oly720man
Posts: 5740
Joined: Fri May 21, 2004 7:13 am

Losing $50 Billion

Fri Dec 12, 2008 4:53 pm

Just been reading this..

http://news.bbc.co.uk/1/hi/business/7779442.stm

The former chairman of the Nasdaq stock market has been arrested and charged with securities fraud, in what may be one of the biggest fraud cases yet.

Bernard Madoff ran a hedge fund which ran up $50bn (£33.5bn) of fraudulent losses and which he called "one big lie", prosecutors allege.


I'm no financial brains by any stretch of the imagination but it must take a spectacular level of incompetence or something to sustain losses to that level. Is he even more gullible/greedy than the people who invested with his company? How can that much money be lost? Starting in 1960 he's averaging $1 billion a year.

And I know lawyers have to defend to the best of their ability, but

Dan Horwitz, Mr Madoff's lawyer, said: "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events."

does seem a little inaccurate, unless he's the leader in the "biggest losses" league table.
wheat and dairy can screw up your brain
 
PSA53
Posts: 2928
Joined: Tue Aug 19, 2003 1:54 pm

RE: Losing $50 Billion

Fri Dec 12, 2008 7:01 pm

And the Wall St. criminal conduct hit parade continues!

I've lost all confidence in Wall St.integrity or lack of it.You'd be safer betting in Vegas.
Tuesday's Off! Do not disturb.
 
Alessandro
Posts: 4962
Joined: Wed Sep 12, 2001 3:13 am

RE: Losing $50 Billion

Fri Dec 12, 2008 9:06 pm

That´s why I always been against the phrase "investing in stocks", I always think "gambling in stocks" are more accurate.
From New Yorqatar to Califarbia...
 
UAL747
Posts: 6725
Joined: Mon Dec 13, 1999 5:42 am

RE: Losing $50 Billion

Fri Dec 12, 2008 10:15 pm



Quoting Alessandro (Reply 2):
That´s why I always been against the phrase "investing in stocks", I always think "gambling in stocks" are more accurate.

It's all really a big gamble when you give money for something that really isn't tangible. By 1000 shares of Wal-Mart and it's not like they are going to pay you your 4000 dollars (assuming trading is a 4 bucks). The only real guarantee is how much money you have stuffed in your mattress at this point. And even money can eventually be worthless.

Maybe it's about time we start investing in those gold coins they sell on TV? Gold sales went up after Sept. 11.

UAL
"Bangkok Tower, United 890 Heavy. Bangkok Tower, United 890 Heavy.....Okay, fine, we'll just turn 190 and Visual Our Way
 
na
Posts: 9129
Joined: Sun Dec 12, 1999 3:52 am

RE: Losing $50 Billion

Fri Dec 12, 2008 10:58 pm

The stock exchange has always been the biggest "snowball"-system in the world. Who comes last, looses. A classmate of mine got rich enough to stop working with 40 years age, shortly before the crash of 2000. He sold everything when he noted that even the most conservative and simple people in his hometown started to invest in stocks.
Its only worth to buy stocks if you become some kind of semiprofessional in it and youre very deeply interested in it, and that with lots of surplus money so that the time spend is actually been "paid" for.

I would like the press to follow the path of those sick Wallstreet sharks to investigate how many people will die, let it be of suicide or other causes, because of their criminal and reckless greed.
That this days scandal hero is called Madoff is interesting. Mad he is for sure, and off he should go to be imprisoned for the rest of his miserable life. Blowing 50 billion of other people´s money deserves lifelong working in a chain-gang.
 
Alessandro
Posts: 4962
Joined: Wed Sep 12, 2001 3:13 am

RE: Losing $50 Billion

Fri Dec 12, 2008 11:07 pm



Quoting UAL747 (Reply 3):
ng Alessandro (Reply 2):
That´s why I always been against the phrase "investing in stocks", I always think "gambling in stocks" are more accurate.

It's all really a big gamble when you give money for something that really isn't tangible. By 1000 shares of Wal-Mart and it's not like they are going to pay you your 4000 dollars (assuming trading is a 4 bucks). The only real guarantee is how much money you have stuffed in your mattress at this point. And even money can eventually be worthless.

Maybe it's about time we start investing in those gold coins they sell on TV? Gold sales went up after Sept. 11.

