If the former chairman of NASDAQ is a crook, who's to say what part of Wall Street isn't crooked?

[Octafish]

It seems to me and about 99-percent of Americans, the Wall Street bailout amounts to little more than a $750 billion (what they've admitted to) rip-off of the American taxpayer. The money's been used, not to make life better for the American people, but to help big banks get bigger and wealthy top executives get richer.

Where would these MBAs, PhD accountants and scions of big money get such an idea?
How would they accomplish such a scam?
Do you think they would get outside help?



The Department of Justice (LOL) could start by asking Bernie Madoff.

Bernard Madoff arrested over alleged $50 billion fraud

By Edith Honan and Dan Wilchins Edith Honan And Dan Wilchins
Fri Dec 12, 12:40 am ET

NEW YORK (Reuters) – Bernard Madoff, a quiet force on Wall Street for decades, was arrested and charged on Thursday with allegedly running a $50 billion "Ponzi scheme" in what may rank among the biggest fraud cases ever.

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him.

A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.

On Thursday, two agents for the U.S. Federal Bureau of Investigation entered Madoff's New York apartment.

"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.

The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history. When former energy trading giant Enron filed for bankruptcy in 2001, one of the largest at the time, it had $63.4 billion in assets.

CONTINUED...

http://news.yahoo.com/s/nm/20081212/bs_nm/us_madoff_arrest

Gee. By his own alleged confession we see that one main masters of the universe is really, at heart, just a crook. I wonder how many others there are? And who do they pay to be their friends and protectors? And who could AFFORD to buy bigwigs off?

One of the good guys in all this -- and she's not even a guy! -- knows where it comes from.
And she understands what a crooked heart can do when entrusted with the nation's wealth and welfare...



"One of the things that is interesting about reading conspiracy theory is that much of what folks think is conspiracy is really many people acting in concert to make or protect their money." - Catherine Austin Fitts

Catherine Austin Fitts had a handle on things way back:

Solari Rising

by Catherine Austin Fitts
November 15–22, 2001
Philadelphia citypaper.net

"The Latin American drug cartels have stretched their tentacles much deeper into our lives than most people believe. It's possible they are calling the shots at all levels of government."

- William Colby, former CIA Director, 1995


The Solari Index is my way of estimating how well a place is doing. It is based upon the percentage of people in a place who believe that a child can leave his or her home, go to the nearest place to buy a popsicle and come home alone safely.

When I was a child growing up in the 1950s at 48th and Larchwood in West Philadelphia, the Solari Index was 100 percent. It was unthinkable that a child was not safe running up to the stores on Spruce Street for a popsicle and some pinball. The Dow Jones was about 500 and the Solari Index was 100 percent.

Today, the Dow Jones is over 9,000 and my favorite hairdresser in Philadelphia, Al at the Hair Hut in West Philadelphia, and I just agreed that the Solari Index is in the tank -- both in the streets of Philadelphia and throughout America.

Life on the street isn’t sweet any more. I watched the slide of the Solari Index as a child. A lot of it had to do with narcotics trafficking and the people that narco dollars put in power on our streets -- and in City Hall, in the banks, in Congress and the corporations and investors that surround the city.

Once a month I drive to Philadelphia from my home in Hickory Valley, Tenn., to attend a board meeting. I stay in a lovely little apartment in the first floor of a rowhouse owned by my friend Georgie, not far from where I grew up in West Philadelphia.

Georgie is one of my favorite people in the world. One day, Forest, my dog, and I were up in Georgie’s apartment to enjoy a fresh plate of scrapple that Georgie had fried up that morning. The conversation turned to narco dollars. Georgie said that looking at the big picture was simply too overwhelming. Couldn’t I explain this in terms of a neighborhood in Philadelphia? So we got out a blank piece of paper and started to estimate.

We assumed that two or three teenagers on a Philadelphia street corner dealing drugs could theoretically do $300 a day of sales each and work 250 days a year. We guessed that their supplier got 50 percent, and maybe ran his net profits of $100,000 through a local fast-food restaurant that was owned by a publicly traded company. Assuming that company had a stock market value of 20-30 times its profits, a handful of teenagers could generate approximately $2 million to $3 million in stock market value for a major corporation, not to mention a nice flow of deposits and business for the Philadelphia banks and insurance companies.

