OT: do you think Bernie Madoff will sleep well tonight?

[eddief]

sorry. Just to fing weird for me to fathom. Could not contain my incredulousness. Is that a word? Why don't we have public whippings? I'd pay for that one.

[Elefantino]

Depends if Guido the Shiv is sleeping on top of him or not.

[rwsaunders]

Did Mike Tyson lose money with Bernie? If so, I found the perfect roomate for him.

[Charles M]

Damn...

That would be good.


"Thhqueel like a girl!... How do you like thith ponthy thkeem Bernie?!"

[dogdriver]

"Do you want to be the husband, or do you want to be the wife?"

What a dick.

[Len J]

Another Overstated, Press.....hate mongering story.

Having been involved in the forensic part of these kind of things a few times, and having read quite a bit about the Madoff Ponzi Scheme, I will predict that, when all is said and done, the actual losses on this fraud are significantly smaller than the $50 billion that the press talks about. In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victimms were everyones neighbors and friends. How does that happen?

The other thing that I will be interested in when the history is written on this is how much of the the fund balances that people are claiming as losses are the erroneous cumulative "gains" and how much is the original amounts the investors put in. Its a big difference if someone put $6 million in 12 years ago, and because of the 12% "earnings" madoff was claiming, they "should" have $65 million. So if, when all was said and done, they receive a final settlement of $20 million, have they "lost" $45 million, or "gained" $14 million?

Finally, will the bankruptcy court decide that distributions of fund balances for the 90 days prior to the middle of December filing were preferential payments and therefor, will the court try to recoup these, recognizing that it was the market crash in the middle of Sept, that precipitated the fund withdrawls that caused the house of cards to collapse? If they do, (as long as the attorneys don't get fed too much), then most investors will end up getting a large part of their original deposits back (although the fictious gains will be gone). If that happens, I'm sure it won't get the press that it's getting now, nor will it generate the emotion the current story does.

IMO.

Len

[Ahneida Ride]

Banks practice fractional reserve. A Ponzi scheme if there ever was one.

Bernie Ponzi scheme gets exposed and he cops a plea ...

Banks Ponzi Scheme gets a bailout at the expense of US taxpayers.

Moral: Always practice "Legalized" Counterfeiting.

[eddief]

I live near 3 bridges. All 3 are for sale. My paypal address is the same as my email. My tongue is bleeding cause I just bit it.

[Len J]

If it is not $50 billion, but only $5 billion, what the hell is your point?

read my post if you want my point.

Again, what if investors get back 100% of what they actually put in (which isn't unlikely).........even if it's $15 million less than their statement says, is it a real loss?

Len

EDIT: BTW, I am not defending what he did...I think it's deplorable. Rather, I think that the facts don't support the sensationalization of the event.

[rwsaunders]

Here's a list just of individuals and foundations which were affected in Massachusetts alone. This guy is a big-time smack, regardless of the amount that was swindled.

http://www.bizjournals.com/boston/stories/2009/02/02/daily60.html

[Birddog]

Most of the accounts that I have read, that I can recall, have stated that Mr and Mrs so and so invested X amount and lost it all. There was no mention of fluffed up profits. Also several charities were totally wiped out, I wouldn't call them "originally rich"or large financial institutions. There were plenty of smaller fry who were invested in Madoff's scheme by a larger 3rd party. I personally would like to see he and all involved wiped out, just like the small fry who were unwitting victims.

Birddog

[Len J]

Most of the accounts that I have read, that I can recall, have stated that Mr and Mrs so and so invested X amount and lost it all. There was no mention of fluffed up profits. Also several charities were totally wiped out, I wouldn't call them "originally rich"or large financial institutions. There were plenty of smaller fry who were invested in Madoff's scheme by a larger 3rd party. I personally would like to see he and all involved wiped out, just like the small fry who were unwitting victims.

Birddog


No one knows yet who was wiped out. The final settlements aren't even close yet.

Most of the "Loses" reported are equal to the value of the last statements they received from the funds. Those statements included cumulative "earnings" that were totally fictious. It's part of what the courts have to get through.

I'm not saying no one lost...I'm saying that reported losses are dramaticially overstated. And a loss on an investment...who would have thought it was possible?

[SamIAm]

Most of the accounts that I have read, that I can recall, have stated that Mr and Mrs so and so invested X amount and lost it all. There was no mention of fluffed up profits. Also several charities were totally wiped out, I wouldn't call them "originally rich"or large financial institutions. There were plenty of smaller fry who were invested in Madoff's scheme by a larger 3rd party. I personally would like to see he and all involved wiped out, just like the small fry who were unwitting victims.

Birddog

Agreed. I still can't get over this thinking that if it were just rich people then its not such a big deal! Is there really this much wealth envy in todays society? What if he just took out Bill Gates and Warren Buffet? Would that be ok?

[eddief]

i was trying to be conscious of the community here. i had no idea it might get contentious. i hear bernie madoff prefers campy and, while his bank account is huge, his stem is obviously way too short.

[Len J]

i was trying to be conscious of the community here. i had no idea it might get contentious. i hear bernie madoff prefers campy and, while his bank account is huge, his stem is obviously way too short.

Well hell...if you wanted a Bernie madoff hanging thread....no reality allowed...why didn't you say so? :confused:

I'll bow out now and you all can have a verbal lynching. That's what mobs do don't they. :rolleyes:

Len

[Birddog]

Len, I don't think anybody is disagreeing with the fact that there maybe overstated losses. I for one, have seen several accounts where folks simply said they invested X amount and it was all gone. Officials investigating the fraud, have stated publicly that the almost 65 billion $ figure probably does include so called profits. I'm willing to bet the total loss will end up being in the 50B$ area, after all, that's what Bernie the Turd said himself. Where do you thiunk hecame up with that figure?

I will say it again, I hope that the Madoff's are left penniless, just like some of their victims. Maybe some of those victims will recover some of the $, but many are right now forced to liquidate assets, just to stay afloat while this pans out. This is occurring while Bernie and wife are in their Penthouse! I hope Mrs Madoff can still make a tuna casserole. Sure the coverage has been sensationalized, but the bare bones underlying the sensationalism are still pretty freaking grim.

Birddog

[Louis]

Elie Wiesel (sp?) was on "On Point" on NPR yesterday and I was surprised by how bitter he was. Given what he's been through you'd think he'd be able to put this in perspective, but I guess when you loose a lot of money, that's not easy. (I have no idea how much he lost.) The NYT has also covered the ethnic / religious aspects of the story. Many of Madoff's clients were Jewish, and a feeling of betrayal might help explain Wiesel's strong emotions. (Not that any particular ethnicity, religion or lack of religion should have a corner on the honesty or cupidity market.)

Louis

[Sandy]

I think you are simply emphasizing different aspects of the same story- One the deplorable immorality of what he did and the other a more analytical approach emphasizing that one really does not know how much money was lost, who lost what, and how much each investor will receive, nor what loss even defines. Len also questions the sensationalism of the story.

I opt for the first emphasis, realizing that we did not know the particulars and agree the final loss numbers will be significantly less than reported thus far.

Not sure what the forensic side of such an event is, but the emotional side and the genuine fear that some people must have is clear to me. One side is a quanitative analysis and the other side is human suffering.


Sandy

[Charles M]

At it's best pie in the sky / wishfull thinking outcome it's still horrible...


I would guess that if one of your family members (or several because who doesn't talk about a "great opportunity"), the thought that they lost years worth of savings wouldn't be cosidered "hype" and the bashing Madoff is taking wouldn't seem very unfair...



This ****bird had been hyping hot air to rob people.


And it's the press and public that are considered to be over stating?




How silly.

[Sandy]

No one knows yet who was wiped out. The final settlements aren't even close yet.

Most of the "Loses" reported are equal to the value of the last statements they received from the funds. Those statements included cumulative "earnings" that were totally fictious. It's part of what the courts have to get through.

I'm not saying no one lost...I'm saying that reported losses are dramaticially overstated. And a loss on an investment...who would have thought it was possible?

Of course people lose money in investments. I sure have this past year. But that is hardly the point. Losing money in an investment because of poor choices or other factors is one thing. But losing money because the one handling your investment is a liar and a thief makes your statement about loss on an investment rather hard to even understand.

You do not know how much anyone will get back. There is the possibility that people will lose all (or most) of what they invested, be it individuals, charities, or whatever. Do you not realize the emotional turmoil and stess that some people must feel because of a thief?? Some of that money is basically all that some people had.


Sandy

[andy mac]

Order and smash (really) a Bernie Madoff doll.

http://www.minimemodelworks.com/content/news.php?n=2

:beer:

[Ray]

I think you are simply emphasizing different aspects of the same story- One the deplorable immorality of what he did and the other a more analytical approach emphasizing that one really does not know how much money was lost, who lost what, and how much each investor will receive, nor what loss even defines. Len also questions the sensationalism of the story.

