get wind of this kind of information, but surely a bank or a hedge fund would do the kind of diligence that would uncover these huge red flags.
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And the regulators...they can't even claim to have caught him...the ride just ended.
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If the SEC and NYSE spent more time on doing their job instead of thinking up asinine Continuing Education studies and tests for the rank and file brokers, maybe schemes like this could be uncovered.
The head of the SEC has probably been the most incompetent Federal official after Michael Brown, the head of FEMA at Katrina.
Bob
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Don't invest in a strategy that you can not understand. Make sure that your investment manager uses an independent broker or custodian to value and hold your assets. These basic pillars of due diligence won't help you determine who is skilled enough to outperform markets, but they will protect you from fraud in nearly all cases. Madoff's investors completely ignored these gigantic red flags.
Tim, I don't think that is exactly correct. In part it is applicable to the Madoff scheme because of the lack of independent broker, custodian and clearing house. But, the average small individual investor relies heavily on analysts from these independent brokers. Personally, I have been burned several times by what appeared to be good broker analyst info and evaluation, such as K-mart being rated as a good buy and sound and so forth by ML analysts in ~1999, but the accounting data was stated incorrectly, and there was suspicion of the analyst being overly courted by the management to not fully state the facts. I suffered the same bad so-called independent analyst nefarious relationship with TYCO and ML. (what a pity ::) :-\ )
I haven't a clue about the nuts and bolts of GAAP and such. But, neither does the average investor. Most active individual investors must rely on good data, and competent analysis, and let's face it, luck or intuition or some version of speculative foresight in making investment decisions.
These people that trusted Madoff with so much did so in part due to his history of Wall Street experience. He was thought to be one of the 'master's of the universe" with all his backround including Chairman of NASDAQ,many years on board of governors, 40 years owner manager of his firm... etc.
When it gets right down to it, many of the folks as described at the Palm Beach CC were wealthy, presumably more knowledgeable than the average cat sort of people, yet with a bio like Madoff's, and the aura of covetted and special privelege that comes in these exclusive enclave settings like PBCC, the victims thought they were on the inside with a "special" guy, when they were really on the outside, being suckered and taken advantage of by operation of the very setting they thought was insulated from the rest of the harried investor world. It was the perfect setting where it was socially unpopular to actually speak of the details of financial doings and costs and scrutinizing where your money was going. What a set-up for a con!!!
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One of the large publicly traded US banks said this today: "We would like to inform you that ABCD Diversified Hedge Fund and ABCD Alpha Strategies Fund have no exposure to any of the Bernard Madoff funds. Our due diligence process does not allow an investment in such a strategy. There were a number of red flags that our process identified, including an affiliated broker dealer, a small unknown auditing firm, lack of access to the PM, lack of transparency and overall secretive..."
What surprises me is how much exposure Euro banks have. In these instances I think the banks will be on the hook for the $$$, they will have to replenish the customer accounts. Could be wrong.
As for the 1/3 reduction in the number of hedge funds, comparing that to Madoff is not a fair comparison. Lots of hedge funds will close due to poor performance, very few will close because they perpetrated an outright fraud (but a number will close because they were stupid enough to hand $$$ over to Madoff).
As if AIG, LEH, BSC, et al weren't enough, Madoff just put another big hurt on the wealth surrounding Pound Ridge!! Just kidding Matt ;-)
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There is a lot of pop finance and economics going on here.
As the WSJ indicates, there were warnings about Mr. Madoff. We don't know how many prudent investors did their due diligence and refrained from joining the fund. We do know that the SEC had information that something was not right, and, for whatever reason, did not act.
I won't be irresponsible and suggest that political considerations similar to those at play in the Fannie and Freddie debacle kept the regulators' head in the sand. It is known that Madoff was politically active and a heavy donor. Perhaps the regulators simply believed that rich people should have enough sense to know their bedfellows intimately.
Regarding the characterization here and in the popular press regarding hedge funds, they are hardly a homogenous entity or way to invest. Like with the fates of many individual stocks and mutual funds, some hedge funds have huge losses this year. However, there are any number of them that have done very well relative to the market and are performing as they're designed. Among the biggest problems facing well-performing hedge funds today are redemptions from investors needing to cover their other obligations and that new money has all but dried-up.
Regarding the mental capacity or horsepower of these folks, for a large part, they compare favorably with even the brightest of our posters. The suggestion that very smart people would place millions with rather ordinary opportunists may be the impression given by the Madoff affair, but I don't think that this is hardly the typical situation. I haven't seen Madoff's client list, but if I was a fiduciary to one of them, I'd be getting a good lawyer.
Most hedge fund managers invest their money in their funds right along with their clients. For the most part, they live their jobs and the losses of their clients are extremely personal. It is much more than money to them, and, whether we like it or not, their success is very important to our country.
As NYC public servants will soon learn, those outrageous, inconceivable Wall Street bonus checks of yesteryear which funded their payrolls are all but gone. Who is going to come to their rescue? Uncle Sam? And who is going to rescue him? The Chinese? And who's going to save the Chicomms as the rural masses continue to migrate to the cities and can't find work?
We are going through a perfect storm which, I believe, can trace its genesis to the New Deal, but really regained its energy when the children of the sixties came of age during the Clinton administration. These folks are now in charge. Ironically, they are highly a secular bunch but will need to govern with a strong faith in the supernatural. If we are to get our ire up, perhaps we should direct it in the proper direction.
Yesterday's local paper had a witty Mallard Fillmore cartoon whose theme was the ignorance of history among college students forcing a re-examination of our most valued aphorisms. Santayana's famous quote "Those who cannot remember the past are condemmed to repeat it" was modified by crossing out"condemmed to repeat it" and replaced with "a highly sought-after voting bloc". Populism requires short memories. One of the tragegies of life is how hard it is to overcome our inherent shortcomings, of which greed is indeed a very serious one, but no more so than envy.
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I like that Mallard Fillmore quote, Lou.
As for the Vics, there are a lot of very smart people who got caught in the Madoff web even though for many of them it was OPM that they were "managing" that got disappeared, as per Dunbar (the character in Catch-22, not the golf course).
Somebody said above that all the banks were insolvent. There's nothing new about that--all banks are and always will be technically insolvent, as their role in life is to borrow short (deposits) and lend long (mortgages, commercial debt) and do so at very high leverages (6-1 even before all the recent shenanigans). Their insolvency only comes when their lenders (the depositors) lose their cool an dask for their money back en masse. As it is the Christmas season, watch "It's a Wonderful Life" again to see how panics mostly affect the good guys who are playing by the rules.
Madoff is just one of the "Potters" who will be exposed before this whole sordid mess is resolved.
Have a happy one--at least we don't live in Zimbabwe.........
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Lou, I agree with the Santayana's quote. But you missed the part of history that needs to be remembered so as not to repeat it. It wasn't the Hoover part of responding to the crisis with miserly conservatism that is now widely understood to have exacerbated the problem (and which you seem to suggest a conservative and miserly approach to this crisis rather than the massive spending that is now 'regrettably' needed).
But, you don't have to go back to the "new deal" to rail like a 'Corkerite' in a bottle about what the new admin will/must do and not do. Nor do you need to go back there to understand the premise you opened with:
..We don't know how many prudent investors did their due diligence and refrained from joining the fund. We do know that the SEC had information that something was not right, and, for whatever reason, did not act.
I won't be irresponsible and suggest that political considerations similar to those at play in the Fannie and Freddie debacle kept the regulators' head in the sand...
You need to go back no further than the FINRA era and Mr Gramm's manipulations: (wiki version for summary)
http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000 (http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000)
[url]
and associated with that crippling of SEC oversight resources to take the watchdog away from the henhouse was the cut in the SEC budget in 2003 which Sen Sarbannes warned would hurt enforcement, and the insiders like Sen Shelby and Rep cronies pointed the way to justifying. As Paul O'neill explains in his book how that SEC budget was cut to spin the funds over to the Iraq effort, one can learn from a man that was at the table during this era of deregulation and defunding the guards so as not to look into the ever increasing complexity of the bust-out and bilking scandals of the American investors and taxpayers.
Lou, going back 75-80 years to find blame in the 'new deal' and associate blame for what has happened now with democrat philosophies and recovery efforts then is like pointing to horseshoe tracks in the Nevada desert and saying they were made by Zebras. That is the method of modern conservative talk radio spin, not the facts. I don't know much, but I'm pretty sure I know this... ::)
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For those who are quick to fault the regulators, most hedge funds are largely unregulated because they restrict their offerings to accredited investors. Since these larger investors are presumed to be sophisticated enough to protect themselves, the regulators such as the SEC are limited intheir ability to act prior to a showing of fraud. Of course the definitions pertaining to investors were created at a different time and the size of investments have increased markedly.
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I'm waiting for Shivas to come on here and explain everything about the current crisis and particularly with what happened to the 'members' of the PBCC in "Caddyshack" terms. Who are the correlating cast of characters? ;D ::)
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It wasn't the Hoover part of responding to the crisis with miserly conservatism that is now widely understood to have exacerbated the problem (and which you seem to suggest a conservative and miserly approach to this crisis rather than the massive spending that is now 'regrettably' needed).
Might want to read some other historians/economists, something like The Forgotten Man by Amity Schlaes. :)
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Never ceases to amaze me how many smart folks fall for con men, legal or illegal. The lure of easy money...
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George, no time, so I'll go for the summary version:
http://www.reason.com/news/show/123476.html (http://www.reason.com/news/show/123476.html)
It seems she starts off with the effects of uncertainty and "“bold, persistent experimentation”. What else could they do? they were treading in unknown territory. They had to experiment. And, the wasn't the Hoover reluctance to intervene with massive spending for stimulus still widely seen as the tug that set the hook deep into the depression and that early stimulus is now believed in hindsight would have been better?
Then she ends up with the typical "forgotten man - taxpayer" rant about the ubiquitous government growth vis-a-vis the social security system and says that is why she wrote the book.
"The most important thing for our generation is that the New Deal will come back to bite our children when they pay yet higher payroll taxes because we did not dare to reform Social Security and other entitlements. There are not enough people to pay for Social Security, and Social Security is set up so that you can’t fix it just by growing the economy. "
Isn't the book just another taxpayer rant and rationale to do what is now impossible to contemplate in the real world?
Isn't the real question, what did we learn about the early reluctance to provide serious stimulus by Hoover and the slow learning curve of feeling their way by experimentation, with mistakes made by FDR, yet stimulus was what was needed at the end of the day to effectively deal with the problem. So now what, go back to the reluctance of the taxphobia people and close the pocket book at this time?
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SL,
You are absolutely right. I think that the term qualified or accredited investor has a specific definition, maybe even legal. Sophisticated, wealthy folks have the wherewithall to obtain the best information and if they fail to do so, it is largely their problem.
Not running in Mr. Madoff's economic, political, and civic circles, I don't have any specific memory of him prior to last week. But given the amount of the money in question and the fact that the SEC was contacted on several ocassions by professional people with serious charges, even a cynical Monday morning quarterback has cause for concern.
Perhaps the lesson is that we should take from this is President Reagan's admonition and always "trust, but verify". Most of us put way too much faith in what people we like and trust say without critical reflection. One the few things Joe Perches and I agree on is that on things that matter, we should always be skeptical.
Dick Daley,
You probably don't do it with malice, but you consistently attempt to diminish me and what I put out there for consideration with the notion that I am parroting Rush Limbaugh or Sean Hannity- "That is the method of modern conservative talk radio spin, not the facts. I don't know much, but I'm pretty sure I know this...".
I could be indignant and defensive about your method of attacking the individual rather than positing superior counter-arguments, but, I confess, I do enjoy Rush and Sean, and believe that their sometimes exagerated, show-bizz shtick is directionally accurate. You and I have debated on numerous occasions the way the world works and we simply see things very differently. Perhaps you should expand your universe of source information just a bit beyond Moore, Franken, MSNBC, CNN, and your fellow disaffected, socialist nut jobs. ;)
Much has been written regarding the causes of the Great Depression. George's reference to Ms. Schlaes' work is a good one, but I am sure you won't find the emotional satisfaction you are seeking by reading it. I offer the following link that references the WSJ with some temerity as I've come to realize that information that contradicts fervent faith can make the believer apoplectic, but here it goes anyways:
http://www.businessandmedia.org/articles/2008/20081104085447.aspx
Two things appeared to have exacerbated a bad business cycle into a terrible depression: 1) protectionism with high tariffs on imported goods which led the rest of the world to react in kind; and 2) an extremely tight money supply. Summarizing what FDR's friend and Treasury secretary Mr. Morganthau was quoted as saying, throwing the kitchen sink at the problem only made it worse.
It is ironic how roles have reversed somewhat 70-80 years later. Today's protectionists are the Democrats. Unfortunately, President Clinton was entirely wrong when he declared that the era of Big Government was over. As President Bush, his Republican congress, and governors such as the one we have in CA, Republicans have long abdicated the position that governments that govern least govern best. Frugality and small government has given way to which party can show their support for the biggest bailout of powerful constituencies. There is no longer a tension, a competition for the minds and hearts between those who hold the individual as the epitome and those who abstractly place the collective on the throne. The outcome, I fear, is the "europization" of America with ongoing, dimishing prospects for the rest of the world. I sincerely hope that I am completely wrong.
Rich Goodale,
You are right. I was a participant in the industry in Texas during the bank and S & L crisis of the late 1980s early 90s. It is a shame that the ordinary person doesn't understand how things work on the margin. Sad that a similar mark to market approach to valuing assets snow-balled the system and took down many otherwise healthy institutions. I never bought completely into the notion that there were way too many of them (banks and S & Ls) and that consolidation was necessarily a good thing. Today, some of the small local and regional banks with prudent lending practices are in the best shape.
I still have warm memories of Victoria Falls and the wildlife parks in what was once the breadbasket of Africa. What an absolute pity.
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Mr Daley
Since you are smart enough to know who to blame in this fiasco other than Madoff, perhaps you are smart enough to do your own research and not have invested in KM, MER, and TYC.
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Lou, I'm not trying to diminish you as an individual. In fact, I stated that you seem to have the first part of your post about right, IMHO. I just was trying to indicate that the method of pointing out the line about 'not remembering the past - doomed to repeat it' while conveniently not remembering the whole past as it pertained to this issue is putting what I hear as the conservative talk show spin/method we have come to expect on these matters in these times.
Maybe I'm alone on this, but I find it laughable and incredible that the whole talk show crowd ( and as I hear you, yourself) can come up with these contorted and labored ways of finding fault with anything and everything they can remotely link in current conditions as primarily rooted in historical democratic policies and philosophies. Yet the realities are clear when it comes to this whole deregulated grab fest created indisputably by the idealogues on your conservative "less goverenment-deregulation'" side of the equation. These historical facts about who created FINRA and who cut the SEC enforcement budget and who took Fannie and Freddie out of the perview of SEC and put them under HUD-OFEA and who creates loopholes to evade both taxes and accountability to the people as precursor to this crisis are conveniently ignored. (your original concession that SEC went missing or sleeping on the job) Your isolating FDR 'new deal - bold experimentations' to get us out of THAT depression, as origins of this problem, while not recognising the Hoover response or lack thereof as being standard old conservative party 'let the market take care of itself' notion, is selective history at best.
Yes, Smoot Hawley tarrifs were the conservative business crowd's original lobbied position back then. Yes it is ironic that now labor and liberals want "fair trade" which has been distorted to accuse of absolute protectionism by the right. I'd bet that the business crowd would be crying the loudest for tarrifs again, had they not spun all the manufacturing and profits off shore in the first place. If the profits depended on on-shore American based plants and manufacturing, the business crowd would still be in Smoot Hawley mode. But, they gutted on-shore manufacturing, moved it to slave labore and wages third world, then blamed it on unions, and then rail against unions for wanting to save American jobs and manufacturing. What a con...
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Isn't the book just another taxpayer rant and rationale to do what is now impossible to contemplate in the real world?
I don't doubt that is the message some would take from the book. I simply suggest it as a check against the notion that Hoover did nothing, and the notion that FDR's plans are what was needed and were successful.
You reap what you sow. We've been sowing since FDR and before; what we're experiencing now is just the tip of the iceberg.
Anyone that can look at the economic history of the US and the world and conclude that free markets don't work and government intervention does is someone I am incapable of influencing at all, so I will bow out now. :)
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No Hamm, I'm not smart enough, nor smarter than millions of other investor/shareholders that believed the analysts who have financial educations well above my puny self. I believed the stock tauts when they published the data based on 10Ks and required reports that must legally be correct, yet were infact illegal misstated data.
We presumably have a government that hires cops and knowlegeable enforcement professionals to oversee accounting principles so as to be confident that the data is honest. When the cops are taken off the beat, or 'ham'strung ;) ;D to do their jobs effectively, then honest people get beaten, not by their lack of due diligence, but by organized and enabled deception.
Bad things can happen in any business where they go bust and investors loose money. But, this is different. It is not lack of due diligence as a shareholder or potential investor. It is lack of honest information and unconflicted interests by analysts for investors to make investment decisons upon. Why do you seem coddle the criminal deceivers and enablers and overlook the incompetent enforcement, and blame their victims?
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George, before you go, please tell me what relationship, 'fair' and 'honest' and 'legal' must have with your notion of 'free markets'? Where in that same history of the world has there ever been totally free markets that you can say have worked that have not been regulated in various ways, starting with honest and transparent markets. Does a perfectly free market work if there are ever dwindling numbers of winners and ever increasing numbers of loosers, and loss not due to indolence, but deception and cheating? Who regulates that in your free market? This ain't golf George, where you self regulate and call penalties on yourself. Free markets need a ref and enforcer on rules or it is a deadly spiral down to the end for all but the few winners who gain advantage by hook or crook... IMHO.
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While the details of this disaster are still murky it seems clear that the "accelerators" of this scam were the funds of funds that did horrible due diligence. The unfortunate consequence could be continued pressure on hedge funds as investors just want their money back.
I remember when I set up my own investment firm and enthusiastically told my first few clients about it. There was an uncomfortable pause at their end of the phone which quickly went away when I said "Oh, and by the way , I won' t be keeping your securities in a box under my desk!".
I am having trouble developing sympathy for people who overlooked his constant statements that he had some secret way of successful investing.
I also am a little annoyed at all of those who are coming out and saying that they smelled something bad about Madoff. Don't they have some responsibility to blow the whistle?
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Mike, blow the whistle to who? Has there always been someone on the other end listening for the whistle? Did the enforcers have a list of priorities and allocations of investigative resources to have been able or willing to address this earlier?
I sure don't know the answer. Please explain to me how this happens. I hear some say the SEC is one of the most effective agencies of government still operating. Yet, they can get a charge on Martha Stewart for lying under oath, not the alleged secruities crime (as I understand it) for peanuts cash at stake, and they miss a fraud with a 50billion scope of loss?
If it is the case that the SEC is overwhelmed by all the accelerating pace of scandals in recent years, and potential out there of what other shoes haven't yet dropped, what does that say about us in the U.S.?
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George, before you go, please tell me what relationship, 'fair' and 'honest' and 'legal' must have with your notion of 'free markets'? Where in that same history of the world has there ever been totally free markets that you can say have worked that have not been regulated in various ways, starting with honest and transparent markets. Does a perfectly free market work if there are ever dwindling numbers of winners and ever increasing numbers of loosers, and loss not due to indolence, but deception and cheating? Who regulates that in your free market? This ain't golf George, where you self regulate and call penalties on yourself. Free markets need a ref and enforcer on rules or it is a deadly spiral down to the end for all but the few winners who gain advantage by hook or crook... IMHO.
Where did you get the notion that free markets mean no laws whatsoever? That is anarchy, not free markets.
Free markets are no more - and no less - than freedom of choice extended to the economic arena. You cannot have a free choice exchange without certain regulations, but that is a far cry from massive intervention in the marketplace by the government.
What I - and, seemingly, sadly few others - object to is the notion that the enlightened Masters of the Universe can manipulate markets at their own will and there will only be positive consequences to their manipulations.
You love to state as fact that free markets have been tried and have never worked. That is your opinion, it does not happen to be mine. My opinion is that free markets are rarely tried, whereas government intervention is the most proven loser of all. Even casual inspection of the areas in which our economy are suffering would reveal that it is invariably the areas where the government is most involved.
EDIT: corrected the typo Dick caught.
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I haven't seen Madoff's client list, but if I was a fiduciary to one of them, I'd be getting a good lawyer.
I would hope that the lawyer would be retained to go after Madoff & Co. and not to defend your actions against your client, because as a fiduciary you really wouldn't have any justifiable defense. Time to dig deep, recover what you can and make your client whole.
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Interesting discussion. My $0.02...
I live by the rule that you should never trust your money with someone else. There is only one person why has the exact same monetary goal as you do - you, so trust no one with your hard earned money.
The problem with Madoff affair is that people always believe there are people out there who are so much smarter or better connected that they will always perform better than everyone else when the facts say that this is not true. These "Masters of the Universe" don't know any better than an average Joe's off the street. If you look at the statistics, the percentage of winners/losers on Wall Street are basically dictated by chance and not skill. Even if you have some money managers who made extraordinary money, it is more likely that he/she was just lucky, rather than he was more talented than everyone else. You can basically equal a typical return by a money manager by choosing securities at random. But people don't like mathematics and hate statistics. So they keep entrusting their money to these modern snake oil salesmen.
The most telling part of Madoff fraud was that its return was so amazingly consistent. Math tells you that this is almost impossible. But people believed that Madoff was smarter and more talented than everyone else so they ignored the evidence.
In the end, math won and people lost. It always will.
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Some details on the big name losers..
HSBC, one of the world's largest banking groups, could lose $1 billion, it announced Monday.
The Royal Bank of Scotland (RBS) told CNN its hedge funds had exposure of up to 400 million British pounds ($600 million) to funds managed by securities broker Bernard Madoff.
France's BNP Paribas (BNPQ.Y) said Sunday its maximum potential loss was about 350 million euros ($468 million).
Spain's Banco Santander (STD) said it had a direct exposure of 17 million euros ($23 million) while clients of its hedge funds had 2.33 billion euros ($3.1 billion) at risk in Madoff's firm. Spain's second-largest bank, BBVA (BFR), said it could lose up to 300 million euros ($404 million).
Japan's Nomura (NMR) on Monday said it had 27.6 billion Japanese yen ($303 million) of exposure, but that the impact on its capital would be limited.
http://money.cnn.com/2008/12/15/news/newsmakers/Madoff_exposure/index.htm?postversion=2008121508
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Even casual inspection of the areas in which are (sic 'our') economy are suffering would reveal that it is invariably the areas where the government is most involved.
Yup George, it is a simply explained honest difference in our points of view. I think you could alter yours to say "Even casual inspection of the areas in which ouR economy are suffering would reveal that it is invariably the areas where the government is most uninvolved and failing to do its job as they were charged with doing, via cronism and designed to fail legislation, as lobbied for by those seeking to game and take advantage of the original intent."
But then I guess somewhere deep down I'm some sort of conspiracy nut. I'm already scrutinizing the video to see if there was a second "shoeman" on a grassy knoll... ::) :-\
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RJ, et al.
You know what the real problem is with all you guys debating OT stuff...its always the wrong thing. ;D
http://www.cnn.com/2008/TECH/12/15/internet.sex.survey/index.html
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Even casual inspection of the areas in which are (sic 'our') economy are suffering would reveal that it is invariably the areas where the government is most involved.
Yup George, it is a simply explained honest difference in our points of view. I think you could alter yours to say "Even casual inspection of the areas in which ouR economy are suffering would reveal that it is invariably the areas where the government is most uninvolved and failing to do its job as they were charged with doing, via cronism and designed to fail legislation, as lobbied for by those seeking to game and take advantage of the original intent."
But then I guess somewhere deep down I'm some sort of conspiracy nut. I'm already scrutinizing the video to see if there was a second "shoeman" on a grassy knoll... ::) :-\
That's the difference - you see failed government intervention as the government being uninvolved - I see it as the government being ineffective. If the government wasn't doling out favors, cronyism wouldn't be nearly as popular, for instance. If the government didn't heavily regulate the securities industries, then maybe some folks would have been more inclined to look at what Madoff was doing, rather than misplacing blind faith in the SEC.
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Where did you get the notion that free markets mean no laws whatsoever? That is anarchy, not free markets.
Apparently, the existing laws are insufficient to prevent a debt fueled meltdown.
The overwhelming majority of today's problems are caused by greedy lenders extending credit to those who can't afford it, and greedy consumers accepting that credit.
And Lou, then money supply is not too tight. This is a housing price bubble, one in a series of commodities bubbles created by loose credit.
I have a new friend at my health club who made a compelling argument against further bank regulation. In summary, he says this has been extremely traumatic for the banks, and that the most likely reaction is for banks to become overly selective in their lending practices. If we regulate our banks further, then commerce will take their banking business elsewhere.
Still, I don't see how we then prevent a recurrence of today's problems.
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Interesting discussion. My $0.02...
I live by the rule that you should never trust your money with someone else. There is only one person why has the exact same monetary goal as you do - you, so trust no one with your hard earned money.
The problem with Madoff affair is that people always believe there are people out there who are so much smarter or better connected that they will always perform better than everyone else when the facts say that this is not true. These "Masters of the Universe" don't know any better than an average Joe's off the street. If you look at the statistics, the percentage of winners/losers on Wall Street are basically dictated by chance and not skill. Even if you have some money managers who made extraordinary money, it is more likely that he/she was just lucky, rather than he was more talented than everyone else. You can basically equal a typical return by a money manager by choosing securities at random. But people don't like mathematics and hate statistics. So they keep entrusting their money to these modern snake oil salesmen.
The most telling part of Madoff fraud was that its return was so amazingly consistent. Math tells you that this is almost impossible. But people believed that Madoff was smarter and more talented than everyone else so they ignored the evidence.
In the end, math won and people lost. It always will.
We think alike. We know alike.
In fact, I'd argue the only way "broker guy" beats the market over the long haul is with illegal information.
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Apparently, the existing laws are insufficient to prevent a debt fueled meltdown.
The overwhelming majority of today's problems are caused by greedy lenders extending credit to those who can't afford it, and greedy consumers accepting that credit.
And who's pushing this debt-fueled situation?
Free market lenders would be going bankrupt, not being propped up for further problems down the line.
Every time someone commits a white collar type crime, it is trumpeted as a failing of the freee market, and the free market is emblazoned as Public Enemy #1. That would be like saying every time someone commits murder, that would should abandon all of our personal freedoms in favor of living in a police state.
Free markets require laws, and enforcement of those laws, not the complete abandonment of laws, nor the government trying to tweak the results in one way or another.
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Hello Lou!
Hope you are doing good. If this debacle can be traced to the New Deal, please explain how the New Deal caused similar debacles such as the one that precipitated Shay's Rebellion, the Panic of 1873, the Panic of 1893, and Richard Whitney's huge fraud in the 1920s. Thanks.
Jeff
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Hi George,
I don't quite follow you here.
We are in total agreement that a true free market system would have allowed these horseshit banks and brokerages to fail. It appears that many are way underwater. The greatest tragedy of all is the way these banks protected themselves by investing in so many unregulated, off-balance sheet transactions that the government decided it could not let them fail. The whole thing smells of cronyism, though.
"Help! We need 700 billion dollars. Now!" This after several years of the gaudiest paychecks in business history. A middlin' guy working on Wall Street has been making $500-1000k per year, you know. It's enough to make you scream. These are the people least worthy of assistance.
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Hi George,
I don't quite follow you here.
We are in total agreement that a true free market system would have allowed these horseshit banks and brokerages to fail. It appears that many are way underwater. The greatest tragedy of all is the way these banks protected themselves by investing in so many unregulated, off-balance sheet transactions that the government decided it could not let them fail. The whole thing smells of cronyism, though.
"Help! We need 700 billion dollars. Now!" This after several years of the gaudiest paychecks in business history. A middlin' guy working on Wall Street has been making $500-1000k per year, you know. It's enough to make you scream. These are the people least worthy of assistance.
I do agree with you, sorry if it didn't come cross that way. Folks on here love to rip the free markets, as though free market capitalism means anything goes, no laws whatsoever. My point to Dick is simply that free markets does not mean an absence of laws.
The existing laws may indeed not be sufficient, though I personally believe they are simply not being enforced vigorously, as opposed to being insufficient. And considering who has been charged with creating and enforcing the laws, it isn't surprising. What's surprising to me is the proposed solutions by many on here and many of the enlightened outsiders - more laws to make people feel better, while those making the laws and enforcing them (and I mean all of them in Washington, both parties) are complicit in covering up their own misdeeds.
Jeff -
Love the sarcasm (I really do, I'm not being sarcastic :)) But seriously, do you see any difference between the recoveries after the panics you mention and the much deeper and longer lasting Great Depression? Some might say it shows how wrong the policies of both Hoover and Roosevelt were.
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I think everyone can agree that there has to be a balance between free market and regulation. Too much of either and you end up with a mess like this.
Based on what has happened over the last decade, I think the market can use more regulation. While it is entirely possible that we may go overboard with regulation, we will have to apply more regulations until we start seeing the negative effects.
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Rats, I had this eloquent retort to Dick's "Phil Gramm defanged the SEC" argument and I lost it in cyberspace. Dick, there were complaints about Madoff's unreal returns throughout the 1990s. The SEC had a complaint filed as early as 1999 and did nothing about it. Whatever Texas Senator Gramm did in the 2000s, it had little to do with Madoff's fraud.
Jeff,
I am doing fine, thank you. Panics have existed throughout the history of mankind. Tulips, stocks, commodities, etc. Markets are highly imperfect and volatile. They are just a whole lot better than the alternative. But if you have some reasoned, interesting, relevant information on the ones you mention, I am all ears.
I would also be curious to know what level of the economy you believe the government should account for. Is a third enough? Is half better? How many "public servants" can the economy reasonably sustain? Do you think that half of us can depend on the government for our livelyhood and the economy will somehow continue to chum along?
John Kirk,
If I gave the impression that I believe the money supply is too tight today that is certainly not my intention. The opposite is the case. My only reference to a tight money supply was to the post-1929 time frame when the Hoover administration failed to provide liquidity in the midst of the stock market and banking collapse.
As to brokers not being able to beat the market, you can believe what you want, but given that the maket is an average which reflects both good and bad picks, I think it is reasonable to conclude that there are some brokers who pick more winners than losers and beat that average. To believe otherwise would lead one to only buy index funds or, as in current times, to remain highly liquid. But, as I am sure you know, there is even considerable risk in just sticking your money under a matress.
HenryE,
You are right about not having much of a defense ("other smart people did it too"), and that is why a good attorney is a necessity. A lazy, incompetent, but otherwise honest man can do little for restitution sitting in jail. I hope I am wrong, but I bet these advisors don't have the insurance or assets to make Madoff's "victims" anywhere close to whole.
Richard Choi,
I could not disagree with you more vis-a-vis the present level of regulation. It is not Madoff's fraud that collapsed Fanny and Freddy or that drove gasoline prices to unsupportable levels. It is the noise that government creates in each and every transaction, big and small, which eventually overwhelmed us.
Adding to this noise is the new administration's promises to increase taxes on the productive, force trillions of dollars of additional costs on our economy (to prevent purported modeled/theoretical consequences of global warming), and placing nearly a third of the economy (health care) in the hands of the government. If you think that the path to salvation is paved by government programs you may wish to heed Senator Clinton's advice about suspending disbelief. It is all about the math and human nature.
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Lou,
Fair enough. I agree.
The best way for a broker/manager to work in your best interests is to take a percentage of your net worth, regardless of transaction fees. It would still be difficult to verify they were doing what they said they did.
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Lou,
Fair enough. I agree.
The best way for a broker/manager to work in your best interests is to take a percentage of your net worth, regardless of transaction fees. It would still be difficult to verify they were doing what they said they did.
Huh?
I think an investor and advisor/broker best work together if they have a clear and reasonable understanding of each other's objectives and capabilities. There are hedge funds where the principals invest most of their own personal money right along with their clients. No one can have even a near perfect record. And if anyone tells you that they have it all figured out, run the other way. Today, with governments becoming so active in support of key industries throughout the world (e.g. Germany and VW), even the very best financial people are recalibrating. Unfortunately, the lessons from the new realities can be very expensive. Exciting times, wouldn't you say?
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George,
The panics in the 1800s came every 15-20 years or so, and the ones in 1873 and 1893 lasted 4-5 years each. The depression was longer and harsher, but these were bad enough. Note that since the great depression, we've had bad recessions in 1972-3 or so (though that was really a different phenomena), and 1980-1982 or so, which was necessary, unfortunately, to ring inflation out of the economy. I would say that the economic stabilizers resulting from the New Deal have been pretty effective. Nobody has banned the business cycle (no matter what the supply-siders say), but recessions since the Keynes era began have been less harsh.
Lou, the least government intervention is best; it should create a level playing field, and let the market do its work. It must be involved when information costs and other friction can cause really bad things, and that's why we need regulators to do their job. However, it by definition has a huge influence because it prints the money, and there is no getting away from that. Decent monetary policy can also help let the market do its work. However, now we are in a situation where it appears that the market is frozen, and nothing that the fed does will have any influence. Interest rates are already basically zero, and nobody wants to invest in anything. That's understandable--when there is this much excess capacity, why create more? Same goes for tax cuts--folks will just take the money and put it under the bed. We have already had in effect a huge tax cut with the decline in the price of oil, and its done zippo. Therefore, in this case, government must make up the difference between output and potential output by spending. A huge lot. Quickly. If it employs folks to do stuff, they will get money, get confidence, and buy things, and those folks will buy things etc. etc.