Gold is up this year, one of the few things that has gone up. Woolworth in the UK, an 99-year old supermarket chain has gone bust, so nothing is granted.
From New Yorqatar to Califarbia...
 
photopilot
Posts: 3061
Joined: Mon Jul 15, 2002 11:16 am

RE: Losing $50 Billion

Sat Dec 13, 2008 2:01 am

How do you make a small fortune in the stock market? Start with a Large fortune!
:D
 
johns624
Posts: 1239
Joined: Mon Jul 07, 2008 11:09 pm

RE: Losing $50 Billion

Sat Dec 13, 2008 1:56 pm



Quoting Oly720man (Thread starter):
I'm no financial brains by any stretch of the imagination but it must take a spectacular level of incompetence or something to sustain losses to that level. Is he even more gullible/greedy than the people who invested with his company? How can that much money be lost? Starting in 1960 he's averaging $1 billion a year.

He didn't lose it in the stock market. It was never in the stock market. It was a Ponzi (pyramid) scheme.
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: Losing $50 Billion

Sat Dec 13, 2008 2:05 pm



Quoting UAL747 (Reply 3):
And even money can eventually be worthless.

Yes, have your checked the money supply lately?
http://www.federalreserve.gov/releases/h6/Current/

According to some, not good. And so far, what has it bought? Then again, maybe it would be worse without that blowout.
 
comorin
Posts: 3857
Joined: Sun May 29, 2005 5:52 am

RE: Losing $50 Billion

Sat Dec 13, 2008 4:56 pm



Quoting Johns624 (Reply 7):
He didn't lose it in the stock market. It was never in the stock market. It was a Ponzi (pyramid) scheme.

It wasn't a pure Ponzi scheme (I think). I know someone (really nice chap) who spent 4 years in a Federal 'Country Club' for doing the following, and it sounds close to what happened:

1. He raises funds from an ethnically-affiliated group with a promise of constant returns.
2. The funds are then invested in what this person thinks will yield beyond that expected return, so that he can keep the margin.
3. His investments don't do so well, so he panics. He starts using new money (from new investors) to spike up portfolio (on paper) returns to his original investors in the hope that the market turns around.
4. Market doesn't turn around, so the best this guy can hope for is that no one asks for redemption. Someone does, and the guy is greeted in the early am with guys wearing badges.

Now the above scheme was only in the millions. To scale up the operation, you would need to have your own broker-dealer so that you can create fictitious customer statements of holdings. You would also need enough liquidity to take care of the occasional redemption.

So why the institutions invest? His returns had very low volatility - perfect for risk-averse pension funds and fund of funds. For this scheme to work, you had to make sure your returns were always ahead of the pack (redemption risk). However, with the markets tumbling of late, many had to cash out having lost money elsewhere, and the whole pyramid came tumbling down.

Let's not forget that the aptly named Mr. Madoff was also a past Chairman of NASDAQ, and was a pioneer in electronic trade execution. A kind and decent guy got in over his head and went bad.
 
oly720man
Posts: 5740
Joined: Fri May 21, 2004 7:13 am

RE: Losing $50 Billion

Sat Dec 13, 2008 7:26 pm



Quoting Comorin (Reply 9):
So why the institutions invest?

http://news.bbc.co.uk/1/hi/business/7781086.stm

Some of the world's wealthiest private and corporate investors are reported to be victims of an alleged $50bn fraud by Wall Street broker Bernard Madoff.

Mr Madoff is alleged to have confessed to a huge Ponzi scheme (pyramid fraud).

Reports say the main owner of the New York Mets baseball team, Fred Wilpon, and former American football team owner Norman Braman are among the victims.

Others facing losses reportedly include French bank BNP Paribas, Japan's Nomura Holdings and Zurich's Neue Privat Bank.
.
.
.
.
Brad Friedman, a lawyer for some of the investors, said: "There are people who were very, very well off a few days ago who are now virtually destitute.

"They have nothing left but their apartments or homes - which they are going to have to sell to get money to live on," he told the New York Times.



Is it fair to say that the name of the man in charge blinkered potential investors to maybe doing deeper checks? Or were there simply no indications there was anything wrong until the wheels fell off?