OK, that is what a handful of kids can do. Let’s look at all the organized crime profits, narcotics trafficking and everything else. If the Department of Justice is correct about $500 billion to $1 trillion of annual money laundering in the U.S., then about $20 billion to $40 billion is a reasonable estimate for what should move annually through the Philadelphia Federal Reserve district.

Assuming a 20-percent margin for organized-crime profits and a 20-times multiple on the stock of the companies being used to launder the money, the stock market value that could potentially be "addicted" to organized crime profits flowing through the Philadelphia area from $20 billion to $40 billion in narco- and organized-crime revenues could be as much as $160 billion. If you add all the things you could do with debt and other ways to increase the multiples, you could get that even higher, say $250 billion.

Imagine what would happen if all these teenagers in the Philadelphia area stopped taking and dealing drugs? Now do you understand what Philadelphia mothers and dads are up against when they try and make sure their children are safe?

CONTINUED...

http://www.ratical.org/co-globalize/solariRising.html

Narco-Dollars for Beginners - How the Money Works in the Illicit Drug Trade

Seeing my friends on DU lose their homes fighting these bastards, seeing my neighbors in Detroit lose their homes because the greedheads want it all, seeing my new President handcuffed by guilt through association before he's even in office, are most maddening.

We need to do something about this now -- while we still can.

Congreff -- do your stuff! America! You may think you are safe, but with these gangsters in power, no one is safe.

[Phred42]

1. ...only PART of Wall Street is cooked?

That was sarcasm - right?

[Octafish]

3. The Real Deal: The Ultimate New Business Cold Call -- NYSE Grasso and the FARC rebels in Columbia

Banksters must like to go where the money is. Columbia, for example.

The Real Deal: The Ultimate New Business Cold Call

Monday, 18 February 2002, 10:13 am
Column: Catherine Austin Fitts

Narco-Dollars For Dummies (Part 3)
How The Money Works In The Illicit Drug Trade
Part 3 in a 13 Part Series
By Catherine Austin Fitts
First published in the Narco News Bulletin

A Real World Example:
NYSE's Richard Grasso and the Ultimate New Business "Cold Call"

Lest you think that my comment about the New York Stock Exchange is too strong, let's look at one event that occurred before our "war on drugs" went into high gear through Plan Colombia, banging heads over narco dollar market share in Latin America.

In late June 1999, numerous news services, including Associated Press, reported that Richard Grasso, Chairman of the New York Stock Exchange flew to Colombia to meet with a spokesperson for Raul Reyes of the Revolutionary Armed Forces of Columbia (FARC), the supposed "narco terrorists" with whom we are now at war.

The purpose of the trip was "to bring a message of cooperation from U.S. financial services" and to discuss foreign investment and the future role of U.S. businesses in Colombia.

Some reading in between the lines said to me that Grasso's mission related to the continued circulation of cocaine capital through the US financial system. FARC, the Colombian rebels, were circulating their profits back into local development without the assistance of the American banking and investment system. Worse yet for the outlook for the US stock market's strength from $500 billion - $1 trillion in annual money laundering - FARC was calling for the decriminalization of cocaine.

To understand the threat of decriminalization of the drug trade, just go back to your Sam and Dave estimate and recalculate the numbers given what decriminalization does to drive BIG PERCENT back to SLIM PERCENT and what that means to Wall Street and Washington's cash flows. No narco dollars, no reinvestment into the stock markets, no campaign contributions.

It was only a few days after Grasso's trip that BBC News reported a General Accounting Office (GAO) report to Congress as saying: "Colombia's cocaine and heroin production is set to rise by as much as 50 percent as the U.S. backed drug war flounders, due largely to the growing strength of Marxist rebels"

CONTINUED...

http://www.scoop.co.nz/stories/HL0202/S00069.htm

LOL! It was a rhetorical question: I asked which part ISN'T crooked?
Going by the gangster behavior of those at the top of the financial pyramid, I guess it was a trick question.

BTW: I don't remember the professor talking about this part of the money supply in Economics.

[Phred42]

5. Whoa - Great snag! Thanks

:toast:

[Jackpine Radical]

2. Wow, thanks for turning me on to those Fitts pieces.

I'll spread them around a little.

[Octafish]

4. The End

You are most welcome, my Friend. Catherine Austin Fitts is a real hero.

She's called out these turds who are hastening Doomsday -- Biblical, political, economic and real-time.



Photoillustration by: Ji Lee

The following writer puts our situation into perspective:

The End

by Michael Lewis
CondeNastPortfolio.com
December 2008 Issue

The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

CONTINUED...

http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom

Most young people are like their parents -- good, hard-working contributors to society.
Then there are others, a type Bob Marley called the "crazy baldheads"...