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As to brokers not being able to beat the market, you can believe what you want, but given that the maket is an average which reflects both good and bad picks, I think it is reasonable to conclude that there are some brokers who pick more winners than losers and beat that average. To believe otherwise would lead one to only buy index funds or, as in current times, to remain highly liquid. But, as I am sure you know, there is even considerable risk in just sticking your money under a matress.
Nobody is saying that there aren't any money managers out there who cannot "beat the market". What math and statistics tells us, however, is that people who are "beating" the market are just lucky, not skilled.
Let me put it in a simple way. If you have 1,000 people flip a coin 10 times and have people call it while in the air, you are going to have a few people who will correctly predict the results all 10 times just by the odds. However, those people may believe that they have an uncanny ability to predict the coin flip instead of realizing that they were just lucky.
That is exactly what happens in the Wall Street. If you have enough money managers, you are going to have many who are very successful and few who are extraordinarily successful. But that is not because they are skilled, it is just a by product of the odds. But I am sure if you interview those money managers, they believe they have an uncanny ability to predict the market.
I will put a caveat that there may be people who are truly talented that they can beat the market average over the long run. However, if you look at the numbers and statistics, these kind of people do not exist more than what statistics would predict (based on random chances). So, far as anyone is concerned, they might as well not exist (because you will never be able to distiguish them from those who are just lucky).
And it is also very naive to believe that just because the money manager takes a percentage of your total net worth, their objective lines with yours. Their objective is to make themselves rich, not you. Making you money is just a byproduct of him getting rich, not his major focus.
Even if those money managers have significant amount of their own money in the game, they may still take WAY too much risk than what they really should take. This is exactly what happened with LTCM. Even though, most of the executives at LTCM had their own money in LTCM, they leveraged 40 to 50 times of their holdings because if they were right, they gained to make 40 to 50 times of their money while if they lost, they only lost what they had. And most of the LTCM customers had no idea that their money was at such risk because all they saw was consistent returns for 4 or 5 years (until it all came crashing).
Index funds are a GREAT way to invest. Certainly better than rolling a dice and getting a money manager. If you figure in the extra cost involved with money managers, 95% of the money managers cannot beat the Index Fund returns. And I will take 95% sure thing over 5% maybe.
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HenryE,
You are right about not having much of a defense ("other smart people did it too"), and that is why a good attorney is a necessity. A lazy, incompetent, but otherwise honest man can do little for restitution sitting in jail. I hope I am wrong, but I bet these advisors don't have the insurance or assets to make Madoff's "victims" anywhere close to whole.
Being honest, lazy & incompetent is not a criminal offense. Unless they were aware of Madoff's fraud, there's no reason they would go to jail. As for whether or not the advisors have the assets to make their clients whole, I'd say it's about 50%. Certainly the big guys like HSBC & Paribas have the capability. Let's see if they do the right thing or take your suggestion of hiring legal representation to defend against their own clients.
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Nobody is saying that there aren't any money managers out there who cannot "beat the market". What math and statistics tells us, however, is that people who are "beating" the market are just lucky, not skilled.
Let me put it in a simple way. If you have 1,000 people flip a coin 10 times and have people call it while in the air, you are going to have a few people who will correctly predict the results all 10 times just by the odds. However, those people may believe that they have an uncanny ability to predict the coin flip instead of realizing that they were just lucky.
Richard, you're assuming every investment is like a fair, double sided coin. They're not. They have variables which determine their future performance. Some people happen to be better than others at predicting these variables, but skill is involved. It would be nice if public companies were homogenous entities, but they aren't. Want to flip a coin to see if you get to buy Enron or Berkshire Hathaway? I don't either.
You also assume that managed funds have the same volitility as index funds. They do not. In many cases, much less. Volatility causes investors to run scared. The "market" averages it's 10 and change percent, while investors average much less....buy high, sell low. Investor behavior has a heck of a lot more to do with returns than the fees of a managed fund do.
Index funds: your 100% guarantee to always underperform the market.
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Lou,
Fair enough. I agree.
The best way for a broker/manager to work in your best interests is to take a percentage of your net worth, regardless of transaction fees. It would still be difficult to verify they were doing what they said they did.
Huh?
I think an investor and advisor/broker best work together if they have a clear and reasonable understanding of each other's objectives and capabilities. There are hedge funds where the principals invest most of their own personal money right along with their clients. No one can have even a near perfect record. And if anyone tells you that they have it all figured out, run the other way. Today, with governments becoming so active in support of key industries throughout the world (e.g. Germany and VW), even the very best financial people are recalibrating. Unfortunately, the lessons from the new realities can be very expensive. Exciting times, wouldn't you say?
I tried to figure out a better way to type that thought. I'm not surprised it earned the "?" response. The money manager's pay should be proportional to the amount of money under management. I was just trying to say the manager should be incentivized to grow the wealth.
Yes, these are very exciting times. However, I'm a glass is half empty guy, and see the next fifty years filled with painful adjustments. I'm betting the farm on the continued proliferation of Internet commerce.
Not to get too far off track, but I see a world filled with unneeded workers. Automation renders a significant portion of the adult work force unnecessary. There are also unneeded middlemen in many industries, and people who sell you unhealthy crap. Call me crazy, but I think as many as 10-20% of the work force is unimportant. I see permanent high unemployment in the future. What are we going to do about it?
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As to brokers not being able to beat the market, you can believe what you want, but given that the maket is an average which reflects both good and bad picks, I think it is reasonable to conclude that there are some brokers who pick more winners than losers and beat that average. To believe otherwise would lead one to only buy index funds or, as in current times, to remain highly liquid. But, as I am sure you know, there is even considerable risk in just sticking your money under a matress.
Nobody is saying that there aren't any money managers out there who cannot "beat the market". What math and statistics tells us, however, is that people who are "beating" the market are just lucky, not skilled.
Let me put it in a simple way. If you have 1,000 people flip a coin 10 times and have people call it while in the air, you are going to have a few people who will correctly predict the results all 10 times just by the odds. However, those people may believe that they have an uncanny ability to predict the coin flip instead of realizing that they were just lucky.
That is exactly what happens in the Wall Street. If you have enough money managers, you are going to have many who are very successful and few who are extraordinarily successful. But that is not because they are skilled, it is just a by product of the odds. But I am sure if you interview those money managers, they believe they have an uncanny ability to predict the market.
I will put a caveat that there may be people who are truly talented that they can beat the market average over the long run. However, if you look at the numbers and statistics, these kind of people do not exist more than what statistics would predict (based on random chances). So, far as anyone is concerned, they might as well not exist (because you will never be able to distiguish them from those who are just lucky).
And it is also very naive to believe that just because the money manager takes a percentage of your total net worth, their objective lines with yours. Their objective is to make themselves rich, not you. Making you money is just a byproduct of him getting rich, not his major focus.
Even if those money managers have significant amount of their own money in the game, they may still take WAY too much risk than what they really should take. This is exactly what happened with LTCM. Even though, most of the executives at LTCM had their own money in LTCM, they leveraged 40 to 50 times of their holdings because if they were right, they gained to make 40 to 50 times of their money while if they lost, they only lost what they had. And most of the LTCM customers had no idea that their money was at such risk because all they saw was consistent returns for 4 or 5 years (until it all came crashing).
Index funds are a GREAT way to invest. Certainly better than rolling a dice and getting a money manager. If you figure in the extra cost involved with money managers, 95% of the money managers cannot beat the Index Fund returns. And I will take 95% sure thing over 5% maybe.
If you ever spent some time explaining to a " master of the Universe"
the principles involved in getting the ball airborne....
that his 8 iron doesn't go 150 yards....
that he can't hit it perfect every time.... (actually never)
that his son's drives don't go 300 yards (nor his 250)
that being "good at everything else I do ???" doesn't exempt him from the fundamentals of golf and a realistic practice regimine to improve...
that three on and four putts is not a 5 (disregarding the three mulligans of course)....
that 9 foursomes can't tee off at 8 o'clock on a Saturday...
that he'd be scratch if only he'd started when I had.... (despite 15 years of being a 25)
then you'd have to agree with Richard
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Index funds: your 100% guarantee to always underperform the market.
True, by 0.12% per year. Good luck beating that.
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Index funds: your 100% guarantee to always underperform the market.
True, by 0.12% per year. Good luck beating that.
But there is much more to it John. We can't pretend that humans invest in an emotionless world. In that 10.8% index fund, volatility scares people into selling in times like this. They're almost guaranteed to miss upside. Upside that you can't get back. They'll reinvest again at the peaks.
Case in point: The highest mutual fund redemptions of the last decade were in 2002. The bottom of the market. The highest mutual fund inflows were in 1999 and 2007, the peaks of the market. Investors do the opposite of what is right.
You must not ignore volatility, which index funds excel at. Give an investor a 10.8% S&P 500 index fund or a 8% balanced fund and 20 years and get out of the way.....they'll do better in the balanced fund.
CPS
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Clint,
At the bottom of your post, it says 95% of all putts left short do not go in. I believe 100% is a closer estimate. How can I trust your other thoughts of investing percentages?
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Richard, you're assuming every investment is like a fair, double sided coin. They're not. They have variables which determine their future performance. Some people happen to be better than others at predicting these variables, but skill is involved. It would be nice if public companies were homogenous entities, but they aren't. Want to flip a coin to see if you get to buy Enron or Berkshire Hathaway? I don't either.
My example was simple just to illustrate the point. But the stock market is a fairly simple system to analyze. You have finite number of companies, and you have historical record on their gains and losses over many years. Based on that data, it is almost trivial to predict how many people will make more money than average based on the data. This kind of analysis produces numbers that are consistent of number of money managers who beat the average. If there were significant number of money managers who are very good at predicting so called variables, we should see a whole lot more people beating the average than the statistical model indicates, but we do not. They are just lucky.
You also assume that managed funds have the same volitility as index funds. They do not. In many cases, much less. Volatility causes investors to run scared. The "market" averages it's 10 and change percent, while investors average much less....buy high, sell low. Investor behavior has a heck of a lot more to do with returns than the fees of a managed fund do.
Volatility is just a function of risk. More risk you take, more volatile you will be. It does not matter if it is a managed fund or an index fund.
Index funds: your 100% guarantee to always underperform the market.
If this is true, why did a study find that 78% of actively managed funds lagged the returns of the Vanguard 500 Index fund by an average of 2.6% per year?
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The Securities Investors Protection Act has been invoked:
http://news.yahoo.com/s/ap/20081215/ap_on_bi_ge/wall_street_arrest
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George,
The panics in the 1800s came every 15-20 years or so, and the ones in 1873 and 1893 lasted 4-5 years each. The depression was longer and harsher, but these were bad enough. Note that since the great depression, we've had bad recessions in 1972-3 or so (though that was really a different phenomena), and 1980-1982 or so, which was necessary, unfortunately, to ring inflation out of the economy. I would say that the economic stabilizers resulting from the New Deal have been pretty effective. Nobody has banned the business cycle (no matter what the supply-siders say), but recessions since the Keynes era began have been less harsh.
Lou, the least government intervention is best; it should create a level playing field, and let the market do its work. It must be involved when information costs and other friction can cause really bad things, and that's why we need regulators to do their job. However, it by definition has a huge influence because it prints the money, and there is no getting away from that. Decent monetary policy can also help let the market do its work. However, now we are in a situation where it appears that the market is frozen, and nothing that the fed does will have any influence. Interest rates are already basically zero, and nobody wants to invest in anything. That's understandable--when there is this much excess capacity, why create more? Same goes for tax cuts--folks will just take the money and put it under the bed. We have already had in effect a huge tax cut with the decline in the price of oil, and its done zippo. Therefore, in this case, government must make up the difference between output and potential output by spending. A huge lot. Quickly. If it employs folks to do stuff, they will get money, get confidence, and buy things, and those folks will buy things etc. etc.
This is a very well put post and I agree with it completely.
edit: the fed is not a part of the United States Government and our fiat currency might be printed by the BEP but is controlled by the Federal Reserve, a private institution. so when Jeff says that the government prints our money he is correct but the decision to print it is not made by our government. that's the only thing I disagree with. virtually a non-issue in the scope of his comments.
Jeff F.
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http://www.marketwatch.com/news/story/How-Madoff-cost-my-family/story.aspx?guid={8B073FA4-2052-485A-86FF-D4905E250DB9}
ROBERT POWELL
The Madoff scheme hits home
Commentary: Wife's job, entire 401(k) disappear along with a good cause
By Robert Powell, MarketWatch
Last update: 12:16 p.m. EST Dec. 15, 2008
BOSTON (MarketWatch) -- For much of my life, the name Bernie Madoff has meant nothing to me. Now, however, it means far more than it should in my household and countless others across America. In my household, the net effect of the Madoff scheme is that my wife has lost all the money in her 401(k) account and her job as well.
It's not only high-net-worth individuals who are affected by the Bernard Madoff scandal. Andrew Grumet, attorney at Schiff Hardin LLP, talks with MarketWatch's Kelsey Hubbard about the impact on charities. (Dec. 15)
But that's only part of the story. She worked at a private foundation that shut its doors last Friday, its assets -- all of which were "managed" by Madoff's firm -- frozen by court order.
The head of the Robert I. Lappin Charitable Foundation spent his hard-earned money on a cause that affected thousands of people who lived in the Jewish community north of Boston. And now, that cause -- in the absence of anyone or any group of people and organizations stepping up -- will become a memory instead of a legacy.
My personal story with Madoff begins this way. Some years ago, my wife signed up for a 401(k) at work. I didn't pay much attention to her retirement account until earlier this year, after the 2007 year-end performance numbers were reported. Her account was up, not significantly but more than other retirement accounts.
Curious, I tried to learn more about her employer's 401(k) plan provider, the Bernard L. Madoff Investment Securities LLC. Unfortunately, I found little information about the firm on its Web site, nor on the Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA) Web sites. So, I dropped the matter, failing to take note of what, in retrospect, was one of the red flags. Read more on what prosecutors say was Madoff's Ponzi scheme.
Like most 401(k) statements, it listed employee contributions, employer contributions, amount vested, percent increase over the previous period and total value. But what the statement didn't contain was any footer with the usual legal mumbo jumbo, no mention of SIPC insurance, or the broker-dealer through which securities are cleared, or anything that is normally found on 401(k) statements. Nor did the statement contain the names of any listed securities or mutual funds.
Fast forward to October of this year. Her 401(k) statement for the nine months ended September 2008 arrives and once again the account was up 6% or so -- it's hard to tell exactly. Now, I'm thinking that maybe her 401(k) plan provider is the Joe Kennedy of his time. He's the one guy who's making money in a down market, he's the guy on the other side of the trade. He's the next Bill Miller or Peter Lynch. In fact, my wife and I even discussed upping her contribution to her 401(k) plan given what's his name's success.
Then last Thursday evening I am with two other gentlemen -- a professor and money manager -- at a holiday party. The money manager asks whether we read the news about Madoff. No, I say, thinking the name Madoff rings a bell but I can't place it. The money manager relates the story. "Madoff," the professor asks. "Oh my God, I think my sister has her life savings with that guy," he says.
He borrows the money manager's phone to call his sister and returns ashen-faced. His sister has lost her life savings. The money manager and I offer the professor our condolences. I tell him about Securities Investor Protection Corporation and the possibility of his sister getting some of her money back. But really there are no words of comfort, except "there but for the grace of God go I."
I return home from the party and tell my wife about the "Madoff story," about the professor, about how sad he looked, about how terrible it all is on top of everything else.
Bob, she says, Madoff is the guy who runs our 401(k). Oh s*#t, I say. The connection is made. We begin to read the stories on the Wall Street Journal, on MarketWatch, on every media outlet and blog possible. Does this mean what I think it means, my wife asks. Yes, I say. You've lost everything in your 401(k). And then my wife asks the question about the elephant in the room. What if the foundation's money was with Madoff? My wife emails her boss to no avail.
After a sleepless night, Friday morning arrives. There's an email from my wife's boss with a timestamp of 5 a.m. My wife rushes to work. By 10 a.m., I get a tearful call. The entire staff has been laid off and all the foundation's programs have been terminated. Their money and a lot of other people's money is gone. And all because of this guy Madoff, who wasn't happy with enough.
In some small way, I feel better knowing that plenty of big-name investors got duped as well. I'm angry with myself for not questioning the statements and the performance more closely, for not asking my friends at the SEC or other experts to give things a once over. But even then, I'm not sure what good it would have done.
Plenty of people, more important than me, raised red flags to no avail.
With hope, my wife and I will survive this setback. We may or may not recover her 401(k) money. She may or may not land the same kind of job.
Oddly, that's almost irrelevant in the scheme of things. Thousands upon thousands of people put their trust in someone who didn't deserve that trust. And the collateral damage caused by that misplaced trust is not yet fully known and may never be fully known. Read about the lawsuits that are likely to ensue from the Madoff scheme.
"I hope he fries in hell," the professor writes in an email to me. And though Bernie Madoff has been a household name for a couple days now, so do I, so do I.
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My value system says this is one of worst crimes anyone can commit, perhaps just short of murder.
If he is found guilty, I'd like to see him in jail for the rest of his life. It's so slimy and cruel, using power and influence to hang around in high society while sapping the riches of those around him.
50 billion dollars!
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While I agree with your sentiments John, how many of us have joined private clubs to gain access to people like Madoff?
I am guessing quite a few number of people on this board have their money with people they have socialized with through their clubs.
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Yes, and perhaps 78% of them are underperforming index funds by an average of 2.6% per year!
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Lou Duran...you are so far wrong....but just keep believing that government IS the problem...go ahead. I'll believe that human nature is toward greed and dishonesty and without government we get something very much like the last 30 years....every man for himself, and the rest, screw you!
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So where did all the $50B go? Did he have $100B under management and the market is down 50%? Is it real money or paper profits gone away?
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good GCA thread. would read again. touched on lots of financial topics. only topics left are the importance of fat tails in fixed income aribtrage return distributions and Kelly betting vs. mean variance approaches to maximizing results.
Oh, or we could discuss an old article by the same guy who called CDS and the like, "weapons of mass financial destruction" years ago...
http://www4.gsb.columbia.edu/null/CIER?exclusive=filemgr.download&file_id=645551&showthumb=0
Cheers!
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jeffwarne,
Your post flew right over me.
But I can explain how to get the ball airborne; I can hit an 8-iron 150 yards if I really try; my son can most definitely hit the ball 300 yards, with a 3 metalwood; I can ocassionally hit a driver 250; and I KNOW I could have been a much better golfer if I learned to play early in life instead of wasting my time playing baseball. However, I would not bother more than I already have to try to convince Mr. Choi that the world works differently than he thinks.
Jeff Goldman,
Come on. Certainly you can do better than that. I know you think Richard "today we are all Keynesians" Nixon was a conservative Republican, but even he did not suggest that the business cycle had been eliminated. What self-respecting supply-sider offered that straw man? Please answer my questions. When is government big enough for your tastes? Add federal, state, and local, is one "public servant" per four or five private sector employees about right? Or would you like the ratio to approach that of retired to active GM employees, all drawing benefits.
May I suggest that a technology revolution leading to large productivity increases and globalism might have a little to do with shallower recessions and quicker, longer recoveries? Or do you believe that the billion or so people worldwide who've climbed out of abject poverty in the past decade have FDR and the much delayed vestiges of the New Deal to thank for their sudden good fortune. Is Morganthau just full of s---- when he said that ND big government spending did nothing for unemployment other than to accumulate huge debts? I know, hadn't it been for FDR's heroic and noble efforts, things would have gone to hell and we would all be calling each other comrade. And if only we paid all public school teachers $100,000 a year our kids would all be getting perfect ACT and SAT scores and getting into Harvard.
As to your comparison of recent gasoline price declines to a tax cut and its ineffectiveness in jump starting the economy, was the huge price increases in 2007 and the first part of this year akin to a tax increase? Many even on your side of the aisle suggested that the high gasoline oil prices was the straw that broke the camel's back forcing people to default on their mortgages and accelarating the housing meltdown.
Why is it then that your president-elect wants to raise taxes? Anyways, wasn't it the folks on your side that claimed that the greedy oil companies and speculators not supply and demand were responsible for the astronomical high gas prices? Have the bad actors suddendly grown a conscience? Or is it just a short break for the Christmas/holiday season before the bastards jack them back up as one of my barber's clients opined while I was waiting for my turn?
Craig Sweet,
I am not sure that it is an honor to be taken to the shed by someone like you, but I can take it. I will turn the other cheek and wish you well. Your sentiments reveal something about you which, if it was me, I would not be particularly proud of. May I assume that we won't be playing golf any time soon?
Bill McBride,
The money apparently went to pay other investors a "return" on their money, for living expenses, country club memberships, and political contributions. There was probably never the assets with values anywhere close to the artificial value of the fund. The market collapse and the resulting redemption demands appears to have accelarated the day of reckoning. It will be interesting to see if his sons who turned him in will come out of this mess unscathed.
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"Why is it then that your president-elect wants to raise taxes? Anyways, wasn't it the folks on your side ..."
Lou, are you an American resident/citizen? (I really don't know) If so, why is the President-elect HIS and not yours? Also, your attitude of "us and them" is exactly what our President-elect is trying to eliminate. In his words . . . "I need your help."
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So where did all the $50B go? Did he have $100B under management and the market is down 50%? Is it real money or paper profits gone away?
Fees, comp for the firm's employees, rent and trading losses. Sounds like he was trading options and not as a hedging mechanism.
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Jeff Goldman,
Come on. Certainly you can do better than that. I know you think Richard "today we are all Keynesians" Nixon was a conservative Republican, but even he did not suggest that the business cycle had been eliminated. What self-respecting supply-sider offered that straw man?
Lou, as you know, the father of Supply-Side economics was Jude Wanniski (along, I suppose, with Arthur Laffer and the guy from the WSJ, and a couple other cranks). Wanniski wrote: "When economists talk about a business cycle, they have in mind a natural expansion and contraction of the national economy, not a "business." In that sense, I don't believe in the conventional "business cycle." But I do believe that individual industries expand and contract along cyclical paths. When we think of a business cycle, we normally imagine a sine curve, rising and falling. The national economy need not go through much of this if it is not being terribly mismanaged by government policy."
Nixon, of course, had nothing to do with supply-side economics. In fact, one of the tenets of supply-side economics is a return to the gold standard. Nixon got us off it.
"ND big government spending did nothing for unemployment other than to accumulate huge debts?" Actually, the New Deal did not do enough. Lot's of it was dumb--trying to push up prices artificially and restrict production, but what cured the depression was one of the biggest government programs in the history of the world --WWII. Employment in the US went to zero in nothing flat. However, until FDR listened to conservatives and raised taxes and cut spending in 37-38, the economy was slowly recovering. It would have been much faster if the government had spent as much in 1933 as it did in 1942.
"When is government big enough for your tastes?" Beats me. Clinton shrunk it pretty good, and Bush expanded it unnecessarily. Now, it doesn't have to get bigger, it just has to spend a lot more, until we pull out of this, then it should shrink again, bigtime.
"May I suggest that a technology revolution leading to large productivity increases and globalism might have a little to do with shallower recessions and quicker, longer recoveries?" Sure. It looks like that's what caused the big productivity gains in the Clinton years, along with decent monetary and fiscal policy, but I don't know what that will have to do with curing this mess.
"was the huge price increases in 2007 and the first part of this year akin to a tax increase?" Well, yeah, it decreased personal income, except we got nothing for it in terms of increased investment in long term assets like roads, bridges, etc.
"Why is it then that your president-elect wants to raise taxes?" I don't think he does anymore right now. If he does, he's nuts. The money supply has shrunk enough right now. It would be equivalent to raising tariffs, cutting government spending, etc. etc.
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My family lost money with Bernie Madoff. My father called his office for two years before they let him invest. His brother, while he grew up in Roslyn, couldn't get in. It was a sign of status to invest with Bernie.
We'll be okay, but we know of many people that won't be. I know 4-5 people that are wiped out. One guy mortgaged his house to invest with Bernie.
What upsets me is that one gang-banger kills another one and the perpetrator gets life in prison. But, one man ruins thousands of families, and he'll probably get 5-10 years. We need white-collar crimes to have serious consequences. Why not 40 years for serious financial fraud????
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messed up
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Speaking of Arthur Laffer, aka Mr. Supply-side Economics and Trickle Down Theory...
http://www.youtube.com/watch?v=2I0QN-FYkpw
Is this guy EVER right??? Why is anyone still listening to this bozo?
This video is a text book case on why you should never trust so-called "experts" when it comes to stocks.
P.S. Laffer also weaseled out on the bet made on this video.
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Here's what i've heard as far as golf clubs go -
80 members at St. Andrews
100 at Palm Beach Country Club
30 at Frenchman's Creek
1/2 of Seawane
Dozens at Fresh Meadows
10 families at Glen Oaks just resigned their memberships.
This is going to hit alot of Jewish clubs hard....
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There is an article at . . .
http://www.google.com/hostednews/afp/article/ALeqM5ioGbTMXj9tjQRGNXAXQGg4s3fZ5Q
. . . that speaks of the banks and nations involved. E.g. Bank of Scotland claims 600 million US dollars in losses.
An amazing scale of corruption over decades.
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Slag,
I am a U.S. citizen. I did not vote for Mr. Obama and vehemently oppose many if not most of his policies. He is my president-elect literally, only. I love it when the class warriors want to play nice after savaging the opposition and demagoguing whole classes of people. Mr. Obama is certainly one of the most deft at playing the "evil rich" and race cards. No lesser authorities than Senator and President Clinton said as much. Perhaps I am being too harsh, but I suspect that the only things Mr. Obama wants from the likes of me are my money and my acquiescence. I have no choice on the former and I certainly will be a lot more charitable and respectful toward him than most of his supporters have been to President Bush for the last eight years.
Richard Choi,
I don't know what you do for a living, maybe something to do with statistics and research? But to characterize Art Laffer as a "bozo" is nothing short of breathtaking. Perhaps you could share with the group your curriculum vitae, a list of your published books and articles, and a couple of client references so that we can assess your qualifications in rendering such an adverse opinion. I can't imagine why all those companies pay his retainer and seek his advice. They must be "bozos" too. And to think that they could gain the benefit of your expertise just for the asking! ;)
Jeff Goldman,
You do seem to be doing a lot of that these days. Messing up. ;D
Too bad Mr. Wanniski is no longer around to address your incorrect assertions. As I recall, he theorized that government through its tax and regulatory policies had a huge impact on the well-being of the economy. Like Milton Friedman, he believed that most government interventions to smooth cycles could never be timed properly and were, as a result, ineffective at best and often counterproductive. I don't suppose you've bothered to read his book "How The World Works". Of course, if you can't accept Henry Morganthau's own characterization of the failures of his and FDR's ND economic policies, it is unreasonable to think that you would give a supply-side "crank" his due consideration. Why is it so hard to overcome our environment?
And please explain to me how the money supply has shrunk? Are you perhaps referring to the couple plus trillion dollar loss in wealth? I'll have to think about that. I've been more concerned about how government was going to fund the trillions of promised bailouts if the Chicomms are too busy with their own problems to buy our IOUs. I do have huge losses in a paper company, so maybe there is an upside if the mints have to work overtime to monetize our deficits. Indeed, we are all Keynesians today!
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Hi George,
I don't quite follow you here.
We are in total agreement that a true free market system would have allowed these horseshit banks and brokerages to fail. It appears that many are way underwater. The greatest tragedy of all is the way these banks protected themselves by investing in so many unregulated, off-balance sheet transactions that the government decided it could not let them fail. The whole thing smells of cronyism, though.
"Help! We need 700 billion dollars. Now!" This after several years of the gaudiest paychecks in business history. A middlin' guy working on Wall Street has been making $500-1000k per year, you know. It's enough to make you scream. These are the people least worthy of assistance.
I do agree with you, sorry if it didn't come cross that way. Folks on here love to rip the free markets, as though free market capitalism means anything goes, no laws whatsoever. My point to Dick is simply that free markets does not mean an absence of laws.
The existing laws may indeed not be sufficient, though I personally believe they are simply not being enforced vigorously, as opposed to being insufficient. And considering who has been charged with creating and enforcing the laws, it isn't surprising. What's surprising to me is the proposed solutions by many on here and many of the enlightened outsiders - more laws to make people feel better, while those making the laws and enforcing them (and I mean all of them in Washington, both parties) are complicit in covering up their own misdeeds.
Jeff -
Love the sarcasm (I really do, I'm not being sarcastic :)) But seriously, do you see any difference between the recoveries after the panics you mention and the much deeper and longer lasting Great Depression? Some might say it shows how wrong the policies of both Hoover and Roosevelt were.
George or anybody
What is a free market if not a deregulated/tax free (?)/non duty market? It sounds as if you are not really for a free market, but one with an appropriate amount (whatever that is) of regulation. I can't pretend to know what is better between a free market and the other choices which are essentially shades of gray of what we call a free market. But I do know that regardless of laws, there are people who will scam whenever they can. It is clear that in this day and age it doesn't necessarily take many scams or turnings of blind eyes to cause serious convulsions in the world economy. I have a deep seated distrust of the market and how it operates because I know that at any given moment sections of it are rigged. I also have a deep seated distrust of governments. I guess that leaves me between a rock and a hard place. The thing is, the sensible folks like me who don't get involved in all this high fallutin finance crap are the ones who pay the price anyway with our savings threatened (then we are asked to remain calm so as to start a run), interest rates dropping as part of a bailout and our tax money stolen to pay for a bailout. With that in mind, where else am I going to turn other than to governments to control markets as best they can (which think they fall well short of doing at the moment)?
Ciao
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I do know that some members of Boca Rio were hit very hard by the Ponzi scheme. As were U.S. Senators and other intelligent, sophisticated investors.
This will result in additional membership losses at select clubs.
It comes at a bad time for any golf club.
How the bad economy, coupled with additional membership loss will affect maintainance and GCA remains an area of concern for many clubs whose members were affected by this scheme.
Having 20-20 hindsight makes geniuses of us all.
The guy was the former Chairman of Nasdaq, had 20-30 years of credibility, offered conservative returns and listed a clientele of highly reputable individuals. He had been audited by outsiders and presented detailed monthly statements to investors. If investors requested occassional funds for use, they were sent within a week. So how would you know something was wrong ?
So how is it that the rocket scientists on this site knew that he was a phony ?
The only mistake made by some, and it's a significant mistake, is that many investors didn't diversify. Many investors had the great majority of their net worth invested with him.
But, could you blame them for over-weighting their portfolio ?
The man had a 20-30 year PROVEN track record, a great reputation and a sophisticated clientele.
Some friends of mine have been wiped out.
I talked to some fellow members of my club in NJ and we're just glad he didn't come to our club because we would have lined up to give him some of our money. ;D Who amongst us wouldn't ?
If this scheme is as far reaching as some predict, some clubs may drastically alter their operations for 2009, including what goes on with the golf course.
I've heard that several clubs are thinking about mergers in order to stem costs.
Will confederations of golf clubs come into existance ?
Will clubs form collectives where purchasing and other functions are performed for a group of clubs, including the purchasing and leasing of maintainance equipment, by a committee of representatives from each club ?
Club revenues will NOT increase.
Therefore, the expense side of the ledger will be scrutinized with an eye toward cutting costs.
What's the largest budget at clubs ?
I'm concerned that distinctive features, especially those that present a maintainance challenge, will be softened or eradicated.
On the other hand, will the present and future economic environment cause more clubs to revert to "GOLF" clubs instead of "COUNTRY" clubs ?
Is that a trend in the right direction, or, is it contrary to the trend to make a club a full service family facility ?
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The convicts will always devote more time and energy to plotting their escape than the guards will to confine them.
Caveat Emptor.
Bogey
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I think it's ridiculous to blame this on the Southeastern Conference.
Bogey
Barkley said it's because Auburn didn't hire a black guy. :D
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Retracted.
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Lou....Art Laffer can draw all kinds of graphs and call it what he will and say how wonderful his ideas are....but in reality...where the rubber meets the road....they do not work.
I find it sad, but laughable, when someone starts telling me that TOO MUCH regulation is the problem....we have two examples now...the 1920's and the 1980's thru 2008....of less regulation...and we see what has happened....unfortunately, we are following Hoover and throwing more money into the banks, cutting interest rates,and saying we need greater tax cuts....it did not work in the 1930's and it won't work today....especially when MOST of the TARP money is being horded by the banks,or used for mergers...we need to invest in job creation, putting money in the pockets of people, that will generate demand for goods....and more jobs.
Here's an interesting report from Dr. Ravi Batra, an economist at SMU
http://www.ravibatra.com/obamamccain.html
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It is tragic that many smaller investors have been wiped out by Madoff. Today on the MarketWatch Web Site a column about a charitable foundation that has to close as it lost everything in this mess. To add insult to injury the laid off workers found out that their 401k were gone as well as they to were invested with Madoff. Never put all your eggs in one basket, if you do or are forced to you best watch that basket quite carefully.