How circumspect are people going to be, from now on, about investing anywhere?
wheat and dairy can screw up your brain
 
comorin
Posts: 3857
Joined: Sun May 29, 2005 5:52 am

RE: Losing $50 Billion

Sun Dec 14, 2008 4:09 am



Quoting Oly720man (Reply 10):
Is it fair to say that the name of the man in charge blinkered potential investors to maybe doing deeper checks? Or were there simply no indications there was anything wrong until the wheels fell off?

He did a really good job! You had to join these very exclusive clubs to meet him so that he'd even consider taking your money - it was an honor if Madoff agreed to manage your money. Fund returns get around on the Street, so everyone was lining up to get in on it. I just can't believe a bank like BNPP would not do the necessary due diligence.

Nobody knew anything was wrong until Madoff confessed to his sons and they called the SEC.
 
Dougloid
Posts: 7248
Joined: Tue Jul 05, 2005 2:44 am

RE: Losing $50 Billion

Sun Dec 14, 2008 5:07 am



Quoting NA (Reply 4):
He sold everything when he noted that even the most conservative and simple people in his hometown started to invest in stocks.

In the spring of 1929, Bernard Baruch the financier walked to his office on Wall Street and as was his custom, had his shoes shined. The shoeshine boy gave him a tip on what what he guaranteed was the Next Big Thing In Stocks.

Baruch thought about this and then started quietly liquidating his holdings, which he did throughout the summer of 1929.
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
jcs17
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RE: Losing $50 Billion

Sun Dec 14, 2008 7:32 am

As a die-hard free market capitalist, I will never understand a billionaires reason to rip people off. It's the most ridiculous concept ever, in my opinion. This opinion is probably what is setting me apart from millionaire status: If you have $100+ million in the bank, what's the point. You and your children can retire comfortably, you can do whatever you please. You don't need to rip people off to make another cent.
America's chickens are coming home to rooooost!
 
comorin
Posts: 3857
Joined: Sun May 29, 2005 5:52 am

RE: Losing $50 Billion

Sun Dec 14, 2008 3:11 pm



Quoting JCS17 (Reply 13):
As a die-hard free market capitalist, I will never understand a billionaires reason to rip people off. It's the most ridiculous concept ever, in my opinion. This opinion is probably what is setting me apart from millionaire status: If you have $100+ million in the bank, what's the point. You and your children can retire comfortably, you can do whatever you please. You don't need to rip people off to make another cent.

You just don't understand!  Wink $100M+ is chump change if all your friends have $200M - you can feel really miserable. In Silicon Valley for example, there's a strong caste system based on 'the number' - not very different from Wall Street. My own informal ranking:

$10M - Arriviste - Just another Joe Schmo. Starts going to Charity events.
$100M - Junior League - first step on the rat race, sets up Charitable Trust. Get Trophy Wife.
$300M - Comfortable - You can now bail out with dignity intact.
$500M - Officially Rich - Trophy Wife and spoilt kids await your demise...
$1B - Billionaire - Sigh of relief, game over. No more friends, family as you can't trust anyone.
 
oly720man
Posts: 5740
Joined: Fri May 21, 2004 7:13 am

RE: Losing $50 Billion

Sun Dec 14, 2008 9:58 pm



Quoting Comorin (Reply 14):
if all your friends have $200M

Or they think they do
wheat and dairy can screw up your brain
 
PPVRA
Posts: 7864
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RE: Losing $50 Billion

Mon Dec 15, 2008 12:40 am

$50 billion!?

The man's too big to fail. Let's bail him out.

 thumbsdown 
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Beaucaire
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Joined: Sun Sep 14, 2003 4:48 am

RE: Losing $50 Billion

Mon Dec 15, 2008 7:41 am



Quoting NA (Reply 4):
Blowing 50 billion of other people´s money deserves lifelong working in a chain-gang.

 checkmark   checkmark   checkmark   checkmark   checkmark 
He most probably gets a few years in jail and after six months a smartass lawyer bails him out because they discovered a procedural fault during the tral or arrest.
A Siberian prisoncamp would even be to weak a punishment for this sick individual.
Please respect animals - don't eat them...
 
Dougloid
Posts: 7248
Joined: Tue Jul 05, 2005 2:44 am

RE: Losing $50 Billion

Mon Dec 15, 2008 3:03 pm



Quoting Beaucaire (Reply 17):
He most probably gets a few years in jail and after six months a smartass lawyer bails him out because they discovered a procedural fault during the tral or arrest

Stick to your knitting, B. It's early in the day. Also, at the age of seventy, how much time do you expect he can do?

