Any comments about Mr Madoff?

[tw]

Originally Posted by Beestie

Hedge funds shouldn't be used as primary investment vehicles anyway. Their primary purpose is to hedge against risks that cannot be offset by diversification such as exchange-rate risk.

Are you investing to solve a problem in the economy or provide a company with a solution? If investing to advance mankind and society, then a profit is earned. If simply investing to make a fast profit, then the resulting losses were deserved. Others argue silly nonsense such as greed. A responsible investor instead sees real assets, services, or products.

Hedge funds that should be profitable invested in risk directly attached to existing real assets. Such funds also would be transparent to investors.

Part of Madoff's trick was to deny direct investment. Investments were made through feeder funds. The investor then (foolishly) thought that broker was a financial guru. In reality, that feeder fund was nothing more than a salesman whose profits were larger when recommending Madoff. They never bothered to learn what Madoff was doing. Why would they? So many actually believe brokers are more than a salesman. Why bother to actually do the work when how the sale is made is more important?

Do you invest in a feeder fund who in turn invests in Madoff who in turn invests in equities too far removed from actual assets? No wonder the ponzi scheme lived on so long. Victims were too busy realizing 'profits' rather than first looking at what the fund was actually investing to advance mankind, the economy, and society.

Buy shares of Intel and actually see your investment is doing something productive and therefore profitable. Invest in an agricultural future so that the farmer can hedge himself (survive) from catastrophic risks. Do investing in regulated markets that are forced to operate ethically. The meltdown is directly traceable investments promoted only by myths; assets based only in paper and sometimes even in secret, private deals.

Madoff simply used additional 'layers' to play that game. To take investments from those too far removed to actually see what they were investing in.

Read the JP Morgan article. How do you know a problem exists? One gives bank money to invest. The bank takes a 2% service fee. Then the bank invests in another fund which also takes a service fee. That is an investor all but asking for trouble. A broker (or bank) should be the only service fee. The bank even quickly pulled out their own money but never bothered to inform investors who were even paying a 2% service fee.

Such investors are all but asking to be taken - just like investors in Bernie Madoff who could only invest through feeder funds. Just like anyone who pays a financial adviser a service fee to invest in mutual funds which then take more service fees.

[classicman]

Madoff list: Celebs, athletes and ordinary people

NEW YORK (AP) -- The scope of Bernard Madoff's alleged fraud is detailed in 162 pages of minuscule type -- a list of the disgraced money manager's once-trusting customers, including a bevy of the rich, famous and powerful.

In between, though, are all the others -- the names you've never heard. A retired teacher from the San Francisco Bay area. An emergency room doctor in Oregon. A carpenter from upstate New York. Thousands of mostly ordinary people, until now all but overlooked. Their voices reveal the true toll of Madoff's scheme, one that cannot be measured in dollars alone.

To do so, would overlook the anger, despair and silent shame they share.

"My wife says, 'keep yourself busy and get your mind off it,'" said Alan English, a Florida business owner whose life savings were lost to Madoff. "But how can I take my mind off something that has destroyed my whole life?"

English is one of thousands of Madoff customers whose names were made public late Wednesday in a filing with the U.S. Bankruptcy Court in Manhattan, and serves as testament to the sweeping nature of Madoff's alleged $50 billion fraud.

The list includes scores of famous names, from Hall of Fame pitcher Sandy Koufax, to World Trade Center developer Larry Silverstein to actor John Malkovich and CNN host Larry King.

But on a list with 13,000 entries, they are the exceptions. Run a finger down the list and what's most noteworthy is that so many of the names are people who might be just another neighbor or co-worker or friend.

They are people like Dr. Bonnie Sidoff, 56, an emergency room physician in West Linn, Ore. Years ago, her mother told her if she ever wanted to invest some money, she couldn't do much better than Bernie Madoff. Evelyn Rosen had never met Madoff personally, but in her circle of Florida country club friends, having money with the New Yorker was "considered an honor," Sidoff said Thursday.

So when Rosen died in April 2006 at the age of 80, her daughter left the $100,000 or so in her account with Madoff. Not only that, she took the money her mother left her in other accounts and invested that with Madoff.

In December, the day before the Madoff scandal broke, Sidoff and her husband Mike, both emergency room doctors, wired another $150,000 for Madoff to invest. The day after they learned the devastating news, the couple received a letter confirming the deposit.

"That was pretty heartbreaking," Sidoff said.

An analysis of the list shows that the people come from 44 states and at least 40 countries, from the Cayman Islands to Kenya to Switzerland. Florida has nearly 2,200 entries.

[Elspode]

I still say the dude should slit his own throat. He's scum.

[TheMercenary]

I can't agree more. It is wild to think of the number of people who have gone from fame and fortune to destitute. It certainly has shades of the day of the crash in '39.