I did read on a blog that some of the "smart money" (what ever that is) always suspected that he was doing something illegal or at the very least quite questionable. Insider trading was what was guessed at. I guess stepping over the line is ok for some if returns are good and consistent
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Speaking of "smaller investors"
http://today.msnbc.msn.com/id/26184891/vp/18424824#28250898
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Jeff Goldman,
You do seem to be doing a lot of that these days. Messing up. ;D
Too bad Mr. Wanniski is no longer around to address your incorrect assertions. As I recall, he theorized that government through its tax and regulatory policies had a huge impact on the well-being of the economy. Like Milton Friedman, he believed that most government interventions to smooth cycles could never be timed properly and were, as a result, ineffective at best and often counterproductive. I don't suppose you've bothered to read his book "How The World Works". Of course, if you can't accept Henry Morganthau's own characterization of the failures of his and FDR's ND economic policies, it is unreasonable to think that you would give a supply-side "crank" his due consideration. Why is it so hard to overcome our environment?
And please explain to me how the money supply has shrunk? Are you perhaps referring to the couple plus trillion dollar loss in wealth? I'll have to think about that. I've been more concerned about how government was going to fund the trillions of promised bailouts if the Chicomms are too busy with their own problems to buy our IOUs. I do have huge losses in a paper company, so maybe there is an upside if the mints have to work overtime to monetize our deficits. Indeed, we are all Keynesians today!
Lou, I have read "The Way the World Works"; that's what convinced me the guy was a crank. And he would be greatly offended by you lumping him in with Milton Friedman. He and the rest of the supply-siders believe(d) that Friedman was a hack. That's right, they think he's an idiot clown with no knowledge of the economy. No Keynsian would say that (we would say he was one of the most brilliant economists of the 20th century, who fudged his numbers at times to try to prove his theories).
Supply-side theory, as espoused by him, Robert Bartley (the WSJ guy), and Laffer, is a specific set of beliefs that, to my mind, have nothing to do with one another, and pretty much reject monetarism completely. For example, supply side theory doesn't give a fig for deficits, and Friedman thought they were destructive. Supply side theory believes in the gold standard (or a similar one), while Friedman, of course, rejects any such regulation. Supply sider theory thinks that inflation is caused by currency fluctuation. Friedman believed that it was an increase in the money supply above increases in productivity in the economy. etc. etc.
You are correct on my view why the money supply has shrunk. Less wealth means a lower supply, and a credit crunch means that even more.
I too am concerned about future government debts, but this is not the time for that. This is a very serious and dangerous situation, and no time for finger wagging at people who borrowed too much, businesses that have been mismanaged, etc. Cricket morality has no place in dealing with an oncoming depression.
Let me ask you a question: Specifically, how would you have dealt with the depression (though our situation is really closer to the panic of 1873)?
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As an aside, one day, after one of FDR's radio chats, he made a comment that was not meant for public consumption. Basically the microphone was still on and he was still live. The words he spoke were this "I'm going to make every American an accountant."
Take it for what it's worth, as pointless as it may seem.
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The fact that this crook was allowed to slip between the cracks of our formerly vaunted regulatory system is an affront to common sense and yet another indictment of the free market champions. Apparently what we have in America is free markets left to run amok without regulation or with flimsy regulation or with regulation that is negligent or corruptible. This is not an anti-Republican party rant or a blown kiss to the new administration; it is simply a reminder that Wall Street was left to do its own thing in the past twelve years or so and the chickens have come home to shit on our heads.
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As an aside, one day after one of FDR's radio chats, he made a comment that was not meant for public consumption. Basically the microphone was still on and he was still live. The words he spoke were this "I'm going to make every American an accountant."
Take it for what it's worth, as pointless as it may seem.
Adam
FDR really said that? You have made Lou Duran's day!
Rich
"Accountants know the price of everything, but the value of nothing." Anon.
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But to characterize Art Laffer as a "bozo" is nothing short of breathtaking.
Did you even see this video? http://www.youtube.com/watch?v=2I0QN-FYkpw
It is not just that he was wrong. He was SPECTACULARLY wrong. If that is not a bozo, than I do not know the meaning of the word...
It does not take PhD in Economics to know that the emperor has no clothes.
And he is not just a bozo, he is a weasel. Just look at how he backtracks on this video: http://www.youtube.com/watch?v=z3WjgKUf-kA
I cannot believe that anybody still believes that this guy is credible in anything.
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That video is the most amazing thing I've seen in many years. Schiff was right about everything and he was laughed at by Ben Stein (who was wrong about EVERYTHING) and by Laffer (also dead f'ing wrong) and by the paragon of puffery, Neil Cavuto. Thanks for sharing the link.
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OK, as someone who has at best understood maybe every third word this thread, and none of the acronyms, could someone explain something to me? Apparently Madoff took advantage of lots of really smart and sharp financial people as well as high-end institutions. This may sound leading and apologies if so but is it likely or not that government regulators would have been better at spotting things than the smart people and institutions? My hunch would be less likely but is that not the case?
How about Fannie and Freddie--as quasi-governmental, were they regulated or unregulated?
PS If Laffer really is a Bozo like Richard said, then isn't he well named?
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I must admit the You Tube video is great. How wrong some of these experts turn out to be. Interesting to see a web site that shows the predictions/forecasts compared to the reality.
Laffer and Stein could not have been more wrong.
All of these media experts are happy to get face time on TV and make their quotes. Far fewer ever talk about the forecasts latter. Best advice is to skip CNBC and Fox Business except for entertainment value.
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I love it when the class warriors want to play nice after savaging the opposition and demagoguing whole classes of people.
Obama's campaign was the cleanest in decades.
Mr. Obama is certainly one of the most deft at playing the "evil rich" and race cards. No lesser authorities than Senator and President Clinton said as much.
History will show that Obama attempted to eliminate the race issue. Sardonic that you use the Clinton's "authority" as a source of valid concurrence.
Perhaps I am being too harsh, . . . but I certainly will be a lot more charitable and respectful toward him than most of his supporters have been to President Bush for the last eight years.
I suppose you think Karl Rove and Lee Atwater divvied up altruistic love to all the world's lovely people.
The person with the most power should be scrutinized the most. That, I hope, is what continues to happen throughout Obama's reign and into the future.
"Not on my watch." George Bush
I believe those words will haunt him and us for a very long time.
"When the Right becomes the wrong,
The Left becomes the Right." Mark Knopfler
BTW . . . I have a little calculator that I was going to do some $ figgerin' with, about how much $50Billion is, but it doesn't even go to 1 billion. Those numbers are not comprehensible to me but the sad stories posted here and in the news are.
$50 Billion = Fifty thousand million dollars. One thousand million dollars per state. That's some serious Ponzi scheming.
http://www.reuters.com/article/topNews/idUSTRE4BE6LN20081216
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Thanks for posting those U-Tube links, Richard.
Maybe the best advertisement slogan for the highest best use of U-Tube:
"For those that can't or won't conveniently remember their past convictions, and are too recalcitrant to admit failure and step up to their responsibility for the future. "
At least Pat Mucci has been true to his never ending attempts (so often sidetracked in O.T.s by the likes of me) to draw this thread back to some semblence of GCA or GCM. ;)
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I think this is funny...
http://blip.tv/file/1528079
Fred Thompson, crackin wise:)
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So, it sounds, from the gist of the original post and link, that the country club is a good place to wheel and deal....
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Never ceases to amaze me how many smart folks fall for con men, legal or illegal. The lure of easy money...
One of the tactics of the scam artiste is to 'walk away from the deal'. The Mark's (aka sucker or in this case investor) greed then leads them to beg to be included and reason has gone out the window.
Amazing how he used one of the oldest hooks; he turned away the small guy and this made the big investors desperate to deal with him.
Anyone interested in scams needs to read The Big Con by David Maurer.
Madoff's place in history now assured.
http://en.wikipedia.org/wiki/Confidence_trick
One of the credo's of the confidence trickster is 'You can't con an honest man'. I don't know anyone who has lost on this but what they were buying into was a secret method that guaranteed to outperform the market. Hindsight is a wonderful thing.
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Shivas have you been taking the train to work again?
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Dave, had it ever ocurred to you while riding the train that Einstein's theory was wrong?
http://www.youtube.com/watch?v=wteiuxyqtoM (http://www.youtube.com/watch?v=wteiuxyqtoM)
and that this guy was right:
http://homepage.mac.com/ardeshir/Einstein'sTrain.html (http://homepage.mac.com/ardeshir/Einstein'sTrain.html)
It is sort of like you are riding on Bernie Madoff's gravy train to riches, at 12% per year constant speed, and your gravy train gets hit with a total financial sector meltdown lightening bolts on both ends of the train simultaneously - the liquidity end caboose, and the engine asset value end. You as the rider on the train see that the asset engine end in front got hit first. But a fellow from the SEC is standing on the side of the tracks and because he is blind, doesn't see a friggin thing. But the rest of the observant world sees that the train is going too fast at 12% a year-no deviation while half the wheels are off the track. You on the train come to the conclusion it was your ass(ets) that go hit first and you want SIPC to make you whole. The fed says no, it was the liquidity end that got hit at the same time, and gives all the passengers the same amount of the TARP money to make you partially whole. And the rest of the world just didn't see it that way... It is all relative, I guess. ::)
It just goes to prove that many wild and crazy ideas come while riding a choo-choo.
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DS,
Re: chump change
How about the politicians who have us in a $53 trillion unfunded commitment for social security, medicare, and medicaid entitlements. I hope your kids are getting a good education and/or marry well. Brave New World or Soylent Green?
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Our social programs already take 65% of the federal budget,and that doesn't come close to paying for them.Adding to this load is robbing the future.Check Massachusetts 400 million dollar additional shortfall.Our expensive defense budget costs less than our social programs.We can argue philosophy all day,but the fact is we are going under.The more I look at the details of our financial situation the more I wonder how we can maintain any standards,even with a fifth of the world's economy.There is plenty of blame to go around.How do we get out of this mess?
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Kelly,
Beautiful post. Peter Schiff thinks President Obama and Congress will prolong and deepen the problem by throwing money at it. So there is a clear difference in opinion, between those economists like Schiff who think we should let the weak fall and starting picking up the pieces now, and other economists who think we should try to ease out of this somehow. Like Mike Beene says, it may be too late, but for starters, don't be surprised if adjustments to the age limits for Social Security and Medicare are made.
I find it very refreshing to hear two of our more conservative members voice their concerns. For years, the majority of my friends have thought the economy was fine; I assign blame to certain major media outlets for spreading misinformation. Imagine if you're Peter Schiff, and CNBC or Fox News invites you to a panel discussion. He gains some exposure for his own mutual fund products, but he knows it's going to be a futile battle with a pack of media clowns and get laughed at for his "crazy ideas". My fellow amateur economists at the Motley Fool saw this coming years ago, so I see no reason why responsible journalists would not have the same ability, and choose to instead act as "economy cheerleaders", knowing that high asset values benefit their own cause.
I just love the second set of guys laughing at Schiff, saying that real estate goes up "about 10% per year" normally. They looked like they were on steroids. Anybody who expects a 10% return on his investments needs to re-evaluate. Today, the return on the S&P 500 for the last 40 years is about 5.5%.
I swear some of these guys are paid to say everything is OK. Think Larry Kudlow, who has no credibility in my book. With overall American debt increasing astronomically in the last few years, how could these clowns think everything was OK? And they are TRUSTED by our people!
I'm certain that part of the upper middle class feels that entitlement programs are out of hand, so they embrace the tax cuts and feel justified in their increased wealth. Like Kelly says, the problem may well be social unrest, and though I have grown resentful of "guy who spent his way into impossible debt keeping up with the Joneses", I don't want him coming up my driveway looking for trouble.
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Well Kelly and others who think in terms of future massive movements, some doomsdayers talk about the US renoucing its debt, pulling back to its borders and telling the world not to mess with us or else it is launch time, thus launching a world wide panic and political disorder in multiple vacuums, leading right into world war III. Yet, unlike the last world war, where when you add up the carnage of all the brutality and 10s of millions perished, even though we were lucky to have two oceans protecting us, we are pretty much back to talking MAD this time.
What do you tell people that have been bilked out of everything they had (which in some of these cases is seriou$$$ wealth) or are now foreclosed on, lost their retirement assets, got sick and had a loophole ridden policy and are now facing medical cause bankruptcy, etc.? Something tells me they don't want to hear any more idealogue laissez fair capitalist market works, and supply side economic theory. Maybe the American people are so shell shocked at all the mounting scandal and ubiquitous political corruption, and utter failure to be protected by the government they 'thought' they were electing to help them, that they haven't really added it up yet or haven't come to terms that it is not the just the other guy this time, but them.
Well, first tell them that "they" themselves likely played the game of trying in everyway they could to give money to legislators via some special interest org, to represent their own narrow special cause, and didn't see that the whole process was just a mutually assured distruction bribery as an institution war game played to maintain both Dem and Rep fortunate sons political position and power and favors were sold for the highest bidders. One special interest trumped another, trumped another until all the cards were gone and the deck was empty.
How telling is it that in a so called representative democratic republic of 300million plus people we can't find more willing honest servants than a cylce of family dynasties named Clinton, Kennedy and of course Bush and now more family political acts coming up through the same system. Pretty soon we'll have Track Palin in congress for crikey's sake.
The only way to stop this grab bag of power and government selling influence and favors to the highest contributor bidder and the most coniving political operatives, is to get the money out of politics. Screw the first ammendment red herring argument that curtailing money in politics is curtailing free political speech. It has become darn right seditious of our original intended constitutional objectives to allow the money influence to buy off for special interest every office from dog catcher to President. You won't get rid of Madoffs, Blagojevich's, Cunninghams, Jeffersons, Abramhoffs, or Daley's ( ::) ) or their power broker manipulators like Rove, until you get the money as far out of politics as possible, and shutter the whore house capitol from anyone's lobbiest. If we expect a different result from the same old political arguments and philosophies, we are defining ourselves as crazy or demonstrating just how much we have reaped what we sowed and deserve. We need a new revolutionary national ethic, and must leave behind the old rhetoric, In My Humble Opinion.
Our 'Old Tom' saw some of this economic end game in a narrow scope compared to what is actually going on now, when he figured money center institutions (banks) would get so big and powerful and pervasive in their influence that they would lead to absolute national collapse. Forget all that monitarist debating academy argument BS - it is the macro process of money in politics corruption, not the esoteric minutia of specific theory or policy that is killing us.
"If a nation expects to be ignorant and free, it expects what never was and never will be."
"If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
"I believe that banking institutions are more dangerous to our liberties than standing armies."
"I wish it were possible to obtain a single amendment to our constitution - taking from the federal government their power of borrowing."
-Thomas Jefferson
Old Tom couldn't possibly imagine the actual wealth and power that modern day Wall Street Banks-Financial institutions and International conglomerates could/would coalesce via buying legislation via their lobbiests and power brokers, and yet he had that minor vision of an economic eventual melt down back then.
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Dick,not quite sure where this fits,but didn't Jefferson avoid bankruptcy by selling his books to the govt for something like $5000?(the library of congress has worked out pretty well,I suppose)
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Try 18 terawatts.
That's the amount of new energy we'll need in 25 years.
[]
If you don't think this is the issue of our lifetimes, think again...
Do you have any citations for your assertion?
I think you're typing without thinking.
I think you're way way too high.
Today US peak electrical production is about one terawatt.
Over the year, we use about half of our peak production capability.
That's about 4000 terawatt hours per year.
Even assuming we convert all of the petroleum products we use
for transportation to electricity, I can't imagine getting close to 18 terawatts.
(~150,000 terawatt hours/year)
The electrical equivalent of a gallon of gas/diesel/kerosene is roughly 30 kwh.
The US uses:
~250 billion gallons a year for cars
~125 billion gallons a year for trucks
~50 billion gallons a year for jets
Let's say:
500 billion gallons/year
x 30kwh/gallon
= 15,000 terawatt hours/year
http://www.eia.doe.gov/cneaf/electricity/epa/epat2p1.html
http://tonto.eia.doe.gov/dnav/pet/pet_sum_snd_d_nus_mbbl_a_cur.htm
I think we'll manage just fine.
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Who was it that said words to the effect that, "you can fool all of the people some of the time and you can fool some of the people all of the time, but, you can't fool all of the people all of the time"
Why is it that when one guy cons others, including his peers and above, suddenly the entire system is flawed ?
Those who got seriously burned ignored a basic theory of investing.
DIVERSITY.
Not putting all your eggs in one basket.
Bernie Madoff has never been a member of Boca Rio.
He's played there occassionally and counts a number of members amongst his victims.
I just heard that another club in South Florida is in financial trouble.
Will clubs, in an attempt to control costs, form confederations or collectives ?
If so, would this seem to be the begining of a trend away from pristine maintainance practices ?
In an effort to stem costs will water use be rationed ?
Will firm and fast be the by-product of insufficient funds ?
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Patrick...I would not be surprised if some routine maintenance practices are cut back....maybe fewer top dressings...fewer days on bunkers....less aerification.....all in an effort to "just make it" through the next couple of tough years until the economy picks up again...I would be surprised if more drastic measures are taken...unless the club was in financial trouble heading into this mess....
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"Who was it that said words to the effect that, "you can fool all of the people some of the time and you can fool some of the people all of the time, but, you can't fool all of the people all of the time"
Pat:
Ahhh, I used to know that. I think his first name was Abe. His last name is on the tip of my tongue but I just can't think of it right now---I guess it's too early in the morning. His last name sounded like some well known American car.
"Those who got seriously burned ignored a basic theory of investing.
DIVERSITY.
Not putting all your eggs in one basket."
I like Warren Buffet's theory on investing:
"If I don't understand the investment I don't invest in it." ;)
As of the last 24 hours it looks like a number of people were skeptical of the legitimacy of Madoff's operation up to eight years ago. It seems they could not believe that return could ever be that "smooth" over that amount of time. Another adage they used was; "If it looks too good to be true it probably is."
I got it Patrick. The guy who made that quotation of yours above was Abe Ford.
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Pat,
You said,"Will clubs, in an attempt to control costs, form confederations or collectives ?
If so, would this seem to be the begining of a trend away from pristine maintainance practices ?
In an effort to stem costs will water use be rationed ?
Will firm and fast be the by-product of insufficient funds ? "
Is there anything wrong with this in the short term?
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Mr. Daley
I might be mistaken but wasn't Mccain-Feingold an attempt to get money out of politics? Didn't one candidate renage on his promise to use the more "clean" public financing and go all in with contributors that could not even be verified in a presidential election?
Yep money is the problem but it is telling that you take the Ruth Bader Ginsburg philosophy on the constitution by "screwing" the first amendment. Why not, you and Ruth know better.
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"Those who got seriously burned ignored a basic theory of investing.
DIVERSITY.
Not putting all your eggs in one basket."
The greatest accumluators of wealth (e.g. Carnegie, Gates, etc.) actually did the very opposite, i.e.:
"Put all your eggs in one basket, and watch the basket!"
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Steve,
The "collective" form of management is frought with problems.
It's not as easy as it would seem.
Yet, when you look at the many mergers of hospitals, Banks, Health Insurers and other entities, could golf clubs be the next in line ?
Even municipalites are discussing and debating mergers, mergers of their Police, Fire and other departments.
I believe the crunch on costs is going to get worse.
Just look at the proposed tax hikes in New York this morning.
Governments are getting desperate for revenue.
Maybe NOW, those in government might come to the realization that they'd better make businesses their ally instead of their adversary, as they've done for the last four or five decades.
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Dick, you can't have factions without a democracy and you can't have a democracy without factions. The solution should be to make penalties for violating the public trust so severe that no one would do it without risking their life. Not their political life either.
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Well said, Adam.
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We had a similar situation in Charleston not too long ago. It involved a local economic professor, Al Parrish, at the Baptist College. He claimed big returns. He was on the local TV station dispensing economic advice and prognostication. People around him loved him and thought that he could spin straw into gold. Turns out he was running a ponzi scheme and invested money in fountain pens, garden trolls and dubious artwork.
People acted similar to Bernie Madoff's people, couldn't hand the money over to him fast enough. In the end, he duped around $50 million from everyone, and in the end, everyone lost all of their investments. Al's now serving time for, I think, 15 years.
I know that Al pales in comparison, but the emotions, and the MO are the same. The guy was "trusted" and it was hard for people to convince themselves to check on the guy and everything that he was offering was too good to be true.
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Bloomberg states that he has a 9.8 handicap. Any bets on how honest that handicap is?
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I fully agree Adam. In Jefferson's time, I believe a fellow like Madoff would be off to the gallows. They really did hang folks back then for such matters.
Factions are what democracy is made of, and they should have a market place of ideas. But when it comes to candidates running for public office, we should hear all their ideas for free on multiple public TV and radio stations dedicated to giving free speech of candidates their microphone, rather than letting them buy the biggest microphone with lobbiests and influencial large contributor's money. Free speech is something to fight and die for. But, bought speech and bought candidates is something to fight and die to prevent.
Hammy, didn't McCain-Feingold get so watered down and bastardized by folks like McConnel and his ilk that it isn't worth a bucket of warm spit in its present form? We have to go way further than McCain-Feingold, for the very reason that Obama and anyone else that raises vast sums of money - however, can opt out of various provisions. There needs to be an absolute commitment that a free marketplace of ideas is insured to everyone via public access to media, without the need to raise vast sums of money to market and buy ignorant people's attention.
I don't know about you, but I listen to c-span more these days than I do watch Desperate Housewives. I can get that at home... ::) ;D
Pat Mucci, I hope that some of those clubs and courses, private or public can survive at all, and find a silver lining in reduced maintenance practices that put emphasis back on the recreational and sporting aspects of the game and maybe drive down the walls of exclusivity due to the pure factor of money and social status. No matter what, the people still need recreation and diversion in their lives. The long time traditional socialist city of Milwaukee used the hard times of the recession of the teens and then the depression era to put WPA workers onto the task of expanding their park and rec system, including Brown Deer GC, as something that people need in their lives.
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Bloomberg states that he has a 9.8 handicap. Any bets on how honest that handicap is?
http://www.cnbc.com/id/28277660 (http://www.cnbc.com/id/28277660)
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As Madoff walked out of the courthouse this golf crazy guy asked " What's the logo on his hat?"
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Bloomberg states that he has a 9.8 handicap. Any bets on how honest that handicap is?
http://www.cnbc.com/id/28277660 (http://www.cnbc.com/id/28277660)
I actually put the numbers in a spreadsheet and looked at them a little bit. if you threw out the two high and low scores, all of the other 16 scores fell in between 83 and 87 -- amazingly consistent, almost too good to be true!
and the range between high and low score of the 20 was only 9 shots. I have a similar handicap and my range was fully 19 shots.
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Who needs free speech and the First Amendment? Perhaps now some of you may begin to understand the importance of the Second.
I think it was HenryE who said that we don't criminalize laziness, negligence, and errors in judgement. Today we are calling for Madoff's head. There is a fine line between negligence and malfeasance (okay, counselors, jump all over me on this one). I was warned in Europe during the early 90s that filing for bankruptcy could land one in jail. With the hatred of Wall Street, corporations and CEOS, and the rich in general running rampant in this country, the comfort of just being stupid, foolish, or a little of both may be gone by the wayside.
Just like a simple audit of Madoff's inventory would have shown that something was amiss, a review of his posted scores reveal that he is likely a crook and a cheat. The range of my 27 scores this year is 16 strokes (74-90). As a not very good 5, my range should be tighter than Madoff's (87-80=7) as a 10. At least it should have triggered a more thorough review. I suppose that he was a smart crook in both accounts, not posting any huge investment gains or sub-par rounds which may have brought more attention to himself.
I would love to see a list of beneficiaries of his political and charitable contributions. It will be interesting to see who the trustees go after to recover Madoff's distributions during the relevant statutory period (supposedly investors who got money out of the fund may have to return it to the authorities for an equitable re-distribution to all wronged parties).
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I think it was HenryE who said that we don't criminalize laziness, negligence, and errors in judgement. Today we are calling for Madoff's head.
Lou,
Betrayal is indefensible.
Mike
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Lou this morning on CNBC the former head of the SEC noted that it seems that Madoff had two sets of books so a simple audit would in all likelihood not shown anything wrong.
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Lou this morning on CNBC the former head of the SEC noted that it seems that Madoff had two sets of books so a simple audit would in all likelihood not shown anything wrong.
Is it possible that a business with (theoretically) $50 billion in assets could get by with a "simple" audit? This thing smells more and worse every day.....
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Each watt costs about $1
On my last electric bill, each KILOwatt hour (1000 watts/hour) used cost about 11.38 cents.
If I was paying a buck a watt, my bill would have been $462,000.
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Each watt costs about $1
On my last electric bill, each KILOwatt hour (1000 watts/hour) used cost about 11.38 cents.
Slagbert
You live in Oregon which has Hydro. In Chicago they must rely on hot air, incineration of e-mails between the Governwhore and Rahm Emmanuel, and methane generated from brat slippage. $1/watt (whatever that means) seems cheap at half the price.
Richbert
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Each watt costs about $1
On my last electric bill, each KILOwatt hour (1000 watts/hour) used cost about 11.38 cents.
I think he's describing the infrastructure cost.
Building a 10MW plant costs about $10M to construct.
http://www.jcmiras.net/surge/p130.htm
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I think Madoff's handicap postings are pretty telling. Perhaps everyone should review the handicap of the money managers before hiring them...
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Who is going to be surprised that the level of collusion it would take to not have had one of the red flags allegedly raised over the last 8-10 years investigated by the authorities, involves something very dark and shady in the spooky nether world of 'black budget ops'?
They supposedly have computer programs monitoring trading there at the SEC for anomolies to the extent that even if a small investor shmuck like me starts trading unusually in options and such, and the insider information trading bell goes off. Is ther such a thing as too big to detect? ::)
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Just the sound of Madoff's name (Is it pronounced Made Off ?) is enough to make me run away from him.
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I think Madoff's handicap postings are pretty telling. Perhaps everyone should review the handicap of the money managers before hiring them...
Who was that mogul who had posted 20 scores in the range of 84-87 (or whatever) who was outed here on GCA.com?
I also remember a few years ago when Donald Trump's GHIN index at Winged Foot was 0.5 or so. It has gone up dramatically since being outed. Must be the pressure of moguldom....
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If I'm not mistaken, those celebrity vanity handicaps have been a very nice living for a certain friend of yours Rich, who might reside near a certain cannery row. ;) ;D "Everybody loves somebody sometime... " ;D ;D ;D
Man, there must be some well situated golf hustler somewhere in Palm Beach these days... Unless Bernie is one of those odd duck formerly ultra rich guys that never plays for more than a $2 Nassau...
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Mike,
You are so right. How could he do this to his clients, friends, and family. The picture of his arrest shows a countenance depicting bemusement, not embarrassment. Perhaps it was just relief from no longer carrying this dirty secret of nearly 20 years. The man must be a sociopath. Though hardly satisfying to his former clients, I suspect that he will get his due.
John,
I learned early on as an apartment broker that commercial real estate owners kept three sets of books: one for investors and brokers which were generally available with proper confidentiality assurances; one for the IRS with extremely limited distribution; and the real ones which never saw the light of day. I am not a very sophisticated guy, but a rather cursory review of the rent roll, bank deposits, and monthly financial reports over a period of six to nine months gave a pretty good indication whether things were as they seemed or further due diligence was called for.
As the WSJ reports, the SEC, long before any of the alleged Bush/Gramm defunding of enforcement had occured, looked into Madoff's operation and found nothing of concern. The WSJ opines that the SEC can't be expected to detect all fraud, and I agree. However, in Madoff's case, I think that a relatively simple comparison of a sampling of his security holdings to his cooked financial statements would have revealed a problem. Somebody had to be holding those assets if they existed, and it is my understanding that he did not claim to be involved in exotic derivatives or other investments whose physical ownership and value would have been difficult to determine. Even if he was handling the backroom operations in-house, he had to have records which could be verified with second and third parties.
Others have said that the SEC is spread too thin and can't check each and every accusation of impropriety. I know for a fact that the SEC can and does look into accusations of relatively small, low seven figure insider trading gains, and will spend weeks deposing, analyzing, and investigating. Often, the targets and those who are subpoenaed are told that they can be recalled at any time and may never find out the conclusion of the investigation. If I was a defrauded investor, I would be asking for much more from the SEC including a full investigation by an independent party on its failure in this case.
There is an interesting, probably totally happenstance peculiarity here. There was a financial industry watchdog running rampant in NY during this time. You would think that AG Spitzer might have caught wind of the complaints against Madoff right in his backyard. At least during breaks in his frequent oil changes, he may have directed one of his pups to sniff out Bernie and see what he was up to. Might Mr. Spitzer been on the leash of Mr. Madoff's political largesse?
Now this is really OT- but in the age of Blago, the mind runs wild. Could Hank Greenberg still be running AIG and perhaps avoided the firm's financial meltdown if he provided the necessary lubricants to the powers that be? This is not a suggestion for controlling campaign contributions. Quite the opposite. In my opinion, there should be no limits on contributions, only that they be done in broad daylight for everyone to see.
If anyone sees Madoff's donee list please post the link. I suspect that it will be embarrasing and possibly enlightening.
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Madoff violated the trust of his clients, period. If I were to apply a standard of punishment commensurate with violating the public trust, I would sentence him to 10 years of road-side labor. Of course, he'd have to be incarcerated in a state that allows such "public service" work.
Let him clean highways, pour asphalt, prune bushes, carry trash for an hourly wage measured in pennies. The community would benefit from the work and at a reduced cost. At the same time, Mr. Madoff would be given an opportunity to not only learn from his mistakes**, but in some small measure repay the debt he created by working below scale --- remember I said pennies per hour.
However, since decades of publicized outcry has led to the evolution of our penal system into a rehab state of social welfare services, many of us will be less than satisfied to witness Mr. Madoff residing at a facility that offers conjugal visits, recreational services, therapy, educational outreach, and medical supervision free of premiums. I'm sure he'll learn his lesson that way.
An aside to the SEC oversight:
I may not be well versed in financial or investment matters, but it seems to me that the SEC is much like any law enforcement --- they will always be the third party to arrive at the scene of the crime. And thus you have the standard upon which the Second Amendment holds resolute --- only you can truly defend yourself.
**EDIT
Footnote: Recidivism statistics tell us that the vast majority of those incarcerated in fact do not learn from their mistakes.
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I'm disappointed by the lack of "hat" analysis going on here.
;D ;D
It looks like the type of hat that has a plastic rectangular logo often seen in upscale clubs.
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Here's his hat:
(http://www.bloomberg.com/apps/data?pid=avimage&iid=iQD9bFq8dgMw)
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(http://www.freshmeadow.org/app/freshmeadow/images/logo.gif)
Is it Fresh Meadow?
(http://www.oldoakscc.org/images/oocc_login_logo.gif)
Or Old Oaks?
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Lou, you mean you didn't already see individual contributions that is found on Fox Noise...? They only go back to 2004. Here is a link to one version of political lobbiest expenditures and shows a bigger lobby effort when FINRA was being shaped in 1998-2003:
http://www.opensecrets.org/lobby/clientsum.php?year=2008&lname=Bernard+L+Madoff+Investment+Securities (http://www.opensecrets.org/lobby/clientsum.php?year=2008&lname=Bernard+L+Madoff+Investment+Securities)
Maybe if you look harder Lou, you still might find some version of Gramm buried somewhere.
You'll feel somehow righteous I suppose that his individual candidates contributions are heavily east coast Dems, but a few sellect and notorious Reps. But unfortunately, you still seem to be saying, keep the money in politics...just so we know who is buying who. I wish you were kidding. Political corruption and influence peddling is a bi-partisan sport, and who said differently?
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Steve,
You are the man!
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Apologies if this has been posted already, but here's Bernard Madoff himself participating in a roundtable discussion in 2007.
For a con-man of epic proportions, he's a very unimpressive communicator. Maybe it's because lying is hard work.
One of his junior staffers also speaks...he's even less impressive.
The video is over 30 minutes, but you'll get a full flavor for the man in very little time.
http://www.youtube.com/watch?v=auSfaavHDXQ (http://www.youtube.com/watch?v=auSfaavHDXQ)
Unfortunately the roundtable moderator is absolutely awful.
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I don't think it is a golf logo. It looks like a working man's hat and coat. Maybe the service elevator man, or postal worker or something.
I guess since Abramhoff's perp walks, logos on hats and styles of hats on the perp walk are a new leading financial crook indicator...
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This isn't a very sophisticated question, but it's the one I keep coming to in times like this:
How does a guy like this SLEEP?
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Dan - maybe it's like actors playing villains: the secret is to remember that villains don't think of themselves that way. I can imagine BM blaming it all on the 'failings' of his clients, as in "Why do these people keep tempting me with all their money"?
Peter
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I don't think it is a golf logo. It looks like a working man's hat and coat. Maybe the service elevator man, or postal worker or something.
I guess since Abramhoff's perp walks, logos on hats and styles of hats on the perp walk are a new leading financial crook indicator...
It's a Jackson Hole Resort (Wyoming) hat.
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How does a guy like this SLEEP?
I think this article give a pretty reasonable explanation of how things come to this.
http://www.forbes.com/opinions/2008/12/16/madoff-fraud-investments-oped-cx_ak_1216kessler.html
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Dick,
Thanks for the link. I will look it up.
