Bernard Madoff, now the most vilified man (if you can call him that) in America, killed two people recently. A plea bargain is being sought in the case in order to protect Madoff from serving justice for toppling investor confidence, bankrupting charities, leaving widows impoverished, and killing the two men shown above. Madoff will likely face a $75 fine when the swift arm of the SEC slams down on him.At left is pictured William Foxton, who put a bullet in his head after learning that his family's life savings were wiped out after being invested (if you can call it that) with Madoff. At right is pictured Rene-Thierry Magon de la Villehuchet, who slashed his wrists when he learned that his family's life savings had vanished thanks to an investment with Madoff.
Meanwhile, back at the ranch, Bernie and wife Ruth are sipping margaritas, that we're paying for, in their luxury apartment, that we're paying for. The margaritas they're enjoying are costing each American taxpayer just fractions of a penny. Which isn't so bad. The apartment, however, is costing each American taxpayer 7 cents. We don't know about you, but it pisses us off that we're paying 7 cents to fund this guy's retirement. In fact, we feel he owes us. We used to love this country, but we're really on the fence now. Every day Madoff is free on bail is a slap in the face to the rest of us. We're spending the first 19 seconds of our work day working for Bernie and Ruth! That includes the cost of the margaritas, by the way. If everyone in America were to punch the clock 19 seconds late each morning in protest until Madoff is behind bars, it would send a message to Washington that we're not paying for this!
We think Bernie should be brought up on manslaughter charges and be behind bars on that basis alone. In all other aspects of life, if you contribute to a person's death, you're partly responsible. Apparently Wall Street has written its own set of rules, in which our role as the State has been reduced to just to paying the bill.
23 comments:
Damn, I'm at the point where I just want to see one big crash where the DOW drops 1,000 points in a day so we can put a stop to this seemingly endless water torture!!
Same here, but you can never expect much on a Friday either way. Monday and Turnaround Tuesday, particulary, are the big ones.
i was reading another blog where the author compared our current economic crisis to the 2 stages of a tsunami. i found the metaphor interesting so i thought i'd share it.
rl
...let's say that we are witnessing the two stages of a tsunami. The current disappearance of wealth in the form of debts repudiated, bets welshed on, contracts canceled, and Lehman Brothers-style sob stories played out is like the withdrawal of the sea. The poor curious little monkey-humans stand on the beach transfixed by the strangeness of the event as the water recedes and the sea floor is exposed and all kinds of exotic creatures are seen thrashing in the mud, while the skeletons of historic wrecks are exposed to view, and a great stench of organic decay wafts toward the strand. Then comes the second stage, the tidal wave itself -- which in this case will be horrific monetary inflation -- roaring back over the mud flats toward the land mass, crashing over the beach, and ripping apart all the hotels and houses and infrastructure there while it drowns the poor curious monkey-humans who were too enthralled by the weird spectacle to make for higher ground. The killer tidal wave washes away all the things they have labored to build for decades, all their poignant little effects and chattels, and the survivors are left keening amidst the wreckage as the sea once again returns to normal in its eternal cradle.
A video you guys and gals have got to see:
poking fun at CNBC
Joe
Joe,
Great link. It's a sad day when one discovers he can get a more honest view of the world financial situation from what's offered us at Comedy Central than from our esteemed official financial reporting news gurus.......Not sure I know what to say about that......well, yeah! I do know what to say, but it's perhaps not printable here (sorta like Jon Stewart's comments that get blanked out). After that part that's not printable, I can add that Comedy Central is about what this financial crisis has been reduced to by TPTB.....a great big comedy....or is that a tragedy? Jeeze, I have to laugh, if I don't, what's next?
I listened to not just the video you linked us to, but several more in addition to it, just by clicking next, next, next.....several worthwhile videos there....got some good laugh's too!
Agr8gem57
rl,
That's POWERFUL STUFF!!
Agr8gem57
Gary's performance 090308: -8%. :)
SP500: -29%.
Time to improve Gary? :)
From a Yahoo board:
These two women were walking through the forest when they hear this voice from under a log. Investigating, the women discovered the voice was coming from a frog:
"Help me, ladies! I am an investment banker who, through an evil witch's curse, has been transformed into a frog. If one of you will kiss me, I'll be returned to my former state!"