[Karenina]

8. Highly recommended!

[Octafish]

23. Depth of Wall Street corruption exposed... (from 2003).

Here's some big names, big friends of Bush.



SEC chairman William Donaldson, NASD chief executive Robert Glauber
and NYSE chairman Richard Grasso at a briefing on the settlement

Depth of Wall Street corruption exposed

By Simon English in New York
Last Updated: 11:50PM BST 28 Apr 2003

A two-year investigation into Wall Street corruption drew to a close yesterday with a $1.4 billion settlement, fraud charges against major banks and disgrace for some of the financial world's leading figures.

In hundreds of pages of evidence released by Eliot Spitzer, the New York attorney general who led the crusade, internal bank documents repeatedly show that analysts knew their own investment advice was biased.

Banks are setting aside billions of dollars to deal with the thousands of lawsuits expected from investors who lost money from the collapse of the internet boom.

One internal paper shows the head of global equity research at Salomon Smith Barney describing the firm's share research as "ridiculous on its face" in a presentation to senior management at parent company Citigroup.

To Mr Spitzer, this showed how far up the chain the corruption went, as analysts derided their own share tips and brokers hid the truth from investors, all with the approval of management.

SNIP...

Citigroup executives are now banned from direct contact with analysts following suggestions that Mr Weill influenced Mr Grubman's share ratings. Mr Spitzer said Citigroup ignored internal warnings that its research was "basically worthless".

The banks will be barred from offsetting the fines against tax, though few will struggle to pay the penalties.

Other banks named and shamed are Bear Stearns, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Morgan Stanley, UBS Warburg and US Bancorp Piper Jaffray, all of which settled lesser charges of violating market rules.

http://www.telegraph.co.uk/finance/2850286/Depth-of-Wall-Street-corruption-exposed.html

Crooks like to do business with crooks.

Honest people don't.

I know you the difference, Karenina. Thank you, infinitely.

[Land Shark]

6. We're rendered defenseless against upward wealth transfers if we can't call it 'class war' nt

[Octafish]

10. Two great crashes, one surviving United Slaves of America

Like the sage said, we need to call things by their real name.

Two great crashes, one surviving United Slaves of America

Ben Tanosborn
News Central Asia
on 22 September, 2008 12:46:44

EXCERPT...

Give me Capitalism, or give me Death! That seems to be the droning chant in America; one that long ago replaced what Patrick Henry is attributed to have said, as liberty's great luster quickly dulled and became money-matte as greed and gluttony are allowed to roam free, without appropriate restraints. And sure enough, as our capitalism has become more expropriatory, greedy, cruel and predatory, we have been brainwashed to feel we have no choice but to learn to live with it. It's our country, our way of life. and God's will being done here on earth. Americans have rationalized the suppression of two capital sins, insisting that the number ought to be five, not seven. After all, isn't greed really the basis for capitalism, and consumerism (gluttony) the way we measure well-being and success in today's society?

Quickly, very quickly, it's becoming vividly clear that our much-touted American Dream is metamorphosing into an economic nightmare, one taking place right before our eyes. Another gilded epoch in America is quickly coming to past; this time, however, its exit appears to be of the farewell-forever kind, as our nation no longer looms so vast and overpowering, economically, before the rest of the world.

A week ago, as Black Monday in Wall Street helped turn on the lights on Main Street, there was a hint of mobilization by the mainstream media to do journalistic speculation, for their efforts did appear hapless on investigation, as they started reporting that maybe the nation's economic fundamentals weren't as sound as they had been reporting all along. courtesy, of course, of the White House (and Fed) propaganda machine.

Then, after a week of turmoil and the appearance of a White Knight or, should we say, a White Trojan Horse, the US as the guarantor of last resort, the market ended the week just where it had started. And during the weekend, the polluted minds of a corrupt and incapable Congress, the "brilliant" Bush advisory cadre and an incredible Fed that has really known the facts that would bring the nation to this chaos for years, got together to construct a bailout package, or program, that they project will add up to $700 billion. And, with zero power that we citizens have in this republic of ours, where democracy is a cruel joke, the citizenry, many somewhat remorseful for their contribution to greed and gluttony, will bite their lips and take it in stride. Except for one thing. this action will solve nothing, only provide a temporary lifeline for domestic as well as foreign banks that may have been affected by the greed-induced mortgage crisis; and that eventually will help cronies acquire additional wealth as the disposition of real estate assets takes place. But these folks, who dedicated "their Sunday" to the welfare of the nation, and an orderly solution to our economic ills, are missing the point; they still don't get it!