I am dead serious about free speech and political contributions. It is not the money, it's the individuals who rise through the political machines and find "public service" to be very attractive, highly renumerative lifestyle. Pass a simple law that every dime received or spent by a campaign must be posted prominently on the internet with the full proper names and domiciles of the actual principals clearly identified.
An inconsistency in my libertarian orientation is that I believe in strict, rather brief term limits. Just like you and many on this site believe that corporate CEOs are not anything special, just lucky or well-connected, I believe that this is true of politicians in spades, even at the highest levels. I prefer the thinking of Washington and some of the founding fathers who saw public service not as a career, but a brief hiatus from the private sector AFTER some proficiency in an endeavor other than politics is demonstrated.
Peter,
"Why do these people keep tempting me with all their money"? Like McCain's and Dick's otherwise good, honest politicians?
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Lou - If I understand your question, I'd say yes, very much like the otherwise honest politicians, and I dare say very much like many of the rest of us at one point or other in our lives, and in one way or another. I guess that's why people who know the world and the world of business are always urging us to do our due diligence.
Peter
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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 ?
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Well Lou, it seems to me that there is one fragile branch onto which you and I can meet in gerneral agreement regarding politicians just being lucky and well connected, and demonstrating over and over again that strict term limits are better than no term limits.
But, as for too many CEOs (not all), they are the connection to the money that makes the luck for too many politicians... IMHO. And, getting all money out of politics is the only way to serve the people, and getting elected based on what you say in free open airwaves and media. Throw in an additional election regulation similar to what the Brits have. The election is declared and the campaign season goes for about 6-8 max. Oh, and give the national candidates free transportation too. No more Enron jets like 1999.
No special interest negative ads on TV misleading the masses in 30 second slim fests. Make the people get off their dead asses and go read the position papers of the candidates on the Internet, listen to free sponsored debates on TV, and force them to make informed choices. Let the press scrutinize the positions of candidates until the cows come home. Just no phoney fair and balanced news from Fox or MSNBC. If they catch-em lying, prove it in the free press.
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Peter,
I may be naive, but I refuse to believe that we all have a price and only differ on the amount. I've been in positions where I could influence important decisions and never gave a second thought to inducements to steer business improperly. I've turned down inducements ranging from a round at ANGC to a cushy, high-paying job managing a large real estate portfolio contingent on me doing things that were not necessarily in my principals' interests. Making the right decision was not hard, and I think most people do the right thing under similar circumstances. For every Madoff there are hundreds who don't betray their clients' trust. We just never hear about them.
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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 ?
It is a bit stale based on the age of the scores:
(http://i11.photobucket.com/albums/a168/carrera993/Madoffghin.jpg)
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Pass a simple law that every dime received or spent by a campaign must be posted prominently on the internet with the full proper names and domiciles of the actual principals clearly identified.
Lou,
These sites are easy to find on the Internet. Type in someone's name and "campaign contributions" on Google and something should come up.
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This thread has gotten long, but here's a summary of who seems to have gotten burned:
http://projects.nytimes.com/creditcrisis/madoff_clients/table
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I honestly have no interest in a political debate on this thread as I think we all know where we stand in general.
What I want to know is... how many people KNEW what was going on? It seems completely impossible to me that one person, or even if you include a few family members in on it as well, could hide this. This appears to me to implicate many hands that are covered in green blood. There had to be investors that more or less knew what was going on but kept quiet as long as their returns were coming in. These investors could even include non-profit organizations. This is starting to look like it was always a transparent Ponzi scheme to some of those that were invested in Madoff's firm.
This is a failure on so many levels it's ridiculous. I am not much of a conspiracy theory guy but every day the idea of an "Illuminati" seems more possible. The wiping out of peoples' fortunes and the consolidation and concentration of wealth and power is at a staggeringly, rapid pace. The fact that the U.S. government doesn't even control the right to print its own currency, the Wall Street bubbles and their guaranteed burstings, the Madoff-type scandals, etc. are just about to push me into the wacko-zone on my core beliefs. This stuff has no party other than money/power. This isn't a class-warfare take either, this is about a select few groups that seem to be ever-growing their stranglehold on the world economy.
Hopefully, if a NWO is ever truly introduced they'll at least allow us access to some great courses, that's obviously assuming we don't piss Big Brother off. Orwell seems more and more like a genius everyday.
Jeff F.
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Let me quote James Garfield from 1881...
"Whosoever controls the volume of money in any country is absolute master of all industry and commerce... And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."
How prophetic.
Jeff F.
P.S.: Weeks after Garfield made this statement he was assassinated. Creepy.
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Kevin, Patrick, Mike -
Since this is an investment topic, you need the disclaimer when talking handicaps:
"Past performance is not an indicator of future results"
It is a bit stale based on the age of the scores:
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unless the club was in financial trouble heading into this mess....
bingo.
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Lou...I have never bought the "transparency" idea behind campaign finance laws...sure, transparency is a good thing, but only political wonks track every contribution, and only political wonks get worked up over where the money is coming from...what happens is someone raises huge sums of money and typically wins and no one cares where the money came from...I think some use the transparency argument because they want no limits on who can spend and how much they can spend...as if all is well if we only have transparency....
And the money does not end with the campaign...BILLIONS are spent influencing legislation every year...and history leaves no doubt that he that spends the most lobbying, gets the most...
And that leads to this....the average person has little choice but to join a "special interest" to get his/her interest heard...be it a union, a conservation group, whatever...
It was the lobbying of special interest in the financial industry that made someone like Madoff possible...they lobbied for less regulation, they lobbied to get the right people in the SEC....if people are going to scam the system they figured, why not legalize most of the scaming and let transparency shine the light on the real bad guys...
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Jeff
I had posted much earlier that many thought that Madoff was doing something lets say questionable at the least that would allow him to get the consistent results he did. In fact many thought it was the illegal practice of insider trading. Seems they were willing to overlook or turn a blind eye as long as results were good.
Not sure if this is true or not but it an interesting note.
John
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Who was that mogul who had posted 20 scores in the range of 84-87 (or whatever) who was outed here on GCA.com?
Rich, that was Richard Halmi who partnered to win the pro am at Pebble et al. I remember because I have since referred to a score of 85 as a "Halmi."
Bogey
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Who was that mogul who had posted 20 scores in the range of 84-87 (or whatever) who was outed here on GCA.com?
Rich, that was Richard Halmi who partnered to win the pro am at Pebble et al. I remember because I have since referred to a score of 85 as a "Halmi."
Bogey
Thanks, Mike
I've taken to calling any one over "par" score a "Hendren."
Rich
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Reminds me of an old saying: "If you want to know what God thinks of money, just look at who he gives it to."
Bogey
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Mr. Daley:
As I read your posts, I believe a recurring theme is "money is the root of all evil." I would submit that human greed & lust is the root of all evil. (Note: I don't claim that as an original concept --- someone else thought of it first).
Money as the root of all evil assumes the equation that without money, corruption ceases to have the oxygen necessary to sustain itself. I believe it is naive to believe that removing the money variable would halt the steady march of selfish individuals into politics.
Why? Power would still be in great supply. By definition, political positions are about power. In the end, even the greediest of individuals only care about money because it's the most expedient tool of influence & power. Take away one tool of power (money) and humans will find another.
I, too, believe in strict term limits in the way that Mr. Duran describes. Much easier to enforce & monitor, the hard & fast term limit would at least restrict the time window that a legislator could leverage the position for personal gain.
The alternative of trying to eliminate money from politics altogether would be primarily successful in creating another bloated federal watchdog agency. No thank you.
Well Lou, it seems to me that there is one fragile branch onto which you and I can meet in gerneral agreement regarding politicians just being lucky and well connected, and demonstrating over and over again that strict term limits are better than no term limits.
But, as for too many CEOs (not all), they are the connection to the money that makes the luck for too many politicians... IMHO. And, getting all money out of politics is the only way to serve the people, and getting elected based on what you say in free open airwaves and media. Throw in an additional election regulation similar to what the Brits have. The election is declared and the campaign season goes for about 6-8 max. Oh, and give the national candidates free transportation too. No more Enron jets like 1999.
No special interest negative ads on TV misleading the masses in 30 second slim fests. Make the people get off their dead asses and go read the position papers of the candidates on the Internet, listen to free sponsored debates on TV, and force them to make informed choices. Let the press scrutinize the positions of candidates until the cows come home. Just no phoney fair and balanced news from Fox or MSNBC. If they catch-em lying, prove it in the free press.
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Nick...I believe the saying is "the LOVE for money is the root of all evil"
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Let the press scrutinize the positions of candidates until the cows come home. Just no phoney fair and balanced news from Fox or MSNBC. If they catch-em lying, prove it in the free press.
Dick, what do you do when the press picks a favorite and the coverage is not as equal as you are assuming, or declines to truly scrutinize one or the other candidate? I don't watch them, but are you implying that a news source like Fox or MSNBC is less valuable or reliable than a source like the NY Times, or that one should be allowed and the other censored?
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Quoting Thomas Edison...
"If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the dollar bond good, makes the bill good, also. The difference between the bond and the bill is the bond lets money brokers collect twice the amount of the bond and an additional 20%, where as the currency pays nobody but those who contribute directly in some useful way.
It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and one helps the people."
I am starting to realize how the member banks of the Fed make money out of thin air and make money in interest off that money. They literally contribute nothing to society other than the printing of money and it's loaning thereafter. They are making money out of nothing. Literally making it rain green from just saying that the money exists. What a scam. The Federal Reserve Act was passed in 1913 on December 23rd or 24th with only 3 senators present. They passed it after the House approved it. There were 80-90 senators at the time, and only 3 were present for the vote.
We need someone with balls like Lincoln to start printing Greenbacks again. This is a joke.
Jeff F.
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If you are still wondering why stuff like this happen, there is a very good explainer on NY Times today.
http://www.nytimes.com/2008/12/18/business/18pay.html?em
One exec at Merrill Lynch made over $100 million just in bonuses due to the "profits" he brought in (which have all vanished and infact led to the demise of Merrill).
When people who contribute 0% to the production of the economy takes most of its largess, things are bound to break down.
Aren't you glad that the taxpayers are footing the bill this Christmas time so that these Wall Streeters still get their bonus this Christmas?
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This thread has gotten long, but here's a summary of who seems to have gotten burned:
http://projects.nytimes.com/creditcrisis/madoff_clients/table
Madoff Family Foundation Charity Lost $19 Million
It's tough to read some of those scoured, like Gift of Life Bone Marrow Foundation, etc.
"How does he sleep at night?" Hopefully with some big psycho named Sluggo.
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This thread has gotten long, but here's a summary of who seems to have gotten burned:
http://projects.nytimes.com/creditcrisis/madoff_clients/table
Madoff Family Foundation Charity Lost $19 Million
It's tough to read some of those scoured, like Gift of Life Bone Marrow Foundation, etc.
"How does he sleep at night?" Hopefully with some big psycho named Sluggo.
Slag
Mind you, how much dirty money went into these charities? I don't have a clue, but the flow of bad money isn't a one way deal.
Ciao
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Sean, I can't speculate on that. I know there's some dirty money in some charities, created and fed for the wrong reasons - perhaps tax reasons - but if we react overly suspiciously, that can't help the higher causes. Benevolence shouldn't be forgotten as a virtue.
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Nick Church, you've almost got me right, but you are one step removed from my core principle and something I have said over and over on these O.T. threads for years. I do not end with "money is the root of all evil", or thirst for money, per se. I know many many people with money that are wonderful and admirable people. And, that is not just because they give their money or lend it, or invest it in making society better. It is because they have "ETHICS" about who they are, and what they do, or don't do.
So, if you are going to peg me, please know that I don't hate people with money. I believe at my core that the evolution of a sick ethic has taken place, via the ever increasing ability to distort and pervert human attitudes and inclinations with media and cultural bombardment and has twisted our collective ethic and fueled greed and lust for power.
I like when these topics veer off and force me to go looking at quote pages to review some synopsis of great thinkers ideals on various philosophical subjects, since I can't possibly read them all or remember the minutia of those that I have read:
http://www.wisdomquotes.com/cat_ethics.html (http://www.wisdomquotes.com/cat_ethics.html)
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Has anyone mentioned the irony that his named is pronounced "Made Off"?
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a friend pointed out an interesting thing to me
Go to GHIN.com and look up his handicap index and scores-
notice a pattern?
very consistent returns....
Betcha he couldn't break 100 in reality
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The SEC knew about Madoff for a long time.
From the WSJ:
Securities and Exchange Commission investigators discovered in 2006 that Bernard Madoff had misled the agency about how he managed customer money, according to documents, yet the SEC missed an opportunity to uncover an alleged Ponzi scheme.
The documents indicate the agency had Mr. Madoff in its sights amid multiple violations that, if pursued, could have blown open his alleged multibillion-dollar scam. Instead, his firm registered as an investment adviser, at the agency's request, and the public got no word of the violations.
Harry Markopolos -- who once worked for a Madoff rival -- sparked the probe with his nearly decadelong campaign to persuade the SEC that Mr. Madoff's returns were too good to be true. In recent days, The Wall Street Journal reviewed emails, letters and other documents that Mr. Markopolos shared with the SEC over the years.
HARRY MARKOPOLOS
When he first began studying Mr. Madoff's investment performance a decade ago, Mr. Markopolos told a colleague at the time, "It doesn't make any damn sense," he and the colleague recall. "This has to be a Ponzi scheme."
For Mr. Markopolos, the arrest last week of Mr. Madoff was something of a vindication after his long campaign. At a certain point, he says, "I was just the boy who cried wolf."
A lawyer for Mr. Madoff declined to comment on Mr. Markopolos's allegations.
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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.
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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.
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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.
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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.
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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.
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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 (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...
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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.
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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 ?
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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.
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CNBC will be showing a 1 hour special on Madoff tonight at 10pm EST
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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).
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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.
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This woman will save the world.
(http://www.case.edu/alumni/notable/background/gharib.jpg)
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."
(http://www.bruce-campbell.com/images/header-left.jpg)
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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.
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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!
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Current Fed. policy is killing the dollar, and is going to lead to hyper inflation within the next few years....
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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!
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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.
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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.
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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.
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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 ?
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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
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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.
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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.
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Patrick, who do you hold responsible for the collapse of Bears, Lehmans and others?
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Patrick....Wall Street wages are typically low?
This is from a 2006 San Diego article
Wall Street wages on the rise
October 18, 2006
Wall Street workers took home nearly $300,000 on average last year as profits from trading and merger advising fueled record earnings, New York State Comptroller Alan Hevesi said. Wall Street compensation averaged $289,664, 5.1 times the average $56,634 for workers citywide, the comptroller said. The highest-paid bankers and traders can command eight-figure pay packages.
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Bonuses totaled a record $21.5 billion, or $125,500 per person. The securities industry paid out $48.8 billion, while generating $2.1 billion of taxes for the city, Hevesi said.
Industry employment is also on the rise, up to 170,800 last year from 161,300 in 2003.
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Current Fed. policy is killing the dollar, and is going to lead to hyper inflation within the next few years....
After a year or two of stagflation, right? Looks to me like a deflationary spiral is underway, no jobs, no liquidity, no credit, falling prices (down 1.6% last month, gas headed toward $0.199 again).
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For Cryin out loud Pat. How can you say that crap with a straight face (or blue type) ::)
Anyone that reads this and can still be an apologist for these pirates needs a some kind of refocus and perspective readjustment.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aGL5l6xOPEHc&refer=home (http://www.bloomberg.com/apps/news?pid=20601109&sid=aGL5l6xOPEHc&refer=home)
Pat, you seem to know a lot of these 'masters of the universe' Wall Street crowd. Where do you meet these hard working guys, at the golf clubs?
Why don't one of these enterprising clever reporters do a research investigative story and find out what the ratio is for the higher up the CEO or Wall Street exec and the more bonus they make, what the proportionate time spent at the club and doing the whole high society life time is? What do you want to bet that the smaller the bonus and the further down the firms pecking order, the more time is spent working hard to manufacture this funny money paper economy, and the most well paid are the least likely to be slaving away all day at the office? Did you see that alligator skin tan on Mozilli? If he isn't on the yahct or golf course 8 hours a day, I'm the queen of Ireland. ::) :-[
And, Poor Henry Paulson, was apparently sucking hind tit on the bonus gravy train with only a pawltry 161 million over 5 years before getting to be the toastmaster general for his old buds... What an effing Chump...
The only thing I'll concede is like Gov Patterson mentioned tonight on Jim Lehrer. He said the State on NY made 213million on taxing the bonuses just last year and it will really hurt their budget to not have that gold mine of salaries to tax. God, I hope they find a way to tax it all back from those pirates.
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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.
Ding, ding, ding! We have a winner.
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"the absence of any product actually being produced"
That sums it up....a "product"....for example a kitchen table....has incredible value added to it via manufacturing...labor generates income that creates demand...
These guys took a million dollars passed it around and around and generated nothing but a paper economy....
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Craig Sweet,
You don't know what you're talking about, choosing to cite an article that confuses WAGES with SALARIES
Salaries for employees on Wall Street are LOW.
It's the performance bonuses that comprise the majority of their WAGES.
WAGES as used in the article aren't SALARIES.
WAGES are the sum total of their compensation, which is comprised of many facets, including commissions, salary, bonuses and other perks like parking, car allowances, etc, etc..
RJ Daley,
As a former police officer I find your disparagement of ALL those who work on Wall Street similar akin to someone claiming that all cops are bad because one took a payoff or engaged in brutality or a crime.
You should know better.
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It is "Mozilo" not "Mozilli". The man is an Italian-American and it would be appreciated if we did not make comments on the color of people's skin.
I wonder what percentage of those who have direct employment on Wall Street would be considered "pirates" subject to confiscation of previously paid wages in the perfect society of Governor Paterson and RJ Daley.
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It is "Mozilo" not "Mozilli". The man is an Italian-American and it would be appreciated if we did not make comments on the color of people's skin.
I wonder what percentage of those who have direct employment on Wall Street would be considered "pirates" subject to confiscation of previously paid wages in the perfect society of Governor Paterson and RJ Daley.
Post under your real name.
Jeff F.
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Craig Sweet,
You don't know what you're talking about, choosing to cite an article that confuses WAGES with SALARIES
Salaries for employees on Wall Street are LOW.
It's the performance bonuses that comprise the majority of their WAGES.
WAGES as used in the article aren't SALARIES.
WAGES are the sum total of their compensation, which is comprised of many facets, including commissions, salary, bonuses and other perks like parking, car allowances, etc, etc..
Patrick:
This article:
http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aVann0.cv9Tw
...suggests Wall St. salaries aren't "low," relative to salaries for workers around the rest of the country. In fact, the lowest Wall St. salary cited in the article is roughly double the mean salary in the country. See this from the article:
"Even without bonuses, Wall Street's traders and bankers typically receive salaries that range from $80,000 to $600,000 a year. That compares with the mean annual wage for the average U.S. employee of about $40,690 and a mean for CEOs of $151,370, according to a May 2007 Bureau of Labor Statistics report."
Note also this paragraph:
``When you work on Wall Street and you get no bonus, that is a huge shock to the system,'' said Bill Coleman, chief compensation officer at Salary.com, a software provider based in Waltham, Massachusetts. ``Wall Street has created this mindset that most people find obscene, which is that it's hard to live on just half a million dollars a year.''
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Oh, Mr. Mucci, you and your Straw Man tactics.
This seems to be your favorite way to divert an argument when you know you are on an indefensible position. And normally, I don't like to engage Straw Man tactics, but I am sitting in an airport with a 4 hour delay, so why not...
First, to address your specious Straw Man arguments, here are some definitions.
*"These Guys" - aka, "Masters of Universe", refers to CEO's, executives, and traders who work for Wall Street firms directly responsible for trading decisions. This does not apply to secretaries, accountant, and other support staff who may make decent salaries, but usually do not receive the 6 figure bonuses that "These Guys" command.
*"Not every Wall Street firm engaged in these tactics" - I am mainly referring to the 5 former Wall Street investment houses - Bear, Merrill, Goldman, Lehman, and Morgan Stanley that are covered under SEC authority. For your information, every one of these guys engaged in these tactics.
*"Typical Wall Street salaries are low" - I hope you weren't drinking at the time when you typed this and ruined your own keyboard. I think we can all agree that Wall Street has done enough damage without ruining your keyboard as well. For the record, if you read the article that I linked (http://www.nytimes.com/2008/12/18/business/18pay.html?_r=1&em), you will see that Dow Kim, the person who oversaw Merrill's mortgage business had a base salary of $350,000 ($35 million in bonus - 2006 alone), 20-something analysts had a base salary of $130,000 ($250,000 bonus), and 30-something trader had $180,000 base salary ($5 million bonus).
If these 6 figure salaries are "low" to you, than, obviously we have a vastly different point of view on how much money you need to have a comfortable living. And please don't drag support staff salary in to this argument, I have alredy defined who "these guys" refer to (see above).
And there is no otherway to describe these bonuses as anything other than obscene. These guys contribute nothing to production. These guys did not have any "special" skills to speakof. It does not take a Harvard Business School education to buy (supposedly) AAA rated securities and leverage the hell out of it. You could have done the same thing with average high school grad with minimal training.
*"they met their objective, so they deserve their bonus" - This is actually one of the main points of the debate. My argument (and many other on this thread) is that the compensation structure on Wall Street where it over valued short term trade profit over long term growth is exactly what caused the debacle that we are in right now. There was so much emphasis on making as much money as possible as quickly as possible (and why wouldn't you when you can earn $35 million bonus like Kim did) that all risk and exposure analysis went out the window and "these guys" gambled with investors' and banks' money. These types of "objectives" and compensation structure needs to be eliminated. If the banks won't do it themselves than it needs to be done with the law since we have already seen what kind of damage this can do when unchecked. The biggest reason why object to TARP is precisely because it make no demand to curtail this behavior for the future.
Just because your have contract does not make it right. Just as it would be wrong for me to borrow your money (through a contract) and gamble it away.
And I couldn't care less about "these guys" losing their lifetime savings in stocks. First, they should have known better than to put all of their savings in one place (seriously, how do these people get Wall Street jobs when they fail Investing 101???). I do feel worse for the support staff who were just along for the ride, but then again, I don't see a lot of sympathy right now for GM workers either.
Let me know if you would like to be even more specific, I will be more than happy to.
P.S. I still do not see any difference between "these guys" and Madoff. There is no evidence that Madoff skimmed off the top from the investments. Madoff was already very very wealthy before he started the management business. When it is all said and done, I believe you will see that "these guys" on Wall Street (in just one investment house) took FAR more money out (via bonus) than Madoff ever took from the investments he managed. Madoff was only crime is that he was not a very good money manager and tried to cover it up. Only difference between that and what "these guys" did was that "these guys" didn't hide their loses as long as Madoff did.
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Patrick, who do you hold responsible for the collapse of Bears, Lehmans and others?
Bloomberg magazine had an interesting article about Lehman this month. I'm pretty sure it can be accessed on-line. Would be interested to see how people react to the article and what they conclude about placing blame.
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Hammy, Mozilo, Mozzilli, I couldn't care less. As an Italian Irish American, I say the man is a 'brigante' in polite company. But, the term 'cazzone' or "testa di cazz' " more befitting. His skin is like an aligator's because all he must do is bathe in the lap of pirated luxuary on his yahct or at the course. It is a wonder you get an ethinic tone from that.
Pat, the article and my statement is pretty clear. It is the 'pirates' at the top floors of the Wall Street houses of which I and everyone else speaks, not the janitors and secretaries... ::)
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Hammy, Mozilo, Mozzilli, I couldn't care less. As an Italian Irish American, I say the man is a 'brigante' in polite company. But, the term 'cazzone' or "testa di cazz' " more befitting. His skin is like an aligator's because all he must do is bathe in the lap of pirated luxuary on his yahct or at the course. It is a wonder you get an ethinic tone from that.
Pat, the article and my statement is pretty clear. It is the 'pirates' at the top floors of the Wall Street houses of which I and everyone else speaks, not the janitors and secretaries... ::)
How about all the thousands of hard working people who occupied the floors between the penthouse and the basement ?
Do you really think Jimmy Cayne and other top executives wanted to lose hundreds of millions personally ?
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Oh, Mr. Mucci, you and your Straw Man tactics.
This seems to be your favorite way to divert an argument when you know you are on an indefensible position. And normally, I don't like to engage Straw Man tactics, but I am sitting in an airport with a 4 hour delay, so why not...
First, to address your specious Straw Man arguments, here are some definitions.
*"These Guys" - aka, "Masters of Universe", refers to CEO's, executives[/b], and traders who work for Wall Street firms directly responsible for trading decisions. This does not apply to secretaries, accountant, and other support staff who may make decent salaries, but usually do not receive the 6 figure bonuses that "These Guys" command.
Could you NAME "these guys" ?
Your casting of an enormous blanket of guilt over every executive is irresponsible.
Lot's of hard working executives who had nothing to do with the downfall of these companies lost most of what they had, including their job.
*"Not every Wall Street firm engaged in these tactics" - I am mainly referring to the 5 former Wall Street investment houses - Bear, Merrill, Goldman, Lehman, and Morgan Stanley that are covered under SEC authority.
For your information, every one of these guys engaged in these tactics.
You don't know what you're talking about.
Once again you choose to cast an enormous, indescriminate blanket over every executive who worked for those firms. That's irresponsible.
*"Typical Wall Street salaries are low" - I hope you weren't drinking at the time when you typed this and ruined your own keyboard. I think we can all agree that Wall Street has done enough damage without ruining your keyboard as well. For the record, if you read the article that I linked (http://www.nytimes.com/2008/12/18/business/18pay.html?_r=1&em), you will see that Dow Kim, the person who oversaw Merrill's mortgage business had a base salary of $350,000 ($35 million in bonus - 2006 alone),
Do the math.
Kim's salary was ONE PERCENT of the total pay.
I'd call that a low salary
20-something analysts had a base salary of $130,000 ($250,000 bonus), and 30-something trader had $180,000 base salary ($5 million bonus).
It would seem apparent that you don't live in New York, nor do you appear to understand the cost of living in New York.
A salary of $ 130,000 isn't outlandish.
With Federal, State and City taxes, try living in NYC and getting by on # 130,000. A salary of $ 130,000 in Manhattan, New York, ain't like a salary of $ 130,000 in Manhattan, Kansas.
If these 6 figure salaries are "low" to you, than, obviously we have a vastly different point of view on how much money you need to have a comfortable living.
Those are low salaries in NYC, considering that they're not making Widgets.
In what city/town do you reside ?
And please don't drag support staff salary in to this argument, I have alredy defined who "these guys" refer to (see above).
You didn't define them, you cast a broad, vague reference to a nebulous group. If you can't name them by name, just name their job titles for us, along with the companies they work for.
And there is no otherway to describe these bonuses as anything other than obscene. These guys contribute nothing to production.
How do you know that ?
You can't even name their names, nor can you name their specific titles at the companies they work for.
I KNOW guys who work/ed on Wall Street who have/had employment contracts that specifically stated what they would make based on their production. I've seen some of those the contracts.
Years ago, I had a hand in crafting some of those contracts.
What's your personal, first hand experience with employment contracts on Wall Street ?
If you have none, how can you responsibly and accurately comment on compensation arrangements between companies and hard working, successful employees ?
These guys did not have any "special" skills to speak of.
Oh, I see, guys could give up their jobs caddying and driving a cab, walk in off the street, be successful and make a lot of money. Now I understand.
It does not take a Harvard Business School education to buy (supposedly) AAA rated securities and leverage the hell out of it. You could have done the same thing with average high school grad with minimal training.
So that's what happens and what happened on Wall Street.
What about the Government Bond Brokers ?
Did they do that too ?
Did EVERYBODY on Wall Street buy AAA rated securities and leverage the hell out of them ?
*"they met their objective, so they deserve their bonus" -
This is actually one of the main points of the debate. My argument (and many other on this thread) is that the compensation structure on Wall Street where it over valued short term trade profit over long term growth is exactly what caused the debacle that we are in right now.
I have news for you.
The profit motive has been on Wall Street for decades upon decades.
Could you also elaborate on the "compensation structure" since you seem to know so much about it ?
Could you detail it for us, not just on a firm by firm basis, but, on a department by department basis, so that we can better understand how honest, hard working employees, who met their contractually determined goals, aren't really entitled to the compensation under the agreements they entered into with their employer.
There was so much emphasis on making as much money as possible as quickly as possible (and why wouldn't you when you can earn $35 million bonus like Kim did) that all risk and exposure analysis went out the window and "these guys" gambled with investors' and banks' money.
There you go with "these guys" again.
Could you identify them, by name or job title at each firm, and, if you can, on a department by department basis.
Tell us how the Government Bond Traders, especially those who act as brokers and take NO position, gambled with investors' and banks' money.
These types of "objectives" and compensation structure needs to be eliminated.
Are you nuts ?
Do you really understand the compensation structure for each department, or have you just read about it ?
If the banks won't do it themselves than it needs to be done with the law since we have already seen what kind of damage this can do when unchecked.
Now there's a great solution.
Do it by law.
Whom do you suggest should be the author of the law.
Did you ever hear of the "Brain Drain" in the U.K. ?
Research it and let us know what happens when talented people exit a business/industry/country
The biggest reason why object to TARP is precisely because it make no demand to curtail this behavior for the future.
Might I ask what your occupation is ?
Do you also favor regulating what doctors and lawyers can earn ?
Just because your have contract does not make it right.
I no longer suspect that you don't know what you're talking about, I know that you don't know what you're talking about and that you have little if any personal experience with the area of compensation when it comes to the vast array of thousands of people who work on Wall Street.
The next time you have time to kill in an airport, try spending that time researching and analyzing the compensation arrangements of the great majority of the thousands of people who work on Wall Street, and not just "those guys" that nebulous group you've read about in a local newspaper
Just as it would be wrong for me to borrow your money (through a contract) and gamble it away.
You can bet, that if you borrowed money from me, it would be collateralized, and, you'd sign for it personally. Secondly, the contract would spell out your obligation with respect to the use of the funds. Gambling them away, would be a criminal breach of that contract, and I'd make sure that you were pursued to the fullest extent of the law, and civilly.
And I couldn't care less about "these guys" losing their lifetime savings in stocks.
First, they should have known better than to put all of their savings in one place (seriously, how do these people get Wall Street jobs when they fail Investing 101???).
Obviously, you don't have a clue with respect to how firms like Bear Sterns operated. Why don't you research the issue of stock options, etc., etc. at Bear Sterns and then you can explain to us how those employees HAD to keep their "savings" in one place.
HINT
It was a cultural issue, not a financial issue.
I do feel worse for the support staff who were just along for the ride, but then again, I don't see a lot of sympathy right now for GM workers either.
I don't like to see anyone lose their job, their savings or their dignity.
But, GM workers were amongst the highest paid workers in the auto industry.
Let me know if you would like to be even more specific, I will be more than happy to.
More specific ?
You've been nothing but vague, choosing to paint everyone who worked on Wall Street as unqualified and unentitled to their pay and pointing the finger of guilt to an enormous, anonymous group known only as "those guys"
P.S. I still do not see any difference between "these guys" and Madoff.
Then have someone who understands the difference explain it to you.
There is no evidence that Madoff skimmed off the top from the investments.
I've come to the conclusion that an escapee from a local asylum has broken into your computer and is posting on GCA.com under your name.
Madoff was already very very wealthy before he started the management business. When it is all said and done, I believe you will see that "these guys" on Wall Street (in just one investment house) took FAR more money out (via bonus) than Madoff ever took from the investments he managed.
Wait, I can hear the sirens.
You'd better beat it out the back door before they strap you in those jackets with all the fancy buckles.
Madoff was only crime is that he was not a very good money manager and tried to cover it up.
Now that is funny.
Now I clearly understand how you arrived at your other positions.
Your statement has to be one of the most bizarre, if not idiotic statements made on this thread/site, and a clear indication that you just don't know what you're talking about. But, that shouldn't surprise me.
And you spent 4 hours in the airport thinking about and crafting your response. You'd have been better off consuming vast quantities of alcohol.
Only difference between that and what "these guys" did was that "these guys" didn't hide their loses as long as Madoff did.
According to you, Madoff was just a bad money manager for the last 30 yeas.
Your definition is hard to come to grips with for a guy who was so ingenuous that he fooled sophisticated institutions, savy money managers and sophisticated financial people for 30 years.
Is it another theory of yours that maybe he was just lucky for the last 30 years.
One last thing, could you describe for us exactly how "those guys" hid their losses ?
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Craig Sweet,
You don't know what you're talking about, choosing to cite an article that confuses WAGES with SALARIES
Salaries for employees on Wall Street are LOW.
It's the performance bonuses that comprise the majority of their WAGES.
WAGES as used in the article aren't SALARIES.
WAGES are the sum total of their compensation, which is comprised of many facets, including commissions, salary, bonuses and other perks like parking, car allowances, etc, etc..
Patrick:
This article:
http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aVann0.cv9Tw
...suggests Wall St. salaries aren't "low," relative to salaries for workers around the rest of the country. In fact, the lowest Wall St. salary cited in the article is roughly double the mean salary in the country. See this from the article:
Phil,
How would you compare the cost of living in Manhattan to the cost of living for the rest of the country ?
