Two Considerations for anybody Laughing over the Madoff Scandal

[Mike 03]

He was actually beloved and respected by some of the "old time" investors from the 70s, such as Arthur Levitt of the SEC and others. He had an impeccable reputation for integrity.

Obviously he was a psychopath, but the point is:

His investors were not just greedy hedge funds operators but money managers for retiree pension funds, charitable organizations, investment funds for universities, city and municiple funds, including pension funds for retirees. Isn't one of Spielberg's charities to provide netting for children at risk for malaria?

To laugh at this catastrophe is to rejoice in the demise of Steven Spielberg's charity, retirement funds all over the East Coast and, basically, you say goodbye to a ton of university endowments and the sorts of college grants and scholarships that enabled me and others like me to get through college.

So laugh yourselves to death.

[geckosfeet]

1. He is a sociopath. And his clients probably fall into two primary categories.

1. Want to make a quick buck, don't care how, who or where and not doing the research.
2. Want to make a quick buck, don't care how, who or where and did the research but can't argue with his apparent success.

[cali]

11. wrong. but continue your delusional and uniformed beliefs.

[leftofthedial]

30. pathetic

absurd

ridiculous

ignorant

[geckosfeet]

37. Oh wait - I was wrong. He is the salt of the earth and so are his clients. eom

[girl gone mad]

38. I think that was a pretty accurate description.

His investors clearly did not do their due diligence. His returns were shockingly suspicious. The SEC had been alerted to his questionable dealings by rival firms. Many of his investors have come forward to say they knew something wasn't right, but they thought he was "just" engaging in insider trading.

What are charities doing investing in hedge funds? What are retirees doing investing in hedge funds? Highly irresponsible money management in both cases.

[elleng]

41. And the SEC did/said WHAT?

Many investors rely on formerly reliable sources, and don't/can't do due diligence themselves. (I'm thinking of individuals here, intelligent and hardworking retirees like my father. Fortunately those HE relies on were not among Mad's investors.)

[SoCalDem]

2. Many college endowments never actually end up being USED

There's a recent study (saw the lady on C-span) that showed how many prominent colleges hoard their endowments, and use them as an enticement to get MORE money, but rarely give much to students..for an actual education.. and most people who GAVE to the endowments actually specified that they wanted their money to go to HELP kids pay for their educations..

edit:

found a link about the report
http://www.nptimes.com/instantfund/08Dec/IF-081211-1.html

[pnwmom]

3. I think some of the laughers fail to realize how connected everything is,

and that whatever their personal financial circumstances, they are not immune from the repercussions of this meltdown.

[DJ13]

4. Charitable organizations had no right to use a hedge fund with their money

Thats gambling, and any charity that gambled their funds deserves all the scorn we can give them.

[gravity]

13. They do all the time

Most hedge funds actually provide low risks returns, and aren't much different than investing in a mutual fund or bond fund.

And Madoff didn't even run a hedge fund, it was managed accounts. He managed the stocks for the organizations, which the clients assumed they owned those companies that were in their own accounts. They lost money because who they trusted to act as a broker, said I'm sorry, but I stole all your money.

If the victims were guilty of anything, it was actually trusting the SEC to do its job to prevent frauds. Geez, stop blaming the victim here.

[DJ13]

17. Sorry, but there IS a significant difference between a bond fund & hedge fund

Hedge funds are unregulated, and as such theres more risk, which makes them completely unsuitable for institutions and charities to invest in.

[gravity]

23. Many are suitable for institutions

If they preform the proper due diligence ahead of time. Many hedge funds offer lower risks investment strategies, which make them attractive investments to begin with for these organizations.

There are also lots of hedge funds who are too risky for institutions to invest in to. You can't characterize them all with a blanket statement.

[sarcasmo]

18. Correct, and if I had money to donate and a charity messed with a hedge fund, I would be pissed.

[BrklynLiberal]

5. Since he has been around so long, and WAS respected...perhaps he had

some sort of debilitating mental problem that no one saw..Alzheimers or dementia??