We seem to micro-look at the situation and never grasp the problem in its entirety. First, it was just mismanaged sub-prime lending, and then the escalation went on until all major financial institutions became houses of ill-repute. But no $700 billion is going to save these institutions, nor our entire economic system; not when we may have somewhere between $350 and $500 trillion in structured financial paper (derivatives) just roaming in this US, most of it in the over the counter markets. An incredible mess!

Back in 1999, Alan Greenspan, addressing the Futures Industry Association, stated: "As we approach the twenty-first century, both banks and non-banks will need to continually reassess whether their risk management practices have kept pace with their own evolving activities and with changes in financial market dynamics and readjust accordingly. Should they succeed I am quite confident that market participants will continue to increase their reliance on derivatives to unbundled risks and thereby enhance the process of wealth creation."

CONTINUED...

http://www.newscentralasia.net/Articles-and-Reports/339.html

Thanks for putting it into words, Land Shark. It is class war. And We the People are losing.

[glitch]

18. We are losing because we have not yet begun to fight.

We'll see how it ends.

[originalpckelly]

7. HE CAM

[formercia]

12. Prison won't save him

not with that kind of money. He will welcome death.

[Octafish]

21. The fellah contributed generously to the Democratic Party.

From firedoglake, via Babylonsister: Madoff was a huge Dem donor

Which goes to show that there's corruption on both sides of the aisle. RFK Jr. estimated 95-percent of GOPers are corrupt and about 75-percent of DEMs because the money needed to get and hold office is so great. The source for funding is the same for both -- wealthy folk and big corporations.

It's almost easier to understand when one considers the amounts of money are so huge and the power of access is so great.
Machiavelli: Use money to obtain power. Use power to obtain money. Repeat ad infinitum until the Prince holds all of both and We the People have zilch.

Going by the trend line, we're heading to become a Haiti with 300 million poor people and about 3 million rich people. That may explain why the powers-that-be seem to always support the dictator over the common people in country after country, from Guatemala to Iran to Greece to Nicaragua to El Salvador to even commie China and a lot of other nations.

[hankthecrank]

9. k & r n/t

[Octafish]

24. Bush White House gives one last gift to Wall Street

AIG gets $170 billion and Detroit gets...zip.

Bush White House gives one last gift to Wall Street

Johanna Neuman
LA Times Blog

Well maybe not the last. After all, there are still 71 days to go before the inauguration.

But late Sunday, George W. Bush's administration scrapped its original $123-billion bailout of American International Group (AIG) and offered a new one, for $170 billion, that extends the loan from two years to five. The deal is part of the $700-billion stash that Congress passed last month.

So far this morning, Wall Street seems to like the news. As for AIG, its CEO Edward Liddy said the new plan "is a significant step forward" that will help AIG divest itself of bad business loans. Tapped to lead the company amid its turmoil five weeks ago, Liddy also said it feels more like five years.

As the Wall Street Journal reported this morning, the new, more robust bailout of AIG is likely to spark a political backlash.

For one thing, Democrats have signaled that under President-elect Barack Obama's administration, the Treasury will use the $700-billion bailout money differently. If there's any left.

For another, Democrats are likely to be enraged that the U.S. government is bailing out Wall Street -- again -- while the Big Three auto makers are nearing the precipice. The White House has been resisting a direct bailout of an industry, preferring to dole out the money to the financial sector and let those traditional gatekeepers of the nation's money supply do their thing.

-- Johanna Neuman

http://latimesblogs.latimes.com/presidentbush/2008/11/gift-to-wall-st.html

BTW: A hearty welcome to DU, hankthecrank! Let's get these crooked bastards.

[Bozita]

11. I call bullseye on the wording of the title of the OP

Recommended!

[Octafish]

25. Madoff ‘Tragedy’ Said to Have Escaped Scrutiny by SEC

Capitalism's Invisible Army at work: Billions for Bankers. Nothing for Workers. Sounds about right to millionaires and their servants in government.

Madoff ‘Tragedy’ Said to Have Escaped Scrutiny by SEC (Update1)

By David Scheer and Jesse Westbrook

Dec. 15 (Bloomberg) -- U.S. regulators never inspected Bernard Madoff’s investment advisory business, alleged to be a Ponzi scheme that cost investors $50 billion, after he subjected it to oversight two years ago, people familiar with the case said.