"Even without bonuses, Wall Street's traders and bankers typically receive salaries that range from $80,000 to $600,000 a year.
Phil, how are traders compensated ?
Bankers is far too nebulous of a term.
Could you define the job title of those who work in banking who had annual salaries of 80K to 600 K ?
Could you tell us about the salary levels of those not defined as traders ?
Are surgeons paid more than orderlies ?
Why do you think that is ?
That compares with the mean annual wage for the average U.S. employee of about $40,690 and a mean for CEOs of $151,370, according to a May 2007 Bureau of Labor Statistics report."
It's disengenuous to compare salaries in Manhattan with average salaries throughout the country. You know it and I know it.
Just look at what it costs to rent a one room closet in mid-town Manhattan and you'll quickly get the picture.
Note also this paragraph:
``When you work on Wall Street and you get no bonus, that is a huge shock to the system,'' said Bill Coleman, chief compensation officer at Salary.com, a software provider based in Waltham, Massachusetts. ``Wall Street has created this mindset that most people find obscene, which is that it's hard to live on just half a million dollars a year.''
As if everyone who works on Wall Street makes $ 500,000 per year.
But, if you think that's a lot of money net of Federal, State and City taxes in conjunction with the cost of living in Manhattan, there are those who would disagree.
What do you think it might cost to garage two cars in Manhattan.
$ 50 per month ?
$ 500 per month ?
$ 1,000 per month
$ 1,500 per month
$ 3,000 per month
What do you think it costs to send three kids to private schools ?
$ 5,000 per year
$ 15,000 per year
$ 25,000 per year
$ 50,000 per year
$ 75,000 per year
$ 100,000 per year
The next time you get the opportunity, look into buying a residence in Manhattan.
What you'll get for $ 1,000,000 will shock you.
What do you think it costs to maintain that residence ?
It ain't cheap.
So, please don't tell me about the National averages, because the cost of living in Manhattan ain't about National averages, it's extremely expensive, which means that employers in Manhattan have to pay higher wages than indicated by the "national average"
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You hold Cayne up as a subject of pity? Are you serious? His claims of ignorance about what was really going on with Bear Stern's mortgage business are far worse than if he had said he knew all along it was a sham and he was just chasing short term profits. If he really was ignorant about what was going on in his own company for something that was generating a large portion of its profits, then he not only didn't deserve any bonuses he shouldn't have even been running a coffee shop!
I find it interesting that a lot of the rank and file employees in corporate America who receive stock options as part of their compensation typically have to wait a few years for them to vest or to be able to exercise them. They have an incentive for the company to do well in the longer term, and to stick around if they want to keep those options.
CEOs who get stock options or large cash bonuses based on a single year's results do not have such an incentive. Isn't the CEO exactly the guy you want to thinking about the long term health and not the year end results? Isn't he exactly the guy you want to have incentivized to stick around a few more years if he has brought good results to the company in the past? Instead the CEO is incentivized with the severance package, where you collect millions as you walk out the door, even if you are fired for doing a terrible job (see Carly Fiorina for a good example of this)
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$1000 a month to garage 2 cars, minimum.
$75,000 to send 3 kids to private school, mnimum, but $100,000 easily.
$1,000,000 will get you about 1,100 sq ft with monthly maintenance costs of $1,700++, that usually includes taxes.
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Patrick,
One of the reasons Manhattan costs what it does is because of all the money on Wall Street. I would expect we'll see the same type of price drops there that many other over-inflated areas have seen with some of the Wall Streeters out of work and less bonus money for those who do. They won't be able to upgrade to a large place, or buy that weekend home in Long Island. Some will be forced to sell, and with fewer buyers they will have to cut prices. I wouldn't be surprised if it isn't already happening, though I'll be NYC realtors would deny it if asked, just like the realtors in other overpriced areas denied it at first.
The real estate prices there are partly because there were so many people with so much money. The island is only so big, so the more money people make the higher they will bid the prices up. But that will equally make them fall when people are making less money.
New York City is going to be really hurting financially, not just directly because of the loss of tax money on their salaries but all the money they spent around town. But I suppose the city will ask the government for a bailout, just like some states are already trying to do.
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Doug,
Long before the Wall Street money there was the Japanese money, European money, Middle Eastern money, then it was dot.com money, etc., etc...
Miami's real estate was driven up by similar forces plus South American money.
It's interesting how everyone just thinks about the last few seconds in the spectrum of time.
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Phil,
How would you compare the cost of living in Manhattan to the cost of living for the rest of the country ?
It's disengenuous to compare salaries in Manhattan with average salaries throughout the country. You know it and I know it.
Just look at what it costs to rent a one room closet in mid-town Manhattan and you'll quickly get the picture.
Pat,
I am not going to debate the Trader bonuses and their legitimacy. However, let me ask you this...
What entitles a Wall St. trader to have the privelege of living in mid-town Mahattan?
Granted I moved in 2005, but I lived in a one-bedroom Brownstone flat in Brooklyn for $1200/month, and it was not rent controlled. It was @ 900 sq. ft. in a safe neighborhood, one block from an R Train subway stop. The subway ride was less than 30 minutes to a block from the stock exchange on Wall St. That is no more, if not less, of a commute to Wall St. from mid-town Manhattan.
Are these Wall St. workers entitled to live in Manhattan? Why can't they search out more affordable living arrangements in other burroughs with similar commutes in safe neighborhoods?
Just a thought.
Jeff F.
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You hold Cayne up as a subject of pity? Are you serious?
Yes, I hold EVERY ONE who worked for Bear Stern, Lehman Bros and Merrill Lynch up as a subject of pity.
These people lost almost everything.
Do you think there was this giant conspiracy where every one at Bear Stern, Lehman and Merrill knew exactly what was going on ?
His claims of ignorance about what was really going on with Bear Stern's mortgage business are far worse than if he had said he knew all along it was a sham and he was just chasing short term profits. If he really was ignorant about what was going on in his own company for something that was generating a large portion of its profits, then he not only didn't deserve any bonuses he shouldn't have even been running a coffee shop!
Let's see, for about 30 or more years he seemed to have done an outstanding job, didn't he.
Who did know exactly what was going on ?
Did any of the execs at Bear Stern dump all their stock right before the crash ? Or, were they as surprised as every one else ?
And, if it was so easy to see coming, why didn't anyone in the private or public sector say something and fire a warning shot ?
I find it interesting that a lot of the rank and file employees in corporate America who receive stock options as part of their compensation typically have to wait a few years for them to vest or to be able to exercise them. They have an incentive for the company to do well in the longer term, and to stick around if they want to keep those options.
Wouldn't you want to attract and retain valuable employees by giving them ownership in the company and a chance to capitalize on the increased price of the stock ? That sounds like a fairly sound compensation system.
Employees of many companies, from janitors to secretaries to execs have made a lot of money by working hard and staying with a company for a long time.
CEOs who get stock options or large cash bonuses based on a single year's results do not have such an incentive.
The IRS surtaxes cash compensation in excess of $ 1,000,000, hence, the government incentivized companies to seek other methods of compensation. Enter stage left, stock options.
As to large stock options, you're wrong.
They do incentivize execs to work hard and stay with the company a long time. What are they going to do, exercise an option of $ 20 for $ 20 ?
Isn't the CEO exactly the guy you want to thinking about the long term health and not the year end results? Isn't he exactly the guy you want to have incentivized to stick around a few more years if he has brought good results to the company in the past?
Doug, do yourself a favor.
Read a few proxy statements, especially the compensation sections, then let me know what you think.
Instead the CEO is incentivized with the severance package, where you collect millions as you walk out the door, even if you are fired for doing a terrible job (see Carly Fiorina for a good example of this)
Severance packages served a useful purpose when change in control issues arose.
However, I've never been a fan of severance packages where POORLY performing CEO's or EXECS were fired or left the company.
I do believe in severance packages when GOOD performing CEO's and EXEC's are fired or forced out.
You and others seem to view or want to understand the issues in the simplest of terms, a black and white approach. Things aren't always as you they appear or how you read them in the newspapers.
My view of compensation is that the government NEVER should have placed a surtax on compensation in excess of $ 1,000,000.
It helped foster stock options.
Not just for the top execs, but, for tiers of execs.
Thus, they became systemic, and everyone seemed to have, as one of their primary objectives, running the price of the stock up, instead of running the company efficiently for the long term.
If America doesn't start making things again, we'll be doomed to mediocrity.
A service oriented society doesn't bode well for our children.
As you drive near Newark Airport you see abandoned factory after abandoned factory. Empty, with their windows smashed.
At one time they were thriving companies, employing thousands of workers.
Generating taxes for the city, county, state and federal government.
Now, they're all gone.
Who forced those companies out of business ?
The various governments ?
Unions ?
Bad Management ?
A lack of Nationalism ?
A combination of the above ?
If we don't rekindle industry, we'll be cooked.
End of rant.
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$1000 a month to garage 2 cars, minimum.
$75,000 to send 3 kids to private school, mnimum, but $100,000 easily.
$1,000,000 will get you about 1,100 sq ft with monthly maintenance costs of $1,700++, that usually includes taxes.
Sam,
That's a sad state of affairs isn't it.
I love New York City, but, it's awful expensive to live there.
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Jeff,
Everyone doesn't live in Manhattan, many commute.
Having commuted into New York for a short time, mostly by bus or car, I can tell you that it's no bargain and takes a good deal of time.
Leaving at 6:00 am and getting home at 6:00 pm, 8:00 pm or 11:00 pm can take a toll on your family life.
Many brokers/traders entertain after work, taking clients/contacts to dinner, so, days can be long. I don't think you'd choose that line of work if you were getting paid minimum wage. There has to be a financial incentive.
Brooklyn is part of NYC.
Coming from Long Island always raises the possibility that you could be on the LIE for two consecutive birthdays, Westchester and CT might be a little better, and NJ is no bargain.
Well, it's after 2:00 am and I have to be up at 7:00 am, so, I'm off to bed.
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Jeff,
Everyone doesn't live in Manhattan, many commute.
Having commuted into New York for a short time, mostly by bus or car, I can tell you that it's no bargain and takes a good deal of time.
Leaving at 6:00 am and getting home at 6:00 pm, 8:00 pm or 11:00 pm can take a toll on your family life.
Many brokers/traders entertain after work, taking clients/contacts to dinner, so, days can be long. I don't think you'd choose that line of work if you were getting paid minimum wage. There has to be a financial incentive.
Brooklyn is part of NYC.
Coming from Long Island always raises the possibility that you could be on the LIE for two consecutive birthdays, Westchester and CT might be a little better, and NJ is no bargain.
Well, it's after 2:00 am and I have to be up at 7:00 am, so, I'm off to bed.
Pat,
Fair enough. I guess my point is that it appeared like you were justifying high salaries and bonuses on the fact that "these guys" need the money because they live in Manhattan. I do know many live in other borroughs, counties and states. I was simply saying that justifying these astrominical salaries based on living in Manhattan doesn't include the reality of finding much better bargains in safe areas fairly close to Wall St. in relative terms.
I lived in Brooklyn and worked in Manhasset and had to commute in the morning via the Belt Pkwy, to the Cross Island Exp., to the L.I.E. That is a 30 mile commute by car and it could take anywhere from 40 minutes to 2 hours depending on traffic. At night I took the L.I.E., to the B.Q.E. That commute was 24 miles and took anywhere from 35 minutes to 2 hours depending on traffic. I know the ills of leaving early and getting home late due to NYC metro traffic. It was brutal. I ended up selling my car and commuting by train to the nearest LIRR stop in Manhasset and took a cab from there daily.
Living in Brooklyn and commuting to Wall St. was simple though. My wife did it for years. It took no more than 30 minutes without changing trains and a two block walk. Her monthly subway pass cost $60-$70. That's quite a bit cheaper than having to own a car, insure it, and find parking. You don't even need a car in NYC. You can hire a car when necessary and use the mass transit for most of your transportation needs and save a TON of dough.
I know you know all this. I guess I am just trying to say that there are plenty of ways to live in the NYC metro area and make it work without having to make $1,000,000+ a year. If you want to live in Manhattan, then be prepared to pay the price. Using the cost of living in Manhattan as an argument to make risky investments so that you get paid more falls flat on its face when faced with the reality that you can live a very safe, comfortable life in one of the other borroughs or neighboring counties and states.
Good night.
Jeff F.
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A service oriented society doesn't bode well for our children.
As you drive near Newark Airport you see abandoned factory after abandoned factory. Empty, with their windows smashed.
At one time they were thriving companies, employing thousands of workers.
Generating taxes for the city, county, state and federal government.
Now, they're all gone.
Who forced those companies out of business ?
The various governments ?
Unions ?
Bad Management ?
A lack of Nationalism ?
A combination of the above ?
If we don't rekindle industry, we'll be cooked.
End of rant.[/b]
Patrick,
The stapler factory in Newark is now a Pharmaceutical company in New Brunswick:
http://www.thelabrat.com/jobs/companies/BiotechNewJersey.shtml
America, New Jersey and Wall Street has re-tooled and will continue to re-tool.I also hope that Cory Booker can continue to help Newark.
I paid $ 4.85 for gas last summer in New Hampshire and $1.47 this week near Hidden Creek. At both price points, I continue to believe that we need to invest in green energy and diversify away from oil for multiple reasons including national security. Our energy choices need to be more like walking into a 7-11 store and choosing a drink. It needs to be a consumer driver rather than a supplier driven market.
The car companies are a tough one. We need a domestic industry for lots of reasons including national security. I believe that they can compete with "Toyota of Tennessee" if they can get rid of the old baggage that Mitt Romney speaks of. Problem is that baggage is the pensions of people, so it is a political and social issue on top of an economic one. Tough call and as much as I have been critical of Bush, I think he made the right call this week on the car companies. Reality is he passed the buck to Obama, but that is all he could do right now.
2009 will be a better year.
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Patrick...that's funny stuff you posted!
Why does someone need two cars in Manhatten?
Why does someone have to send three kids to private school?
Those are just excuses to spend those huge earnings (is that a better word than wages or salaries?) the Wall Streeters are being paid.....joining three or four clubs is also an excuse for spending...
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Patrick...that's funny stuff you posted!
It's only funny if you didn't understand it.
Why does someone need two cars in Manhatten?
Manhattan isn't the maximum security prison depicted in the 1981 Film, "Escape from New York" Believe it or not, Manhattanites do venture across the rivers and have a need for cars. Have you ever been in Manhattan ?
Why does someone have to send three kids to private school?
Are you familiar with the public school system in New York ?
Or in any major city ?
Are you aware of high percentage of politicians in D.C. and elsewhere that send their kids to private school ?
Are you aware of the fact that Barak Obama's kids attend Private School ?
Don't you want your children to get the best education possible ?
Why should others be deprived of having their children get the best education possible ?
Those are just excuses to spend those huge earnings (is that a better word than wages or salaries?) the Wall Streeters are being paid.....joining three or four clubs is also an excuse for spending...
So now you think that sending your children to the best possible schools is an excuse to spend money. That has to be one of the dumbest remarks I've ever heard. What parent doesn't want the best for their kids ?
What parent doesn't want their kids attending the best schools, grammar, high school, college and post graduate.
Why do you think 529 plans were created by Congress ?
Do you think that Barak Obama's sending his kids to Private school was just an excuse for him to spend money ?
Do you have children ?
If not, I now have a better understanding of your position.
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Yeah Pat, don't waste your time...
We've given nearly $8 trillion to big banks...banks by the way that refuse to tell Congress, much less the taxpayers, what they have done with that money....of course being a socialist, I don't mind....
By the way...check this out....http://federalreserve.gov/releases/h8/current/
And this conclusion.....http://www.reuters.com/article/ousiv/idUSTRE4BA47420081211?sp=true
But hey, I'm a socialist so what do I care that we've been "punk'd"
But Pat, back to your hypothetical single parent with three kids...
Yeah, I've been to Manhattan...and I have lived in Boston...have you ever taken public transportation? Have you ever rented a car for that weekend trip out of the city? It's way cheaper than owning a car in that mess...heck, the money you save on insurance will pay for car rentals every weekend....
As for the schools....I think it's you that's been watching too many bad movies...NYC has some pretty good public schools and less expensive charter schools...http://insideschools.org/index12.php
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I must say there is some funny stuff on this thread.
With 2/3rds of the world living in 3rd world squallor wondering where their next meal will come from, and most of the rest of the other 1/3rd just trying to make that next paycheck cover all thier bare essential expenses...
...imagine the horror of "making things work" on $500k per year living in NYC. Gasp these poor folks must shell out big money to send thier kids to private school and pay for those expensive parking stalls for thier BMWs....whats the world coming to!! ::) ::) ::)
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Mike Sweeney,
Those pharmaceutical companies were always in New Brunswick.
When the fastest growing employer in the State of NJ is the State of NJ, you know you've got problems.
Just drive along any major route and/or through the old industrial sections and you'll see that a large percentage of those companies didn't move, they went out of business. The ones that moved, just moved further west and south and then either went out of business or overseas.
The type of employee working for those pharmaceutical companies isn't the same type of employee that worked in those factories.
The middle class and lower class employee ranks have been devastated.
We need to boost the lower and middle class and you do that by creating meaningful jobs, not just phone service reps who make minimum wage.
Years ago, many companies contributed 25 % of an employees pay
to their qualified retirement plans. Some contributed 15 % others 10 %, but, they were meaningful amounts that allowed the vast cross section of employees to build up a significant retirement package. What gets contributed today ? Peanuts !
Let me ask you another question.
Did you get better service on almost every item 25 years ago, or today ?
I agree with you a thousand percent about going green as long as we don't insanely pursue going green and unfairly penalize those that don't march at the speed of light.
A company I'm familiar with is presently designing and building an experimental green residential home that will take the home off the grid and in fact have the home contribute to the grid. Solar power, the use of rainwater, directional alignment, and in ground insulation are all part of the process. But, going green only deals with the energy sources. We need to produce things again, that's what made us a great nation in the first place, not flipping burgers or outsourcing customer service in India
We need to promote businesses that produce goods
We need to accentuate the entepreneurial aspect of business.
The government needs to incentivize the creation and perpetuation of PROFITABLE businesses that continue to grow, hiring more and more workers as they do so.
Business, was and continues to be viewed as an evil enterprise by many.
Businesses were overburdened by regulations from an inordinate number of agencies, local, county, state and federal. If we don't start to reward the creation and perpetuation of profitable businesses we'll be a third rate nation and AT RISK from those who seek our destruction, internally and externally.
End of rant, have a nice day.
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Pat, don't waste your time...nothing about capitalism will please socialists until we have socialism, and even then, they'll start pining for communism.
I'm trying to stay out of this argument because it's the holidays. However, it's comments like these that remind me how narrow-minded people can be. Labeling people socialists that secretly want communism because they disagree with your political beliefs is ignorant and a gutless attempt to divert the conversation.
Let me show you how ignorant it is by saying the same thing about you but with a right-leaning twist...
Craig/RJ, don't waste your time...nothing about a democracy will please fascists until we have fascism, and even then, they'll start pining for a Evangelical Christian fueled totalitarianism.
Now, Shivas, I know that doesn't describe you, so how about ending the ridiculous comments aimed to discredit people by calling them socialists. It's untrue and does nothing but spread hate. Oh that's right, hate is a common tactic used by the right so I guess it's kind of understandable. You're a smart guy and you don't have to resort to name-calling.
Jeff F.
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Mike Sweeney,
We need to promote businesses that produce goods
We need to accentuate the entepreneurial aspect of business.
The government needs to incentivize the creation and perpetuation of PROFITABLE businesses that continue to grow, hiring more and more workers as they do so.
Agreed --it's one reason that the government should get rid of the idea of bailing out the insurance company....er, sorry, automobile manufacturer...known as GM.
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Pat..when driving down the highway, you can tell from looking, that the boarded up manufacturing facilities "did not move, they went out of business"???
Yeah, I suppose if the physical building is still there, it did not move.
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I agree with Patrick about manufacturing. Without it, we're cooked. I was talking to my dad the other night about the whole "local" movement from locally grown food, to buying from the local bookstore. He said not to forget about manufacturing (though agriculture is like manufacturing). Manufacturing is the only way to create new value. Everything else rides on that value. Luckily for my dad it's cost prohibitive for companies to get precision parts like stents and bomb-fins made in China. So his company gets to do it here in rural Minnesota.
I would guess that Patrick and my dad would agree about much. I may not agree with either about a whole lot, but when it comes to "real" businesses, they are correct. Make life easier on those businesses, life will be easier on us all.
Now, whether wall street should be included in that category...that may be a different matter.
Charlie
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Pat, don't waste your time...nothing about capitalism will please socialists until we have socialism, and even then, they'll start pining for communism.
I'm trying to stay out of this argument because it's the holidays. However, it's comments like these that remind me how narrow-minded people can be. Labeling people socialists that secretly want communism because they disagree with your political beliefs is ignorant and a gutless attempt to divert the conversation.
Let me show you how ignorant it is by saying the same thing about you but with a right-leaning twist...
Craig/RJ, don't waste your time...nothing about a democracy will please fascists until we have fascism, and even then, they'll start pining for a Evangelical Christian fueled totalitarianism.
Now, Shivas, I know that doesn't describe you, so how about ending the ridiculous comments aimed to discredit people by calling them socialists. It's untrue and does nothing but spread hate. Oh that's right, hate is a common tactic used by the right so I guess it's kind of understandable. You're a smart guy and you don't have to resort to name-calling.
Jeff F.
Jeff, why do socialists in this country break the 100-yard dash world record running the other way every time somebody calls them a socialist?
I just don't get it. I don't run from being called "blond" or even "overweight".
Socialism is not a dirty term. Why do you assume it is? It's just a belief-set. What's narrow minded, to me, is the presumption that socialism is evil or derogatory.
Wanting government to run more of the economy and to collect and redistribute money to the less successful is a core socialist belief.
If a guy doesn't like it, then I have a solution: he shouldn't believe in it!
Dave,
Please try to remember that socialism is the economic system that advocates common (i.e. government) ownership of production. ALL production. Any system in which the government doesn't own the means of production isn't true socialism. No amount of regulation or taxes is logically equivalent with ownership, however odious those regulations and taxes may be.
Again, bear in mind that I'm not making a value judgment as to whether your, or Jeff's political beliefs are correct, just addressing the definition of socialism.
Charlie
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Hey Dave, whatever you like, just bear in mind that Titleist can bury you under a mountain of paperwork. :o
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Yeah Pat, don't waste your time...
We've given nearly $8 trillion to big banks...banks by the way that refuse to tell Congress, much less the taxpayers, what they have done with that money....of course being a socialist, I don't mind....
That's pure nonsense.
Where do you come up with these wild allegations
Refusing to testify before Congress results in contempt citations, punishable by one year in jail and a fine.
What banks and what individuals have refused to tell Congress what they've done with the money ? Where they cited for Contempt ?
If not, stop making wild assertions where your only source of info in some article you read.
By the way...check this out....http://federalreserve.gov/releases/h8/current/
And this conclusion.....http://www.reuters.com/article/ousiv/idUSTRE4BA47420081211?sp=true
You continually cite articles as your sole source and hold them up as completely factual, well reasoned, and the Gospel. But, I notice that you only present the articles that support your position, not the articles that refute your position.
Do you have any first hand, personal experience to support your position ? If not, please refrain from making absurd comments
But hey, I'm a socialist so what do I care that we've been "punk'd"
But Pat, back to your hypothetical single parent with three kids...
Yeah, I've been to Manhattan...and I have lived in Boston...have you ever taken public transportation?
I've ridden the subways, taken buses, trains and taxis.
I'm far more qualified to discuss living in New York than you are.
Have you ever rented a car for that weekend trip out of the city?
It's way cheaper than owning a car in that mess...heck, the money you save on insurance will pay for car rentals every weekend....
Provided you can get a car, or the car of your choice.
Remember, three kids and the parents have to fit comfortably into that car.
What about the guy who lives in Manhattan who works in NJ, on LI or Westchester, should he not own a car ? Or the guy who has a summer home at the Jersey shore, or on Long Island, who commutes on the weekend, should he not own a car ?
You want to dictate your values to everyone else, eliminating choice and stifling the entepreneurial spirit. You want to punish those who think well and work hard, who make good money through the efforts of their labor. You want to limit what they can make and how they spend what they make. I'll let you categorize individuals who share your beliefs.
You didn't answer my question.
Do you have children ?
As for the schools....I think it's you that's been watching too many bad movies...NYC has some pretty good public schools and less expensive charter schools...http://insideschools.org/index12.php
What personal, first hand experience do you have with NY schools ?
What personal, first hand experience do you have with close friends who live in NY who have kids in NY schools, private and/or public ?
Mayor Bloomberg stated that the NYC schools were lousy
He's contributed millions to try to fix them.
If the Mayor of NYC says they stink, I guess he's uniformed and should talk to you and the sources you cite. Mike Bloomberg has done a great job in improving the quality of education in NYC.
Craig, stick to something you know about, you're out of your league on this topic.
Phrased another way, do you possess ANY first hand experience in this area ?
Are the articles you choose to read or cite your only source ?
And lastly, do you have children ?
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Patrick,
Have you been in discussions with a public company's finance folks before the end of a quarter or year, and how they balance immediate results vs overall results further down the road (and how compensation can effect these)? Have you reviewed changes in compliance departments in the last few years, or the balance between investment vs. immediate returns in the last 20 or so years? The results are interesting.
Shivas,
You and the other "free market" folks seem to argue almost ritualistically for a program of absolute private ordering. My usual answer to these argument is "Thalidomide". Certainly if enough babies were born without arms and legs, companies would have stopped selling the drug. However, most think that the transaction costs in connection with this philosophy is too great. Don't you think one reason we have been successful is the confidence we and other countries have in our markets (which has gone way down recently, obviously)? You think this would be true if the system really was totally caveat emptor? I think the present situation disproves that absolutely. Moreover, since most of you folks not only want private ordering, but would restrict that by limiting lawsuits, it appears that you not only favor private ordering, but with a big thumb on the scale (course, maybe actually having a functioning court system goes too far towards government regulation). Think about that next time you buy food or know a victim of crime.
Jeff
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Who should live in Manhattan the people who can afford it or those who need government help through rent control and rent stabilization programs?
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Refusing to testify before Congress results in contempt citations, punishable by one year in jail and a fine.
Really Patrick? Why is Rove out on the streets? How about Harriet whatshername??? To think, Bush was going to nominate her for the Supreme Court....and she ignores the law....great!
Actually Pat, I cited data from the Federal Reserve....but you can call it what you want...I just figured we based our solutions on information coming from the people entrusted with compiling the data..
Pat, you are making a pretty wild assumption when you say you are far more qualified to comment on living in NYC than me...
Hey Pat, do you have any personal first hand knowledge of anything?
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Dave,
Your descriptions were more than adequate at conveying your disagreements with our government, without using the word "socialism". You made my point and yours. In fact, your description was far more convincing and powerful than the word "socialism" would have been.
And, for good or ill, socialism is a loaded word. Of course the fact that it is a loaded word WOULD NOT preclude its use, in my opinion, as long as it was used in a factually correct manner. Unfortunately, while your argument may have nicely stated your disagreement with government policy correctly, it did not adequately support the conclusion that what our government does is socialism.
For what it's worth, I dislike the incorrect use of the concept of "anarchy" when used by those of the more liberal persuasion as an epithet toward those of a more conservative persuasion. It is a loaded word, and its usage in that context is obviously not factually correct either.
In fairness, I shouldn't have singled you out without addressing all such misapplications. Unfortunately, I just can't read that much stuff.
All the best, (and I look forward to your judgmental-ness on our armchair architecture contest; I think the Simon role suits you best ;))
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Patrick,
Have you been in discussions with a public company's finance folks before the end of a quarter or year, and how they balance immediate results vs overall results further down the road (and how compensation can effect these)?
Jeff, I'm fairly close to a number of public companies and their management team.
I think you've been watching too many movies and reading too many cartoon editorials.
Deadlines for Filing quarterlies is a chaotic time.
When you consider how large some of these companies are, the many divisions and departments involved, it's not as you imagine.
Compensation and the compensation formulas are set long before each quarter, just read the proxy statements
Have you reviewed changes in compliance departments in the last few years, or the balance between investment vs. immediate returns in the last 20 or so years? The results are interesting.
Shivas is right about one thing, SOX has unduely burdened companies.
The expense and waste are unconscionable, and who pays for it, the shareholders, CALPERS and other institutions and retirement plans.
And, for what good ?
The execs at Enron should have gone to jail.
The company should NOT have been fined, the guilty execs should have been fined. The shareholders paid those fines, not the company.
And, those few individuals involved at Arthur Anderson should have gone to jail and paid fines.
Instead the government put the entire company out of business.
A great company with 85,000 employees losing their jobs
And, guess what, the governments action was overturned by the Supreme Court, but, the damage was already done and the company and it's employees NEVER recovered.
That's great regulatory and institutional oversight.
Punish 84,893 people for the actions of 107 people.
Destroy a viable business that employed 85,000 people, that's great government/public policy.
And now some morons want the government to get intimately involved with actually running companies and setting compensation levels ?
Who amongst them is qualified ?
Congress does a lousy job at their chosen field of endeavor.
They've been THE most irresponsible people when it comes to handling money, for decades and decades
Why would anyone want them supervising a viable business ?
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Free market types???? My usual argument is "please show me when and where it has ever worked for more than a very short period of time"
The 1920's? The 1980's-2008??? How about the 1800's???
Nope...never worked in any sustainable way...
Patrick...all those manufacturing plants in NJ...you ask what happened...you left something out....how about the company making a decision that they could maximize their profits, and lower labor costs by moving to another country...good for the shareholders...bad for the worker.
Would you like me to cite another study...from Princeton, I believe?
What Happens When Income Taxes Are Raised?
Checking the Facts
Impact of taxes on migration of high income individuals and economic growth
In September, 2008 Princeton University’s Policy Research Institute for the Region released “Trends in New Jersey Migration: Housing, Employment, and Taxation” to assess the impact of New Jersey’s decision in 2004 to enact a 2.6 percent increase in its personal income tax on individuals earning more than $500,000 per year.
The study found that:
* The tax increase is “an effective and efficient revenue generation mechanism, having little effect on migration patterns among half-millionaire households.”
* Since the increase in New Jersey, the “total number of New Jersey half-millionaires also increased sharply, from about 26,000 in 2002 to 44,000 in 2006 - an increase of 70%.”[ii]
* In fact, the study found that most people who move away from New Jersey move to states that impose higher income taxes.
In January, 2004 the Fiscal Policy Institute examined the impact of New York’s 2003 temporary .65 percent income tax rate increase on single filers and .85 percent income tax rate increase on taxpayers earning more than $500,000 per year.
* During the period the tax surcharge was in effect the number of high-income returns grew by 30% from approximately 250,000 to over 325,000. [iii]
* At the same time, New York State created 127,200 jobs.[iv]
Fifteen states currently have higher income tax rates than New York. Each one experienced positive private sector job growth from 2000-2008[v], with an average growth rate of over 6.3 percent.
State
Top Rate on Single Filers
Private Sector Job Growth,
2000-2008
California
10.3% > $1,000,000
3.16%
New Jersey
8.97% > $500,000
0.38%
North Carolina
8.25% > $120,000
5.41%
New York
6.85% > $20,000
0.88%
Stiglitz: Raising taxes on wealthy better option than cutting spending
Economists including Nobel Prize winner Joseph Stiglitz agree that state tax increases have a less negative economic impact than cuts in spending:
[T]ax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits in the short run. Reductions in government spending on goods and services, or reductions in transfer payments to lower-income families, are likely to be more damaging to the economy in the short run than tax increases focused on higher-income families.
Recent tax policy has overwhelmingly benefited the wealthiest New Yorkers
* Over the last 30 years, NY has cut its top personal income tax (PIT) rate on the wealthy by half (15.375% to 6.85%).[vi] Tax rates have been cut for the top 5% as their income has more than doubled since 2003.[vii]
* At the federal level, the Bush tax cuts in the earlier part of this decade overwhelmingly benefited the wealthiest New Yorkers:
o From 2001-2010, the wealthiest one percent of New Yorkers were the beneficiaries of 48.3 percent of the tax cuts. The bottom 60 percent will receive less than 14 percent of the cuts.[viii]
* Furthermore, wealthy New Yorkers benefit the most from federal and state tax deductions which blunt the impact of any tax increases. In 2006, New York filers with incomes above $200,000 captured 60 percent, or $21 billion, of state and local tax federal deductions.[ix]
Young, Cristobal, Varner, Charles, Massey, Douglas S., Trends in new Jersey Migration: Housing, Employment and Taxation, The Woodrow Wilson School of Public and International Affairs at Princeton University, September 2008, http://www.princeton.edu/prior/PRIOReconomy-Final-(2).pdf.
[ii] Ibid
[iii] Balancing New York State’s 2004-2005 Budget in an Economically Sensible Manner, Fiscal Policy Institute, January 2004, http://www.fiscalpolicy.org/downloads/2004bud.pdf.
[iv] New York State Department of Labor, Current Employment Statistics Survey.
