Posted on 12/13/2008 4:08:15 AM PST by TigerLikesRooster
The Madoff Dilemma
By mark.gimein
Created 12/12/2008 - 3:57pm
Bernard Madoff, one of Wall Street's best-known brokers and money managers, was arrested [1] on Thursday after allegedly confessing to his sons in a near nervous-breakdown-type meeting that instead of the $17 billion they thought he had in his funds, there was pretty much zip. The whole thing was—as the criminal complaint quotes Madoff himself saying—"basically, a giant Ponzi scheme" in which investors who wanted their money back got paid with earlier investors' money.
/snip
The extraordinary thing that Lo does in the third chapter of his book Hedge Funds, published earlier this year, is to demonstrate mathematically that an excessive degree of serial correlation is a powerful indicator that the holdings of a fund aren't being reported realistically. What Lo shows from the pattern of historical returns in hedge-fund databases is that when funds' returns grow too consistent, it is a sign that the investments are either very hard to value accurately and the returns are just guesses, or, worse, that they've been manipulated in a way that smoothes them artificially. What Lo creates is a mathematical model for judging what "looks too good to be true." Lo's work turns a lot of the conventional thinking about what's safe on its head. It shows that the evenness that investors have traditionally been taught indicates safety and reliability can actually be the best sign risk is being hidden or that the data are unreliable.
(Excerpt) Read more at thebigmoney.com ...
My guess, zip, zero, nada?
Perhaps my educated guess should have read thus.
My guess, zip, zero, nada!!!!!!!!
Re AIG as a Ponzi scheme:
That’s not quite correct. In a Ponzi scheme, the schemer uses the incoming funds to payoff early investors (and usually diverts some to himself).
The thing that brought down AIG was a bit different. They wrote insurance that they couldn’t cover. It’s like sitting down at a poker game, showing your wad which is really a stack of play money with $100 bills on each side, and betting. If no one finds out, you can walk away with your winnings, but you have to welsh on your bets if you lose. Its a different kind of theft, because a welsher is establishing an option on the pot, which has value. He can’t lose (he doesn’t have any money), but he can win.
Where I come from, welching on a bet on a poker hand can get your ass in some serious trouble in a hurry. Like shot!
As it should. For a company, though, the worst that happens is bankruptcy, and maybe, if the CEO was in on it, a short jail term. If its a TBTF (too big to fail) company, apparently the only people who get screwed are the shareholders and the taxpayers.
A: He's breathing.
How positively ridiculous.
The problem has been two-fold. We have black Christians who vote for baby killers and thieves ~ because it shows solidarity (if not gross stupidity). Then we have white Christians who will simply not show up, or when they do, will vote for 9 of 10 candidates, but not the 10th if he's offensive in some way. That lets in the Democrat who is all but being an armbanded card carrying fascist.
At the same time we have non-Christians voting for the guy who promises them the most abortions, or the free-est sex, or the greatest opportunity for tax evasion, or shorter prison sentences.
They seem to be in the majority these days.
Yes it is, AIG used bogus warrant sales, it was not insurance, to pay off current loses, the spent all the rest!! LOL, But it was still crooked and should be regulated out of business just like hedges and credit default swaps all the DERIVATIVES BS.
Here we part company. The problem with many hedge funds is that they aren't hedged. Originally, hedge fund was applied to a long-short strategy; now it means just about any private investment vehicle which escapes regulation under the Investment Act because its members are accredited investors. Yes, I ran a small one, too, but it wasn't leveraged.
Derivatives, properly used, help limit risk.
The real problem is leverage and principal at risk. Like excessive credit (to which these are linked) too much brings down the house on players and non-players alike.
Regulation of large money pools is a tricky business. It is difficult to create regulations that are actually relevant, and it is difficult to administer them effectively. Perhaps some sort of overall leverage limits on large players might be in order, but then you run into problems of jurisdiction on international players.
The world survived without them for a few years, I'm sure we can make it without them again. Investment without Risk is a fools deal!! And in the end has no value!!!