The Securities and Exchange Commission hadn’t examined Madoff’s books since he registered the unit with the agency in September 2006, two people said, declining to be identified because the reviews aren’t public. The SEC tries to inspect advisers at least every five years and to scrutinize newly registered firms in their first year, former agency officials and securities lawyers said.

Madoff, 70, who had advised the SEC how to regulate markets and donated regularly to politicians, was arrested Dec. 11 and charged with operating what he told his sons was a long-running Ponzi scheme in the New York-based firm’s business advising rich people, hedge funds and institutions. His ability to avoid detection may fuel debate about the SEC’s effectiveness and the adequacy of its resources for policing money managers.

“Given what the SEC claims is the magnitude of the fraud, this is something you would hope an inspection would have uncovered,” said Mercer Bullard, a University of Mississippi law professor and former mutual-fund attorney at the SEC. “It’s hard to imagine a fraud of this alleged size not being accompanied by significant and pervasive compliance problems.”

SNIP...

Since 2000, he has given at least $100,000 to the Democratic Senatorial Campaign Committee and more than $23,000 to the party’s candidates, including Senator Charles Schumer of New York and Senator Frank Lautenberg of New Jersey, who leads a charitable foundation that invested with Madoff.

“You can see where people would pull the shades down over their eyes in terms of recognizing what could be one of the great frauds of our time,” Levitt said in a Bloomberg Television interview. “I’ve known him for nearly 35 years, and I’m absolutely astonished.”

Levitt is a senior adviser to the Carlyle Group and a board member of Bloomberg LP, the parent of Bloomberg News.

CONTINUED...

http://www.bloomberg.com/apps/news?pid=20601103&sid=atBIu3Se5SQk&refer=us

Thank you for understanding, Bozita. To the billionaires, a tragedy is losing money. To workers, a tragedy is losing a job. Guess who tips bigger?

[AntiFascist]

13. K&R, the government has become one big crime family...

the Fed is their banker and Wall Street is their money launderer.

[Octafish]

26. $2 Trillion Handed out by Paulson and Bernanke, But Who Got It, Nobody Knows

We're talking serious crime. And when we call the cops, they tell us not to worry they're on the case. Then we see them pulled in behind the Dunkin' Donuts, where the bad guy is peeling off a few bills from the roll and putting them in a bag for them to carry out.

$2 Trillion Handed out by Paulson and Bernanke, But Who Got It, Nobody Knows

By Nicholas von Hoffman, The Nation
Posted on November 17, 2008, Printed on November 17, 2008
http://www.alternet.org/story/107340/

With his latest policy switch to buying stock in banks and other companies, Henry Paulson has more zigs and zags to his credit than a fox trying to escape a pack of hounds.

The fox and the hounds, of course, have a clear idea of what they want to do and how they want to do it, which is more than you can say of Paulson. Sums of incalculable size are being spent or pledged by Paulson and his playmate, Ben Bernanke, chairman of the Federal Reserve Board, and nobody outside their organizations, or maybe inside them either, knows who got what, how much they got, and under what conditions they got it.

In the past couple of months Bernanke has loaned out $2 trillion to unnamed companies under eleven different programs and all but three of them were slapped together in the past fifteen months of financial crisis.

To repeat, we do not know who got this money or what collateral was put up in return for the loans or what conditions were attached to them.

The sums involved are almost three times as large as Paulson's $700 billion muddled bailout efforts that Congress voted for last month. Bernanke does have the legal authority to pass out these trillions without Congressional authorization and without explanation, but secrecy breeds suspicion and loss of confidence.

These officials preface every speech by talking about "transparency," their favorite word, at the same time they are handing off $2 trillion and they won't say to whom, and leading Bloomberg News to file suit under the Freedom of Information Act.

CONTINUED...

http://www.alternet.org/workplace/107340/%242_trillion_handed_out_by_paulson_and_bernanke%2C_but_who_got_it%2C_nobody_knows/

There is something very wrong when We the People, in near-unanimity, say "No" to the "loans" for Wall Street and Congress goes ahead and gives Wall Street the money -- no strings or accounting attached.

Thank you for giving a damn about it, AntiFascist.

[Celebration]

14. On CNBC last Friday

First, Jamie Dimon of JP Morgan had a long interview with Erin Burnett-- very rare, and reasonable interview.