[v] Thomas, G. Scott. “Job growth in states and D.C. under Bush and Clinton.” American City Business Journal. October, 2008, http://www.bizjournals.com/specials/pages/205.html
[vi] The Path Not Taken: How New York State Increased the Tax Burden on the Middle Class and Cut Taxes for its Highest Income Taxpayers by Over $8 Billion a Year, Fiscal Policy Institute, http://www.fiscalpolicy.org/taxhistory2.htm.
[vii] ITEP: Personal Income Tax Changes in New York State: Enacted 1995 Cuts and Proposed 2003 Cuts, Institute on Taxation and Economic Policy, www.ctj.org/pdf/nychg.pdf
[viii] McIntyre, Bob, The Bush Tax Cuts: Are New Yorkers Better Off?, Citizens for Tax Justice, October 2006, www.ctj.org/pdf/bushtaxcutsny.pdf.
[ix] SOI Tax Stats - Bulletin, Internal Revenue Service, http://www.irs.gov/pub/irs-soi/06in33ny.xls.
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Pat, don't waste your time...nothing about capitalism will please socialists until we have socialism, and even then, they'll start pining for communism.
I'm trying to stay out of this argument because it's the holidays. However, it's comments like these that remind me how narrow-minded people can be. Labeling people socialists that secretly want communism because they disagree with your political beliefs is ignorant and a gutless attempt to divert the conversation.
Let me show you how ignorant it is by saying the same thing about you but with a right-leaning twist...
Craig/RJ, don't waste your time...nothing about a democracy will please fascists until we have fascism, and even then, they'll start pining for a Evangelical Christian fueled totalitarianism.
Now, Shivas, I know that doesn't describe you, so how about ending the ridiculous comments aimed to discredit people by calling them socialists. It's untrue and does nothing but spread hate. Oh that's right, hate is a common tactic used by the right so I guess it's kind of understandable. You're a smart guy and you don't have to resort to name-calling.
Jeff F.
Jeff, why do socialists in this country break the 100-yard dash world record running the other way every time somebody calls them a socialist?
I just don't get it. I don't run from being called "blond" or even "overweight".
Socialism is not a dirty term. Why do you assume it is? It's just a belief-set. What's narrow minded, to me, is the presumption that socialism is evil or derogatory.
Wanting government to run more of the economy and to collect and redistribute money to the less successful is a core socialist belief.
If a guy doesn't like it, then I have a solution: he shouldn't believe in it!
Oh come on Dave! Just live up to the comment. I am not running away from anything. Would I say that my political beliefs are closer to socialism than yours? Yes. But do I consider myself to be a socialist? No.
You said that socialists won't be happy until they have socialism and even then they would want communism. In effect, you called Craig/RJ and anyone that agrees with them, communists. That's the kind of broad generalizations used by people to discredit others without having to debate and to spin the arguments into a defensive one on other's political beliefs. You changed the topic from Bernie Madoff and compensation for Wall St. types to making people defend themselves from being called a communist.
Face it... just because some people feel that more regulation would be better and CEO's and execs that failed their companies shouldn't get paid millions and millions doesn't make them communist, or even socialist for that matter.
Jeff F.
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KBM....over 60% of the people that were given sub prime mortgages actually qualified for a "prime" loan...they were sold the sub prime loan in many cases because the agent was paid a higher commission for the sub prime loan...
Of course you can always find someone out there that was given a loan that they did not deserve...
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Refusing to testify before Congress results in contempt citations, punishable by one year in jail and a fine.
Really Patrick? Why is Rove out on the streets?
Because his attorneys believe that he's granted immunity due to executive privilege.
I don't think those phantom bankers you cited can make that claim.
You continually make false claims and then try to divert the focus when you're called to actually PROVE any of your outlandish claims.
Why haven't you answered a critical question regarding education.
Do you have any children ?
How about Harriet whatshername??? To think, Bush was going to nominate her for the Supreme Court....and she ignores the law....great!
They're not ignoring the law, they're contesting the interpretation and use of the law. You should know that.
But, it's interesting that you only cited Republicans, choosing to ignore Democrats. You continually revert to your class/political point of view, especially when you're at a loss and can't support your wild contentions.
You didn't answer a single one of my questions to you. WHY ?
Because you don't know the answers and can't support you position.
Your sole defense is to cite an article that you hold out as the Gospel.
This issue isn't and shouldn't be about politics, it's about finance.
Actually Pat, I cited data from the Federal Reserve....but you can call it what you want...I just figured we based our solutions on information coming from the people entrusted with compiling the data..
You didn't cite data, you cited an article.
I'll ask you again, who refused to testify before Congress on the issue of where the money went ?
Pat, you are making a pretty wild assumption when you say you are far more qualified to comment on living in NYC than me...
No I'm not.
Anyone who claims that NYC has had a great public school system clearly don't know what they're talking about when it comes to NY.
Stick to something that you have a decent smattering of knowledge about.
NYC and the educational system therein ain't it.
Hey Pat, do you have any personal first hand knowledge of anything?
Employment contracts might be a start. Followed by the relationship between salary and W-2 earnings.
But, I know one thing, like the two hunters being attacked by the bear, I don't have to outrun the bear, I just have to intellectually outrun you, and I think I've accomplished that. You're out of your element on this thread.
Stick to threads where you know something about the topic.
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KBM....over 60% of the people that were given sub prime mortgages actually qualified for a "prime" loan...they were sold the sub prime loan in many cases because the agent was paid a higher commission for the sub prime loan...
Could you cite your source where 60 % were qualified ?
It would seem that if 60 % were qualified, then clearly 60 % wouldn't be in financial distress and only the 40 % would be the problem area.
Yet, the facts don't bear that out.
Are you sure it was the agent's fault ?
Are you positive that the sub-prime arrangement wasn't more attractive for the borrower ?
Of course you can always find someone out there that was given a loan that they did not deserve...
Someone ?
If it was just a few people, how did the sub-prime problem become so systemic ?
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"When you consider how large some of these companies are, the many divisions and departments involved, it's not as you imagine.
Compensation and the compensation formulas are set long before each quarter, just read the proxy statements"
Patrick, with all due respect on this one, to quote one of my favorite posters (you) you don't know what you're talking about. Of course the formulas are set in the past, but quarterly and yearly reporting results feed the formulas. And while results can be complex, there are always areas for debate -- and which way do these formulas encourage executives to act, short or long term? In certain instances, it can be somewhat similar to what happened with investment banking arms, where bonuses are based on immediate results, and if the stuff goes bad, you don't give the money back.
Of course Anderson got hosed, but the leadeship helped killed the company. Do you think it is appropriate for a firm to both audit the firm's financial statements and provide consulting services that lead to the transactions that have to be audited? These firms changed their focus, supported expanding consulting businesses so that they were giving financial advice to companies they were auditing, despite warnings from compliance departments, AA and a bunch of other entities tossed their business sense into the dumper for big profits. They probably regarded the lawsuits as a cost of doing business, and tried to limit the ability to sue them. So, as I said in an ealier post, a small leadership group killed the place, just as happened in the rest of the financial system.
Let me ask you this: If the auditors had been doing their job, would SOX, FIN 48 and the rest have happened? Overreaction by Congress, sure, but how did it get there (and, by the way, has FIN 48 and other recent regulatory requirements caused auditors to look more carefully at the accounting and tax positions of pubic companies?). If the government killed AA, it didn't kill Lehman and the others. Would you let it all go down?
I don't think anybody believes that the government should run private business (though it does do certain things well -- one reason why social security privatization is so dumb (aside from teh fact that anyone who believes in the market knows that it cannot work), is that transaction costs are so low). But the financial system is in deep deep trouble, and the government is the only one who can pull it out.
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Craig Sweet,
Could you answer the questions I asked you.
After you do, I'll respond to your recent posts.
If you can't answer my questions it merely confirms what I stated.
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Could you cite your source where 60 % were qualified ?
(http://www.summersoccer.com/images/wsj.jpg)
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This back and forth debate is futile. What we have here is the most stunning and overwhelming real life real world example of greed and dishonesty and abuse of power run amock within the most powerful institutions of our nation within the people at the top. Yet we have apologists denying with every fiber of their being, that the root of all this is human greed, and dishonesty, and thirst for power which needs to be reigned in and punished at those highest operative levels. They would have you believe that somehow it is ourselves -the great middle class- through our desire to have an honest government that oversees, taxes for our needs, and protects us, that caused these massive financial crimes and malfeasonce and defalcations. Never mind that our government has actually become one -by and large- whorehouse bought and paid for by an array of these powerful and wealthy institutional powerbrokers and special interests.
Just in the last few days another stunning example of massive banking influence moving in and discombobulating any real reform or delaying reform to a feckless postponed time of 2010, so banks can continue to rape people already in dire debt. This is your solution to this credit crisis?
Where have we seen this recalcitrant denial and apologist movement by the right extreme in behalf of the corporate oligarchy before? I'm not going to say it.
Dave, I am not an Obama apologist. But, I do want him to have a fighting chance to prove himself. You give him none. I guarantee that if he falls into the same old, same old, you won't be hearing me advocate for his re-election. I have NO DOUBT that a McCain-Palin admin would not have had one tenth the transistion and start intitiative that Obama is putting together. People like Phil Gramm would be behind the scenes pulling his strings because he has no sense of economics himself. And she has the intelligence and education of a cheerleader. But, there are those like you that will never even give a moments chance to allow the will of a significantly decided election in Obama's favor, nor a moments relief to your right wing propaganda. You are not the loyal opposition when you spread venom like you do in our country's greatest time of need. You could at least wait and see if your theory's of Obama corruption is real or just your own belief 'before a fact' is real to justify your invective. You and your ilk lost - get over it. You and your ilk lost for a REASON. America is fed up with your brand of demagoguery. We need solutions and they will not come from those whose noses were really in the trough, have slop all over them, and are now being dabbed with a dainty napkin by those apologists like you and Pat. You are defending a corrupt and failed system.
One other thing... I have continued to harp on the need for a new national ethic. I take it you don't believe in such or why would you argue so fervently as you do against reforms? I ask that you atleast consider a few places that seem to have a different national ethic. Take Sweden or Denmark. Both are social democratic countries with a functioning capitalist regulated market place and a tax structure that you would be apoplectic to endure. Yet, They seem to have a national ethic ingrained in their people. Any hint of scandal in Sweden is a national disgrace (they have had very few but the ones they have had are almost obsessed over as disgraceful). Denmark has a national ethic that puts the collective health welfare of its people on the highest pedistal. They do not bow down to the false idol of greed. Oh of course you can come up with some other lame arguement I'm sure to deny their satisfaction of their citizens. But, try looking at what data is out there on their national character, happiness and ethical sense. Such, may be anathema to you... I suppose, but the information is there if you have a will to digest it.
Ethics, that's the one thing...
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Why does someone need two cars in Manhatten?
Craig,
I know a couple that have two cars in Manhattan. The Dad commutes to his office in Connecticut. The Mom commutes from the East Side to Washington Heights where she is an elementary school teacher. Now since they are in a "comfortable position", she was able to leave her family owned Wall Street business to teach elementary school in the worst neighborhood that she could find. Now her husband would rather her drive to that neighborhood and if she was to take the bus(s) for that commute, she would lose about 2 hours more a day with her own kids.
So in this one example, as a result of one Manhattan couple having two cars, 25+ kids in Washington Heights get a teacher with the enthusiasm of Pat Mucci and the intelligence of Rich Goodale and her kids get an extra 10 hours a week with their Mom.
In reference to your question about private schools, 15-18% of the student population at every private school that I know of in Manhattan have kids on scholarships from underpriviledged neighborhoods. My high school, a private Jesuit school in Philly, had a similar program and Michael Nutter, the current Mayor Of Philadelphia came through that program. I believe that Barack Obama came through a similar program at his high school in Hawaii.
I think you are watching a little too much Access Hollywood. As the great Philosopher Mary Kay Gallagher of Brooklyn once said to me, "We need rich people." Who do you think helps fund organizations like http://www.camba.org/camba/ which was started by my cousin in her kitchen and now touches thousands of people in Brooklyn. My cousin happens to be the daughter of Philosopher Gallagher.
Back to the topic in the title, the reason that I think Madoff is beyond anything that we have seen before, it is because of the pain that he has caused to these non-profit agencies.
Any other questions?
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RJ,
I hope those who's wife was a cheerleader in either high school or college aren't lining up to show you a "new ethic".....
Message delivered without venom, of course....... ::)
Joe
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8) anti-cheer leader venon is available at your local drug store..
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8) anti-cheer leader venon is available at your local drug store..
Or by mail order from Wisconsin....... :P
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:o
or from india where politicians and cheerleaders battled in 2008
http://spicey-hot.blogspot.com/2008/04/politicians-and-iplt20-cheerleaders.html
(http://bp1.blogger.com/_FTQObU8igNM/SAzLKoedIZI/AAAAAAAAAIE/ndSEa1Pytm8/s400/ipl+cheerleaders+hotter.jpg)
or would you rather have this
http://latestsportsnews.wordpress.com/2008/06/26/ipl-cheer-leaders-forced-to-cheer-in-burkhas/
(http://news.techtribe.com/TheCareerPigeon/thecareerpigeonv4/images/currenteventv4.jpg)
but lets put some perspective o this mind over matter issue
http://www.cheerhome.com/public/threecheergwb.asp
…. That's right, President.. Bush, .. Ronald Reagan and Dwight D. Eisenhower were cheerleaders who went on to become President. This is not surprising to those of us who have cheered, but it may not sit well with the people that just don't 'get it'. But let's forget about them for now, as we celebrate this victory that once again demonstrates the value of the skills learned from cheerleading.
According to Jim Nelson of GQ magazine, "[There is a] connection, the link between a political rally and a pep rally. {Bush] must understand that he learned something all those years ago, the important stuff. How to work a crowd, how to exploit a captive audience, how to come off wholesome and energetic and winning." Of course, we know that these are just a few of the many skills learned from cheering. But it is nice to see just how useful these skills can be throughout life. It stands as yet another affirmation of the benefit of participating in this wonderful sport.
Looking into the future, it is easy to see that our first woman president is not far away and many more will follow. So where will these great women come from? I would venture a guess that, just as with the men, cheerleaders will be well represented by women presidents. Since females outnumber males by so many in cheerleading and many recent male presidents have been cheerleaders, it just stands to reason that as women get their shot at the presidency that they will come from the ranks of cheerleaders.
It may be hard to notice the life lessons from cheerleading while you are training for competition, doing ab crunches or getting admonished by your coach for missing practice. However, those lessons will serve you well throughout life no matter what you choose to do. If you do want to become President of the United States then you can start your quest with the knowledge that you have an advantage over most of the competition. What a wonderful way to start!
Get over Sarah Palin threatening the boys club.. would you call her stupid to her face, or to Senator Hutchinson, R-TX
now , can this stupid OT thread die?
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Gee Shivas...I like the idea of a pro worker, pro union person, in charge of labor...it is NOT, after all, called the department of business...
As for bribes....they are used all the time. I believe it has been the cornerstone in lessening violence in Iraq...we paid bad people not to shoot at us...and bribes are basically what got us into this financial mess...only the Wall Streeters prefer to call it "commission pay" or a "bonus"...regardless, payment to give someone the results they wanted....so what's the problem with a 5th grader getting a reward for getting A's?
You seem to have a world view that there's a handful of elites that should be running the world...that only those with the money and the finest pedigree should be in charge of anything.....just turn the world over to guys like you and everything will be just fine...sadly you are not alone...
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RJ Daley says
"Yet we have apologists denying with every fiber of their being, that the root of all this is human greed, and dishonesty, and thirst for power which needs to be reigned in and punished at those highest operative levels."
Yes let's punish those with wealth without regard to how it was acquired.
All this arguing is really futile. Clearly most all of the great private clubs were started and continue to be funded by those with "great" wealth. Perhaps, those that hold the members of such clubs in such contempt should do the right and honorable thing and don"t be a phony, and suck up, and attempt to gain access to those clubs.
PLAY ONLY PUBLIC ACCESS AND MUNICIPAL.
Surely drawing the line at golf is a small price to pay ;D
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Special interest? Is that all the American worker is to you, a "special interest"?
My...my....one man's bribe is another mans commission or bonus...sorry the truth hurts you so much...I'll ask again...is there a problem with a 5th grader getting a reward for getting an A?
Answer to question...short term yes, long term no...highest tax rate should be in the neighborhood of 75%....
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When many of the golden era clubs were founded the USA had no income tax...if I'm not mistaken...it was reinstated via the 16th Amendment....but by 1920 the highest tax rate was in the vicinity of 70% on the wealthiest...and it reached it's highest rate of just over 90% in the 1950's...in 1939 about 4 million people paid taxes...by 1950 nearly 50 million Americans paid taxes...
During the time, of what is now considered a "brutal" tax rate, we fought three wars, build the Interstate Highway system, and had some of the longest, most sustained growth and job creation ever...
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Dick, why do you only want to fight greed and dishonesty at the highest levels? What about the lowest levels? I assume you are willing to turn a blind eye to that. Is this the "new ethic" of which you preach? Dick, it's not new. It's called class warfare.
I had said we need a 'new ethic' in this country. I didn't apply it to just what you call the 'highest levels'. You have spun another half truth and ascribed it to your opponent very lawyerlylike. Ethics apply to you and me. A national ethic would be just that, a new collective set of values (or maybe an old fashion set of values) Just not a greed driven power monger set of values whereby what we have been handed down is what we will have to settle for.
The class warfare term is always hauled out in debatant style like you just did by the upper classes it seems to me, and I theorize that they really don't even understand what it actually means, rather than an abstract notion and accusation to use in sterile debates. When the lower classes and masses haul out such notions, it is called 'revolution' and violence is not too far behind.
BTW DAve, how close do you think we are to major civil disorder, upheaval and real class warfare?. If Obama and his admin fail, where do you think the growing numbers of victimized folks will turn for the next promised remedy; Sarah Palin - Rush Limbaugh? No apologies from me for inferring she is a light weight, Joe and Steve. Those other cheeleaders had a body of experience, a bit beyond Sarah's level. Dwight only commanded the greatest army ever assembled. Even Ronnie Reagan had been associated with many circles of intelligent people for many years and a bit wider than Wasilla's library crowd before he was governor or ran for Pres.
Dave, I can remember serious civil disorder and was for much of it on the front lines in the streets manning the so-called 'thin blue line'. I actually felt saw and even tasted what violent disorder is like (on the scene of Sterling Hall - the second most terroristic act of domestic terrorism in this country's modern history), and I saw plenty more disorganized violence in the streets. And, that was basically over a little old draft with youth activists who saw their personal exposure to be hauled into what they perceived as an unjust war, and ancillary social upheaval of civil rights, etc., as the catalyst then. It wasn't about money and wealth per se, it was along a different class line in the 60s.
Now, we are seeing a whole class of people (but not as you think of just "lower" classes i.e. poor people or students) but classes across a wide spectrum of socio-economic strata, victims of financial crimes perpetrated upon them by 'another class' of people alright. But the class warfare you fear, if god forbid it happens, won't be poor folk VS rich folk. It will be disenfrancised people of all persuations that lost their country and security to an oligarchy and conspiracy of power, only the fuel of which is concentrated corporate executive wealth buying legislative enabling power. There are growning numbers of victims like Mr Madoff has now put on the street, that come from the wealthy and well educated, who are waking up and seeing a totally fetid system has robbed them too. People are begining to see that they have been taken to the cleaners by unregulated and unethical classes. And, I don't think they are in a mood for apologists, actually. Many poor folk, and recently bankrupt and now foreclosed and unemployed folk, already know what many recently robbed and marginalized folk are starting to experience on upper ends of the wealth spectrum. What happens when they see their lot is the same and join their political efforts together? Are they suscpetible to another charismatic evil leader? I fear so.
Those socialist and bolshevik movements you fear almost did get a foothold in the depression. And, it was for the same reasons; classes of people being victimized and marginalized by forces of greed, concentrated wealth and power where many people saw those various versions of communist movements as an alternative. We were very close then to loosing our country to those movements, if you ask me. If it weren't for WWII, a very different scene may have played out in the US. And, I would NOT have wanted to see that despite what you may think.
So if you fear class warfare Dave, I would seriously be asking myself with which people of this country or the world and which class would you side if the crap hits the fan. Will you be an apologist for the 'machine' that gave us this, and use mockery to try and put down those you think are wrong and are seeking change? Or, would you be an activist for a new ethic for the 'people'.
And, I wouldn't be too smug to believe that if you are on what you think is the power side of that equation with an army and a police force that you'll be protected. You see, most of those folks in the various services come from the same under class, and the same middle class that has been disenfrancised, defrauded, and victimized by the power elite. They won't be turning any weapons on their moms and dads, sisters and brothers so much... Class warfare indeed, Dave.
I'm glad I am old. :-\ :-[
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Could you cite your source where 60 % were qualified ?
(http://www.summersoccer.com/images/wsj.jpg)
The study you cite disputes your own claim that 60 % were qualified.
55 % weren't qualified.
The statement is clear, ABOUT 55 % MIGHT be qualified.
That's a far cry from 60 % being qualified, but more importantly it reflects your continued intellectual dishonesty and your habit of making FALSE citations in the hopes of supporting your position.
Why do you continue to fail to answer the questions posed to you ?
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ditto.
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Shivas,
Who was the better head of the SEC, Donaldson or Chris Cox? Why? Thanks.
Jeff
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When many of the golden era clubs were founded the USA had no income tax...if I'm not mistaken...it was reinstated via the 16th Amendment....but by 1920 the highest tax rate was in the vicinity of 70% on the wealthiest
Those are marginal tax rates, and, you had to earn over $ 1,000,000 in 1920 for that rate to apply. How many people made $ 1,000,000 in 1920 ? Twelve ?
In addition, exemptions and deductions greatly reduced net taxable income, something you conveniently omitted.
..and it reached it's highest rate of just over 90% in the 1950's
Once again, those were marginal tax rates and they only applied to those making over $ 400,000. How many people made over $ 400,000 in the early 50's ?
And, they too had the availability of an enormous number and amount of exemptions and deductions.
...in 1939 about 4 million people paid taxes...by 1950 nearly 50 million Americans paid taxes...
During the time, of what is now considered a "brutal" tax rate, we fought three wars, build the Interstate Highway system, and had some of the longest, most sustained growth and job creation ever...
That's a lie, the tax rates were not brutal.
Why don't you examine the rate structure, along with available exemptions and deductions before you spew more lies and false conclusions
I've come to accept that you can't tell the truth, and attempt to support your view by employing omissions, fabrications and lies.
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Patrick...snap out of it!! I didn't post that study....
But here is some of what that Wall Street Journal article said:
"RICK BROOKS and RUTH SIMON
One common assumption about the subprime mortgage crisis is that it revolves around borrowers with sketchy credit who couldn't have bought a home without paying punitively high interest rates. But it turns out that plenty of people with seemingly good credit are also caught in the subprime trap. (1)
An analysis for The Wall Street Journal of more than $2.5 trillion in subprime loans made since 2000 shows that as the number of subprime loans mushroomed, an increasing proportion of them went to people with credit scores high enough to often qualify for conventional loans with far better terms. (2)
In 2005, the peak year of the subprime boom, the study says that borrowers with such credit scores got more than half -- 55% -- of all subprime mortgages that were ultimately packaged into securities for sale to investors, as most subprime loans are. (3)
The study by First American LoanPerformance, a San Francisco research firm, says the proportion rose even higher by the end of 2006, to 61%. The figure was just 41% in 2000, according to the study. Even a significant number of borrowers with top-notch credit signed up for expensive subprime loans, the firm's analysis found."
The article went on to say perhaps this is why 80% of those with sub prime loans are still current on their loans...
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RJ Daley,
I sure agree with you about the "being old" comment.
I don't envy young people today.
I think our generation will be the last generation that fared better than our parents, and that's unfortunate.
Everyone wants their children to have a better life than they enjoyed.
You and others keep cloaking these financial issues in political blame.
Yet, the evil doers are both democrats and republicans.
Politics is inherently corrupt, at the local, county, state and federal level.
It's been that way since time immemorial.
Power corrupts and absolute power corrupts absolutely.
You know that, so why continue posturing that only one side is responsible for the dilema we find ourselves in today ?
Isn't anyone capable of independent thought ?
Does everyone have to cater to their special interest groups when trying to solve a problem.
Do you think the "pork" tied to TARP and other issue specific bills was appropriate ?
Congress is the worst.
They stifle good ideas and promote bad ones.
They waste money in unconscionable ways.
And yet, you defend them, or at least one of the guilty groups.
Give me a guy like Mike Bloomberg over a career politician every time.
At least he attempts to get the right thing done, no matter how unpopular it may be, with his own party or anyone else.
We need more independent thinkers, but, the two party system thwarts that.
They're so busy fighting each other that they can't see the real problems and they certainly can't come up with solutions to fix the very real problems we face.
The TARP bill should have had NO pork attached to it, and any Congressman that attempted to do so should have be vilified by the press, unfortunately, like homer refs, they only see things one way.
It's time to throw all of these bums out of office.
The problem is, with the media probing every personal aspect of every candidates private life, who wants to subject their families to that type of abuse.
I don't care if a guy has a girlfriend or tells off color jokes, if he's intelligent, hard working and puts America first, they're my candidate irrespective of their party affililation and closet contents.
If we don't hang together, we're going to hang seperately.
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You continually cite articles as your sole source and hold them up as completely factual, well reasoned, and the Gospel. But, I notice that you only present the articles that support your position, not the articles that refute your position.
For crying out loud Patrick, he cited Federal Reserve information as a source. That's not good enough for you?
If this was a discussion about whether or not the US should attempt to send men back to the moon before 2020 I'd be willing to bet that once someone caught you up by providing evidence against a position you'd taken you'd ask them if they have personally been to the moon, suggesting that if not they aren't worthy to have an opinion on the subject and we should only listen to what Neil Armstrong thinks!
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I only just wish for once that Pat, Dave, Cory, and a few others would quit saying I'm just accusing one party, for the sake of trying to make their point. I can't imagine any independent minded person reading my posts not coming to the conclusion that I have lumped all those that are abusing the public trust and pillaged shareholders stakes into a rogue ruling class in a non-partisan manner.
Yes, I voted for Obama. Yet, I wrote in black and white just a few posts ago that I'm not so enamored with him that if he plays the same old same old game I wouldn't work hard against him next election. But, I did say give the man a chance, because those of you that dislike him and his policies, LOST The Freakin election! He isn't even in office and some are trying desparately to subvert him. Time to let those that won have a shot at governance.
Most of my post above is questioning or maybe cautioning about what really happens IF these disgusting greed and power games keep getting played, and making more victims from ALL strata of people, some rich (formerly) and many poor continually. Do you not believe a reaction will eventually come in the wake of more futile or coneiving unethical activity; and it won't be pretty? Are you that naive? I am saying that some of these apologists for the pirate class that have ruined things to maybe rethink who they want to come out of this mess whole. The middle class, reps and dems irrespective, need to see relief and regain confidence that this isn't just a continuing big rigged system. They have no evidence of that at this point given TARP obscurities and such. And we see everyday how bad it has been with new revelations and new scandals continuing to surface like Madoff. Do you think Madoff is the bottom line and end of it?
I am fully aware that greed, lust for power, and selfishness afflicts all parties equally. The congress is a whorehouse on both sides of the isle. All I've been saying is we need a whole new NATIONAL ETHIC. Not one confined to one party or the next. Those in positions of power and influence, be they making the laws and overseeing regulation, or those running corporations for shareholders need to have new ethics. If they can't be persuaded with pleas for basic morality (which have bounced off their heads like teflon) then draconian regulation needs to be imposed. Money must be gotten out of politics. Special interests (all) need to be banished from the halls of congress.
SOX shmocks - they brought it on themselves and more is coming because they brought us this mess where current regulation didn't stop them. Criminals need to be identified and go to prison - I don't care if they're dems or reps. They have sold our nation out! Even past the devistating human toll of 9/11, the financial toll from just these latest scandals alone surpasses the financial devistation that ocurred on 9/11. Our real enemies are sitting back laughing and believe (if not know) we are killing ourselves with lack of a national ethic to first do the nation's people's work.
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For Pat Mucci...
http://news.yahoo.com/s/ap/20081222/ap_on_bi_ge/meltdown_secrets
Apparently, the woman that is providing over site on the bank bail outs for Congress, can't get any answers from the banks as to where the money is going....
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For Craig Sweet
I am not saying you will like the answer but do you have any reason to doubt the following?
"We manage our capital in its aggregate," said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout
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Corey, I have no doubts about that answer...
Interesting the amount of scrutiny and over site, and detailed plans for use of the auto bail out loans...versus the near total lack of over site and details for accounting for how the banks have used nearly one trillion dollars...
Given that I have little faith any of the bank bail out money will ever be paid back, and given the potential for hyper inflation due to the printing and dumping of trillions of dollars into the market....I truly feel this bank bailout was a huge fraud and will bite our ass hard.
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Whose "facts" do we believe? Craig Sweet's taxing the rich is not bad for job creation and the economy"?
Or Gov. Paterson (D-NY) when he said "that increasing taxes on the rich should be 'the last place you want to go, because it automatically kicks in less job creation and leads to people leaving the state ...' " (NYT, 12/21/08, pg. 37)?
Or long term demographic trends showing outmigration, slower job formation, and lower economic growth in states characterized by high taxes, heavy regulation, large public sectors, and heavy Big Union participation?
In this day of the internet, self-publishing, and the proliferation of self-described "think tanks" with all sorts of long-winded, "common" or "public interest" titles largely misreprenting who they really purport to represent, it is dangerous to provide credibility to any of the cited "studies" without in-depth analysis of the data, methodology, and conclusions. One must not only look at the authors, their ideology, and who funds them, but also, to whether their claims make any real world sense.
For example, those who spouse Big Government solutions to our personal and economic problems, if pressed, will confess that there are other people besides the rich and Republicans who are greedy and subject to lapses in ethics. For better or worse, we are all imperfect people who struggle with any number of the seven deadly sins. Greed, greatly overrated as a culprit among these in my estimation, is hard-coded in all of us; it is a very important component of our survival instinct (ref. David Scmidt's comment about why socialism can never work).
Now, in economic terms, if someone taxes 70% of your production, and, if for the most part you've satisfied your basic needs, how do you think a reasonable, common man will respond? Do you think that perhaps that person might choose to do something else besides that activity for which he will only get to retain 30% of its profits?
The whole idea of supply side economics is not as Goldman and others who ridicule it as "trickle-down", but the common sense, observable, and demonstrable human behavior that when we are allowed to keep more of what we produce, we will produce more. It is happening throughout many parts of the world who were previoulsy socialist basket cases (including many of the former Soviet republics).
Go one step further and evaluate how government spends our money: bridges to nowhere, aid to despots that never reaches the intended recipients, wars that do not have wide support, farm subsidies to rich corporations, political contributions and legal conduits to organizations with agendas many of us on opposite sides of issues despise. I think it is reasonable to say that a substantial percentage of our population correctly believes that we as indiviudals spend our money more efficiently than government does on our behalf. If this is so, how can we believe that more money in governments' hands can be good for the economy?
If someone who is profficient in match can demonstrate to me how decreasing the proportion of the economy that is more productive while increasing the proportion that is less so results in greater production, I would like to see it. Until then, I will always prefer having a little more even though my neighbor might have a whole lot more than me, to having a little bit less so long as my comrades are similarly situated. Envy, in my opinion, is a far more serious, consequential shortcoming.
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Lou...I believe I posted a link to a study done by someone at Princeton University that would conclude the Gov. is wrong in his assumptions...
Here it is again...http://www.workingfamiliesparty.org/2008/11/fact-check-what-happens-when-income-taxes-on-rich-are-raised/
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Lou...you say it is reasonable to believe that most Americans thing individuals can spend money more efficiently than the government can....unlike Mucci I will not ask you to post proof or anything....maybe people believe that and maybe they don't...This I do know...the government can build streets, provide fire and police protection, deliver mail, provide health care, educate our children, more efficiently and cheaper than an individual....
This I will give you...the story that the conservatives have been able to tell over the last 30 years...government is bad, taxes are a burden, greed is good...has been ingrained into the minds of an entire generation....HOWEVER...just as we saw 80 years ago as this country came out of the Roaring 20's into the Great Depression, this story has a very, very bad ending for most Americans...and fortunately, the awakening from that is occurring....witness the 2006 elections and the recent election of Obama.....this time the new story is going to be written by the people....not the elites in the Republican party....not the corporate execs.
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Shivas...you never do like the facts to get in the way of your thinking do you...
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And Shivas...please feel free to refute the Princeton study...if you can.
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Well, I haven't read this thread since it went past page 1, but I can only wonder when this latest discussion of what is surely to become political (assuming it hasn't all ready, and looking at the first page, I'd say it has) will last before being yanked like the rest of them. Just an observation.
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Shivas...Lou specifically was talking about Gov. Patterson and NY State....and the last time I checked the governor of NY could not raise federal taxes.
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And it specifically states that it did not hamper job creation to raise the taxes of the wealthiest....
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Lou...you say it is reasonable to believe that most Americans thing individuals can spend money more efficiently than the government can....unlike Mucci I will not ask you to post proof or anything....maybe people believe that and maybe they don't...This I do know...the government can build streets, provide fire and police protection, deliver mail, provide health care, educate our children, more efficiently and cheaper than an individual....