MADOFF, BERNARD
NEW YORK,NY 10022 SELF EMPLOYED/INVESTOR 4/24/08 $2,300 Merkley, Jeff (D)
MADOFF, BERNARD
NEW YORK,NY 10021 BERNARD MADOFF INVESTMENTS 3/25/03 $2,000 Wyden, Ron (D)
MADOFF, BERNARD
NEW YORK,NY 10021 BERNARD MADOFF INVESTMENTS 3/25/03 $2,000 Wyden, Ron (D)
MADOFF, BERNARD
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT SECURIT 12/20/99 $2,000 Securities Industry Assn
MADOFF, BERNARD
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT SECURIT 12/20/99 $2,000 Securities Industry Assn
MADOFF, BERNARD
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT SECURIT 11/3/00 $2,000 Securities Industry Assn
MADOFF, BERNARD
NEW YORK,NY 10021 MADOFF SECURITIES 8/24/99 $1,000 Corzine, Jon S (D)
MADOFF, BERNARD
NEW YORK,NY 10022 CHAIRMAN 1/13/00 $1,000 Clinton, Hillary Rodham (D)
MADOFF, BERNARD
NEW YORK,NY 10021 BERNARD MADOFF INC 11/28/95 $1,000 Wyden, Ron (D)
MADOFF, BERNARD
NEW YORK,NY 10022 HOUSEWIFE 6/16/94 $1,000 Fields, Jack M Jr (R)
MADOFF, BERNARD
NEW YORK,NY 10021 5/21/96 $1,000 Ackerman, Gary L (D)
MADOFF, BERNARD
NEW YORK,NY 10022 HOUSEWIFE 6/22/94 $1,000 Fields, Jack M Jr (R)
MADOFF, BERNARD
NEW YORK,NY 10022 MADOFF INVESTMENT 6/22/94 $1,000 Fields, Jack M Jr (R)
MADOFF, BERNARD
NEW YORK,NY 10021 BERNARD MADOFF INVESTMENTS 2/18/04 $1,000 Lautenberg, Frank R (D)
MADOFF, BERNARD
NEW YORK,NY 10021 12/4/95 $500 Dodd, Christopher J (D)
MADOFF, BERNARD
NY,NY 10021 BERNARD MADOFF INVEST SECUR 1/17/96 $500 Oxley, Michael G (R)
MADOFF, BERNARD
NEW YORK,NY 10022 BOND BROKER 8/4/98 $500 Crowley, Joseph (D)
MADOFF, BERNARD
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT SECURIT 3/31/98 $300 Schumer, Charles E (D)
MADOFF, BERNARD
NEW YORK,NY 10021 SELF-EMPLOYED/BANKER 10/15/04 $250 Hooley, Darlene (D)
MADOFF, BERNARD
NEW YORK,NY 10021 MADOFF INVESTMENTS/CHAIRMAN 10/18/04 $250 Matheson, Jim (D)
MADOFF, BERNARD
NEW YORK,NY 10022 8/26/98 $-500 Crowley, Joseph (D)
MADOFF, BERNARD
NEW YORK,NY 10022 6/20/94 $-1,000 Fields, Jack M Jr (R)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF INVEST SEC 5/9/05 $25,000 Democratic Senatorial Campaign Cmte (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L. MADOFF INVEST. SEC./CHAI 9/30/06 $25,000 Democratic Senatorial Campaign Cmte (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L. MADOFF INVEST.-SEC./CHAI 5/4/07 $25,000 Democratic Senatorial Campaign Cmte (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L. MADOFF INVEST.-SEC./CHAI 9/12/08 $25,000 Democratic Senatorial Campaign Cmte (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMT SECURITIE 4/11/94 $5,000 Securities Industry Assn
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD MADOFF INVESTMENT 7/20/07 $2,300 Lautenberg, Frank R (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L. MADOFF INVESTMENT/CHAIRM 7/10/07 $2,300 Saul, Andrew Marshall (R)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF/CHAIRMAN 9/23/03 $2,000 Gephardt, Richard A (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 MADOFF INVESTMENTS/CHAIRMAN 6/17/04 $2,000 Markey, Edward J (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 MADOFF INVESTMENTS/CHAIRMAN 6/17/04 $2,000 Markey, Edward J (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 SECURITIES 6/16/94 $2,000 Fields, Jack M Jr (R)
MADOFF, BERNARD L
WASHINGTON,DC 20005 SECURITIES 12/17/93 $1,000 Fields, Jack M Jr (R)
MADOFF, BERNARD L
NEW YORK,NY 10022 SECURITIES 4/28/95 $1,000 Fields, Jack M Jr (R)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L MADOFF PC 10/23/98 $1,000 Rangel, Charles B (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD MADOFF INC 3/10/00 $1,000 Obey, David R (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD MADOFF INVESTMENT SEC 4/20/00 $1,000 Fossella, Vito (R)
MADOFF, BERNARD L
NEW YORK,NY 10021 SELF-EMPLOYED 9/21/98 $1,000 D’Amato, Alfonse M (R)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT SECURIT 5/22/98 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 MADOFF INVESTMENTS 5/15/98 $1,000 Markey, Edward J (D)
MADOFF, BERNARD L
NEW YORK,NY 10023 MADOFF SECURITIES 6/29/94 $1,000 Markey, Edward J (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 MADOFF SECURITIES 8/4/96 $1,000 Markey, Edward J (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF CO 9/17/96 $1,000 Frisa, Daniel (R)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L MADOFF INVEST SECURITIES 11/8/93 $1,000 Dingell, John D (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT 5/5/98 $1,000 Tauzin, W J “Billy” (R)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENT SECURIT 10/30/98 $1,000 Victory in New York