The first woman took out her purse, grabbed the frog, and stuffed it inside her handbag. The second woman, aghast, screamed, "Didn't you hear him? If you kiss him, he'll turn into an investment banker?"
The second woman replied, "Sure, but these days a talking frog is worth more than an investment banker!"
rl,
It was october when I first read that selection from Kunstler. It's been almost 5 months since that was written, yet the tsunami still hasnt hit. This particular poor curious monkey-human is looking out at the horizon and all he is seeing is skeletons. I have been expecting this tidal wave for just as long as Kunstler. We both figured it would take 6 months to hit. But I had not been reading Steve Keen back then, and I'm pretty sure Kunstler wasnt either.
We could have to deal with the smell of rotting corpses for 6 years rather than 6 months...
seeer, we are going to make Gary v2 soon. Seeing as how he's beating the indexes and Warren Buffett, though, his performance isn't all that bad.
In a world where people are unsure if we'll have a functioning financial system six months from now, they're racing to the stores to buy firearms. Protecting your family's stash of food and water may have sounded far-fetched a few years ago, but today some people are preparing for this possibility. RGR (Sturm Ruger) and SWHC (Smith & Wesson Holding Company) have broken out recently, showing that this new interest in personal protection is a very real phenomenon. Stores have been reported as having run out of certain ammunitions.
Snot
Was at a Cabela's over the weekend. I took my son because he was interested in looking at air rifles. Well, the gun counter was absolutely packed. We decided to peruse the rest of the store and return later. Three times I overheard a gun sales staff say that they were out of stock on a particular item. And these folks were not just window shopping. The counter where you register your new firearm had a long line behind it. Another trend: Cabela's is selling ammo in large bulk containers. Haven't seen that before. This reaction must be part of our genetics going back to cave man days. 'Saber tooth coming. Let's get sticks.'
Anybody else find it interesting that Goldman was first in line to receive funds from AIG? At a time when financials are taking a pounding, they are only down 10% YDT, and they didn't even need any bailout moneys to hold their position. I wonder how much more they stand to gain from taxpayer funded bailouts.
Discl: Owned GS for most of '07, but will never buy them again based on principle.
Perfect setup for Turnaround Tuesday here. Close at "fresh new lows" and then gap down tomorrow and make everybody crap their pants. That would be delightful.
S&P taps 623 tomorrow?
snot: i have noticed rgr and swhc myself. i believe swhc earnings report is this week, 3/12 i think. going to wait to see how swhc trades after er. seems like it's already run up quite a bit on the tails of rgr, so i don't want to take a long position in either yet...
rl
Better off waiting for SWHC's er at this point. They may have another bad quarter that they blame on the weather!
Thanks for the report, sb. We can't buy firearms here in NY at a typical sporting goods store like you can there, so we have no way of knowing first hand how many people are really gearing up for the depression. We're stuck between a Barack and a hard place with this economy.
Is Forbes correct?
By STEVE FORBES
What is most astounding about President Barack Obama's radical economic recovery program isn't its breadth, but its continuation of the most destructive policies of the Bush administration. These Bush policies were in themselves repudiations of Franklin Delano Roosevelt, Mr. Obama's hero.
The most disastrous Bush policy that Mr. Obama is perpetuating is mark-to-market or "fair value" accounting for banks, insurance companies and other financial institutions. The idea seems harmless: Financial institutions should adjust their balance sheets and their capital accounts when the market value of the financial assets they hold goes up or down.
That works when you have very liquid securities, such as Treasurys, or the common stock of IBM or GE. But when the credit crisis hit in 2007, there was no market for subprime securities and other suspect assets. Yet regulators and auditors kept pressing banks and other financial firms to knock down the book value of this paper, even in cases where these obligations were being fully serviced in the payment of principal and interest. Thus, under mark-to-market, even non-suspect assets are being artificially knocked down in value for regulatory capital (the amount of capital required by regulators for industries like banks and life insurance).
Banks and life insurance companies that have positive cash flows now find themselves in a death spiral. Of the more than $700 billion that financial institutions have written off, almost all of it has been book write-downs, not actual cash losses. When banks or insurers write down the value of their assets they have to get new capital. And the need for new capital is a signal to ratings agencies that these outfits might deserve a credit-rating reduction.