This I will give you...the story that the conservatives have been able to tell over the last 30 years...government is bad, taxes are a burden, greed is good...has been ingrained into the minds of an entire generation....HOWEVER...just as we saw 80 years ago as this country came out of the Roaring 20's into the Great Depression, this story has a very, very bad ending for most Americans...and fortunately, the awakening from that is occurring....witness the 2006 elections and the recent election of Obama.....this time the new story is going to be written by the people....not the elites in the Republican party....not the corporate execs.
I can honestly say that I've never,before now, witnessed anyone try to make a case for the efficiency/cost effectiveness of government.
There are many privately owned/operated roads.Drivers frequently pay a premium but,presumably,they derive greater value from their usage.I'm unaware of any private road which has failed due to the competition presented by a cheaper/more efficient government road.
There are many communities/neighborhoods with private security forces.Again,these users pay a fee over/above their usual fee for police protection(taxes) yet must derive some value.
FedEx became a multi-billion dollar company by disproving the efficiency of the USPS.
Parents have for years made sacrifices to send their children to private schools due to the efficiency of government-run public schools.
I'm still looking for that one,good singular government-run health care system.When I find it,it won't be cheaper.It won't be more efficient.And,most important,it won't be better.
I have a lot of friends who've emigrated from former Soviet bloc countries.It's always interesting to hear their reactions about economic issues in the news.Lately,it's been a lot of curiosity about why anyone would ever want any government to own anything.They know first hand how that works.That's why they moved here in the first place.
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"Or the fact that this is the 2004 through 2007 timeframe, where the economy was rocking?"
Shivas,
How do you define rocking? It actually was a quite meagre expansion, with most of the GDP increase going to a very small number of folks.
Was productivity growth greater from 2004-07 than under the Clinton recovery, or the boom that occurred AFTER taxes were raised in 1994, when conservatives insisted that we were headed for a depression? What happened to the stock market during Clinton's time in office? Bush's (even before the meltdown)? Was the recovery from the recession in 2000 more robust or less than the average post-war recovery from recessions?
Lou, you compare a 70% rate (marginal I assume) to a 30% rate, which is a straw man (like the conservative that said that the 80s were a terrific time because of Reagan, and that they ran from 1982-1988. Nice. What about the difference between a marginal rate of 30% and 36%? And, to use your analogy, if you already earn $150 million in a year, how much incentive do you have to be more productive?
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I don't know a single employer that got a tax break and turned around an hired more employees....job creation is determined by demand...not tax breaks.
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Shivas/Schmidt...do you feel better cus' you "called me out" and then wasted some of your precious time here on earth, not once, but twice, trying to goad me into responding?
Do you lawyers always walk around with a hard on looking for confrontation?
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Posted by: Craig Sweet Posted on: Yesterday at 09:10:42 pm
Insert Quote
I don't know a single employer that got a tax break and turned around an hired more employees....job creation is determined by demand...not tax breaks.
I know more than a few small business owners that will fire employees if taxes go up. They want to earn the same $$$ after a tax hike that they earned before.
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Shivas...why don't you tell us about the New Party....have you had any first hand experience with the New Party? Perhaps you could tell us what "radical left" ideas they have.
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Go ahead Shivas...tell us from your first hand knowledge about the New Party...
The American Thinker...what a joke...uses all the buzz words for ya...radical, marxist, socialist, communist, pro union...
Come on...you must have some first hand knowledge of the New Party...after all, you brought it up.
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I bet you did....from what I can tell, 99% of the information about the New Party that comes up when you google it, is the wet dream of the radical right....the fringe that see a commie hiding under every bed...and not accurate at all....
What did you find when you googled my name and the New Party?
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I think I just did...
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I laughed out loud at this blurb in the middle of a post from Lou up above:
The whole idea of supply side economics is not as Goldman and others who ridicule it as "trickle-down", but the common sense, observable, and demonstrable human behavior that when we are allowed to keep more of what we produce, we will produce more. It is happening throughout many parts of the world who were previoulsy socialist basket cases (including many of the former Soviet republics).
Here's what has trickled down to the middle and lower class from decades of supply-side lunacy: an economy based almost entirely on consumption with no savings to speak of, an economy that manufactures only a fraction of what it did thirty years ago, an economy that allowed the richest to get rich with precious little accounting of how they were allowed to get rich (Wall Street investment bankers in the main). The government did everything it could to enable these hogs to get fatter and fatter. Here's a good one: how about if we allow you to increase your leverage quotient from 12-1 to 30-1! If you're an insurance company, how about if you decide to also become a mortgage broker! If you're a mortgage broker, why not become a bank? Go ahead and give mortgages to people with no money down, no credit history, no fricking job! We'll just bundle them up together and sell 'em in bulk. We'll pay off Moody's to give us a phony rating and they'll go like hotcakes. The price of real estate, after all is going up, up, up! We'll come up with investments that are so hard to understand (credit default swaps, collateralized debt obligations) that they won't even try to regulate them. Just let us geniuses do what geniuses do!
We'll give out bonuses based on paper profits and we'll all use our money to benefit the lower classes. Let it trickle down on the people who make our private jets. We'll need more people to cut our grass, because the home is on 25 acres! Look how beneficent we are!
If it all goes to shit, don't worry, we have our guy running Treasury. He'll protect the right guys, without asking a single question about what we'll do with the money. But if a real manufacturing entity needs money, we'll grill 'em like a cheap steak and tell them to quit paying their workers too much money. We'll make 'em jump through hoops to get dribs and drabs.
Goldman Sachs? Give 'em $10 billion to right the ship! How do they use the money? Just pay out $10 billion in bonuses! You have to do that to keep quality people.
Trickle down economics was b.s. when Reagan pushed it thirty years ago and it's still b.s. now. If trickle down is applied to real manufacturing concerns and they expand plants and put more people to work, there might be some merit to it. In the financial and tech sectors, the supply siders were left to run amok with no meaningful regulation and look what it got us! Despair.
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The funny part about the whole Laffer/trickle down whatever is this....it is labor that produces...not capital.
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"The whole idea of supply side economics is not as Goldman and others who ridicule it as "trickle-down", but the common sense, observable, and demonstrable human behavior that when we are allowed to keep more of what we produce, we will produce more. It is happening throughout many parts of the world who were previoulsy socialist basket cases (including many of the former Soviet republics). "
Lou,
I have never analogized supply-side economics to "trickle-down." I have called its supporters cranks, and would call them crackpots if asked, but not trickle down. ;D
Supply-side economics isn't just a vague notion of "individuals are better with their money than government". It is purportedly a system of economics with principles and beliefs in causes and effects. I don't quarrel generally with the general statement, but the specific beliefs are nuts. Do you think that the money supply, however measured, has nothing to do with inflation? The supply-siders do. Do you think inflation is caused only by exchange rate fluctuations? The supply-siders do. Do you think Friedman was a hack? The supply-siders do. Do you think the depression was caused by restrictions on free trade, and was NOT a monetary phenomenon? The supply-siders do (Keynsians believe none of these things).
That's the problem with ideologues. They fit the facts to meet their beliefs. Pragmatists, with any luck, have a set of principles, but when things change, are willing to listen. I generally favor somewhat higher taxes on very wealthy people, and believe in the market more than most conservatives on this site (and therefore would tax capital and labor equally), but, given the financial mess we're in, raising taxes on anyone now would be crazy.
Finally, to really blow things up, I find it very odd that the present administration looked to the Stalinists for their expertise in gathering intelligence from captives, but don't give them the same respect for their economics. I guess that is a sort of pragmatism, in a Nuremburg sort of way. ::)
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Exactly...wages from labor creates demand...and demand drives the economy..smart business looks at demand and acts accordingly....they do not sit there and say "hey, I got a tax cut, I think I'll manufacture some widgets".
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I'm not reading any of the posts, don't ask me questions, I just thought I'd post this link to an article on the SEC and Madoff. Even though it's from a largely conservative website, it is rather damning of the SEC under W, so I thought the haters would enjoy that.
How Madoff Did It (http://www.frontpagemag.com/Articles/Read.aspx?GUID=7FE90885-C3BA-4EAD-9629-95DA761E4571)
The title of the article is a little misleading; there isn't much about how he did it. Rather, it's mostly about how the warning signs were there.
As I said, don't ask me questions, I'm not reading other posts. If you feel the need to vent, send me a private message, I will read those.
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first of all...people have to be working....and people have to have some money...tax cuts will not generate enough demand
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I think we need a good psychoanalyst to consult here as much as a classically-trained economist.
I am glad to have made Terry Laving laugh. It never ceases to amaze me how willing some people who live in glass houses are to throw stones. Here we have a man who is extolling the virtues of manufacturing and the evils of the financial and service sectors. He apparently believes that the government should set "leverage quotients" and decide who should go into what professions. Bonuses on paper profits? The horror! Perhaps he'll disclose how he's achieved his great wealth and position of privilege in the ruling class.
As to Jeff Goldman, this is rich: "That's the problem with ideologues. They fit the facts to meet their beliefs. Pragmatists, with any luck, have a set of principles, but when things change, are willing to listen.".
There is a concept in psychology called projection. It is a defense mechanism where we project or attribute one's own undesired characteristics or thoughts to others. Jeff, my friend, you are a dear mean with many, many good traits, but being pragmatic when it comes to politics is not among them. Dogmatic, yes. Willing to change and listen? Not so much.
One example: you keep bringing up the need to tax capital and labor the same and take great delight in exposing conservatives as economic or market hypocrits. Now, on more than a couple of occasions I've tried to explain that many of us would be content if government stopped the double taxation of dividends, the straight taxation of investment interest income without first deducting interest expense, and the taxation of business profits, but, instead, tax all income at the individual level without regard to its source.
I have also tried to explain the rationale for having different rates for capital and labor by which government seeks to encourage the former due to its importance and scarcity relative to the latter. Anyways, to the extent that many of us believe we're heavily over-taxed and that government today is inappropiately in the business of determing winners and loses, we'll take any break we can get. Given the last year, this is sort of a moot point, wouldn't you agree? So why do you keep bringing it up? Your pragmatism acting up again?
I must admit, you are well read, but how did you say it earlier, might you be fitting your facts to meet your beliefs? I doubt very much that supply-siders considered Friedman a "hack", though such an accusation may have been tossed around in the spirit of academic competition. BTW, did you get this divide and conquer tactic from the Chicago or national party playbook?
I think that most principled pragmatists after a carefull reading of Friedman and Wanniski or Laffer would conclude that both camps have much in common- namely a bedrock belief in the inability of government to do much good in the economy and a propensity to do great harm. Even their disagreement relative to monetary policy and its importance in the economy was one of degree and not direction. Both believed monetary policy had to be independent of politics. One believed that the money supply should increase slowly, steadily, predictably to accomodate economic growth. The other prefered tying it to an objective standard, a relatively scarce commodity that could not be manipulated wildly for political reasons. Both camps believed that the economy would work best for all with markets made up of millions of individuals making decisions freely with minimum government interference. Common to both, a preference for low tax rates and small government naturally follows.
As to the Nurenburg comment, it is inappropriate and way beneath you. This is an analogy, one that is not only offensive on its face, but totally, grossly inaccurate. Your side which is now calling for reconciliation and understanding could never help itself during the last eight years, making frequent comparisons of Bush to Hitler and denigrating Christians. Now Stalin and Nurenberg. You guys sure know how to capture minds and hearts.
Craig Sweet,
The old chicken or the egg mystery does not apply to labor and capital. If capital was so easy and derivative of labor, we wouldn't have a nation of employees and we wouldn't have a party that since at least 1930 has been engaged in a highly devisive class war. Most of us should thank God and/or our lucky stars that there are exceptional men and women in this world who create and invest their capital so that we have employ. In this great country where some 45% don't pay any income taxes and many live in relative comfort, we should be doing this at least couple of times a day.
I have known people who have saved during much of their life to start a business. Any savings, be it from eating more beans and less beef, riding a bike vs. driving, or paying less to the government (a tax cut) as opposed to paying more, is money in their pocket and a step closer to their dream. BTW, I've worked in manufacturing and one often doesn't wait to receive an order for widgets before making them. In many businesses, a product is created long before there is demand for it. I know you ideologues are blocked on this, but supply often does beget its own demand.
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The fallout continues..
http://news.yahoo.com/s/ap/20081223/ap_on_bi_ge/madoff_investor_suicide
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"I doubt very much that supply-siders considered Friedman a "hack", though such an accusation may have been tossed around in the spirit of academic competition."
This is an excerpt from a letter published by Jude Wanniski, to Larry Lindsay:
An open letter to Larry Lindsey:
In your Wall Street Journal op-ed of Jan. 27, remarking on "The 17-Year Boom," you opened by saying Bill Clinton would probably take credit for the booming economy when he delivered his State of the Union speech that night. He did. But as I read on, looking for your take on who should get credit, I never found the names of any of the original supply-siders or of Ronald Reagan. Instead, I find this outrageous statement: "Economists came to see 'supply side' management of both inflation expectations and the supply of labor and capital as at least as important as 'demand side' management of spending power. Milton Friedman's lonely voice gave way to a chorus, and the Reagan administration translated it into policy."
Larry, this 17-year economic expansion had absolutely nothing to do with the lonely voice of Milton Friedman. It was, in fact, Friedman and his dopey monetarist idea that you could manage the national economy to perfection by increasing the money supply by 3 percent a year that caused the worst inflation in world history!"
It gets worse, but I think referring to "Friedman and his dopey monetarist idea" is pretty close to calling him a hack. And if you want more, the entire letter is at http://www.worldnetdaily.com/index.php?pageId=2914. Note especially where Wanniski says "Milton Friedman not only screwed up the world monetary system. He also fought the supply-siders on tax policy every step of the way."
On another point, higher ups in the Bush adminstration have admitted quite candidly that they designed their interrogation policy directly basedon the practices used under Stalin (and, I guess, by watching that tv show "24"). They did not consult any military professional interrogators, ignored the army manual, and failed absolutely to consider real evidence of what effective interrogation is and how it works. They simply assumed, as many laymen do, that beating people, putting them in freezing and hot places, forcing them to stand for days, hanging them up by their wrists, etc. etc. is the best way to get them to talk. Probably is, but not necessarily truthfully. (as an aside this weekend I re-watched again one of the great movies of the "Australian New Wave" of the late 70s early 80s, Breaker Morant. Still terrific, and quite relevant. And by the way, the great masterpiece of that era, The Chant of Jimmie Blacksmith, finally got issued on DVD recently.)
I just tossed in the bit about capital and labor for fun. We know our views on that.
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I'm not reading any of the posts, don't ask me questions, I just thought I'd post this link to an article on the SEC and Madoff. Even though it's from a largely conservative website, it is rather damning of the SEC under W, so I thought the haters would enjoy that.
How Madoff Did It (http://www.frontpagemag.com/Articles/Read.aspx?GUID=7FE90885-C3BA-4EAD-9629-95DA761E4571)
The title of the article is a little misleading; there isn't much about how he did it. Rather, it's mostly about how the warning signs were there.
As I said, don't ask me questions, I'm not reading other posts. If you feel the need to vent, send me a private message, I will read those.
Now, if either Mssr.'s Sweet or Shivas would adopt this type of "I'm not playing, but listen to this" kind of attitude, this thread could quietly fade to black......
I wish I had the kind of pull and respect to pull this off like George just did....atta boy, George!
Joe
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It's not as if the world was waiting with baited breath for it, because as we all know, there are about 80 gazillion well-known and clearly identified reasons to flee New Jersey already! ;)
Isn't the award of a PhD limited to candidates who make a substantial contribution to knowledge? If what you say above is accurate, is it fair to characterise their area of research as being insufficient for the award of a doctoral degree? ;D
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Sorry Lou, but nobody has any capital until someone, through their labor, adds value to something ....all I can say is thank god we have hard working men and women in this country that are willing to sacrifice a lot to build the wealth of America....without their hard work many that post here would not have enough money to join a fancy golf club.
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I think we need a good psychoanalyst to consult here as much as a classically-trained economist.
One example: you keep bringing up the need to tax capital and labor the same and take great delight in exposing conservatives as economic or market hypocrits. Now, on more than a couple of occasions I've tried to explain that many of us would be content if government stopped the double taxation of dividends, the straight taxation of investment interest income without first deducting interest expense, and the taxation of business profits, but, instead, tax all income at the individual level without regard to its source.
Can you explain how this would be implemented without increasing the already staggering gap between the rich and poor?
I have also tried to explain the rationale for having different rates for capital and labor by which government seeks to encourage the former due to its importance and scarcity relative to the latter. Anyways, to the extent that many of us believe we're heavily over-taxed and that government today is inappropiately in the business of determing winners and loses, we'll take any break we can get. Given the last year, this is sort of a moot point, wouldn't you agree? So why do you keep bringing it up? Your pragmatism acting up again?
Once again. Please explain how this will benefit the country. Please? Wasn't the Republican candidate for President's campaign slogan, "Country First"? How does your taxation policy of yours benefit America?
I think that most principled pragmatists after a carefull reading of Friedman and Wanniski or Laffer would conclude that both camps have much in common- namely a bedrock belief in the inability of government to do much good in the economy and a propensity to do great harm. Even their disagreement relative to monetary policy and its importance in the economy was one of degree and not direction. Both believed monetary policy had to be independent of politics. One believed that the money supply should increase slowly, steadily, predictably to accomodate economic growth. The other prefered tying it to an objective standard, a relatively scarce commodity that could not be manipulated wildly for political reasons. Both camps believed that the economy would work best for all with markets made up of millions of individuals making decisions freely with minimum government interference. Common to both, a preference for low tax rates and small government naturally follows.
If this is true then tell me why Friedman argued that the Fed should be done away with and the federal government should be in control of our currency. Doesn't that stance actually increase the role of government? Wouldn't taxes for all Americans decrease if our government weren't paying interest to a small group of bankers for every bond, loan, and issuance of currency the U.S. asks from the Fed and banks?
As to the Nurenburg comment, it is inappropriate and way beneath you. This is an analogy, one that is not only offensive on its face, but totally, grossly inaccurate. Your side which is now calling for reconciliation and understanding could never help itself during the last eight years, making frequent comparisons of Bush to Hitler and denigrating Christians. Now Stalin and Nurenberg. You guys sure know how to capture minds and hearts.
Here is where I call BS. I like you Lou. I mean that. So please don't take this the wrong way, but...
Why do politicians try to steer away from the "liberal" label and not the "conservative" label? Because there has been a very effective campaign for years to make the idea of holding liberal political views to be negative, if not evil. Liberals in this country are called "socialists", "communists", "terrorist sympathizers", etc., etc. Of course a liberal's beliefs are going to be closer to socialism than a conservative, just like conservatives lean closer to fascists. That doesn't mean any of us are those extremes.
You have taken part in some of this labeling, regardless of its scope, as have I. But I know when someone's words speak of unqualified righteousness. Can you really say that your "side" holds the high ground here? People were calling Obama a "traitor", "terrorist", and calling for his execution at McCain rallies and you are going to lecture the left about comparing Bush to Hitler? Give me a break. There are nut jobs on both sides, no question. The fact is that verbal blood has been shed on both sides and to point the finger like that only encourages more.
As for Christian denigration... I am a Christian (Catholic). When churches actively try to enforce their beliefs through the laws of this country they need to be prepared for people to disagree and challenge them. When religious groups, that are part of the non-profit sector, lobby and support policies that enforce beliefs on others I think it is flat out wrong, IMHO. While our country was founded by Christian men, it was not intended to wield those ideals on its people. Citizens of this country should not be ruled by the laws of religion. People should make the choice to follow religious laws and rules on their own. Many laws dealing with murder, rape, theft, assault, etc. are shared by all religions and therefore make up a body that is unarguably accepted by all.
Lou, do you support creationism being taught in schools? Do you really disagree with irrefutable evidence that supports evolution? Do you believe the Earth is only 6,000 years old and men rode dinosaurs? The Creation Museum does. They actually have life-size replicas of dinosaurs with saddles on them, implying men rode dinosaurs. Where is there one shred of evidence that this occurred? This is one small example of religious fundamentalists trying to enforce its beliefs on the citizenry and it is flat-out sickening. It's not sickening because a group of people want to believe something, it's sickening because they want to force everyone else to believe it. The Catholic Church used to argue against evidence of the world being a sphere. They were wrong. They argued against the fact that the Earth might not be the center of the universe. They were wrong. They argued against the fact that humans didn't evolve from primates. They were wrong. They are now arguing against the fact the universe is expanding in all directions from the Big Bang. I hate to say it but evidence shows they are wrong again. The one thing they definitely have right, IMO, is the teachings of Christ. I can't think of a better example of how to live than Jesus and the charity work many of these churches do is astounding and undeniably good for their communities.
The left (our "side") has been forced into conflict with the religious right due to the fact that the religious right has attempted to enforce laws and policies directly aimed at applying dogmatic principles on the entire population that go against the ideals of liberty. Liberty is what this country is about, IMO, not religious ideals. So throw the, liberals "denigrate" Christians bomb, all you want. Until the reactionary, religious sect starts accepting the fact that this country isn't about enforcing your religious beliefs on others, expect a full-scale resistance to all attempts to deny others their liberty.
Jeff F.
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Novel thought:
I wonder if Bernie Madoff could be indicted for homicide for the death of the French Investor who committed suicide.
Wasn't one of the foreseeable consequences of the unraveling of this Ponzi scheme that some investors would lose everything and commit suicide?
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Shivas.....as you know, money is like horse manure....it does no good sitting there in a pile...it has to be spread around to be effective.
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Novel thought:
I wonder if Bernie Madoff could be indicted for homicide for the death of the French Investor who committed suicide.
Wasn't one of the foreseeable consequences of the unraveling of this Ponzi scheme that some investors would lose everything and commit suicide?
Cary:
The more likely theory will be for testing mass murder!
There will likely be many more sad tales of suicide before this mess disappears from the headlines.
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Sorry Lou, but nobody has any capital until someone, through their labor, adds value to something ....all I can say is thank god we have hard working men and women in this country that are willing to sacrifice a lot to build the wealth of America....without their hard work many that post here would not have enough money to join a fancy golf club.
Craig,
The penultimate and ultimate lines of your post here, sound to me to be that of class envy. I know a whole lot of people that have worked damn hard at some dirty and dangerous jobs and enjoy club life.
I agree with you on the need to protect the labor force from the predations of some of the unacceptable facets of capitalism, but I doubt that very few work to "sacrifice to build the worth of America," most do it for their personal betterment. Read Maslow.
Bob
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Bob...of course everyone works for the betterment of their own life...but I do believe many that labor understand the wealth they are creating and expect some fair portion of that wealth to find its' way into their pockets...but these people also understand that it is via their hard work that America has become the economic power that it is..I had a discussion with a fellow at a wine tasting last week...he was saying that he did not think GM should be paying for the health insurance of retired employees....and though we both agreed we did not know the particulars...I said I thought that was a very real expectation for someone that went from high school to the assembly floor...put in 40 years building tremendous wealth for GM....in the trillions of dollars over that 40 years....to further put it in perspective, I said...how about the CEO that leaves after 5 years...10 years...and leaves on a low note...yet receives a nice fat multi-million dollar golden parachute?
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Bob...of course everyone works for the betterment of their own life...but I do believe many that labor understand the wealth they are creating and expect some fair portion of that wealth to find its' way into their pockets...but these people also understand that it is via their hard work that America has become the economic power that it is..I had a discussion with a fellow at a wine tasting last week...he was saying that he did not think GM should be paying for the health insurance of retired employees....and though we both agreed we did not know the particulars...I said I thought that was a very real expectation for someone that went from high school to the assembly floor...put in 40 years building tremendous wealth for GM....in the trillions of dollars over that 40 years....to further put it in perspective, I said...how about the CEO that leaves after 5 years...10 years...and leaves on a low note...yet receives a nice fat multi-million dollar golden parachute?
Craig,
I can't argue with you there.
Bob
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Jeff Goldman,
Breaker Morant is among my favorite movies. I would not sacrifice an innocent individual for a political cause.
In regards to Wanniski and Friedman, saying something is "dopey" and calling a respected economist a "hack" are two different things. But even if the supply-siders held Friedman is such low regard, I think it was Dr. Klein who once remarked on these pages about the great ferocity of debate and in-fighting in the academy on the smallest, and most inconsequential and unimportant matters
The other thing you may wish to consider is how the nature of money has changed from the time that Friedman did most of his research and writing, not to say anything about the globalization of the economy. But if you want to put your eggs in the Keynesian basket and believe that spending money you don't have while piling on mountains of debt on top of already existing mountains of debt is the way to salvation, well, I am done.
Oh, please do provide the names and citations for those "higher ups in the Bush adminstration have admitted quite candidly that they designed their interrogation policy directly basedon the practices used under Stalin (and, I guess, by watching that tv show "24")." Derisive to the last days; your pathological hate for Bush knows no bounds. I know Jeff, people have used torture and physical and psychological stress for centuries not because they work in extracting information but because they are just bad and like to inflict pain.
Jeff Fortson,
I've enjoyed our time together and hold no animus toward you. Other than to say that it is not the role of government to equate outcomes, that ALL Americans should pay taxes and have some skin in the game, that Federalism is a necessity if this country as we know it is going to survive over the long run, and that I have never been forced by a Christian to do anything in my life, I have nothing to add.
Sorry, there is one more thing. I do believe that words have specific meanings and I don't consider the left to be "liberal" at all. To the extent that those on your side believe that free markets exist in this country and are the cause of the pain we feel, I believe I am totally justified in calling you guys "socialists". You see, I consider myself to be a liberal in the classical sense. I think of those who wish to confiscate my property, tell me how to spend my money, control my speech and who I listen to, force me into financial associations which are detrimental to my interests, and otherwise lay claim to how I lead my life as the real facists.
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Nah, I just Googled it and found it interesting.
http://en.wikipedia.org/wiki/New_Party_(United_States)
Link doesn't work. Was something taken down?
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Bob...of course everyone works for the betterment of their own life...but I do believe many that labor understand the wealth they are creating and expect some fair portion of that wealth to find its' way into their pockets...but these people also understand that it is via their hard work that America has become the economic power that it is..I had a discussion with a fellow at a wine tasting last week...he was saying that he did not think GM should be paying for the health insurance of retired employees....and though we both agreed we did not know the particulars...I said I thought that was a very real expectation for someone that went from high school to the assembly floor...put in 40 years building tremendous wealth for GM....in the trillions of dollars over that 40 years....to further put it in perspective, I said...how about the CEO that leaves after 5 years...10 years...and leaves on a low note...yet receives a nice fat multi-million dollar golden parachute?
Craig
The only problem with not paying out the benefits and pensions (other than you are going to tax the very people whos benefits/pensions are up for grabs just to get what is rightfully theirs) is that this has been part of the salary structure for a guy working on the line for the last 30 years. It has long been a dodgy trick of the Big 3 to publish the union deals and to include all benefits as part of the salary - sometimes boosting the hourly salary significantly - which obviously gives the wrong impression for the general public. I will say that the Big 3 are at a huge competitive disadvantage because of the American system of pensions compared to how things are done in Europe in Japan. Essentially, the Big 3 are being punished for being successful for so long. When a car company is paying $4000 a car in bennies/pensions there is no way it is going to compete with the likes of Toyota or Porsche. Mind you, Big 3 execs should have seen this imbalance of bennies/pension imbalance cost per unit a long time ago. Or maybe, the cash for these negotiated union deals should have been banked rather than played on the market. Its a classic case of poor government regulation to force much higher percentages of pension money set aside as cash reserves. Now of course, the sums are staggering and there isn't a company in the world (not even cash rich oil companies) who can set aside this amount of cash.
Ciao
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Shivas....it is your "philosophy" that made slavery such a good deal for business owners.. ;D
Have a good New Year
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By the way....do you have any idea how much construction of new business is funded with union money?
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I've heard different numbers about how the cost of an American made car is $2,000 - $4,000 more expensive than their Japanese counterparts. I've also never experienced a similar priced American car that wasn't at least $2,000 - $4,000 less of a value.
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It's time for a group hug. . .
(http://popwatch.ew.com/photos/uncategorized/2008/04/01/teletubbies_l.jpg)
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By the way....do you have any idea how much construction of new business is funded with union money?
How much ?
Could you cite the projects ?
I know the Central States Teamsters Pension Fund invested in Las Vegas, but, I'm not sure if that was for NEW construction or to take ownership of existing projects.
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Shivas....minerals in the ground have very little value until someone, through labor, turns them into something....yeah, someone with some capital invested in getting those minerals out of the ground, and someone with capital invested in the manufacturing plant...but none of that would have happened without labor...
I have no desire to continue this circular discussion with you any longer...we have a huge philosophical difference here....end of story.
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Craig,
I'll throw out this story, and tell me how you relate to it please;
When I was a superintendent, I hired young men and women to do tasks related to golf course maintenance. Sometimes, all I was after was an employee willing to run a string trimmer and do manual labor such as racking bunkers. Once, and only once that I recall, did someone come in after their first few days of work and say something like "this work is hard. I won't do it any longer unless you pay me more."
My response was along these lines..."I described the job when I interviewed you, as well as stated the pay. If you feel it isn't worth your effort, then thank you for your time, but I will look for someone who is willing to work their way up".
The fact of the matter is that people have varying levels of desire to make an effort at earning their wages/salary/compensation. Why in the world would we treat everyone as equals in the labor force when there are clearly differences in personalities, desire, effort, talent, etc.?
Joe
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Joe...I never said anything about 'equality" in matters of compensation....I merely stated labor adds value to the finished product and should be compensated accordingly...
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Novel thought:
I wonder if Bernie Madoff could be indicted for homicide for the death of the French Investor who committed suicide.
Many tax firms are trying to be creative in handling the losses of their clients.
As an investment loss, it is only offset against gains while if it is deem fraud, a loss from "theft" would allow the loss to be against ordinary income and I believe, can be applied to prior years.
Disclaimer: I am not a tax professional not do I play one on TV, I did overhear this discussion at party this week that was comprised of mainly Cal and Stanford Alums ...
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I wonder if Bernie Madoff could be indicted for homicide for the death of the French Investor who committed suicide.
Wasn't one of the foreseeable consequences of the unraveling of this Ponzi scheme that some investors would lose everything and commit suicide?
On a thread full of ridiculous posts from all sides, this is the most ridiculous by a very wide margin.
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Shivas...what question did I dodge? I see little in the way of a "question" in your posts...
I guess investment money grows on trees? I mean, you keep arguing that no one works unless someone invests money in an idea...takes a risk...but where did they get that money? Look, I started a business from scratch...I cashed out a modest retirement that a previous employer had set up for me and went into business....hired a part time employee...the next year a full time employee, the third year another full time employee and the fourth year I had 5 employees....all were hired as the business grew and demand grew....they were all paid considerably more per hour than they could make at my competitors business...but THEY made me money....you can lay on me all the mumbo-jumbo about tax cuts and Laffer curves you want...but I put my faith in labor...I hired knowledge, paid them well, and we made money....a business that relies on tax cuts and loop holes, wage concessions , and smart talking lawyers to get by...is a losing business.
I don't know anyone that ever made a dime without the effort of labor....Unions invest in projects for a number of reasons, one of which is to employee more union workers...I've seen unions invest during slow times to keep people working and money moving in the community....you rarely see investors take that sort of risk....
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Shivas...I never used the word union....
Typical, you putting words in my mouth...
If workers do not feel they are being fairly compensated they should have the option to form a union and negotiate a contract...of course the ONLY option you advocate is "find a new job"....
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Shivas...in a work place with no union, I can either accept the compensation offered, or find another job...
I assume in a union shop wages have been negotiated, and I can have some expectations for future compensation.
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Shivas...people work for themselves in a metaphysical sense... ;D
Unfortunately, conditions other than individual desires set wages....I would love to make $20 an hour mowing greens....and I might be worth $20 an hour to my employer, but typical greenskeeper wages in Missoula start at $6.50 an hour and barely edge past $10....so long as there is no reason for public/private course in this area to pay more, none will...
But getting back to labor and adding value....at what point is the investors money and risk paid back to his satisfaction...and what does the original investor do then? Sit on it? Continue investing in labor and improvements? Sell out?
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Shivas...I never argued one way or another...I said fairly compensated...for their labor...
"After all, the vast majority of Americans work for somebody else, and if they're not in a union, they just decided whether the wage was acceptable to them, isn't that true? And you're telling them that their decision was wrong...that they're worth more."
You see....I never said anyone was wrong....you did. Another example of you putting words in my mouth...good lawyer trick...
It's too bad that there's so many reasons why people settle for a wage that is less than they are worth....but even worse, in my opinion, is the "boss" that has little respect for labor...and pays a lousy wage because they think all employees are a burden...
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I have been picking up a potentially seismic shift in investor attitudes since the Madoff scam has been unmasked. I see investors using it as their excuse , in some cases unconsciously, to give up on investing. They are losing faith and trust!
This could have a significant negative impact on the markets. We are also losing faith in our government's ability to stop this destruction of credit. The new administration is being seen as some sort of Messiah for a short time which will lead to a pendulum effect to the downside when, of course, they won't be able to stop this deleveraging. (BTW I voted for Obama and think he will be a good president. but he's not God!)