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENTS 8/18/04 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENTS 8/18/04 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENTS 4/8/02 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENTS 4/8/02 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L. MADOFF P.C./CHAIRMAN 8/30/01 $1,000 Rangel, Charles B (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT SECURIT 5/22/98 $700 Schumer, Charles E (D)
MADOFF, BERNARD L
NEW YORK,NY 10022 SECURITIES INVESTMENTS 5/18/93 $400 Gillmor, Paul E (R)
MADOFF, BERNARD L
NEW YORK,NY 10021 BERNARD MADOFF INVESTMENT 7/20/07 $300 Lautenberg, Frank R (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 10/15/04 $250 Frost, Martin (D)
MADOFF, BERNARD L
NEW YORK,NY 10/13/94 $200 Ackerman, Gary (D)
MADOFF, BERNARD L
NEW YORK,NY 10021 12/5/07 $-2,300 Saul, Andrew Marshall (R)
MADOFF, BERNARD L MR
NEW YORK,NY 10021 BERNARD L. MADOFF INVESTMENT SECURI 5/24/07 $5,000 Securities Industry & Financial Mkt Assn
MADOFF, BERNARD L MR
NEW YORK,NY 10021 BERNARD L. MADOFF INVESTMENT SECURI 8/20/08 $5,000 Securities Industry & Financial Mkt Assn
MADOFF, BERNARD L MR
NEW YORK,NY 10021 MADOFF (BERNARD L.) INVESTMENT SECU 7/8/04 $5,000 Securities Industry Assn
MADOFF, BERNARD L MR
NEW YORK,NY 10021 BERNARD L. MADOFF INVESTMENT SECURI 10/17/06 $5,000 Securities Industry Assn
MADOFF, BERNARD L MR
NEW YORK,NY 10021 BERNARD L. MADOFF INVESTMENT SECURI 9/22/05 $5,000 Securities Industry Assn
MADOFF, BERNARD MR
NEW YORK,NY 10021 BERNARD MADOFF INVESTMENT SECURITIE 4/26/99 $1,000 Bradley, Bill (D)
The surprises will trickle out, as we hear which HNW individuals, endowments, and hedge funds are directly and INdirectly wiped out by this. I don’t think it’s a coincidence that Citadel froze redemptions the day after the Madoff fraud was revealed. A lot of hedge funds, capital call funds (and there’s at least a bit of overlap between those two categories these days), counterparty lenders, private banks, etc. are only just beginning to figure out how big their indirect hits are. There’s going to be an extensive and very branched domino run emanating from Madoff.
The only good news here is that a sizeable collection of useless “socialites” and “jetsetters” are going to be taken off the map — the ones who were so busy spending money amusing themselves that they never bothered to ask the family office where all the investment income was coming from, and are now learning it was virtually all from the Madoff scheme. And same for a sizeable collection of scumbags who invested with Madoff because they were sure he was getting his steady, strong returns by cheating (by front-running his market-making business).
What did I say in my original post that warranted a “smack down?”
Nothing. But he was doing it wasn’t he.
LOL - lots of people in Palm Beach will be crying to their butlers tonight...
MADOFF, BERNARD L NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENTS 8/18/04 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENTS 4/8/02 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L NEW YORK,NY 10021 BERNARD L MADOFF INVESTMENTS 4/8/02 $1,000 Schumer, Charles E (D)
MADOFF, BERNARD L NEW YORK,NY 10022 BERNARD L. MADOFF P.C./CHAIRMAN 8/30/01 $1,000 Rangel, Charles B (D)
MADOFF, BERNARD L NEW YORK,NY 10022 BERNARD L MADOFF INVESTMENT SECURIT 5/22/98 $700 Schumer, Charles E (D)
MADOFF, BERNARD L
Interesting. I wonder what kind of favors he was buying?
So..you were sticking up for me... a little? :)
BTW, I now know McCain and Cindy READ FR. This morning McCain not only refused to renounce fascism and fascistic designs in legislation, he began demanding a command economy (reform the markets), a new defense expenditure strategy (more command economy stuff), and total reform of Congress' approach to the budget (just piling it on).
Just yesterday I noted once again that all he had to do to get enough votes to win was to abandon his BS "reform" stuff and go whole hog into a modern view point that rejects fascism and the McCain-Feingold Act.
What a stubborn old coot. Maybe you can drive up there and talk some sense to him.
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