[JDPriestly]

19. The slippery slope. Sometimes the desire to please others

is ruinous. Life is hard. It is difficult to step back, view what you are doing objectively, detach yourself from self-interest (aka the ego) and find the courage and self-discipline to do the right thing when everyone around you is doing the wrong thing. I do not know a single person who is without fault, and this is only one way in which people allow their baser desires to seduce them into the easy way out. I fell sorry for the guy, his family, and all who fell for the ruse.

After all, in these days of little to no government regulation, no one to answer to, no strict rules about what you do and cannot do, a lot of people made very serious mistakes, crazy investments and promises they could not keep. It is a day of reckoning for a lot of people on the financial front.

As someone posted yesterday, the real Ponzi scheme was the 401(K) retirement scheme. Here, just put your life savings in the stock market. You want to save your money, I've got a bridge to a happy retirement that I can sell you. It's called a mutual fund, and it diversifies your investments in order to minimize risks.

Yeah, sure. And millions upon millions of Americans fell for it.

Funny thing is that we heard a lot about how the generational bulge of the Baby Boomers followed by the generational shrinking of the younger generations were going to cause a deficit in the Social Security funds. But no one thought about the next step. While that principle may apply to Social Security to some extent, it applies to other retirement schemes far more. Stock values are no longer calculable from the earnings of the company, although that is an important factor. Nowadays, stock values are simply a matter of popularity of the stock. How many buyers v. how many sellers. So volume is everything. And the volume of young buyers is considerably lower than the volume of sellers from the Baby Boomer generation or at least will be very soon.

[BrklynLiberal]

29. Can you imagne what would be happeningif the repukes had succeeded in privatizing SS??

[ProfessorGAC]

45. I Can Imagine It

That extra money would have grossly inflated the value of securities when extra money went flowing into those markets. When the correction came, it would have made what just happened look like a crack in the sidewalk compared to "break you axle" pothole.

It would have been every bit the disaster you imply.
GAC

[natrat]

6. yea colleges have charged 10x the rate of inflation, i cry for them

[ayak9]

14. Irony

Madoff done "made off" with the money. Sometimes, names are just too ironic. We used to have a State Treasurer in TX named Jesse James and another whose last name was Outlaw.

It may not be funny, but I'm glad the rich are hurting, too. Any "greedhead" that voted for Bush twice and continued defending him should be at risk of losing their ill-gotten gains.

[VOX]

7. Well said, Mike. There's much more to this than a come-uppance for rich folks. Link to client list:

A couple of victims of Madoff's scheme:

-Elie Wiesel's Foundation For Humanity. Total assets of about $10 million lost.
-Carl and Ruth Shapiro, donors to Brandeis University, and Beth Israel Deaconess Medical Center. The Boston Globe reported on Saturday that the Shapiro family foundation lost almost half its money, or about $145 million. (Recently donated $2,300 to Hillary Clinton's presidential campaign.)

- - - -

Bernie Madoff's Victims: The List

Henry Blodget | Dec 14, 08 9:09 AM

Word on the identities of Bernie Madoff's clients / victimes continues to emerge. Please add new names to comments (or via email to [e-mail]).

Bernie Madoff's Victims (So Far):

http://clusterstock.alleyinsider.com/2008/12/bernie-madoff-hosed-client-list

[Ian David]

8. Where has the money actually GONE? n/t

[dysfunctional press]

16. the principle amounts from investors were used to pay "dividends" to investors...

who thought that they had actual investments.

[Ian David]

22. That's what I was afraid of. In other words, it's been "dissipated." n/t

[dysfunctional press]

33. yup..it's going to be a good time to pick up some bargain-basement palm beach estates...

i only wish that oxy-rush limpballs was on The List...has anyone heard...? :shrug:

[elleng]

42. LOTS of such properties on the market already!

.

[FloridaJudy]

39. Is that the definition of a "Ponzi Scheme"? eom

[dysfunctional press]

46. yep, pretty much...

charles ponzi

A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business. It is named after Charles Ponzi.<1> The term "Ponzi scheme" is used primarily in the United States, while other English-speaking countries do not distinguish verbally between this scheme and other forms of pyramid scheme.<2>

The scheme usually offers abnormally high short-term returns in order to entice new investors. The perpetuation of the high returns that a Ponzi scheme advertises (and pays) requires an ever-increasing flow of money from investors in order to keep the scheme going.