So although banks have twice the amount of cash on hand that they did a year ago, they lend only under duress, or apply onerous conditions that would warm Tony Soprano's heart. This is because they know that every time they make a loan or an investment there is a risk of a book write-down, even if the loan is unimpaired.
If this rigid mark-to-market accounting had been in effect during the banking trouble in the early 1990s, almost every major commercial bank in the U.S. would have collapsed because of shaky Latin American and commercial real estate loans. We would have had a second Great Depression.
But put aside for a moment the absurdity of trying to price assets in a disrupted or non-existent market, of not distinguishing between distress prices and "normal" prices. Regulatory capital by its definition should take the long view when it comes to valuation; day-to-day fluctuations shouldn't matter. Assets should be kept on the books at the price they were obtained, as long as the assets haven't actually been impaired.
Mark-to-market accounting does just the opposite. When times are good, it artificially boosts banks' capital, thereby encouraging more investing and lending. In a downturn it sets off a devastating deflation.
Mark-to-market accounting is the principle reason why our financial system is in a meltdown. The destructiveness of mark-to-market -- which was in force before the Great Depression -- is why FDR suspended it in 1938. It was unnecessarily destroying banks.
But bad ideas never die. Mark-to-market was resurrected by the Financial Accounting Standards Board and became effective in the fall of 2007 (FASB rule 157) to the approval of the Bush administration, its Treasury Department, and the Securities and Exchange Commission. Even as FASB 157 began to take its toll on financial institutions last year, Mr. Bush refused to kill or suspend it. When Congress voiced displeasure last fall, the administration and regulatory authorities made some cosmetic changes, but the poisonous essence remained.
Thanks for posting that article, Anon. It's one of the most logical accounts of what's going on that we've read.
Forbes is lying his ass off. (Big surprise there...)
Mark-to-market rules would prevent the ballooning of level 3 (illiquid) assets. They are illiquid for one reason and one reason only: they are worth less than what the banks want for them. I agree with Denninger's solution. Suspend mark-to-market for 6 months BUT require 10% of the level-3 assets to be sold in order to establish a market for them. That gives them 6 months to clean up their balance sheet. Of course this wont happen, because TPTB are hellbent on bailout & depression.
There has to be a market for these assets. If there is no market then we allow the banks to essentially make up whatever numbers they want. Then we have no way of valuing these financial institutions. Then it becomes a contest to see who can commit the highest level of fraud in order to bring in the greatest profits. And of course it then also comes down to who can best bribe the regulators. The fact that this is the kind of goddawful corrupt system Forbes wants speaks volumes about how he made his money.
Icon, when you say that 10% of these assets should be sold in order to create a market for them, isn't it true that they are already on the market? What better way to find out the value of something than having people bid competitively for it. Foreclosed homes are already available at auctions everywhere. The fact that people aren't willing to pay 2006 prices for these properties suggests that those prices were unrealistically inflated, making them as toxic as we all fear they are. The banks may actually be upside-down on many of these homes, not just in theory. If we suspended mark-to-market accounting for 6 months and forced the sale of 10% of these assets, we may only merely confirm what we already know about them based on what they've been fetching lately.
Bought some SSO today. The value of the DDM and SSO we've been holding decreased in value, of course, making it 24% of our total account value even though at one point it accounted for 30% of it. Today, we added enough to our SSO position to bring our long holdings back up to the 30% mark. We're still hoping for lower lows, but if this turns out to be a significant bottom, today's purchase will put us at break even if/when the Dow reaches approx 8,600, rather than having to reach 9,000 as we previously needed. Our goal of getting to break even may not sound that glamorous, but considering we remained invested through this historical selloff, breaking even would be something we'd be very proud of.
If we do any more buying, it will have to be at lower levels, as we have no intention of chasing anything in this market.
The run on firearms and ammunition isn't because people are headed to their bunkers to protect their food in the face of the coming riots. It is because the Democrats are in office and they are stockpiling both for fear of gun control legislation.
Joe
"What better way to find out the value of something than having people bid competitively for it."
as funny as the following sounds, i think it could be a good solution to a problem: concert ticket sales! the mm's would be ticket master and the other one, (slippped my mind). tickets could be bought and sold electronically right up to the concert. what do you think? 888888s
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