Second, this scandal came out.

In Fast Money, Karen was making a comment (black humor) about the scandal--"One would think that if one was running a ponzi scheme, that this might be a good time to do it. It might not be a good idea to announce to your employees that it was a ponzi scheme. Merely say, the market has been so tough, sorry I lost all this money, and use that as cover."

Jeff Mackie said,

"Did you hear Jamie Dimon's interview today?"

Well, you had to be there. Trust me, it was funny. Our entire monetary system is a ponzi scheme, but way more so with all the credit default swaps. Mackie actually nailed it.

[Celebration]

16. LOL they didn't put this exchange on the website

Usually they put 100% of the show somewhere on the website, but they left off this "joke."

[Octafish]

27. It must have been accidently left off.

That "joke" is the kind of idea that very rarely gets mentioned in Corporate McPravda.

Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary

Lehman Brothers maintained its squeaky-clean image by relying on its seamier subsidiary. Just call her Aurora.

By Graham Rayman
The Village Voice
published: November 05, 2008
John Lang

Willie Davis/Veras

Philip Grant found that he was one of many with Aurora horror stories.
AP Photo/Susan Walsh

Fuld gets his pink slip after congressional hearings.Lehman Brothers CEO Dick Fuld told Congress on October 6 that the Wall Street investment bank was destroyed by a “financial tsunami”—a natural disaster, an act of God.

In other words, it wasn’t his fault.

But the truth is that Lehman’s fall in the subprime-mortgage crisis was a man-made disaster. The white-shoe firm was not just deeply involved in the murky subprime-mortgage market; Lehman and the other dominant Wall Street investment banks, experts tell the Voice, actually created the demand for the mortgages that they would then package and swap for enormous returns. Addicted to the profits that such securities brought in, Lehman was desperate for the risky mortgages they required.

“Sure, there were sleazy brokers out there who were fooling people, but you have to understand—to use a drug analogy—they are like the ‘corner boys,’ “ says Irv Ackelsberg, a Philadelphia lawyer who specializes in representing homeowners in foreclosure cases. “You have to look at the cartel at the top. The brokers were basically creating loans that had been ordered by Wall Street.”

Put another way, Lehman and other top financial firms “primed the pump and controlled production,” says Kevin Byers, an Atlanta forensic accountant who has spent years tracing the evolution of the subprime market.

“Lehman was very early in getting this deal machine into place,” he says. “With one hand, they loaned the money to the mortgage lender to allow them to originate loans to home buyers. With the other hand, they ostensibly bought the loans originated with their line of credit, and resold them as securities to investors.”

The scheme worked like this: Homeowners signed mortgages with loan companies. Lehman bought those mortgages and bundled them into “tranches,” which they then sold to investors—often large pension funds and other financial institutions.

Jay Weiser, an associate professor of law and real estate at Baruch College, says the system was set up to assure the owners of the mortgage-backed securities that they would get a steady return. “Since everyone at the top was paid for how many mortgage-backed securities they put out each year, they had every incentive to look the other way and overstate the quality of the loans they were making,” he says.

CONTINUED...

http://www.villagevoice.com/content/printVersion/725636

For every bubble that comes along, I get in just as it's about to burst.

Thank you for the heads-up on the show, itsjustme. When the newsmedia scrub the truth, you know we are in perilous times -- now going on 46 years.

[leftofthedial]

15. Capitalism is crime.

One motive beats like the heart of evil at its core, drives it, makes it everything it is. One thing. ...greed.

We live in a finite world, with finite resources and billions of people with whom to share it. We can no longer afford this system that rewards only the most ruthless, the least moral and the luckiest. Capitalists are thieving parasites who don't create anything except the pain of their victims.

[Octafish]

29. Greedheads worship a bull -- a load of bull.

Greedheads come in all flavors, from the Commie rats in Beijing to the Capitalist pigs on Wall Street to the Imperialist NAZI scum most everywhere.

Thank you for making the major point of the current system, leftofthedial: It relies on one class accumulating more property and power at the expense of the vast majority. As you indicated, that doesn't just sound un-democratic, that's un-American.



There is no good way to share the wealth -- meaning the planet's limited resources -- other than through economic cooperation. To be successful, individuals must be free to own as much as they want -- provided that the least powerful have enough as they need. To be enduring, the system must be based on peaceful ends.

[leftofthedial]

31. cooperation.

and the implementation of a system that punishes greed and other base human failings, rather than rewarding them.