The system is destined to collapse because there are little or no underlying earnings from the money received by the promoter. However, the scheme is often interrupted by legal authorities before it collapses, because a Ponzi scheme is suspected and/or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.

The scheme is named after Charles Ponzi, who became notorious for using the technique after emigrating from Italy to the United States in 1903. Ponzi was not the first to invent such a scheme, but his operation took in so much money that it was the first to become known throughout the United States. His original scheme was in theory based on arbitraging international reply coupons for postage stamps, but soon diverted later investors' money to support payments to earlier investors and Ponzi's personal wealth. Today's schemes are often considerably more sophisticated than Ponzi's, although the underlying formula is quite similar and the principle behind every Ponzi scheme is to exploit investor naïveté. However, it has been shown that entering a Ponzi scheme can be rational even at the last round of the scheme if a government will likely bail out those participating in the Ponzi scheme...

http://en.wikipedia.org/wiki/Ponzi_scheme

[Boojatta]

24. If there had been a return of just 1% per year...

and if there were no investments to provide that 1%, then eventually people who owned a share of the fund would be left holding an empty bag.

[tama]

25. To high life

and best returns for the "investors" that the money market could offer.

Funny thing is, everybody new Made-Off was a crook and that's why they invested - out of greed. They just thought he was a crook with insider information who wanted to share with his insider information with other crooks, nobody thought he was a crook with a pyramid scheme. Serves them right.

[Joe Fields]

35. I heard only 20 billion of it has been accounted for.

I also heard that ther maximum fine that he can recieve is five million dollars. Now, he will undoubtedly see jail time. In fact, he may spend the rest of his life in prison, but somewhere there is almost 30 billion dollars unaccounted for.

[Mike 03]

9. I'm not defending Madoff, he was a piece of you know what

But his investors didn't know that. He had been the president of NASDAQ.

If you want to get furious at someone, blame HIM. Not the charities that trusted him. He had an immaculate reputation.

[tama]

26. Wake up, Mikey n/t

[Mike 03]

10. To put it another way: There's nothing to be happy about.

Is that simple enough?

He called himself an "Investment Advisor." I'm not even sure how many of his investors realized what he was doing amounted to investing in a hedge fund. He had three separate operations going.

Well, I'm going to the lounge for a drink.

Tally Ho.

[Waiting For Everyman]

12. Now we know who expected to make a killing every month,

and provided the motivation for the bankers' tactics.

I already knew. (Who they were, I mean. I've been watching this, closely, for like 7 years now... as a "captive audience" so to speak.)

Modest returns on legitimate investments weren't good enough, so "investors" turned to plundering everyday people for every dollar they could steal, by every crooked device they could dream up. Bankers called it "policy". Did you know that mortgage servicing banks' costs are made ENTIRELY on penalizing fees? ALL OF IT, no cost of doing business to the investor whatsoever. Zip. None. Who paid it, I wonder? Could it be borrowers with scores in the "ooo, you aren't as cool as we are" category, the "you have an ill family member so fuck you" category??? Ya think? Those people have been paying DOUBLE INTEREST for the same capital FOR YEARS NOW - like a decade. Oh and they're the same people who are underpaid, so that makes paying double interest really possible too - gee, why do they default so much? They're so risky, those deadbeats, aren't they? We'd better charge them even more, just to be SAFE. BULLSHIT. And whose pockets did all that extorted money go into? I was curious myself, that's why I noticed where the trail led.

Lives destroyed every day. Nobody minded, as long as the portfolio went up. It didn't even make the news until it became an EPIDEMIC.

And pension fund contributors should've directed where their money was going, and what it was enabling, but no... that would take too much effort.

Investors (i.e. speculators, gamblers, predators) can go to hell.