I opt for the first emphasis, realizing that we did not know the particulars and agree the final loss numbers will be significantly less than reported thus far.

Not sure what the forensic side of such an event is, but the emotional side and the genuine fear that some people must have is clear to me. One side is a quanitative analysis and the other side is human suffering.


Sandy
Wise words Sandy. Len's right that this, like most things, its likely waaaaay more complicated than the press will ever be able to explain (and they wouldn't want to if they could). But there's a difference between investment losses and being ripped off. There's a local woman to our area who invested all of her $7 million inheritance after her husband died with Madoff, on a tip from her brother or something. It was generating income of about half a million a year and she was prepared to live out her old age very comfortably. She got the income for a few years, but now its all gone. No income, nothing to fall back on. She working two jobs after never having worked a day in her adult life. Was she an idiot for putting all of her money in one place. Oh, yeah, big time. Is it easy not to feel sorry for someone with that kind of money to begin with - on one level, sort of.

I've lost some equity in the past year like everyone has, but, as Sandy says, there's a big difference between losing it because investment is a risky endeavor and losing it through willful fraud. BIIIIIIGGGGG difference. And when you're taking down Ellie Weisel's foundation, I think there's a particular slot in hell reserved for you.

And part of the emotional appeal of this story is, "there, but for the grace of god, goes me". Its easy to pat myself on the back for keeping my investments well diversified and losing a whole lot less last year than a lot of folks did. But its mostly based on getting really good advice over many years. I'd like to think I'd never fall for a scam like that. But if someone I really trusted (wisely or not) told me about an investment that was doing THAT well and I could get into it, I don't presume I'd be wise enough to stay out. Greed is a powerful force and the spigot of easy money is pretty tough to turn off when its running BEFORE it goes dry on its own. I guess we can all relate in that we can imagine ourselves in that same situation pretty easily. Which makes it an emotional issue.

-Ray

[Climb01742]

as with most things, there is truth in what everyone is saying.

also on NPR, i heard of a husband and wife in fla who "lost" $1.6mil with madoff. that was their entire retirement. she had been investing with madoff for over 20 years, adding yearly contributions and reinvesting "profits".

she had gotten, supposedly, 10% returns each year. so clearly much of her $1.6mil was false paper profits. but that still leaves three things she and her husband lost:

a lifetime of actual earned money she contributed to her retirement fund (maybe $250-400k?).

by his fraud, madoff persauded her to not invest elsewhere. so she "lost" the opportunity to put that $250-400k somewhere where it really would have grown.

lastly, she believed she had "earned" a safe secure retirement by doing what we tell everyone to do: work, save, invest, then retire happily. she thought she was following "the rules".

but there is one major point where i'm in len's camp. a key tenet of any investing is diversification. anyone who put all their life savings with_one_investment/investor is a fool. that foolishness cost some dearly. that doesn't in the least excuse madoff. but if investors had been properly diversified, at least that would have minimized their loses to fraud. i'm surprised this side of the story hasn't been stated more.

[Sandy]

Agreed. I still can't get over this thinking that if it were just rich people then its not such a big deal! Is there really this much wealth envy in todays society? What if he just took out Bill Gates and Warren Buffet? Would that be ok?

No doubt there are people who are envious of others who are wealthy. Too often those people do not understand how much effort it took most of those wealthy people to obtain that wealth and to keep it. But many people focus on the less than wealthy people in this situation because the likelihood of most of those people losing all they have in a situation like this is much more likely than the genuinely wealthy. It would be almost impossible for Bill Gates and Warren Buffet to be taken out in the scenario in which we are talking- too many tangible assets- stock ownership, real estate, interest/dividend, stock options, other investments/ownership, homes, automobiles,....who knows what. In addition, more people can relate to less than wealthy people than to wealthy people, because most people are not wealthy.

I operated a small family owned wholesale business. There was a particular customer who always called me rich because he saw me selling a decent amount of product. The fact that I was in a remarkably competitive business in which it was difficult to achieve a 10% gross markup was meaningless to him. You did business and had inventory , so you had to be wealthy was his belief almost.....


Sandy

[Ray]

but there is one major point where i'm in len's camp. a key tenet of any investing is diversification. anyone who put all their life savings with_one_investment/investor is a fool. that foolishness cost some dearly. that doesn't in the least excuse madoff. but if investors had been properly diversified, at least that would have minimized their loses to fraud. i'm surprised this side of the story hasn't been stated more.
Absolutely. Anyone who puts all their eggs in one basket is just asking for trouble. PARTICULARLY if that basket is too good to be true.

But that's something that "investors" know. But there are a LOT of people in the market, through 401K and similar vehicles that just thought they were contributing some sort of retirement fund at work. No idea about any of it really, had all of their money in equity based funds because that's what somebody advised them in the '80s or '90s, and they just lost huge amounts of what was probably not a huge amount to begin with. While many of the Madoff investors were big enough that they should have known better, there are probably quite a few small investors who just got a good tip from a family member and put their whole retirement of, say, a few hundred thousand, into his 'fund'. And lost everything.

On the one hand, its a 'buyer beware' world and you can't feel too sorry for someone for not making informed decisions. But I feel sorry for them anyway. How many purchases have you and I made in areas we knew nothing about and didn't WANT to know anything about just based on someone's word who seemed to know better than us? A lot of people feel that way about money. And they're totally frucked.

-Ray

[johnnymossville]

probably sleeping like a baby,... up all night screaming and calling for mommy.

[93legendti]

The penalties for stealing from rich, poor or "middle class" are the same.
The sentencing guidelines for stealing from rich, poor, or "middle class" are the same.
Stealing money is illegal.

Losing money on an investment is NOT the same thing as someone stealing money from you.

"In addition, the only people impacted by the fraud will be the originally rich and or large financial institions."

(This is as abhorent as saying you can not rape a prostitute.)

Besides being false, this is a scary class warfare argument.

Entire charities were wiped out by Madoff. Charities that impacted the poor and middle class. Stealing from financial institutions costs everyone in the long run.

Do people seriously think stealing money from a poor person is worse than a rich person having his/her entire fortune stolen? Are these 2 acts not worthy of the same contempt, punishment?

[Ray]

Do people seriously think stealing money from a poor person is worse than a rich person having his/her entire fortune stolen? Are these 2 acts not worthy of the same contempt, punishment?
Did anyone say that? Stealing, defrauding, bilking, swindling, whatever you want to call it is wrong, Madoff fully deserves the penalty he's going to pay, and everyone who was ripped off is a victim. I feel slightly more sorry for the unsophisticated investor (more often those with less to begin with) only because those who were experienced should have know better than to put themselves in that position. But no moral relativism about the crime involved.

And anyone who knowingly rips of Ellie Weisel's charitable foundation is fully entitled to a special place in hell, IMHO.

-Ray

[Len J]

as with most things, there is truth in what everyone is saying.

also on NPR, i heard of a husband and wife in fla who "lost" $1.6mil with madoff. that was their entire retirement. she had been investing with madoff for over 20 years, adding yearly contributions and reinvesting "profits".

she had gotten, supposedly, 10% returns each year. so clearly much of her $1.6mil was false paper profits. but that still leaves three things she and her husband lost:

a lifetime of actual earned money she contributed to her retirement fund (maybe $250-400k?).

by his fraud, madoff persauded her to not invest elsewhere. so she "lost" the opportunity to put that $250-400k somewhere where it really would have grown.

lastly, she believed she had "earned" a safe secure retirement by doing what we tell everyone to do: work, save, invest, then retire happily. she thought she was following "the rules".

but there is one major point where i'm in len's camp. a key tenet of any investing is diversification. anyone who put all their life savings with_one_investment/investor is a fool. that foolishness cost some dearly. that doesn't in the least excuse madoff. but if investors had been properly diversified, at least that would have minimized their loses to fraud. i'm surprised this side of the story hasn't been stated more.

Once again, I'll reiterate that I think what madoff did was deplorable. I think he should & will spend the rest of his life in jail. I think he should and will forfeit most of his assets to either attornies or the court...that is as it should be. My beef in this whole thing is the sensationalism and exagerration and the resultant mob mentality. We all benefited over the last several years by the very things that allowed Madoff to succeed for so long...and now we are all paying for it. He/this issue seems to be a great focus for our anger over this (and the press is fanning the flames).........he is an outlet & I think that is both unhealthy and improper. Obviously, YMMV.

But I also think the investors have an equal culpability. In addition, as I've said repeartedly, everyone is assuming, and acting as if, they have lost everything.............IME, that is and will be far from the truth. I understand and empathize with SOME of the emotions the investors are feeling, I really do, but I think they are way overstated....and as in most things press related, the sad penniless widow is capitalized on, while the majority of the investors are large instiutions, who should have known better.