[Greyhound]

17. Top to bottom, the financial "industry" is a fixed game. They are all thieves or

the employees of thieves.

Leaving the issue of interest aside, the system is utterly dependent on continued expansion, any time that expansion ceases or slows, the built in interdependence creates chaos. That is not a sane system on which to build a nation's future.

[Octafish]

30. You raise questions about bubbles n oversight: 'The Fix' is the only way they can get away with it.

Bubbles. This guy argues that bubbles are good for the economy.

Me (I believe, like you, greyhound 1966) I prefer slow and steady growth -- based on good works, investment and savings -- as the way to build a sustainable economy. And because you and good people wonder, the nation has a chance.

Madoff arrest raises questions about SEC oversight

Regulatory observers say the agency must perform more frequent reviews

By Ronald D. Orol, MarketWatch
Last update: 4:35 p.m. EST Dec. 15, 2008

WASHINGTON (MarketWatch) -- The arrest of investment manager Bernard Madoff on allegations that he ran a $50 billion "Ponzi scheme" raises questions about the effectiveness of the Securities and Exchange Commission's oversight of the investment management industry.

The SEC and Department of Justice on Friday launched parallel suits against Madoff, 70, who oversaw Bernard L. Madoff Investment Securities LLC. Both agencies are trying to identify if any assets remain, but regulatory observers argue that there were several warning signs that should have triggered an SEC investigation much earlier.

SNIP...

The agency is charged with examining the books of new funds registered with the SEC, with follow-up reviews taking place every three years for high risk institutions. Registered investment advisers that fell under the category of low risk are only subject to random investigation. There are no details about how frequently these fund managers are reviewed.

Columbia Law School professor John Coffee said that the agency is overworked and typically examines only 10% of the new funds that are registered.

He added that the SEC should have looked more carefully at Madoff, because he oversaw a huge quasi-hedge fund that was audited only by a tiny New York-based firm, Friehling & Horowitz. Madoff's fund also did not employ a reputable outside custodian, which is an institution that holds the assets of the fund. Finally, Coffee noted that a rival to Madoff raised concerns about the fund in 1999.

"The fact that this was such a huge fund that employed such a small audit firm and no outside custodian should have triggered red flags at the SEC," according to Coffee. "Funds of that size typically have a large internationally recognized auditor."

CONTINUED...

http://www.marketwatch.com/news/story/madoff-arrest-raises-questions-about/story.aspx?guid=%7BE2002EFA-C24D-453B-BF6C-EC67992A0A3C%7D&dist=msr_44

Here's a good analysis of those willing to take a chance on the planet's future. Perhaps they have a personal invite to Dick Cheney's post-collapse private redoubt.

How gamblers broke the banks

By Lionel Barber
Financial Times
Published: December 16 2008 02:00 | Last updated: December 16 2008 02:00

Journalism, so the adage goes, is the first draft of history. In 2008, the Financial Times had a once-in-a-lifetime opportunity to report, analyse and comment on the most serious financial crisis since the Great Crash of 1929. Here was a global story whose tentacles spread from the US sub-prime mortgage market to the City of London, Iceland, Russian oligarchs, Dubai property barons and numerous other actors. It was a story tailor-made for the FT.

The following articles are a selection of the best of the FT's coverage over the past year. Inevitably, there are gaps. There is no space, for example, for our groundbreaking reporting on the credit ratings agencies and the failure of computer modelling. The aim of this special report is to offer readers an unfolding narrative, as well as a broader perspective on a crisis which shook the western model of market capitalism to its foundations.

The opening commentary by George Soros, the financier and philanthropist, sets the scene. Writing in January, Soros argued that the financial crisis is very different from other crises which have erupted at intervals since the end of the second world war. " marks the end of an era of credit expansion based on the dollar as the international reserve currency." As such, it signals "the culmination of a super-boom that has lasted more than 60 years".

Soros's article provides a useful antidote to those commentators who too easily laid the blame for the crisis on lax regulation of sophisticated financial products. Its origins may indeed go back to sub-prime mortgage lending in the US. But sub-prime mortgages - loans to high-risk borrowers seeking a toehold on the residential property ladder - were merely symptoms of a larger problem: global imbalances, in particular a highly indebted US which sucked up the savings of the rest of the world and consumed more than it produced.

CONTINUED...

http://www.ft.com/cms/s/0/4fc84eca-cb10-11dd-87d7-000077b07658.html

Good thing we have computers, too. We're going to need them to prosecute these gangsters and traitors.