John Bogle has spoken of the damage that has been done to capitalism in all of this. He says that capitalism depends on faith and trust. It is a big deal that investment banks have virtually disappeared; they are important to capitalism.
Over the last year the Fed has lost its confidence building ability as well. Can you believe the market is down since they threw the kitchen sink at the economy?
I have been driven to using an Irish expression to describe the situation--
"we're FOOKED !"
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Mike,
When people are fearful of losing their jobs,as so many have so far , and have seen their 401Ks and IRAs shrink, and are afraid to spend money on consumer goods, cars and housing notwithstanding big sales and low interest rates, how do you and other investment people, let alone the Fed, expect the economy or the stock market to turn around so soon?
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Steve,
I am finding an amazing dichotomy emerging in the markets and it proves why the majority always gets it wrong. People are STUCK in stocks while corporate credit is at levels that represent a centennial buying opportunity. They seem to see their only choices as stocks, real estate, or cd's.
I don't see the economy recovering for a long time because we came to depend on debt rather than income to sustain growth. This will take a long time and much pain before it ends.
But, existing corporate loans are likely to become valuable assets during the down time for stocks and the economy.
As I am sure you know, the word "credit" means "faith" and we abused the concept. I have faith we will get through this difficult time but it will be tough.
I was speaking with a Jewish friend of mine who brought up the Madoff thing to me. I said "You tell me why it happened? It seems to be something in the Jewish investing psyche that started all of this." He said " Don't go there!". But, I do think there is a cultural part to this that needs to be dispassionately evaluated. I didn't intend to offend him; I thought he might have some insight.
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I think the prevailing view in the Jewish community, from what I've read, is a sense of betrayal and hurt that he could do something like this to his "own" people and the charities who depended on his investors.
www.nytimes.com/2008/12/24/us/24jews.html?hp
As far as the market is concerned, I think it has been exposed as nothing more than greed personified. Why do the GM execs, who have lost 72Billion in the last 4 years, still have jobs and have even collected bonuses during this time?
Naked options are not an investment. Why are they even allowed? Just go to a casino or a track. The more one reads about those "mortgage packages" the more one gets sick. See the recent article on WaMu in the NY Times:
www.nytimes.com/2008/12/28/business/28wamu.html?em
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I agree with you. What happened was that plain vanilla investments like stocks and bonds got so expensive that the creative investment companies dreamt up all kinds of other investments to draw in the money.
Now, at least one of those plain vanilla investments is very cheap.
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Joe...I never said anything about 'equality" in matters of compensation....I merely stated labor adds value to the finished product and should be compensated accordingly...
How do you determine appropriate compensation?
If I start a business making chairs and I'm paying $10 for the wood, glue, etc. per chair, it takes an hour of labor to make a chair and they sell for $100 each, how much should the guys making them be paid? Theoretically the labor is adding $90 of value, but obviously if the guys are paid $90/hr that doesn't leave anything for overhead for the factory, management, sales, etc.
Let's think about two potential scenarios. In one, I've got a big mortgage on the factory, do a lot of TV ads, and have a showroom for customers to come and buy them. In the other case the factory has been paid off years ago and the reputation of the company is so good that no advertising or sales staff is needed because the customers just show up at the factory to buy the chairs (don't laugh, it works just like that for the Amish who sell furniture about 20 minutes from here)
Let's say in the first case the breakeven occurs when paying the workers $15/hr, any more than that and I'm losing money. In the other case the breakeven is $75/hr due to the almost nonexistent overhead.
If $15/hr was considered fair wages for this work in this area (because that's what all the other chair makers paid) then it would be hard to argue that I should pay anything other than $15/hr in the first case. But in the second case, do you think I owe it to the workers to pay them more, because if I paid them only $15/hr I'd be making $60 on every chair they made? Do I deserve all of that $60, only part of it, or none of it?
Think about it a bit, because the reason I have no overhead is because I paid off the factory building long ago -- I could take a mortgage out on it and use that money for something else that might be profitable to me. The reason I don't have any selling expenses is because of years in business doing right by the customer have given my company such a great reputation that the chairs sell themselves. Put another way, how much of that profit do I deserve for my terrific business skills versus how much the workers deserve for doing such a great job producing quality product that everyone wants to buy?
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I wonder if Bernie Madoff could be indicted for homicide for the death of the French Investor who committed suicide.
Wasn't one of the foreseeable consequences of the unraveling of this Ponzi scheme that some investors would lose everything and commit suicide?
On a thread full of ridiculous posts, this is the most ridiculious by a wide margin
(quote)
Actually, if criminal law were to follow tort law, and the doctrine of "forseeability" were to be applied, while probably very unlikely, it is possible to see some aggressive prosecutor attempt to try to make a name for himself with an indictment like this. Surely, Madoff would be the perfect case to try something like this.
Any criminal prosecutors here on this board want to chime in??????????
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Sadly, many extremely well compensated individuals in the financial services industry have forgotten that there is a difference between risk and fraud.
Carl:
Excellent point. In this age of entitlement when someone loses money they want to sue and then have the Government bail them out.
Minimum Investment with Madoff $1,000,000. So now we should all feel sorry for a bunch of multi-millionaires who were stupid enough to invest without knowing what they were investing in. There is a principle known as "CAVEAT EMPTOR".
When something looks too good to be true it probably isn't true.
Should Madoff go to jail for felony theft, etc. Absolutely.
Should the investors sue him to try and recover money. Absolutely
Should the rest of us bail them out. Absolutely NOT.
Best
Dave
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"There is a principle known as "CAVEAT EMPTOR".
When something looks too good to be true it probably isn't true."
Dave:
That is why I like Warren Buffett, one of today's most successful long-term businessmen----ie he strips sophisticated terms like CAVEAT EMPTOR down to what everyone can understand. In that vein his remark was; "I don't buy anything I can't understand." ;)
What I'm about to say is probably pretty touchy and perhaps somewhat off-limits in these days of extreme political correctness but a few decades ago a true best selling book was published entitled "Our Crowd". It was all about the American history of what might be called the Jewish business/aristocracy/elite. I still have it and it's a very interesting read and history.
Those people then considered to be "Our Crowd" were extremely rich, powerful but also seemingly remarkably charitable. Bernard Madoff seemed to be by all accounts perhaps one of the most impressive modern-day extensions of all the best of that world and that society including the fact he was so charitable and seemingly such a nice down-to-earth guy. He seemed to be the best indication of the success of that Jewish term generally known as Diaspora (if the word can be used as the ultimate melding in successfully of the Jewish race and faith all over the world).
What has happened here with this Madoff fiasco is going to set "Our Crowd" and the American and world perception of it back immeasurably. I can almost hear from here the gush of anti-semitic rumor-mongering going on all over the place, and that is going to be one of the true tragedies of this Madoff mess.
I just hate to see it.
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Moreover, without a note or even a dying declaration attributing the suicide to Madoff, it would be difficult to prove. There are any number of reasons, other than Madoff, that could have led to the suicide. It's pure speculation, even though plausible.. Madoff will have to live with what he has done.
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I wasn't going to post anymore on this thread, for the expression of political perspectives that we have all made ourselves known, but this angle of prosecuting for any aiding and abetting in suicide or stretching that to facilitating may have legs, it seems to me. We have seen any number of cases of illegal drug suppliers being prosecuted criminally and successfully for the deaths of their client users.
The thing about Madoff is that he is so old that what ever they charge him with, he may likely get bail and be out for an interminable time while lawyers jerk around the process. He may not live long enough to actually do time, and if and when he is sent up, it will probably be to a convict nursing home facility.
It seems that all the master mind crooks prey on their own ethnic group first or primarily. Nothing new there.
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I was speaking with a Jewish friend of mine who brought up the Madoff thing to me. I said "You tell me why it happened? It seems to be something in the Jewish investing psyche that started all of this." He said " Don't go there!". But, I do think there is a cultural part to this that needs to be dispassionately evaluated. I didn't intend to offend him; I thought he might have some insight.
Let me see if I can provide some insight into this kind of thinking, having been around many of the types of people that would have invested with Madoff for a good part of my life.
There has always been a prevailing thought in the Jewish community, particularly amongst the generation who are now in their late 60's to 80's (and older) that you invest in the reputation of the person rather than the actual investment. A typical comment would be, 'just call _______, he'll take care of you, don't worry about it.' That could related to almost anything from a repair to a service to an investment. I think much of this came out of the people raised during the Depression and who lived through WWII and the unveiling of the tragedies of the Holocaust. So it becomes easy to 'give your money to Bernie' because he's one of us and won't do anything to hurt you, you can trust him. What Madoff did is so much in opposition to the Jewish heritage it's completely off the charts of possible events, that's what made it so easy to get sucked in. Plus, of course, he had a 30 year history of 'success' in paying these predictable, excellent yields on the money invested with him.
I've always found that it's relatively easy to figure out who to trust and who not to trust except when the person in question acts in a way that is so far outside the bounds of predictable behavior that there is no way (at least for me) to see it coming. I think that's one of the root causes for so many knowledgeable people getting ruined by this mess.
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Mike G,
Well stated. I think this mentality is inherent in every community...might even be part of the definition of community.
It's obviously horrible for this to happen to the individuals and foundations within the Jewish community that demonstrated this blind faith you discuss, what amazes me is the amount of professionally invested dollars apparently lost in this deal.
Maybe those investment decisions tie back to the Jewish connection, but probably not, and those decisions baffle me.
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Tom, Mike, and Jim
You guys deserve recognition for the wisdom and balance in your most recent posts. Handily the best of the year!! :D
Unfortunately, greed frequently and corrosively replaces religion, and common sense gets buried beneath avarice. Investigation was subverted by by a (false) premise of exclusivity. Those were the sins of investing in Madoff.
Comfort superseded intellect for the likes of J. Ezra Merkin. His failure may be the ultimate embarrassment for Jews. He directly solicited and guided most of the largest and most prominent Jewish charities into the Madoff morass. Merkin, once the partner of one of Wall Street's better long-term and greed-less investors, Joel Greenblatt, was 100% guilty of the sin of laziness and comfort.
Bernie had supreme guile. Others sheer negligence and ignorance. Ultimately, I'm sure this could and would likely happen to any cultural or religious community.
Btw... As a Jew, I'm not sure who has embarrassed me more in 2008, Bernie Madoff, Alan Greenspan or Bob Rubin???
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Actually, if criminal law were to follow tort law, and the doctrine of "forseeability" were to be applied, while probably very unlikely, it is possible to see some aggressive prosecutor attempt to try to make a name for himself with an indictment like this. Surely, Madoff would be the perfect case to try something like this.
Any criminal prosecutors here on this board want to chime in??????????
As to foreseeability of suicide in the Madoff case, I'd consider that a big time stretch. It'd be hard to get around the intervening, superseding act (the guy pulling the trigger) that breaks the foreseeability chain.
Cary, I am not a criminal prosecutor, rather a Law graduand.
While we regularly hear about outrageous things that happen in the United States legal system, your idea really is a bridge too far.
If "foreseeability" were the requirement, lets consider other situations where it might be applied:
If a man kills himself after his wife leaves him, she could be indicted.
If a kid kills himself following a rejection letter from Harvard, the admissions director could be indicted.
A losing Presidential candidate kills himself; the voters of America are indicted ;D
An architect builds a course that is poorly received on GCA.com ;D
These are all examples where a life-changing event for the worse has occurred, and a person kills himself as a result. It doesn't mean others can be liable for it.
I will stick with it being the most ridiculous post. The French investor is dead because of a unilateral decision and action which ended his life. Madoff might be partially responsible in a moral sense, but not in the eyes of the law.
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Double post.
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I think Mike Golden is right on. It certainly wasn't the returns that enticed all those investment dollars, there were many hedge funds and even everyday mutual funds returning lots more than 10%. Madoff was pretty smart to keep his "returns" in that 10% area, it didn't attract much attention, just the millions of dollars from those willing to invest for cultural reasons.
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Let me see if I can provide some insight into this kind of thinking, having been around many of the types of people that would have invested with Madoff for a good part of my life.
There has always been a prevailing thought in the Jewish community, particularly amongst the generation who are now in their late 60's to 80's (and older) that you invest in the reputation of the person rather than the actual investment. A typical comment would be, 'just call _______, he'll take care of you, don't worry about it.' That could related to almost anything from a repair to a service to an investment. I think much of this came out of the people raised during the Depression and who lived through WWII and the unveiling of the tragedies of the Holocaust.
So you're saying that this was all Hitler's fault?
I don't look at this in such a complex or psycological way. I simply see a criminal. Maybe a criminal who started clean and turned dirty. But a criminal nonetheless. That's the reason they the path to hell is paved with good intentions.
Dave, that is the single most idiotic comment I have ever read on GCA, where the f**k could you come to that conclusion? I was providing some insight into the kind of thinking that permeates the older Jewish community, where you 'invest' in the person and his/her reputation rather than do any serious due diligence. I have nothing but contempt for Madoff, he has done incredible harm to the very people that trusted him. Maybe you need to read more and argue less in 2009.
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Mike, you said that his clients trust was the result of WWII and the Holocost.
So who else was responsible for WWII and the Holocost other than Hitler?
And, BTW, watch your language when you get bent out of shape. You're the one who said it, not me. The idiotic thing was thinking this had anything to do with Judiasm or the Holocost in the first place. This was about trust and criminality, neither of which knows any creed.
I'm not going to argue about this, you have no clue what you are talking about. I've listened to the kinds of people who invested with Madoff most of my life and know there was an inherent lack of trust in financial institutions because of events such as the Depression, WWII and the Holocaust so investing with someone 'who can be trusted' made them an easy mark. You will of course disagree and argue this point forever but this will be my last response.
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Dave,
As an Irish catholic guy that has had a number of Jewish business partners and a Jewish father-in-law from the era that Mike Golden speaks of, I think he is right on the money with many of Madoff's early investors. Madoff then involved into other things as it got bigger, but I don't think Mike was focused on XYZ hedge fund guy.
Stepping out now,,,,,,,,,,
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And that goes for Irish Catholics, too, unless all of our March 18th hangovers are all St. Patrick's fault.
I really do hate St Patty's Day. The NYC parade ends on 86th Street near my place and people basically throw-up all night long in our neighborhood.
I blame my wife for keeping me in this golf starved city!!
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Btw... As a Jew, I'm not sure who has embarrassed me more in 2008, Bernie Madoff, Alan Greenspan or Bob Rubin???
Steve
You forgot Madonna.... ;)
Rich
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Dave, Since Mike likely wont respond again, I can tell you my impression of what he wrote... It's a cultural thang, resulting in world of mouth recommendations. Implying that people are more likely to trust the word of someone who they know and consider more savvy than they are, opposed to the advertisements or marketing campaigns heaped upon us all.
I don't believe he was saying that these outside factors were at fault, but were instrumental in the development of that cultural thang.(a mindset if you will?)
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Adam,
You are right. From today's WSJ:
While social feedback loops are an obvious contributor to understanding the success of Ponzi and other mass financial manias, one also needs to look at factors located in the dupes themselves. There are four factors in my explanatory model, which can be used to understand acts of gullibility, but also other forms of what I term "foolish action." A foolish (or stupid) act is one in which someone goes ahead with a socially or physically risky behavior in spite of danger signs or unresolved questions. Gullibility is a sub-type of foolish action, which might be termed "induced-social." It is induced because it always occurs in the presence of pressure or deception by other people.
The four factors are situation, cognition, personality and emotion. Obviously, individuals differ in the weights affecting any given gullible act. While I believe that all four factors contributed to most decisions to invest in the Madoff scheme, in some cases personality should be given more weight while in other cases emotion should be given more weight, and so on. As mentioned, I was a participant -- and victim -- of the Madoff scam, and have a pretty good understanding of the factors that caused me to behave foolishly. So I shall use myself as a case study to illustrate how even a well-educated (I'm a college professor) and relatively intelligent person, and an expert on gullibility and financial scams to boot, could fall prey to a hustler such as Mr. Madoff.
Situations. Every gullible act occurs when an individual is presented with a social challenge that he has to solve. In the case of a financial decision, the challenge is typically whether to agree to an investment decision that is being presented to you as benign but may pose severe risks or otherwise not be in one's best interest. Assuming (as with the Madoff scam) that the decision to proceed would be a very risky and thus foolish act, a gullible behavior is more likely to occur if the social and other situational pressures are strong.
The Madoff scam had social feedback pressures that were very strong, almost rising to the level of the "Donators" cult around the Drake inheritance fraud. Newspaper reports described how wealthy retirees in Florida joined Mr. Madoff's country club for the sole reason of having an opportunity to meet him socially and be invited to invest directly with him. Most of these investors, as well as Mr. Madoff's sales representatives, were Jewish. The fact that Mr. Madoff was a prominent Jewish philanthropist was undoubtedly another situational contributor.
http://online.wsj.com/article/SB123093987596650197.html
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David Schmidt,
I will make one more probably futile attempt to explain this to you.
My original comment was a response to Mike Malone's request for an explanation of why Jews could invest with Madoff and take him at face value since his Jewish friend wouldn't provide the explanation. I provided an accurate explanation based on the culture and my life experiences. You are welcome to accept it or take issue with it, that is your choice.
No one has condone Madoff's actions nor has anyone made any indication that someone should not take personal responsibility for their own actions. I had a good friend rip me off 15 years ago for almost $200,000 with virtually the same pretext and have never blamed anyone but myself for my stupidity, as I am sure most of the people who lost money with Madoff are doing today. They will pay the price for the rest of their lives, there is nothing that can be done to change that.
The topic of this thread is a $50B fraud perpetrated through relationships at a variety of country clubs, almost all of which are predominantly Jewish clubs. One of them mentioned, Seawane, was my in-laws club for 25 years so I thought responding to Mike Malone's question was relevant. I am sorry you have chosen to misinterpret these comments out of context, particularly since several other knowledgeable members of GCA have agreed with me.
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And now it is the liberal media going after the Irish Miracle, The New York Times, Sunday Business section putting blame on the entrepreneur, with little mention of the Irish government which announced a $7.5 billion bank bailout taking majority stakes in the country's banks, following a guarantee on all bank deposits.
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prior to the Holocaust, David, Jewish money, property, businesses, and assets were all confiscated by the 3rd Reich. If you don't think that influenced the thinking of the generation brought up during this period and made them less trustful of both government and financial institutions then you have sadly missed the point. I know you will continue to belabor this point and ignore the context of my original remarks but enjoy yourself, I have a tee time this afternoon.
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Thank you Steve Shaffer for posting that very illuminating and I think important article. Perhaps everyone going into an industry that has a fiduciary responsibility, and everyone entering a relationship with a fiduciary, should read that article because it is an insight into the psychological workings of the art of the scam. It is a human emotional roadmap to how the process of being swept into the act or conspiracy of defrauding or being defrauded happens.
I also think it is what I've been driving at for ad infinitum in all these argumentative dust-ups with Dave and some others, when I keep going back to a concept of a new ethic that needs to take hold in this country. Gullibility, blind faith in the executive classes by shareholders (or not enough shareholder or democratic control in voting their compensations rather than administration by a cabal of inbred compensation committees, and lack of transparency and oversight) are the factors that make for situations that spawned Madoff, and so many other abuses of the investor class. The same process works in the political arena, IMHO. A collective ethic to be aware and respect each other within the social value framework of old fashion honesty and compassion is needed.
'How quiant'... perhaps the Darwinian market shall rule, and win at all costs mentality crowd will say, as these scandals keep popping up and all manner of arguments will naysay that the remedy is in reform of our collective ethical natures.
I have understood the heart of Mike Golden and other's comments and observations from the start regarding great historical events (like the depression, WWII carnage upon whole classes and ethnicities, and the actual jewish holocosts) that move a culture or ingrain a mindset for generations. Masses of people in various social, ethnic, political, and economic groups or classes become vulnerable to being preyed upon by the manipulators who always use these communal relationships shared in those crisises with a cultural group to capitalise that emotional, social peer confidence collective behavioral system for unethical advantage, political or financial.
Dave, I can't understand how you keep rising up to these right wing argumentative positions that rely on prescriptions that have and are clearly failing the people and you seem desparate to challenge so many people's real life experiences. Mike Golden knows of what he speaks from real life. By the same token, I don't think you have enough sympathy for the real life situations of so many people that are in serious trouble in this country for reasons of what was an ongoing ethical failure whereby you will revert to denial and defense of what was a governing and financial/economic policy driving mindset that is utterly failed. I just don't think that status quo on those values will do at this point...
thus in this thread, your insistance on calling a question on Mike about cultural and collective psychological effects of what you have wrongly focused on in the micro sense of the "holocost" that Mike used in the macro sense, is somewhat rediculous, IMHO.
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Btw... As a Jew, I'm not sure who has embarrassed me more in 2008, Bernie Madoff, Alan Greenspan or Bob Rubin???
Steve
You forgot Madonna.... ;)
Rich
Rich,
Nah!! She got what she deserved...Mr. May.... A-Rod! ;D
Willie Dow,
With all due respect, the "liberal media NYT" places the real blame not at the feet of Mr. Dunne (though his is the "name & face"), but instead on the doorsteps of the Irish Government and banks. A close read reveals it was their specific inability to measure or moderate risk that threatens. It uses the developer Dunne to illustrate just how Ireland misplaced their long-term prosperity with short-term aspiration (a mistake, btw, that we on this side of the pond practice regularly!).
It is in today's issue of that bastion of liberal, no-good, downright threatening (sic) journalism that the best observationalist of today's financial world, Michael Lewis teams up with a very, very smart guy (biased as he is a friend) David Einhorn to pen a rather incredible Op-Ed piece, "The End of the Financial World as We Know It" (hum the REM chords accordingly). Unlike so many other scribes', Lewis & Einhorn actually make solid recommendations for repairing our broken financial world, all based on very real common sense (might be difficult for U. Chicago-school free-marketer's to stomach).
Regardless of your political or capitalistic bent, this should be required reading for everyone who wants to really understand the macro and micro of today's financial morass. Enjoy!
http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html
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Show me one person, old or young, actual survivor or relative of survivors, who thought to themselves "hey, I gotta give money to Bernie because of the Holocost". Just one. It doesn't exist. It's an after-the-fact pseudo-rationale, at best.
I doubt they thought "I gotta", they thought, "I want to, because he is part of me and us and we all know what we went through, he'd never swindle me". Bernie preyed and capitalized on that notion. That is real, Dave.
I don't know your wife's situation in terms of what class she came from in Iran. Was she from the small ruling class that had everything locked up and cornered on the market, or the vast underclass that had nothing? How big or important was the bourgeoise. My limitted understanding is that there was no real democratically loving middle class there, just a fascist theocrocy leaning radical crowd and an arrogant wealthy crowd. I may be wrong...
I do think or have the impression that much of your defensive or argumentative go-to nature is right wing and culturally developed mindset, that always keys up on buzz words like holocaust, liberal, regulatory reform, taxation, transparency, shared social burden sharing, etc. We can always count on you to pop up and try to cry down any notion that in all those areas, where the ramifications of status quo are clearly not working, you'll keep arguing that they should work "theoretically" - if only all those that are victims would only just go away. Well, they aren't going away...
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Steve: You're "close-read" analysis was six lines wide on a page and one half discussion about Mr. Dunn. Where is evidence of the corrective forces the liberals failed to create while opening the door to chaos ?
They wanted a Bush failure, and they did us in accordingly. How's that for a "Ponzi Scheme" ?
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I don't know your wife's situation in terms of what class she came from in Iran. Was she from the small ruling class that had everything locked up and cornered on the market, or the vast underclass that had nothing? How big or important was the bourgeoise. My limitted understanding is that there was no real democratically loving middle class there, just a fascist theocrocy leaning radical crowd and an arrogant wealthy crowd. I may be wrong...
You are wrong.
No matter if one is rich, poor or in between, being deprived of ones assets, no matter how big or little, is a searing experience. It is one thing to have it done by the State but done by a trickster is the investors gullibilty and fault.
Bob
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I don't even know why I am bothering to post anymore about this, but what I said the first time was that many of the types of people who invested with Madoff did so in large part because they trusted him and distrusted financial institutions. I attributed at least part of this distrust to the DEPRESSION, WWII, and the Holocaust. If you have never spoken with or listened to someone brought up during the Depression then there can be no understanding.
The response was not a question, it was an accusation that I was blaming Hitler for people losing money with Madoff, which is complete bs. If you can't understand how someone's value set is influenced by significant outside events in your lifetime then we live on different planets, my life and attitudes were influenced in major ways by the assasination of JFK, to a lesser extent RFK and MLK, Jr., the riots during the '68 Democratic convention, the Vietnam War, and 9/11. That value set made it easy for them to 'give it to Bernie' because they could trust him. It doesn't mean it was the right thing to do and doesn't allow them to blame their backgrounds for what happened. IT IS JUST AN EXPLANATION OF HOW SOME OF THEM COULD GET SUCKERED IN, PERIOD.
Madoff is a crook who deserves to be punished severely, I hope all of can at least agree about this and put this to rest.
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I don't think Irish-Americans have any particular cultural mores that affect their investing habits. But, I sense that there is more of a cultural thing going on in the Jewish community that made it vulnerable to this scam.
Some ideas have been explored here about trusting certain people. That makes sense.
I wonder if the consistent returns were more attractive to this community of investors as well.
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Btw... As a Jew, I'm not sure who has embarrassed me more in 2008, Bernie Madoff, Alan Greenspan or Bob Rubin???
Steve
You forgot Madonna.... ;)
Rich
Rich,
Nah!! She got what she deserved...Mr. May.... A-Rod! ;D
Willie Dow,
With all due respect, the "liberal media NYT" places the real blame not at the feet of Mr. Dunne (though his is the "name & face"), but instead on the doorsteps of the Irish Government and banks. A close read reveals it was their specific inability to measure or moderate risk that threatens. It uses the developer Dunne to illustrate just how Ireland misplaced their long-term prosperity with short-term aspiration (a mistake, btw, that we on this side of the pond practice regularly!).
It is in today's issue of that bastion of liberal, no-good, downright threatening (sic) journalism that the best observationalist of today's financial world, Michael Lewis teams up with a very, very smart guy (biased as he is a friend) David Einhorn to pen a rather incredible Op-Ed piece, "The End of the Financial World as We Know It" (hum the REM chords accordingly). Unlike so many other scribes', Lewis & Einhorn actually make solid recommendations for repairing our broken financial world, all based on very real common sense (might be difficult for U. Chicago-school free-marketer's to stomach).
Regardless of your political or capitalistic bent, this should be required reading for everyone who wants to really understand the macro and micro of today's financial morass. Enjoy!
http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html
Steve, did you say "enjoy?" You gotta be kidding!
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Don't forget Joe Nocera's must read article in the Times Magazine entitled "Risk".
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There has been much discussion among our friends over the Madoff Fraud and the majority feel that "Greed" was the number 1 ingredient.
One of my friends was turned down twice by Madoff.
My sister was turned down.
Another friend passed in 2000 because he was making more in the market that year than Madoff.
Those are 3 people who escaped without a scratch, we know lots that lost everything, including their houses and cars.
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It amazes me how many otherwise intelligent individuals abandoned a most basic principle of investment, diversification, and have lost everything as a result.
The people I really feel for are the beneficiaries of charities who lost everything. Again, poor management by the trustees, but innocent people will suffer.
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I suspect many of the charities hurt by Mr. Madoff and his investing prowess, were also the beneficiaries of much of his personal largess and felt compelled to invest because of these contributions.
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Shivas; You know I don't usually post on topics like this. First it is clearly outside of the scope of this board and will almost inevitably lead to hard feelings. Second, it touches on areas where I have some professional competence as I have been retained to unravel Ponzi schemes from time to time over the last 25 years and I am concerned that comments in a forum such as this may be used to the detriment of a client in some present or future proceedings. Finally, with the recent turn in the conversation, my ethnic/religious background is impacted and, candidly, this is not a forum in which I generally choose to discuss matters of that nature.
However, because of what I view to be some significant distortions in your argument I feel it necessary to respond. To get to the root of the problem let me make the central premise clear; no one has suggested that the Holocaust (incidentally, while misspellings on the internet are generally excusable, the consistent misspelling of this event should be corrected) is the "root cause" of Jewish investors reliance on Madoff nor has anyone suggested that those investors are in anyway less responsible for their actions because of it.
The discussion was started by Tom Paul's reference to the book "Our Crowd." While some of his references to the book are flawed (Tom the term "diaspora" has a very different meaning than that which you attributed to it) and while some of us might disagree with much of what the author suggested, even though our families were not in that social strata, Tom's general summation of the points contained in the book was largely accurate. Thereafter Mike expanded by seeking to explain some of the factors that might have led to a mindset held by a certain segment of investors which would lead them to place inordinate trust on an individual such as Madoff and to suspend much of the ordinary caution that one might suspect they ordinarily exercised in financial affairs. Among the factors cited for these somewhat older members of my faith was a whole panoply of events impacting on the Jewish people, foremost of which was the Holocaust, without a doubt the single largest influence on the "psyche" of our people in the 20th century. At no point did Mike or anyone say that this mindset absolved any of the investors from their responsibility for having been duped. It was simply an effort to explain how so many seemingly smart and successful people could find themselves victims.
Ordinarily I don't indulge in this type of "pop-psychology" from afar. I think much of what Mike and others have said is interesting and may have some validity. But I think there was much more at work here and none of this explains Madoff's ability to involve large institutional investors. However, as I stated at the outset, I am not here to discuss the substance of the Madoff affair. My sole purpose is to suggest that your exercise in sophistry is treading in very sensitive areas. As you know, I am not afraid to go there in person or in print. But when you do, you should be more careful to accurately state the views of the "other side". Consistent misrepresentation of the other sides argument can lead readers to wonder why you want to continue the argument. Sometime its fun to yank people's chain. But not on a topic like this.
By the way, I agree with your analysis on the felony murder issue. Way too big of a stretch. As to losing the "house and car", some people overextended and became illiquid. Even if this had been a legitimate investment that would have been a bad strategy but sometimes people do unwise things. Like post on this topic.
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Shiv; I've said enough. If you want to talk offline, call me or we'll have lunch. Sometimes it is wisest to back off. If you still think that Mike suggested that any of the factors he cited absolved anyone of responsibility for their acts I suggest you reread his posts.
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prior to the Holocaust, David, Jewish money, property, businesses, and assets were all confiscated by the 3rd Reich. If you don't think that influenced the thinking of the generation brought up during this period and made them less trustful of both government and financial institutions then you have sadly missed the point.
Mike,
I used to think that, however, if that were true, you'd never see a Mercedes or a BMW in the parking lot of any of the Jewish country clubs where Madoff solicited investors.
When I've brought that issue to the attention of good friends of mine, they ask me if I've ever been to Israel and seen what cars are being driven.
I'm still at a loss to understand the disconnect.
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prior to the Holocaust, David, Jewish money, property, businesses, and assets were all confiscated by the 3rd Reich. If you don't think that influenced the thinking of the generation brought up during this period and made them less trustful of both government and financial institutions then you have sadly missed the point.
Mike,
I used to think that, however, if that were true, you'd never see a Mercedes or a BMW in the parking lot of any of the Jewish country clubs where Madoff solicited investors.
When I've brought that issue to the attention of good friends of mine, they ask me if I've ever been to Israel and seen what cars are being driven.
I'm still at a loss to understand the disconnect.
Patrick, it's generational, my parent's generation, who are mostly gone, had a distinct aversion to anything German. Robert Klein even does a comedy bit about it on an HBO special regarding the time he brought his German girl friend over to meet his parents in the mid 60's. I believe it's the whole chapter of a book he wrote several years ago. The younger generations, which would be anyone from age 65 and less, clearly don't care nor do the current generations of Israelis. I can't tell you how many times I heard my father in law, who was a member of Seawane for many years, say he would never buy a German car and would complain about anyone in the family who even mentioned it.
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And why do Americans buy Japanese cars in such numbers? After all, they sneak attacked/bombed us.
Many of my relatives did not care for my VW Beetle. It created conversation within the family.
Many Jews did not buy Ford products because of Henry Ford's virulent anti-semitism.
As Mike has said, it's generational.
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Steve,
That was my point regarding Mike's post on cultural values.
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Good article in today's NYT:
THE GRAND FALLOON Kurt Vonnegut coined this phrase in “Cat’s Cradle,” and never did it have a more devastating application than in the Madoff scheme. In Vonnegut’s world, a grand falloon was a false association mistaken for friendship — two people from the same town, same university, same company meet somewhere and believe that coincidental connection has significant meaning. It doesn’t, no more so than belonging to the Palm Beach Country Club or the Fifth Avenue Synagogue did for those who used their proximity to Mr. Madoff to coax him into taking their money.
This is a crucial point particularly in opaque investments, from hedge funds to private equity partnerships: just because someone is a good golfer does not mean he should be trusted to invest your money. Private bankers are forever telling their clients not to try to get into someone’s hedge fund just because you enjoyed their conversation on the course — or, worse, want to play with them again. Like taking care of your health, picking an investment adviser should be done with the utmost rigor. However much you’ve amassed over a lifetime doesn’t mean you can be any less careful: what took decades to build can disappear over night. Just look at the United States stock market: six years of gains were wiped out in 2008.
www.nytimes.com/2009/01/06/your-money/06wealth.html