In Madoff We Trust

www.financialsense.com...
As the multi-billion dollar Ponzi scheme orchestrated by Wall Street insider Bernard Madoff unravels in the media spotlight, the nation is being presented with a rare opportunity to understand the true nature of many of our most cherished financial structures. Hopefully we have the wisdom to connect the dots.

Although the $50 billion loss engineered by Madoff is truly a staggering accomplishment (and was done using old-fashioned fraud rather than the mathematical wizardry that has characterized Wall Street’s recent larcenies) the size of the scheme pales in comparison to the multi-trillion dollar Ponzi structures run by the United States government. In fact, rather than looking to jail Madoff, President-elect Obama should consider making him our new Treasury secretary. If not that, at least make him the czar of something!

Madoff’s inspiration came from Charles Ponzi, the Italian-born American immigrant who promoted an investment plan in the early 1900s’ that traded postal coupons. Rather than paying investors from legitimate investment returns, Ponzi hit upon the innovative idea of paying out early investors with money collected from new investors. By creating an illusion of success, interest in his investment plan ballooned. Over time the schemes have become known by many other names, such as chain letters or pyramid schemes. They are united by the fact that they always fail in the end.

When the influx of new investors inevitably slows to the point where distributions to current investors can no longer be maintained, investors look to withdraw funds. When this happens, the entire structure falls apart. The profits received by those who “invested” early as well so any funds skimmed off by the promoter, are offset by all the losses of those who came late to the party.

Read the full article here
Peter Schiff
12/17/08

[edit on 18-12-2008 by mybigunit]

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[edit on 18-12-2008 by 12m8keall2c]

reply to post by mybigunit


S & F - an extremely well written and thought provoking read. I haven't had time to educate myself on the Madoff scandal as I've been busy but your post proved to be a concise introduction to a situation which seems to be duplicated here in the UK.

My understanding is that Madoff is not alone - I read something I think here that stated the problem was systemic as the loop holes Madoff was using to get around detection was known by Wall Street and exploited like everything on Wall Street is.. I would expect a good 50% of brokerages are guilty of schemes like Madoffs.... they just havent gotten to them yet... but 50 billion ... all in all what if I said we are looking at a 50 trillion dollar problem.... numbers on a computer screen do mean something - and we will uncover each and every one of these crooks as the economy continues to decline. till at least mid summer 2009. 6 months is about all I can see and Feb. still looks like the challenge month of our life times. I wonder if Feb. is the Month where the Feds tell Wall Street to come clean or else... then we will see just how much fluff is in the fiat currency.

There's this too:

www.nytimes.com...

As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers’ money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.

Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning.

“Compensation was flawed top to bottom,” said Lucian A. Bebchuk, a professor at Harvard Law School and an expert on compensation. “The whole organization was responding to distorted incentives.”

Even Wall Streeters concede they were dazzled by the money. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well.

The fact is - the jig is up. The financial community has showed it's hand. It can't be trusted to play fair or regulate itself. Hopefully we have learned our lesson and it won't be business as usual for these crooks.


[edit on 18/12/2008 by kosmicjack]

Originally posted by BornPatriot
6 months is about all I can see and Feb. still looks like the challenge month of our life times. I wonder if Feb. is the Month where the Feds tell Wall Street to come clean or else... then we will see just how much fluff is in the fiat currency.

100% accurate.

At this point, all that's left is to stop the bailouts and nonsense and find out exactly how much of the world's currency is fake. There is a dollar amount which exists, and which represents the actual true number of how much money is out there versus how much actual liquidity.

This Madoof guy imo was flushed out by other forces which are shaking the core of the money-tree in America, to loosen the rotten apples. Madoff was absolutely being protected by the SEC (They are keystone cop buffoons and I know this from working experience) but somebody pinched him.

America is like a family who has had Dad handling the bills but he's leveraged to the hilt and sinking. Now we find that Dad encouraged all the neighbors on the block to invest with our "family", so it's all the houses on the block whose money is over-leveraged and evaporating. Nevertheless, there is a dollar amount that represents how much this debt is. When that dollar amount is finally revealed (I agree with your timeline, Feb sounds right), then everyone will mess their pants and weep. Blaming "Daddy" at that point seems pointless since he, like everyone, is taking someone else's advice on how to invest anyway (even daytraders learn the game from a mentor), so everyone's got someone to point a finger at as the boat sinks. Debt doesn't go away, even when your creditor goes under. The debt gets sold to someone else.