They took a loss? Oh boo hoo. Eventually, some day, they were going to finish off the goose that laid the golden eggs. Did they care? Did they listen? HELL NO!

[Mike 03]

15. All I'm trying to say is that It's Not Funny. This might have deserved to happen, it was karma,

whatever you want to call it.

But there's no reason to be happy about this, anymore than there is a reason to rejoice that GM is going to fail next year.

It's just bad news for everyone, and will affect everyone, whether we realize it or not.

[tama]

27. It is Funny

LOL

[charlie]

20. "...money managers for retiree pension funds..."

Those entrusted with pensions, charity funds, municipal finances, and the like are expected to do due diligence. Yet time and again, anyone who probed Madoff's organization got nothing more than put your investment in over here, money comes out over here, what happens in between is none of your business. And still, they invested. Of course, money managers who wouldn't avail themselves of Madoff's steady 15% returns would probably feel a lot of pressure from their clients and could wind up out of a job. The responsibility for this nightmare is a whole lot wider than just Madoff.

[damntexdem]

21. Whether concerned for his victims or not, he became just too big to fail.

The real victim is the economy as a whole.

[tama]

28. Please

don't confuse "economy as whole" (=ecology) with finance and money and all that shit. Economy as whole - ecology - is about balance and responsibility to future generations, not about interest, dividends and greed.

[high density]

31. These people willingly put their money into the "black box"

That was their decision. I think it is greed to put money into something that you don't understand and has no explanation, and then say, "As long as it continues making 12% a year, I'm happy." If Madoff had been profiting from slaves, would these charitable organizations been pleased with the returns? I'll never understand why people would hand such enormous amounts of money off to a person, even a friend, with absolutely no research into how the money is going to be put to use.

[dysfunctional press]

32. well..i still get a chuckle out of every new revelation that comes out...

will bernie make his court date tomorrow...or give us one last laugh as they wheel out the gurney with the sheet pulled all the way up?

[tomreedtoon]

34. They deserved it because they, too, were stupid.

They believed the same thing we down here in the gutter believed; that it was possible to make money with investments, not by MAKING something.

The only real wealth comes from manufacturing hard goods. Everything else is delusion. It was a delusion we've all bought into - individuals and charity runners alike - and we're all damned because of it.

And I'll let you know something else; most of the big name charities I've dealt with, in terms of contributing money from benefit events, have been run by the idiot relatives of rich people. This gave them the ability to make something of a living, while maintaining some kind of social status that they didn't deserve.

I know local charities run by individuals - dedicated, caring people, whether they were religious or not. They work and they sweat and slave for their charities. They wear denim shirts, not designer gowns, and they never get invited to rich people balls. But the local branches of big outfits like the Red Cross and American Lung Association have a lot of jerks on staff.

[Ichingcarpenter]

36. No worries.... they will be bailed out with taxpapers money and have... this sucks

This was a risk investment not a bank nor a CD. That's why it sucks


http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3646522

[AllentownJake]

40. Not laughing

but this kind of proves everything we've been saying about regulation of financial services and hedge funds for the past 28 years.

The market regulates iteself :sarcasm:

[elleng]

43. The 'non-government'

'non-regulates' whatever.

[earth mom]

44. Who's laughing? Me, I'm pissed.

This Madoff thing proves beyond a doubt that the stock market is a TOTAL SCAM.

I am livid that those bastards had so many gawd damn millions of dollars that they were able to sit on the money and gamble with it while the masses in this country live paycheck to paycheck and can't afford health care because those same diabolical rich bastards have done everything they possibly could to oppress and exploit the working people of this country for decades.

All so those fuckers could sit on millions of dollars they will never ever spend just so they could "invest" those millions to "create wealth" to match the size of their gawd damn egos!

So fucking what if they give a tiny sliver of that money to charities? I could give a rats ass! I want that money where it belongs-to the masses of people who's hard work, blood, sweat and tears is the genesis of where that money actually came from!

Oh and one more thing. Those fuckers won't ever spend all that money, and they can't take it with them when they die. So what is the fucking point of all the pain and suffering they have caused the rest of humanity?! :wtf: