Archive for the ‘Madoff schemes’ Category

Ponzi wiz Bernard Madoff sent to prison

March 13, 2009

It’s a little bit like seeing the devil,” said Burt Ross, a lawyer from Englewood, NJ who lost $5 million in Madoff’s swindle. Feeling betrayed, DeWitt Baker, an investor who lost more than $1 million angrily fumed “I’d stone him to death.” —-AP (03.12/09, Neusmeister, L; Hays, T)

Bernard Madoff, the personification of Wall Street greed and reckless extravagance has admitted guilt of pulling the biggest Ponzi scam in history. In the Federal Court of Manhattan, in New York, US district judge Denny Chin revoked Madoff’s $10 million bail and ordered the disgraced swindler’s confinement to a windowless room at the Metropolitan Correction Center instead of being comfortably holed in his lavish $7 million home at 133 E, 64th Street.

For defrauding his clients of $65 billion, at sentencing date in June this year, the former chairman of Nasdaq could get a life sentence—a maximum of 150 years in jail for perjury and financial fraud.

Without implicating anyone except himself, the apologetic Madoff who gave no comfort to his victims, pleaded guilty in all counts of fraud. In doing so, many believed his acceptance of full responsibility was a way to protect his wife Ruth, his family, and friends. His victims were fuming mad. Wall Street regulators ignored the flags of deception which allowed the once respected investment guru to operate without being caught for decades.

Thousands of defrauded clients in the United States and abroad include banks, charities, financial institutions, pension funds, retirees, and private individuals whose life savings and investments have been damaged. In their ranks are those who have suffered irreparable financial ruin with no chance to recover. At least one victim has been driven into committing suicide.

Some of Madoff’s Victims
Fairfield Greenwich Advisors—–investment firm————–$7,500,000,000
Banco Santander——————Spanish bank—————–$2,870,000,000
Bank Medici————————-Austrian bank—————-$2,100,000,000
HSBC——————————— British bank——————-$1,000,000,000
BNP————————————French bank——————-$431,170,000
New York University——————University——————–$24,000,000
Korea Teachers Pension———-Korean Pension Fund———$9,100,000
Marc Rich——————————fugitive financier————–Not available
Yeshiva University———————NY private university——–$14,500,000
Int’l Olympic Committee————–Olympic organizer———-$4,800,000
Zsa Zsa Gabor————————-actress————————$10,000,000
Diocese of St. Thomas—————Cath. Church (Virgin Is)—–$2,000,000

The imprisonment of Madoff is just the tip of the iceberg to the massive scandal that rocks Wall Street. Trust in the financial institutions is at an all time low. Many Americans adversely affected by the economic meltdown are demanding for accountability and prosecution of those responsible in the betrayal of trust. (Photo Credits: Acteon; Jason Smith) =0=


The Coming Crisis of 2009: Some Thoughts (Part 2)

January 3, 2009

I am continuing this series in order to provoke some thoughts. In this way we might have a better understanding of the crisis that is coming to our shores.

Finance capital, monopoly capital, “hot money”. What do these all mean?

Finance capital is basically wealth producing wealth. Investors lend money for profit and it will always seek the greatest return. Monopoly capital and finance capital are similar up to a point. “Hot money” is the behavior of finance capital.

In the later stages of capitalism finance capital dominated industrial capital. The industries are now at the mercy of banks, finance houses and more lately by various kinds of funds including hedge funds. Their “worth” now rise and fall with the movement of finance capital. “Bubble”. Just like Henry Sy “earned” S1.1B in the first 9 months of the year and his fellow taipans “lost” hundreds of millions of dollars.

Finance capital can also be exported. And withdrawn. And that is the problem of national economic planners. In the development of a country more and more its planners and its legislatures are no longer the dominant factors. Their economies shrink and expand and their exchange rates change with the movement of “hot money” finance capital. The size of this money dwarfs the national savings of nations.

And that is the reason why our exchange rate is on the downslide. “Hot money” is being withdrawn. Our equities and stock market earned 30% per year from 2003 ton 2007. All because of the “bubble” created by the inflow of “hot money”.

Our local economy was not responsible for that “prosperity” (but it certainly helped Mrs. Arroyo survive). But woe to those that do not understand this kind of “investment”. They will have to be content with the 3-4% interest the bank gives for time deposits which is not even enough to cover inflation.

In the competition of nations, we will be left by Vietnam, a country ravaged by war not so long ago. Our $1B direct foreign investment (DFI) per year is but a fraction of their $7B. And we better learn how to kowtow to China which receives $1B a day at its peak. They will be our investors and buyers in the future.

How do we catch this elusive “hot money”? It is simple as long as one country’s economy can guarantee it will earn handsomely. That is why former developing countries like China and India are fast becoming powerhouses. They will not be left holding the proverbial empty bag because they have real wealth–their manufacturing sector, export market, capital market and technology is own the way to development and they can now absorb flights of “hot money”.

“Hot money” without outlet is a dangerous thing. Arbitrageurs and fund managers became too “creative” in inventing new kinds of investment vehicles and this led to the “sub-prime” woes in the US. They have to show enough “profits” so that they wont lose their (finance capital) investors. After all their earnings are based on percentage and on the rise of their own shares.

And this is the reason for the rise of Madoff schemes (seems Madoff is on the way to replacing Ponzi in the dictionary). We can just speculate how many Madoff schemes are out there in the world.

Whatever financial conflagration that will happen finance capital will find a way to seek profits in all parts of the globe. It won’t even matter if it is a conflict area, a dictatorship for as long as there is reasonable guarantee they will get their money back with interest.

So this crisis, in essence, is just a temporary thing. The world economy will “recover” when finance capital gains enough “confidence” again. But it is gullible, the suckers and the small fries that will bear the brunt of their activity.

Is this what is meant by greed?

[photo credits:huffington post, wired newyork]