I wonder how much of what people are claiming as losses, would have been lost in the market anyway between the high of 2007 and December?....I suspect a large portion of it.

One other point that no one is talking about (because a.) it doesn't sensationalize the story & b.) they will & have been keeping their head down) is those people that did get their money out, or have had significant withdrawls .........no one is asking them (other than the bankruptcy court) to give their fictious "Gains" back.

One final poiint.........my comments seem to be interpreted by some as Rich people envy.........Nothing could be further from either my belief nor my intent.

I said "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victims were everyones neighbors and friends. How does that happen?" You will notice, that unlike several of the interpretations in this thread, there is no judgement in that sentance, rather, the only thing being expressed is surprise at the reaction. Let me expand on this issue a little bit. There is a tremendous amount of class anger IMO, generated over the last several years, as a higher and higher concentration of wealth has been retained by a smaller and smaller portion of the population. You can get a sense of this by visiting political forums that are a wide cross section of socioeconomic classes. I have been surprised then, that in a case where the victims were large financial institutions and the wealthy, that a large portion of the hue & cry for vengence has been from the less affluent. I find the dynamics fascinating & in want of an explanation. I was not suggesting that only rich people should be upset, I was not suggesting that my issue was class jealosy. Rather, I was commenting on how unexpected the response was, nothing more.

Len

[Len J]

The penalties for stealing from rich, poor or "middle class" are the same.
The sentencing guidelines for stealing from rich, poor, or "middle class" are the same.
Stealing money is illegal.

Losing money on an investment is NOT the same thing as someone stealing money from you.

"In addition, the only people impacted by the fraud will be the originally rich and or large financial institions."

(This is as abhorent as saying you can not rape a prostitute.)

Besides being false, this is a scary class warfare argument.

Entire charities were wiped out by Madoff. Charities that impacted the poor and middle class. Stealing from financial institutions costs everyone in the long run.

Do people seriously think stealing money from a poor person is worse than a rich person having his/her entire fortune stolen? Are these 2 acts not worthy of the same contempt, punishment?

Nice...I love when people take one sentance from an entire thought and adhere intentions to it that the wroiter never implied or intended............I think that is very disingenuous.

As I posted on another response.


"I said "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victims were everyones neighbors and friends. How does that happen?"

You will notice, that unlike several of the interpretations in this thread, there is no judgement in that sentance, rather, the only thing being expressed is surprise at the reaction. Let me expand on this issue a little bit. There is a tremendous amount of class anger IMO, generated over the last several years, as a higher and higher concentration of wealth has been retained by a smaller and smaller portion of the population. You can get a sense of this by visiting political forums that are a wide cross section of socioeconomic classes. I have been surprised then, that in a case where the victims were large financial institutions and the wealthy, that a large portion of the hue & cry for vengence has been from the less affluent. I find the dynamics fascinating & in want of an explanation. I was not suggesting that only rich people should be upset, I was not suggesting that my issue was class jealosy. Rather, I was commenting on how unexpected the response was, nothing more. "


Len

[jpw]

I don't think he did this alone. I'm sure some of his 'investors' were well aware of where their dividends were coming from. The whole thing seems like a conspiracy involving quite a few people, some of whom are probably even more well connected than he was - the untouchables. The murky world of the NY elite.

[93legendti]

Did anyone say that? Stealing, defrauding, bilking, swindling, whatever you want to call it is wrong, Madoff fully deserves the penalty he's going to pay, and everyone who was ripped off is a victim. I feel slightly more sorry for the unsophisticated investor (more often those with less to begin with) only because those who were experienced should have know better than to put themselves in that position. But no moral relativism about the crime involved.

And anyone who knowingly rips of Ellie Weisel's charitable foundation is fully entitled to a special place in hell, IMHO.

-Ray
Yes, a poster above said: "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions.

[johnnymossville]

I don't think he did this alone. I'm sure some of his 'investors' were well aware of where their dividends were coming from. The whole thing seems like a conspiracy involving quite a few people, some of whom are probably even more well connected than he was - the untouchables. The murky world of the NY elite.

Talk about untouchables,... He did give a lot of money to a certain political party. ;-p

[Len J]

Yes, a poster above said: "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions.

No I didn't...read the post....in the context of what was said....I never said that I...."..........think stealing money from a poor person is worse than a rich person having his/her entire fortune stolen? Are these 2 acts not worthy of the same contempt, punishment? " Which is what you are accusing me of & projecting into what I wrote. At least be honest in your disagreement.

len

[93legendti]

No I didn't...read the post....in the context of what was said....I never said that I...."..........think stealing money from a poor person is worse than a rich person having his/her entire fortune stolen? Are these 2 acts not worthy of the same contempt, punishment? " Which is what you are accusing me of & projecting into what I wrote. At least be honest in your disagreement.

len
Then why say: "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victimms were everyones neighbors and friends. How does that happen?"

[Len J]

Then why say: "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions"?

As I've explained at least twice in this thread (if you would care to read it).

"I said "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victims were everyones neighbors and friends. How does that happen?"

You will notice, that unlike several of the interpretations in this thread, there is no judgement in that sentance, rather, the only thing being expressed is surprise at the reaction. Let me expand on this issue a little bit. There is a tremendous amount of class anger IMO, generated over the last several years, as a higher and higher concentration of wealth has been retained by a smaller and smaller portion of the population. You can get a sense of this by visiting political forums that are a wide cross section of socioeconomic classes. I have been surprised then, that in a case where the victims were large financial institutions and the wealthy, that a large portion of the hue & cry for vengence has been from the less affluent. I find the dynamics fascinating & in want of an explanation. I was not suggesting that only rich people should be upset, I was not suggesting that my issue was class jealosy. Rather, I was commenting on how unexpected the response was, nothing more. "

It's actually pretty clear if you think about it. The sentance you keep referring to was part of a complete thought....to pick that one sentance out of the thought is disingenuous at best.

len

[jpw]

Talk about untouchables,... He did give a lot of money to a certain political party. ;-p
Tut, tut, you know the p word and topic is a no no on this forum :-).

Which party?

[Charles M]

As I've explained at least twice in this thread (if you would care to read it).

len




Rigght...


You do understand that a Ponzi scheme is like a pYramid scheme???


The Rich big fish and early investors got paid by the little fish and later entry people...

Loads of people got hurt

But it's the smaller / Later guys that were attracted by the big fish and fat cats that will bare the bill the most...


The early guys Earnings / Growth were funded by the later entries so when you also seem to imply that all of that growth is just media hyped numbers you forget it was funded by stealing from other people...

[R2D2]

As I've explained at least twice in this thread (if you would care to read it).

"I said "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victims were everyones neighbors and friends. How does that happen?"

You will notice, that unlike several of the interpretations in this thread, there is no judgement in that sentance, rather, the only thing being expressed is surprise at the reaction. Let me expand on this issue a little bit. There is a tremendous amount of class anger IMO, generated over the last several years, as a higher and higher concentration of wealth has been retained by a smaller and smaller portion of the population. You can get a sense of this by visiting political forums that are a wide cross section of socioeconomic classes. I have been surprised then, that in a case where the victims were large financial institutions and the wealthy, that a large portion of the hue & cry for vengence has been from the less affluent. I find the dynamics fascinating & in want of an explanation. I was not suggesting that only rich people should be upset, I was not suggesting that my issue was class jealosy. Rather, I was commenting on how unexpected the response was, nothing more. "

It's actually pretty clear if you think about it. The sentance you keep referring to was part of a complete thought....to pick that one sentance out of the thought is disingenuous at best.

len

Len:

He's the first monster to be paraded in the streets. He's a target for all those that have been swindled in whatever fashion. Ponzi was greated by an angry mob when he was released.

[Len J]

Rigght...


You do understand that a Ponzi scheme is like a pYramid scheme???


The Rich big fish and early investors got paid by the little fish and later entry people...

Loads of people got hurt

But it's the smaller / Later guys that were attracted by the big fish and fat cats that will bare the bill the most...


The early guys Earnings / Growth were funded by the later entries so when you also seem to imply that all of that growth is just media hyped numbers you forget it was funded by stealing from other people...


So now, I'm a liar? Nice.

I haven't forgot anything....I know, probably more than you do about how a Ponzi scheme works. I also know that small investors don't have access to funds like Madoffs.....without an in from a larger investor.

And I read your explanation say.....the big rich cats suckered the smaller more vulnerable into the scheme....which is hogwash. & is not supported by the facts. The list of people & institutions that claim they lost on this is almost entirely the big fish that you claim will not bear the largest losses.

Other than that you are spot on. :confused:

You might want to get your own biases out of the way, or at least recognize them

len

[Sandy]

As I've explained at least twice in this thread (if you would care to read it).

"I said "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victims were everyones neighbors and friends. How does that happen?"

You will notice, that unlike several of the interpretations in this thread, there is no judgement in that sentance, rather, the only thing being expressed is surprise at the reaction. Let me expand on this issue a little bit. There is a tremendous amount of class anger IMO, generated over the last several years, as a higher and higher concentration of wealth has been retained by a smaller and smaller portion of the population. You can get a sense of this by visiting political forums that are a wide cross section of socioeconomic classes. I have been surprised then, that in a case where the victims were large financial institutions and the wealthy, that a large portion of the hue & cry for vengence has been from the less affluent. I find the dynamics fascinating & in want of an explanation. I was not suggesting that only rich people should be upset, I was not suggesting that my issue was class jealosy. Rather, I was commenting on how unexpected the response was, nothing more. "

It's actually pretty clear if you think about it. The sentance you keep referring to was part of a complete thought....to pick that one sentance out of the thought is disingenuous at best.

len

We will see more and more class anger. It is inevitable to me, and it will be in both directions with a greater gap of lack of understanding and acceptance of each "class" by the other. We are absolutely headed in that direction, more so than many realize. It will get quite ugly in my opinion.


Sandy

[Len J]

Len:

He's the first monster to be paraded in the streets. He's a target for all those that have been swindled in whatever fashion. Ponzi was greated by an angry mob when he was released.

Hence my comments about the mob mentality...I agree with you.....he is the focus of much anger (not all of it, but much of it) that has nothing to do with him personally.. It's a fascinating model for group behavior.

Len

[Sandy]

We all know that news stories are often predicated on sensationalism as opposed to content. Writers produce what will generate interest and sell papers/magazines and push certain agendas. There certainly is no linear/direct relationship between the value/content of a news story, the press it receives, and the time people immerse themselves in it. The OJ Simpson scenario is a simple example- Genuinely tragic and sad what occurred, but there are a zillion similar incidents that occur each and every day, with almost no coverage or miniscule coverage, at best. Give the public what it wants to hear and give the public what you want it to here- pushing your agenda or whatever agenda you are being paid to push.

I know you and that you find Mr. Madoff's actions deplorable. You even stated that. Unfortunately, your emphasis was overwhelmingly on another aspect of the story and that is what so many focused on, which is understandable.

Sandy

[R2D2]

Hence my comments about the mob mentality...I agree with you.....he is the focus of much anger (not all of it, but much of it) that has nothing to do with him personally.. It's a fascinating model for group behavior.

Len

It's all happend before.
You don't need to model it.
I've worked hard and some would say I'm affluent.
And I experienced jeaslously from others that don't have as much.
And I don't mind people working hard and getting ahead (Ayn Rand and all that).
But I do have some problems when people are swindled with the SEC asleep at the switch. As if by fraudulently acquiring wealth one would be provided with the class they are so saddly lacking. And swindling takes a lot of different forms in my book, from slavery,oppression, colonialism. If there's enough of it the seeds for revolution and misguided forms of central planning (communism,socialism etc) are planted.

BTW I have no aswers but can sure point out wrongs (Thinking as a Hobby
William Golding).

[Climb01742]

did anyone see "the daily show" last night, with jim cramer as the guest?

i wonder if some folks are glad madoff is taking some heat right now. takes the spotlight off of others.

like most angry reactions, this one -- to the actions of some on wall street -- will have excesses and a few unfair targets but i share a lot of the feelings john stewart gave voice to last night.

i wish i knew what the right legal and regulatory responses were to this crisis. i actually think madoff is a sideshow or a small symptom of a greater ill. i hope someone smarter than i am can figure out how to reform the financial industry. until then, it's an interesting comment on our culture that a guy who tells jokes for a living is one of the voices of outrage that rings truest to me.

[Ray]

did anyone see "the daily show" last night, with jim cramer as the guest?

i wonder if some folks are glad madoff is taking some heat right now. takes the spotlight off of others.

like most angry reactions, this one -- to the actions of some on wall street -- will have excesses and a few unfair targets but i share a lot of the feelings john stewart gave voice to last night.

i wish i knew what the right legal and regulatory responses were to this crisis. i actually think madoff is a sideshow or a small symptom of a greater ill. i hope someone smarter than i am can figure out how to reform the financial industry. until then, it's an interesting comment on our culture that a guy who tells jokes for a living is one of the voices of outrage that rings truest to me.Yeah, I saw it. I hesitated to bring it up because of the potential political offshoots. But it wasn't really liberal vs conservative - they're both liberals. It was really a comedian who occasional goes all journalist on us vs a inside finance guy who dresses up nightly as a maniac to sell TV commercials. And, yeah, aside from a few cheap shots, it was devastating. About as complete a smackdown as I've seen on tv since some comedian went on Crossfire and called Tucker Carlson and Paul Begala partisan hacks and then called Tucker a dick. Who was that guy?

BTW, the whole unedited thing is out there on the web. It contains a few more nuggets that didn't make the broadcast.

-Ray

[1centaur]

i wish i knew what the right legal and regulatory responses were to this crisis. i hope someone smarter than i am can figure out how to reform the financial industry.

Let me be pedantic and not condescending when I say that anger comes from fear comes from what is not known.

Anger at the financial industry comes from fear of what they have done and what they will do comes from not knowing what they have done (including intent vs. ignorance) and therefore how to stop it happening again.

Not knowing, in the case of the financial industry, is utterly understandable, since the vast majority of the population is not financially sophisticated at all and some of what Wall Street does is very hard to understand for even the top 1% of financially sophisticated people.

That not knowing is what will drive regulation, because regulators won't know what to regulate, exactly, so they'll cast a wide net and hit a lot of unanticipated targets to the detriment of economic growth. What they will not countenance but which is far more true than they accept is that the buyers of financial instruments are just as good as the regulators at fighting the last war. That's why credit cycles happen. Credit goes from tight to easy to tight as fear and greed interact with the passage of time. Let a couple of generations pass and "don't let something like Madoff happen to you" may slip from consciousness as Ponzi did, becoming a name and a concept rather than a fresh lesson in human nature (to scam and to believe rather than check). Near term, lenders will be cautious, rating agencies will be cautious, buyers will be cautious, and bad things won't emanate from Wall Street. Longer term, greed, cubicle vision (I think I'll trademark that term, I just made it up), laziness in the buying population, computing power, pattern analysis and new derivative techniques will naturally build to the point where too much risk is taken and has to be unwound. I see no way for regulation to prevent that because it won't anticipate how the future unfolds and, moreover, it will be the very regulations themselves that create the impetus for the next problem. For example, rules that mandated/encouraged AAA-rated instruments for banks helped drive the structured product business to deliver size and spread to AAA buyers who were not earning much on what AAAs were before structured products. Good intentions, bad consequences. I believe all (other than some mortgage salespeople and perhaps some packagers) thought they were doing something reasonable, but they were focused mostly on their little world (cubicle vision) rather than the big picture. Maybe if government created an entity that simply analyzed assets on important balance sheets for worst case scenarios we'd get a longer period to the next problem.

Conclusion: Nobody smarter than you will make regulations and the regulations won't prevent another big problem, but based on the gap from 1930 to 2008 perhaps the next big problem will occur after you are long gone.

[jpw]

Hence my comments about the mob mentality...I agree with you.....he is the focus of much anger (not all of it, but much of it) that has nothing to do with him personally.. It's a fascinating model for group behavior.

Len

The herd instinct in hard wired into the human species, whether it be class war street mobs or classy wall street investors.

[R2D2]

Let me be pedantic and not condescending when I say that anger comes from fear comes from what is not known.

..........

Others disagree:
Anger is viewed as a reaction and healthy response that has evolved to enable us to deal with threats.[5] Three types of anger are recognized by psychologists: The first form of anger, named "hasty and sudden anger" by Joseph Butler, an 18th century English bishop, is connected to the impulse for self-preservation. It is shared between humans and animals and occurs when tormented or trapped. The second type of anger is named "settled and deliberate" anger and is a reaction to perceived deliberate harm or unfair treatment by others. These two forms of anger are episodic. The third type of anger is however dispositional and is related more to character traits than to instincts or cognitions. Irritability, sullenness and churlishness postures are examples of the last form of anger

[Climb01742]

1centaur, i'm not sure i can buy, at least not completely, your belief that we got here because good intentions went bad. there are many people in finance who have good intentions. but there are some(?) or many(?) who don't. this passage in a recent nytimes piece caught my eye:

"Could these Wall Street executives have made other, less risky choices? Of course they could have, if they had been motivated by something other than absolute greed. Many smaller firms — including Evercore Partners, Greenhill and Lazard — took one look at those risky securities and decided to steer clear. When I worked at Lazard in the 1990s, people tried to convince the firm’s patriarchs — André Meyer, Michel David-Weill and Felix Rohatyn — that they must expand into riskier lines of business to keep pace with the big boys. The answer was always a firm no.

Even the venerable if obscure Brown Brothers Harriman — the private partnership where Prescott Bush, the father and grandfather of two presidents, made his fortune — has remained consistently profitable since 1818. None of these smaller firms manufactured a single mortgage-backed security — and none has taken a penny of taxpayer money during this crisis.

So enough already with the charade of Wall Street executives pretending not to know what really happened and why. They know precisely why their banks either crashed or are alive only thanks to taxpayer-provided life support. And at least one of them — John Mack, the chief executive of Morgan Stanley — seems willing to admit it. He appears to have undergone a religious conversion of sorts after his firm’s near-death experience."

here's the full article: http://www.nytimes.com/2009/03/12/opinion/12cohan.html?pagewanted=2&sq=felix%20rohatyn&st=cse&scp=4

most fundamentally, i don't buy the explanation that "no one" saw this coming. that this was a "once in a lifetime" event out of anyone's control.
some firms, as shown above, didn't play the game. they had different (and it would seem, better) priorities.

i'm not painting all of wall street with the same brush. but i think enough people had to know that 30-to-1 leverage could only lead to bad results, but the gravy train was too tasty to get off.

until wall street admits that this situation_was_in their control and resulted from their actions, few people will, or should, extend much sympathy in their direction.

as warren buffet has proved, it is very possible to make a shiite load of money playing by a decent set of rules and personal sense of right and wrong.

if you haven't yet, perhaps watch the clips john stewart found of jim cramer explaining how to break laws, game the financial system, and play the sec as a bunch of dupes.

again, NOT ALL OF WALL STREET IS TO BLAME, NOR IS MAKING A FORTUNE WRONG. but doing it crookly is.

ps: i know i'm showing my age but wasn't lazard once considered the gold standard on the street for small investment banks?

[gearguywb]

Another Overstated, Press.....hate mongering story.

Having been involved in the forensic part of these kind of things a few times, and having read quite a bit about the Madoff Ponzi Scheme, I will predict that, when all is said and done, the actual losses on this fraud are significantly smaller than the $50 billion that the press talks about. In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victimms were everyones neighbors and friends. How does that happen?

The other thing that I will be interested in when the history is written on this is how much of the the fund balances that people are claiming as losses are the erroneous cumulative "gains" and how much is the original amounts the investors put in. Its a big difference if someone put $6 million in 12 years ago, and because of the 12% "earnings" madoff was claiming, they "should" have $65 million. So if, when all was said and done, they receive a final settlement of $20 million, have they "lost" $45 million, or "gained" $14 million?

Finally, will the bankruptcy court decide that distributions of fund balances for the 90 days prior to the middle of December filing were preferential payments and therefor, will the court try to recoup these, recognizing that it was the market crash in the middle of Sept, that precipitated the fund withdrawls that caused the house of cards to collapse? If they do, (as long as the attorneys don't get fed too much), then most investors will end up getting a large part of their original deposits back (although the fictious gains will be gone). If that happens, I'm sure it won't get the press that it's getting now, nor will it generate the emotion the current story does.

IMO.

Len

Actually there will be far more hurt than "the rich". There were several companies that had all of the employees 401k money invested with this knucklehead. I know if my 401k went to furnish his lifestyle and high dollar condo I would be one mad sumbiatch.

[johnnymossville]

A bunch of the same "insiders" are now working for the current administration.

I'm a complete idiot on finance and wall street, (I draw pictures and make them move for a living,) but talking down the economy by insiders like these people have recently done,... isn't only a clever political stunt,... but also pretty much exactly what Stewart is whacking Cramer with right there. They are gaming all of us, of course they always have so it's nothing new,.. but still.

Finally today he's saying it's "not as bad as we think" *** is that? Is he short selling on us now?

[Hardlyrob]

Len J makes some valid points. The press "reporting" on the losses is fiction at this point - nobody, certainly not a reporter who barely understands the difference between a stock and an option can even guess at what are real losses and what aren't. I'm willing to bet none of the fund holders know anything either. The press is just reporting the most egregious stories to sell papers / TV ads.

It's akin to all the talk of Detroit "being taken out" or "going down" - what the heck does that mean? They will lock the doors and the companies cease to exist? No way. People were more than willing to get on airlines in bankruptcy - I bet they'll buy cars from bankrupt manufacturers.

Don't pay too much attention to the press when they try to report on complex situations - they really aren't very good at it.

None of that is to say what Madoff did is excusable, or that people, institutions and charities weren't hurt, but I think we need to consider the inflammatory nature of the press and their real goals - sell ad space.

Flame away.

Rob

[1centaur]

climb, that NYT article says nothing of factual note other than that too much risk was taken, it turns out. There will always be those who take more risk and those who take less, and one will be rewarded and then the other. This is not evil, this is inevitable. As a matter of logic, did these executives load up on risk expecting it to blow up, cost them many millions of dollars and their careers? Of course not. Find me the CEO who admits that he asked his quant jocks to explain their mortgage-backed securities and they told him that stuff will blow up when housing prices decline 5% and the rating agencies don't get it, to which the CEO said, "what the heck, let's do it anyway" and I'll agree with you for those few people involved. But Wall Street is made up of thousands and thousands of people doing very disparate jobs who are just like every average American and I am sure that if there is blame that deserves punishment it is restricted to the very, very few. Taking too much risk is something that was supported by the buy side, the sell side, the regulatory structure, the stock market...the length since the last downturn.

I saw too little of Cramer's discussion to hear anything other than the way perception can create an investment effect. If I have time this weekend I'll track it down. I only saw Stewart's clips on CNN.com and found his focus on CNBC's journalistic duties to be lacking in recognition for what CNBC is - a surface treatment for fan boys that would fail and go off the air if it was a muckraking skeptical pontification/investigative journalism body. It's there to entertain. There are plenty of serious news organizations that can run investigative pieces if they wish.

[Bud_E]

Okay, Madoff was a con-artist and a thief and was damn good at it and I can understand how naive individuals were persuaded to go all in with him. What I can't understand is how the people who are entrusted to decide how a charity or endowment is invested could go all in with him. I've read at least 3 or 4 interviews with investment analysts who, within one meeting with Madoff's firm quickly concluded from looking at the nature of his returns that he was either lying about his returns or that he had to be committing insider trading in a big way. This says to me that at least a few people went with him thinking that he must have been committing insider trading but they didn't care as long as they were making money OR that some very large charitable organizations hire pretty stupid people to run their investments - either conclusion is disturbing.

[Ray]

I only saw Stewart's clips on CNN.com and found his focus on CNBC's journalistic duties to be lacking in recognition for what CNBC is - a surface treatment for fan boys that would fail and go off the air if it was a muckraking skeptical pontification/investigative journalism body. It's there to entertain. There are plenty of serious news organizations that can run investigative pieces if they wish.
That may be what CNBC is, which is what Stewart was pointing out last night, rather aggressively. But it passes itself off as a financial news network. Which gives it some obligation to be journalists, not just cheerleaders. Ostensibly, its staff has more financial expertise than the average journalist, so who else is gonna do the investigative work? Stewart was just making clear for the viewing public the very point you just made. And Cramer had to meekly cop to it, and promise to try to do better. Which may be a promise that CNBC is institutionally unable to deliver on. But the viewers should know that before they even think about taking advice from those folks. Now, they're more likely to.

Cramer took it very well, I have to say.

-Ray

[93legendti]

That may be what CNBC is, which is what Stewart was pointing out last night, rather aggressively. But it passes itself off as a financial news network. Which gives it some obligation to be journalists, not just cheerleaders. Ostensibly, its staff has more financial expertise than the average journalist, so who else is gonna do the investigative work? Stewart was just making clear for the viewing public the very point you just made. And Cramer had to meekly cop to it, and promise to try to do better. Which may be a promise that CNBC is institutionally unable to deliver on. But the viewers should know that before they even think about taking advice from those folks. Now, they're more likely to.

Cramer took it very well, I have to say.

-Ray


I agree. News networks should not be cheerleaders.

[1centaur]

That may be what CNBC is, which is what Stewart was pointing out last night, rather aggressively. But it passes itself off as a financial news network. Which gives it some obligation to be journalists, not just cheerleaders. Ostensibly, its staff has more financial expertise than the average journalist, so who else is gonna do the investigative work? Stewart was just making clear for the viewing public the very point you just made. And Cramer had to meekly cop to it, and promise to try to do better. Which may be a promise that CNBC is institutionally unable to deliver on. But the viewers should know that before they even think about taking advice from those folks. Now, they're more likely to.

Cramer took it very well, I have to say.

-Ray

I have now watched the entire interview.

Overall, I found Stewart ignorant and manipulative, a classic thought-by-way-of-emotion thinker who can only succeed in an argument by keeping the emotion at the forefront. I found Cramer far too obsequious. Stewart committed slander along the way, twice, with the "you guys knew all along" lines and Cramer did not call him on it. In the right forum, Stewart could have been taken apart line by line for his pandering, childish approach, but to do that would have required Cramer to say, "stop interrupting and I'll tell you why you are wrong," and Stewart to let him, which was not going to happen.

A financial news network has no obligation at all, to anyone, to act as any given type of news organization. Only little babies who want to be taken care of would think otherwise. Grown ups make their own decisions, gather their own information, and take responsibility for their mistakes. The information about bank leverage (mostly not 30 to 1 by the way) has been public for many years; it did not require investigation to uncover. If you invested in something because someone said something on a TV show (which Cramer often explicitly said not to do) that is your fault. CNBC chooses to focus on financial news and hopes that people watch. It reports the numbers, has lots of guests (including CEOs about whom it is the VIEWER who must make up his mind), tries to get them to say interesting things ("so, what are your picks for RIGHT NOW?"). As for the advice that adults choose to take, that's their business.

As we've discussed here before, there's plenty of blame to go around (buyers/sellers/regulators/creators/borrowers/lenders), but blaming CNBC for anything is like blaming CNN for being credulous about WMD. CNBC was not a cheerleader for crooks, it was a reporting device for the market - it reported what it saw which was its right. It is a testament to Stewart's mindset (and that of many others) that picking on CNBC took on a "burn the witch" patina. Outrage that we are here is understandable; outrage at CNBC shows a deep misunderstanding of the problem. Frankly, if the journos there had been utterly brilliant, more so than hedge fund managers, uncovered the problem earlier and reported on it, guess what - the crisis would have happened earlier!

Stewart also does not give credit to the many, many shows CNBC has devoted to this crisis as it unfolded that were as probing and thoughtful as anything out there in the mainstream. Those journos woke up from their haze just like the rest of the country and learned as they went, much as our government is. Cramer in many ways is just a brighter than average investor with some real insight but who was as capable of making as many mistakes as 99.9% of the investing population; most professional investors did not expect Bear or Lehman to fail, so he was reflecting conventional thinking. I listen to him sometimes to get the gist of hedge fund thinking on certain things, but I am very sure that large segments of his audience have way too much sailing over their heads. I am sure he knows that and lives with it because he tries his best to keep it simple and he knows he's putting more on the table than most people on that network. He singlehandedly has done more to educate average investors on that network than anybody else, by far. Stewart's implication that he said sell but secretly knew it was a buy because there's some conspiracy of hedge fund guys who manipulate things is just babyish naivete. In the same stupid league is the thought that all markets must be maintained for the sake of long-term investors. Those old tapes of Cramer explaining how clever traders create perceptions is exactly that - about trading. Mr. long term 401k does not have to pay attention to those gyrations, and if he's day trading he's playing a fool's game anyway. Those trading moves are professionals vs. professionals, and value wins in the end. That long-term investing has not worked over the most recent long term is not about those trading strategies, it is about the underlying fundamentals and the beginning and end points of the measurement period.

I could go on and on, line by line through that "interview," but the overall point is that Stewart was simply out of his intellectual (as opposed to stylistic) depth, his anger misplaced, his tactics unfair, his thought process addled, and he happened to get a guest who was not prepared to make him look like the fool he is.

[Charles M]

So now, I'm a liar? Nice.

I didnt say that...


I basically said that Madoff used later investors to pay earlier investors, so your line about the number being inflated because they also count profit is flawed...


I also know that small investors don't have access to funds like Madoffs.....without an in from a larger investor.

And I read your explanation say.....the big rich cats suckered the smaller more vulnerable into the scheme....which is hogwash. & is not supported by the facts. .

Ah OK... You know little guys can't get in without an in from the big guys but the fact that the big guys suckered smaller guys is... "Hogwash"






The list of people & institutions that claim they lost on this is almost entirely the big fish that you claim will not bear the largest losses.

len


So you're sure the numbers lost are false and hyped but the list of investors is spot on, rather than an example of the media showing the big guys for the sake of impact??


Restating the painfully obviouse doesn't make your judgement of the entire issue more "right" than anyone else's...


My point in this was simply that this is a horrible situation and lots of people are getting hurt and that Madoff deserves a lot of what he's getting for ruining lives...


I don't think you're a Liar (and never called you one...) I just disagree with your opinion.

[Ray]

A financial news network has no obligation at all, to anyone, to act as any given type of news organization. Only little babies who want to be taken care of would think otherwise. Grown ups make their own decisions, gather their own information, and take responsibility for their mistakes.
If a financial news network wants to pass itself off as "news", I think it does have an obligation. It if wants to cheerlead, cool, but I think some truth in advertising is in order. And Stewart, regardless of his tactics (I agree with you on some of them and not on others), took care of the truth in advertising for them. Just as ridiculous as Fox calling itself "fair and balanced" or MSNBC pretending to be anything other than it is - I don't think they have a pernicious catchphrase, but they obviously have an agenda.

BTW, Stewart did praise a couple of specific CNBC reporters for doing good investigative work (the guy who did "House of Cards" a couple of weeks ago and the Madoff special that re-aired last night was one of them). I thought House of Cards was really good and got across to me just how totally people at every level and sector of the economy were complicit in the housing bubble. If everyone wants to believe something badly enough and its been a few years since there was any countervailing evidence, they're damn sure gonna believe it. The overwhelming agreement among damn near everyone that American real estate would always go up and the decisions made on that assumption is incredible. Everyone from those giving loans, those taking loans, those borrowing against the theoretical equity in their houses, those packaging up all of these loans into new investment vehicles, the rating agencies who were giving these vehicles AAA ratings, those not regulating what was going on (because what elected official wants to break up a good party?), and those (all over the damn WORLD) who were buying them, were all making the SAME gravity defying assumption. We can argue about whether some were more guilty than others, but its amazing how pervasive the fundamentally flawed assumption was.

-Ray

[Joellogicman]

Another Overstated, Press.....hate mongering story.

Having been involved in the forensic part of these kind of things a few times, and having read quite a bit about the Madoff Ponzi Scheme, I will predict that, when all is said and done, the actual losses on this fraud are significantly smaller than the $50 billion that the press talks about. In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victimms were everyones neighbors and friends. How does that happen?

Len

This is one of the many articles I have read that say Madoff did not have many institutional investors, and that unlike other large Ponzi schemes, at least at present there is little if any thing to suggest a major recovery is possible:

http://www.nytimes.com/2009/03/14/business/14nocera.html?hp

[Joellogicman]

But I also think the investors have an equal culpability. In addition, as I've said repeartedly, everyone is assuming, and acting as if, they have lost everything.............IME, that is and will be far from the truth. I understand and empathize with SOME of the emotions the investors are feeling, I really do, but I think they are way overstated....and as in most things press related, the sad penniless widow is capitalized on, while the majority of the investors are large instiutions, who should have known better.

I wonder how much of what people are claiming as losses, would have been lost in the market anyway between the high of 2007 and December?....I suspect a large portion of it.


Len

Agrees the investors are culpable, but disagrees they will make a substantial recovery. It also suggest at least some of the investors thought they avoiding the higher flying investments of their day in favor of something more stable. Whether they would have put their money in T and Muni Bonds paying at most 5% if Madoff's promise of a steady 10 to 12% is something I guess we will never know.

[Len J]

This is one of the many articles I have read that say Madoff did not have many institutional investors, and that unlike other large Ponzi schemes, at least at present there is little if any thing to suggest a major recovery is possible:

http://www.nytimes.com/2009/03/14/business/14nocera.html?hp

Well if you are going to use the press to refut my contention that the press is overstating the loss.............Hmmmmmmmm. :crap:

As to the institutional investors........Here is a list of maximum losses (assuming no assets are recovered from other investors and madoff himself & that a loss is determined based on Madoffs made up statements including fictious losses) by investor from the Wall street Journal........just looking at it quickly, 75% of the dollars are institutional investors as opposed to individuals.

http://s.wsj.net/public/resources/documents/st_madoff_victims_20081215.html


Len

[Joellogicman]

Well if you are going to use the press to refut my contention that the press is overstating the loss.............Hmmmmmmmm. :crap:
Len

Do I accept the premise from a well reasoned article by a respected finance writer who clearly is not trying to play the poor victim's angle or an anti-media rant complete with cute little smilies?

Madoff was busted some time back. If there are significant recoverable assets out there, it stands to reason there would already be reports about it.

[Len J]

Do I accept the premise from a well reasoned article by a respected finance writer who clearly is not trying to play the poor victim's angle or an anti-media rant complete with cute little smilies?

Madoff was busted some time back. If there are significant recoverable assets out there, it stands to reason there would already be reports about it.

Look up preferential payments law under bankruptcy law.

Len

[OtayBW]

Another Overstated, Press.....hate mongering story.

Having been involved in the forensic part of these kind of things a few times, and having read quite a bit about the Madoff Ponzi Scheme, I will predict that, when all is said and done, the actual losses on this fraud are significantly smaller than the $50 billion that the press talks about. In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victimms were everyones neighbors and friends. How does that happen?

The other thing that I will be interested in when the history is written on this is how much of the the fund balances that people are claiming as losses are the erroneous cumulative "gains" and how much is the original amounts the investors put in. Its a big difference if someone put $6 million in 12 years ago, and because of the 12% "earnings" madoff was claiming, they "should" have $65 million. So if, when all was said and done, they receive a final settlement of $20 million, have they "lost" $45 million, or "gained" $14 million?

Finally, will the bankruptcy court decide that distributions of fund balances for the 90 days prior to the middle of December filing were preferential payments and therefor, will the court try to recoup these, recognizing that it was the market crash in the middle of Sept, that precipitated the fund withdrawls that caused the house of cards to collapse? If they do, (as long as the attorneys don't get fed too much), then most investors will end up getting a large part of their original deposits back (although the fictious gains will be gone). If that happens, I'm sure it won't get the press that it's getting now, nor will it generate the emotion the current story does.

IMO.

Len
(Emphasis mine...)
Inaccurate prediction and already proved to be not true. I personally know someone who is wiped out - as in loss of everything, not just some imaginary earnings. You may argue that it was stupid not to diversify, and I would agree with you, but the fact remains, that REAL people got hurt here, not just the 'originally rich and/or large financial institutions' - as if that mattered....

[93legendti]

(Emphasis mine...)
Inaccurate prediction and already proved to be not true. I personally know someone who is wiped out - as in loss of everything, not just some imaginary earnings. You may argue that it was stupid not to diversify, and I would agree with you, but the fact remains, that REAL people got hurt here, not just the 'originally rich and/or large financial institutions' - as if that mattered....
The neo-liberals consider the "rich" and financial institutions to be predators of the "poor". The neo-liberals reason that, since the "rich" and financial institutions are viewed to have "stolen" from the poor to get "rich", if they lose money, or are taxed excessively, it is "ok".

[OtayBW]

The neo-liberals consider the "rich" and financial institutions to be predators of the "poor". The neo-liberals reason that, since the "rich" and financial institutions are viewed to have "stolen" from the poor to get "rich", if they lose money, or are taxed excessively, it is "ok".
Ah yes, and in this dreamscape, everybody is classified very neatly, and one's entire world view is partitioned very nicely into a black-and-white little boxes. Pretty hilarious thinking, unfortunately.

Madoff ripped off people and ruined many lives - one such person I know personally. That was the sole point of my post. Anything you read into it beyond that is your own (over-active) imagination.

[Len J]

(Emphasis mine...)
Inaccurate prediction and already proved to be not true. I personally know someone who is wiped out - as in loss of everything, not just some imaginary earnings. You may argue that it was stupid not to diversify, and I would agree with you, but the fact remains, that REAL people got hurt here, not just the 'originally rich and/or large financial institutions' - as if that mattered....

A.) Read the rest of my posts and maybe you will understand what I am saying & maybe not take out of context.
b.) No one, least of all the press knows yet what anyone has lost...including the woman you know. The story is yet to be written as to how much recovery there will be.
c.) How much had she taken as withdrawls over the life of the investment compared to what she has actually put in?


It's way more complicated than "I know a wonam that lost everything."

Len

[Charles M]

just looking at it quickly, 75% of the dollars are institutional investors as opposed to individuals.

Len


Interesting...

So none of the money invested through institutions is from indiviual investors?

Really?



In addition, the only people impacted by the fraud will be the originally rich and or large financial institions

Len


Even if institutional dollars lost have no effect on individual investors (which isn't the case...) Madoff still would have robbed billions from people that you don't classify as rich..


he (Bernie Madoff) is an outlet & I think that is both unhealthy and improper. Obviously, YMMV.

But I also think the investors have an equal culpability.

Len


Len I think this last thing is what has some folks a little sideways with what you're saying...

The idea that Bernie is being improperly used as an outlet and especially that the people he robbed have equal culpability is certainly representative of you having a bit different sense of entitlement and responsibility than what at least a few others might...

[Len J]

Interesting...

So none of the money invested through institutions is from indiviual investors?

Really?





Even if institutional dollars lost have no effect on individual investors (which isn't the case...) Madoff still would have robbed billions from people that you don't classify as rich..





Len I think this last thing is what has some folks a little sideways with what you're saying...

The idea that Bernie is being improperly used as an outlet and especially that the people he robbed have equal culpability is certainly representative of you having a bit different sense of entitlement and responsibility than what at least a few others might...

I never said that intstitutional investors didn't affect individual investors...That would be you saying that......what I was reacting to was the comment that the majority of the losers were small investors...that just is not supported by the facts. In addition, large instirutional investors are much more diversified than the average small investor, so even if there are small investors invested in the institutional investor, their losses (if there are any) are smaller.

It's not a sense of entitlement I'm pointing to, it's the sense that this is all about Madoff, and none is about the investor. As I said earlier, what he did is abhorent & he should be punished....but the investors have a part in this, through their own lack of due diligence, their non-diversification and their sense that they are entitled to not only their investments but also the ficticious gains (read the NYT article).

Len

[OtayBW]

A.) Read the rest of my posts and maybe you will understand what I am saying & maybe not take out of context.
b.) No one, least of all the press knows yet what anyone has lost...including the woman you know. The story is yet to be written as to how much recovery there will be.
c.) How much had she taken as withdrawls over the life of the investment compared to what she has actually put in?


It's way more complicated than "I know a wonam that lost everything."

Len
This is not complicated:

1) I read your posts.
2) I know what my friend lost. He knows what he invested, and he knows what remains. Again - not complicated.
3) No withdrawals in this case.

Please read my original post again and do not build in any additional context. I never indicated this person's gender, and you assumed (incorrectly) that it was a woman.

I agree with you that the press has this 65B figure that is unsubstantiated. I simply tell you from close experience that people got slammed by Mr. Madoff - whether that was to the degree that the press or anybody else has speculated is really not the point.

And finally, it is not "way more complicated than "I know a wonam that lost everything". Really - it's just not much more complicated than that, occurring many times over.

[Charles M]

I never said that intstitutional investors didn't affect individual investors...


See when you think they're opposed, that might lead someone to believe you mean they're, well, opposed...

just looking at it quickly, 75% of the dollars are institutional investors as opposed to individuals.

Len








what I was reacting to was the comment that the majority of the losers were small investors...

You know what the breakdown of the larger institutions investers are? Or are you again implying that when large institutions get hurt it only effects the rich.


Wait.... You already andwered that...



In addition, the only people impacted by the fraud will be the originally rich and or large financial institions


Len

and



the investors have a part in this, through their own lack of due diligence, their non-diversification and their sense that they are entitled to not only their investments but also the ficticious gains

Len

Right. but it's not just that they "have a part..."

You think the people that got robbed should stand right beside Bernie Madoff...


I also think the investors have an equal culpability. [/B]

Len

As for ficticious gains,


In a Ponzi Scheme the "ficticious gains" were real, hard earned dollars deposited by later investors... So while one group certainly has the moral high ground in claiming the dollars, they're real enough.

[Len J]

This is not complicated:

1) I read your posts.
2) I know what my friend lost. He knows what he invested, and he knows what remains. Again - not complicated.
3) No withdrawals in this case.

Please read my original post again and do not build in any additional context. I never indicated this person's gender, and you assumed (incorrectly) that it was a woman.

I agree with you that the press has this 65B figure that is unsubstantiated. I simply tell you from close experience that people got slammed by Mr. Madoff - whether that was to the degree that the press or anybody else has speculated is really not the point.

And finally, it is not "way more complicated than "I know a wonam that lost everything". Really - it's just not much more complicated than that, occurring many times over.


How can anyone be certain they have lost everything when the final accounting hasn't been done & the courts have not gone after preferential payments is beyond me. Since you and your friend can see into the future......please give me the lottery numbers for tonight.

Len

[OtayBW]

How can anyone be certain they have lost everything when the final accounting hasn't been done & the courts have not gone after preferential payments is beyond me. Since you and your friend can see into the future......please give me the lottery numbers for tonight.