What I find interesting in all this is who's been caught with their pants down by Mr. "Made-off" who it seems made off with the money.

http://www.forbes.com/home/2008/12/1...ts-equity-cx_po_1215markets05.html
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
johns624
Posts: 1239
Joined: Mon Jul 07, 2008 11:09 pm

RE: Losing $50 Billion

Mon Dec 15, 2008 3:17 pm



Quoting Beaucaire (Reply 17):
He most probably gets a few years in jail and after six months a smartass lawyer bails him out because they discovered a procedural fault during the tral or arrest.
A Siberian prisoncamp would even be to weak a punishment for this sick individual.

This is a perfect example of what I have never understood about the criminal justice system. A workingman can lose his job, run out of money and rob the local 7-11 of $100 to feed his family and if he gets caught, does many years of hard time. Yet, a white collar criminal can steal millions (or billions), ruin thousands of peoples' savings, and get a relative slap on the wrist. Who harmed society more?
 
mandala499
Posts: 6458
Joined: Wed Aug 29, 2001 8:47 pm

RE: Losing $50 Billion

Tue Dec 16, 2008 4:03 pm



Quoting NA (Reply 4):
The stock exchange has always been the biggest "snowball"-system in the world. Who comes last, looses. A classmate of mine got rich enough to stop working with 40 years age, shortly before the crash of 2000. He sold everything when he noted that even the most conservative and simple people in his hometown started to invest in stocks.

LOL, a couple of friends and I have this principle... Once the janitors starts talking about stocks in their coffee breaks, sell everything, and just play bits for fun and watch it all crumble...
Once this happens:

Quoting Oly720man (Reply 10):
How circumspect are people going to be, from now on, about investing anywhere?

Then U know U get to start working and look for the opportunities...

And repeat the whole process...

I was told that... in a rising tide, all ships float... in a falling tide, some hit the bottom before others...

Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
prebennorholm
Posts: 6409
Joined: Tue Mar 21, 2000 6:25 am

RE: Losing $50 Billion

Wed Dec 17, 2008 12:00 am



Quoting Comorin (Reply 11):
He did a really good job! You had to join these very exclusive clubs to meet him so that he'd even consider taking your money - it was an honor if Madoff agreed to manage your money. Fund returns get around on the Street, so everyone was lining up to get in on it.

Hmmm, not so! A few ordinary Danish retail banks lost substantial sums on Mr. Mad$$$'s crime. So also the ordinary Mr. Hansen and Mrs. Jensen over here will pay a higher return on their mortgage to cover Mr. Mad$$$'s debts.
Always keep your number of landings equal to your number of take-offs
 
Dougloid
Posts: 7248
Joined: Tue Jul 05, 2005 2:44 am

RE: Losing $50 Billion

Fri Dec 19, 2008 2:56 am



Quoting Prebennorholm (Reply 21):
A few ordinary Danish retail banks lost substantial sums on Mr. Mad$$$'s crime. So also the ordinary Mr. Hansen and Mrs. Jensen over here will pay a higher return on their mortgage to cover Mr. Mad$$$'s debts.

So the banks are going to just go right ahead and pass that on to the customers? Do you not have fixed rate mortgages?

I mean, if US Bank f**ks up and loses a few billion on some dumbass "investment" it matters not to me. They can't raise my rates.

Anyway, Barron's did an expose of Madoff's 'business model" 5 or 6 years ago. Don't the fellows in your bank subscribe?
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
jfk69
Posts: 1197
Joined: Sat Jul 01, 2006 3:04 am

RE: Losing $50 Billion

Fri Dec 19, 2008 4:07 am



Quoting Beaucaire (Reply 17):
He most probably gets a few years in jail and after six months a smartass lawyer bails him out because they discovered a procedural fault during the tral or arrest.
A Siberian prisoncamp would even be to weak a punishment for this sick individual.

Nah, he will go away for a while. Some relatives of mine lost money in a very similar ponzi scheme back in 01. The guy served 6 of 8 years. That scheme was only estimated at $35-40 mil.

I suspect Madoff, or as some of the papers are calling him....MADE OFF.....(UCH, stupid papers) will get a nice chunk of time to rot.....prob more than 10-15 years since so many charities got screwed.

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