[ZenGum]

Originally Posted by tw

Cheech is Cheech. And Tommy is Chong. All I wanted to be is the bong. Everyone loves the bong.

And I would have guessed it was Sheldon who wants to be sucked by Phelps....

[TheMercenary]

Or the other way around.

[sugarpop]

Did anyone catch the hearings with Harry Markopolos? He's the man who tried, for YEARS, to get the SEC to do something about Madoff. He gave pretty scathing testimony about how inept they are earlier this week.

I hope we get some sensible regulations on business again. I have a feeling that a LOT of people will going to prison over the next few years, for fraud, or not doing their jobs (of providing oversight), or causing the collapse of the entire world economy.

[Beestie]

Originally Posted by TheMercenary

I can't agree more. It is wild to think of the number of people who have gone from fame and fortune to destitute. It certainly has shades of the day of the crash in '39.

That would be '29. But not really. '29 was a collapse of the entire market. This is just a case of a con man being unmasked by a market collapse.

And who the hell gives their entire fortune to one guy to invest? Didn't these knuckleheads ever hear of diversification? I feel bad for the people who lost their life savings to Madoff but they could have given at least some of it to... I dunno, Fidelity or T Rowe Price or any number of reputable investment firms.

Why didn't they? Because Madoff promised returns higher than those offered by reputable investment firms. Now why would any sane person think that Madoff is smarter than the entire portfolio investment brain trust at TRP/Fidelity/etc.?

Too bad P. T. Barnum or Ben Franklin aren't here to answer that question.

[tw]

Originally Posted by sugarpop

Did anyone catch the hearings with Harry Markopolos? He's the man who tried, for YEARS, to get the SEC to do something about Madoff. He gave pretty scathing testimony about how inept they are earlier this week.

It has been noted here for years. During the Enron hearings, both Democrats and Republicans wanted to double the SEC budget. Harvey Pitts, the SEC Chairman refused the money. Even at the start of 2000s, the political agenda was to subvert oversight in the name of deregulation.

Previously, Clinton also tried to increase the SEC Budget. Congressional Republicans were united in their threat. If Clinton tried to increase SEC powers, then the political agenda would remove all SEC funding. Clinton backed down.

Some ask if this about philosophy. Reasons for outright fraud were apparent even in LTCM, Enron, and the mythical CA energy crisis. Even First Energy created the NorthEast blackout. Even First Energy violated a long list of operational requirements and was exonerated as lies about an obsolete grid, instead, were promoted. Even First Energy operated a nuclear reactor with a hole in its cap and other complications that could have taken out Toledo. Technical violations were all but encouraged by deregulation. Deregulation designed to eliminate oversight and responsibility to the product in the name of profits short term profits.

Madoff is only another example of what we encouraged and created at the highest levels of government. Engineers were even denied facts necessary to save the Columbia because managers were more interested in their politics and image rather than in technical facts. My god. The President even outrightly lied about Saddam's WMDs when facts said otherwise were even withheld. These are accidents? Hardly. We did not even hold him responsible. Why should SEC investigations of Madoff be anything different?

Those SEC investigators were only doing what we wanted the administration to impose on them. Least paid government employees were in the SEC. That political agenda was painfully obvious when Harvey Pitts testified before Congress and refused to take a budget increase. Where were you when the problem was so painfully obvious?

Government did what we wanted for the past 10 years. Where is the investigation of Morgan Stanley and other for manipulating oil prices? When do we prosecute others for intentionally creating the CA energy crisis? Why is Madoff any different? In those other cases, we considered these accidents? Even the State of Oklahoma had to embarrass the Federal government and file suit against Enron before the Feds would finally prosecute.

[sugarpop]

They didn't do what I wanted. I have wanted more regulation of business since Reagan started systematically deregulating everything in sight.

[OnyxCougar]

I'm shocked that no one here made a smart ass comment about how the federal government has been actively participating in and forcing a ponzi scheme on us all for YEARS.

[classicman]

You mean the one called Social Security?

[sugarpop]

Some people would not survive without SS and Medicare. Those are not schemes, they are successful programs. Is there some waste? Yes, but the whole health care industry is full of it. So you can't really blame Medicare...

[Clodfobble]

Correction: they are rapidly failing programs. "Some people" need SS and Medicare, just like all social programs. It's when you try to pretend that everyone will receive reasonable and fair benefits when they retire that it becomes a Ponzi scheme. The money simply isn't there.

[Happy Monkey]

That's not true. The absolute worst case scenario for Social Security is that all of the beneficiaries split up all of the contributors' tax contributions. This could (depending on the ratio of workers to retired/disabled) be less than is currently promised, but will never be zero. It will never fail. And the rates/retirement ages/upper tax limits can be adjusted for the times.

A Ponzi scheme with only two levels, in which everyone (who doesn't die early) gets to be in the top level eventually, isn't really a Ponzi scheme.