Len
Why give you the lotto numbers? You already know it all yourself!

[Len J]

See when you think they're opposed, that might lead someone to believe you mean they're, well, opposed...

I have no idea what this means




You know what the breakdown of the larger institutions investers are? Or are you again implying that when large institutions get hurt it only effects the rich.

Again, if you read my posts, I was referring to someones claim that most of the losses were by small investors...that there were very few institutional investors...that is just incorrect by all published reports listing investors. Reading more into it than that is your problem not mine.

Wait.... You already andwered that...




and




Right. but it's not just that they "have a part..."

You think the people that got robbed should stand right beside Bernie Madoff...

Again, stop projecting into my posts...it's not what I said, it's not implied by what I said, & it's no where close to what I meant. What I've said & continue to said that what madoff did was deplorable and should be punished severly. That being said, the investors are not without culpability. No where did I say that culpability is at the same level as madoff, ,,,,,but to suggest that they have no personal responsibility for the lack of personal due diligence or for investing in some cases 100% of what they ahd is naive at best and blind at worst. It takes two to get in this dance. Of course I could read into your post that they are all sensless victims minding their own business, but that wouldn'e be right either. Hell read the NYTimes article attached........some of these investors believe that the Gov't should bail them out. Here is a newsflash, they invested.....with no guarantees. Some of the outcome is no doubt sad, but that is why investing is a risk.


As for ficticious gains,


In a Ponzi Scheme the "ficticious gains" were real, hard earned dollars deposited by later investors... So while one group certainly has the moral high ground in claiming the dollars, they're real enough.

See that's where you are not correct. I have read estimates by experts in struff like this that contend that of the $64 billion in losses that people are claiming, less than $15 billion could represent principle invested....the remainder is accumulated "reported earnings", which in Madoff's case were totally made up. When/if the court goes back and collects $15 to $20 billion in deemed preferential payments paid to other investors........people have a good chance of getting their original principle or a large part thereof back.........but the non-existant, fictious gains never exited.




I bolded because I can't get the quotes to work on my computer.

Len

[Charles M]

Let me help you with the quotes...


I wrote: You think the people that got robbed should stand right beside Bernie Madoff...

Again, stop projecting into my posts...it's not what I said, it's not implied by what I said, & it's no where close to what I meant.


Instead of telling others to read what you wrote, hows bout you try...


I also think the investors have an equal culpability.


Len



you not only want to ignore your own words but also redefine words...

like “equal culpability” when comparing the robber to the robbed.

[Len J]

Let me help you with the quotes...


I wrote: You think the people that got robbed should stand right beside Bernie Madoff...




Instead of telling others to read what you wrote, hows bout you try...






you not only want to ignore your own words but also redefine words...

like “equal culpability” when comparing the robber to the robbed.

I have tried more than once...you see & interpret what you want to.



You know what...you've convinced me........Madoff is the devil incarnate......no one will ever get anything and no one who loast anything had any fault in what happened.....sheesh.

Len

[Charles M]

Again,

I just quoted you...

If you feel like swinging from the people he robbed being equally culpable to Bernie is the devil, so be it...

[Sandy]

Once again, I'll reiterate that I think what madoff did was deplorable. I think he should & will spend the rest of his life in jail. I think he should and will forfeit most of his assets to either attornies or the court...that is as it should be. My beef in this whole thing is the sensationalism and exagerration and the resultant mob mentality. We all benefited over the last several years by the very things that allowed Madoff to succeed for so long...and now we are all paying for it. He/this issue seems to be a great focus for our anger over this (and the press is fanning the flames).........he is an outlet & I think that is both unhealthy and improper. Obviously, YMMV.

But I also think the investors have an equal culpability. In addition, as I've said repeartedly, everyone is assuming, and acting as if, they have lost everything.............IME, that is and will be far from the truth. I understand and empathize with SOME of the emotions the investors are feeling, I really do, but I think they are way overstated....and as in most things press related, the sad penniless widow is capitalized on, while the majority of the investors are large instiutions, who should have known better.

I wonder how much of what people are claiming as losses, would have been lost in the market anyway between the high of 2007 and December?....I suspect a large portion of it.

One other point that no one is talking about (because a.) it doesn't sensationalize the story & b.) they will & have been keeping their head down) is those people that did get their money out, or have had significant withdrawls .........no one is asking them (other than the bankruptcy court) to give their fictious "Gains" back.

One final poiint.........my comments seem to be interpreted by some as Rich people envy.........Nothing could be further from either my belief nor my intent.

I said "In addition, the only people impacted by the fraud will be the originally rich and or large financial institions. Yet, to read the press and listen to the emotive hate that is being vented on forums and blogs, you would think that the victims were everyones neighbors and friends. How does that happen?" You will notice, that unlike several of the interpretations in this thread, there is no judgement in that sentance, rather, the only thing being expressed is surprise at the reaction. Let me expand on this issue a little bit. There is a tremendous amount of class anger IMO, generated over the last several years, as a higher and higher concentration of wealth has been retained by a smaller and smaller portion of the population. You can get a sense of this by visiting political forums that are a wide cross section of socioeconomic classes. I have been surprised then, that in a case where the victims were large financial institutions and the wealthy, that a large portion of the hue & cry for vengence has been from the less affluent. I find the dynamics fascinating & in want of an explanation. I was not suggesting that only rich people should be upset, I was not suggesting that my issue was class jealosy. Rather, I was commenting on how unexpected the response was, nothing more.

Len

"....I also think the investors have an equal culpability..." I find that statement astonishing. Culpable means deserving blame. You are saying that the investors deserve the blame as equally as Madoff does. That to me is ridiculous. Question one's sophistication in investing and the error of putting all of one's eggs in one basket, or most of one's eggs, but how were the investors to know that they were dealing with a fraud, liar, and cheat, and that the reports they received were bogus? Errors in not investing in an optimal manner is one thing, but fraud is not expected. Madoff had a reputation that was so good that investors flocked to invest through him. Of course his reputation was not consistent with reality. He stole from them. Miles apart from poor investing.

If investors are equally cupable then put the investors in jail too....but that is ridiculous because they did not commit fraud and lie. I normally agree with almost everything you say on this forum, but I really disagree strongly with you here. Perhaps you know too much about these types of things and that influences your reasoning. Perhaps I know so little about them that I have no sound reasoning. But to me it is simple- A fraud, liar, cheat,and thief is a whole lot more culpable than someone who did not make the most sophisticated investment. Two different classes of people.


Sandy

[Len J]

Again,

I just quoted you...

If you feel like swinging from the people he robbed being equally culpable to Bernie is the devil, so be it...

If you believe in personal responsibility then they are both eaqully culpable. Investors for their lack of due diligence and under diversification, Madoff for the scam. Both come down to their own choices....what is so hard to understand?

len

[Len J]

"....I also think the investors have an equal culpability..." I find that statement astonishing. Culpable means deserving blame. You are saying that the investors deserve the blame as equally as Madoff does. That to me is ridiculous. Question one's sophistication in investing and the error of putting all of one's eggs in one basket, or most of one's eggs, but how were the investors to know that they were dealing with a fraud, liar, and cheat, and that the reports they received were bogus? Errors in not investing in an optimal manner is one thing, but fraud is not expected. Madoff had a reputation that was so good that investors flocked to invest through him. Of course his reputation was not consistent with reality. He stole from them. Miles apart from poor investing.

If investors are equally cupable then put the investors in jail too....but that is ridiculous because they did not commit fraud and lie. I normally agree with almost everything you say on this forum, but I really disagree strongly with you here. Perhaps you know too much about these types of things and that influences your reasoning. Perhaps I know so little about them that I have no sound reasoning. But to me it is simple- A fraud, liar, cheat,and thief is a whole lot more culpable than someone who did not make the most sophisticated investment. Two different classes of people.


Sandy

Then why is it the a large number of people that actually questioned what Madoff was doing......came away not investing?

cul⋅pa⋅ble   /ˈkʌlpəbəl/ Show Spelled Pronunciation [kuhl-puh-buhl] Show IPA
–adjective deserving blame or censure; blameworthy.
--------------------------------------------------------------------------------

I do believe that the blame lies with both parties in this mess.


Madoff is clearly responsible for the defcisions he made......and shold pay the penalty for that.

The investors are (or should be) responsible for the decisions they made.......which include (in many cases) doing little if any due diligence, but rather trusting others recommendations, and under diversifing....and should pay the penalty for that, just like any investor.

As I've repeatedly said, I don't think most investors will lose a large portion of their original principle, they will lose investment time (offset by whatever losses they would have incurred had they not been with Madoff), and think that is an appropriate "Penalty" for their degree of culpability.

Madoff could not have done what he did to the degree that he did it if investors were rigorous in their review.

Len