A slick UPC barcode branded on each person's wrist, would be so much easier. It's non-forgeable, instantly accessible and verifiable. Just a drop of your blood and an Iris scan and you're part of a whole NEW Credit Union!

What is the goofy SEC going to do this time.

Secret investments must be the rule for the Illuminati.

This man is apparently more competent than the SEC:

Mass. Man spent 10 years trying to SEC about thieving bastard Madoff, was ignored.

Markopolos complained to the SEC's Boston office in May 1999, saying it was impossible for the kind of profit Madoff was reporting to have been gained legally.

But Madoff continued to thrive, even as Markopolos continued to pursue the case.

In 2005, he submitted a report to the SEC saying it was "highly likely" that "Madoff Securities is the world's largest Ponzi scheme." In the report, he says he knew his research could ruin people's careers and asked the SEC be discreet about circulating the report and his name.

"I am worried about the personal safety of myself and my family," he wrote.

The report highlights 29 "red flags" about Madoff's business, among them the returns of a third-party hedge fund managed by Madoff's firm which had negative returns in just seven on the 174 months Markopolos analyzed.

"No major league baseball hitter bats .960, no NFL team has ever gone 96 wins and only 4 losses over a 100 game span, and you can bet everything you own that no money manager is up 96% of the months either," he said.

There's no shortage of worthless "experts" and conspiracy debunkers on ATS but they seem to always avoid the truly useful threads. Meanwhile truth continues to be sidelined in favor of stupid UFO threads. What a joke. Klaatu steals your attention while some scumbag elitist steals your cash.


[edit on 19-12-2008 by smallpeeps]

Originally posted by smallpeeps

There's no shortage of worthless "experts" and conspiracy debunkers on ATS but they seem to always avoid the truly useful threads. Meanwhile truth continues to be sidelined in favor of stupid UFO threads. What a joke. Klaatu steals your attention while some scumbag elitist steals your cash.


[edit on 19-12-2008 by smallpeeps]

Partial quote from above.

There may be only one "unheeded prophet" in the UFO world as well.

If there is a "UFO industry", the real and the phony, it may be more
important than $50B.

If the "industry" took two world wars to make, the final plunder should
make 2012 look like a new presidential year in the very least exceptional.

Originally posted by TeslaandLyne
If there is a "UFO industry", the real and the phony, it may be more
important than $50B.

If the "industry" took two world wars to make, the final plunder should
make 2012 look like a new presidential year in the very least exceptional.

I like the way you think. Assuming there is a fake and also a real UFO industry (or perhaps both sides are 'fake' but managed so that one is seen as more fake than the other) then as you say, when the UFO industry is 'plundered', a lot of people will be "surprised". Now we have the hedge funds getting plundered globally, but they had to get plundered, because that's why they were set up!

If you look at the historical chart of the DJIA for example, you'll see that in 1984 is when the DOW starts rising. Why? Because 1984 is the rise of the 401k. So beginning then, the DJIA rose to record heights and is now being "plundered" by the people at the top. This only took 20 years to engineer, whereas the UFO crap has had 60 years to simmer. Both industries are made to be "plundered".

When the engineered crash of the UFO culture begins, there will be clear evidence to show you which UFO threads were "false" and which were "real" but BOTH will be designed to keep you from seeing the truth.

When will humans stop being "surprised"? Also, when will they see the connection between billions of dollars and lights in the sky? We really are infants here on Earth but why do so few want to stay snuggled up in the crib? ...It's a sad state of affairs.

Madoff hid most of the money years ago. The only really incriminating documentation was delivered as hard copy for digital transfer to an office in the Worlrd Trade Centre early September 2001.

CIA with the help of Mossad planted bombs in the Towers, with airlines plowing into them as a cover.

I haven't figured out how Israel benefits from all this, but am sure someone around here can find linkage.


Mike F

OK, sorry. The last message was a conspiract theory joke.


In the rush to report how much Madoff ... uh ... made off with, no one seems too intent on figuring out what can be recovered and how.

Even if he had been totally on the up and up, Madoff would have been dripping with red ink in the last year for his clients.

We don't have yet any esitmate of how much money he actually received in cash, how much was bought on margin, what happened to any legitimate profits, etc.

It's just possible many billions that have been siphoned out of the system by Madoff cohorts are hiding under the umbrealla of this scandal, with Madoff providing no bookkeeping, taking the rap, and equally gulity parties being shielded.

Heads should roll, but it looks as if this goes so deep right into the political stratum that we won't be given the bigger picture.


Mike F