[Greyhound]

35. The boom-bust cycle is a direct, and purposeful, result of the FRCBS.

There is money to be made in chaos and the cycle is necessary to, not only make the huge sums of money that are extracted from the real economy, but to conceal the inevitable result of interest charged on nonexistent money.

The only way to fix this is to abandon this Ponzi scheme and replace it with a sane currency. Perpetual economic growth in an usurious system is no more possible than perpetual motion.

[earth mom]

19. Here is all the proof anyone will ever need that Wall Street is rotten to the core.

Meanwhile the talking heads on teevee will continue to push Wall Street on the fools who refuse to see what's staring them square in the face.

[Octafish]

32. I Knew Bernie Madoff Was Cheating--That's Why I Invested With Him

They make money the old-fashioned way. They steal it.

I Knew Bernie Madoff Was Cheating--That's Why I Invested With Him

Henry Blodget | Dec 12, 08 6:03 AM

Interesting tidbits coming in about Bernie Madoff (read indictment here).

Specifically, we're hearing that the smart money KNEW Bernie had to be cheating, because the returns he was generating were impossibly good. Many Wall Streeters suspected the wrong rigged game, though: They thought it was insider trading, not a Ponzi scheme. And here's the best part: That's why they invested with him.

For years and years I've heard people say that investment performance was too good to be true. The returns were too steady -- like GE earnings under Welch -- and too high given the supposed strategy.

One Madoff investor, himself a legend, told me that Madoff's performance "just doesn't make sense. The numbers can't be straight." Another sophisticated Madoff investor actually went through trade confirms in order to reverse-engineer the strategy and said, "it doesn't add up."

So why did these smart and skeptical investors keep investing? They, like many Madoff investors, assumed Madoff was somehow illegally trading on information from his market-making business for their benefit. They didn't consider the possibility that he was clean on that score but running a good old-fashioned Ponzi scheme.

And another from Whitney Tilson:

One friend who saw this coming said Madoff had his own broker-dealer and a relative as his finance guy; another friend said he was suspicious because of the 1-2%/month returns with never a down month (much less quarter or year), combined with never showing a a down month (much less quarter or year), combined with never showing anyone his portfolio. 99% of the time, if it sounds too good to be true, IT IS!

Got your own Bernie Madoff stories? Please send them in. ([e-mail]).

SOURCE: http://clusterstock.alleyinsider.com/2008/12/i-knew-bernie-madoff-was-cheating--thats-why-i-invested-with-him

Gee. What interesting times we live in, when crooks complain about the crookery.

Remember when the crazy baldhead Jim Cramer admitted Wall Street was a scam on the teevee and nearly nobody said squat?

Thanks for caring, TheGoldenRule. With any luck...

[RB TexLa]

20. If the governor of Illinois sells senate appointments, they all do.

:crazy:

[depakid]

22. The interesting thing is that some of the "savvy" investors were pretty sure he was crooked

but they thought he was into some sort of insider trading... so they went ahead and invested.

Turns out it was the oldest scam in the book.

[Octafish]

33. Jim Cramer's big mouth -- His revelations only confirm what dupes average investors are

It's like we exist in two worlds: Planet Haves and Planet Have-Nots.

Jim Cramer's big mouth

His revelations only confirm what dupes average investors are

By Thomas Kostigen, Ethics Monitor, MarketWatch
Last update: 12:03 a.m. EDT March 23, 2007

SANTA MONICA, Calif. (MarketWatch) -- Jim Cramer, the boisterous host of CNBC's "Mad Money," recently bragged in an interview about manipulating stock prices when he was a Wall Street trader, proving all too directly -- and stupidly, I might add -- that investment professionals profit off the backs of the naïve investing public.

Cramer is just admitting to a game every one on Wall Street knows: professional money managers use retail investors as pawns in their pursuit of high returns -- ridiculously so.

The question is whether Cramer and every other professional Wall Street investor should be faulted for using all the ammunition with which they are equipped -- market knowledge, sophisticated trading schemes, high technology and public relations -- or whether it's the stupid investors who are duped who should be chastised.

SNIP...

Cramer was smart enough to realize that the capital markets are played just like a professional sports game. He decided some time ago to become a commentator. So it should be no surprise that he would spill some dirty little secrets from days gone by, such as manipulating futures to get quick gains in the options market, false-feeding the media and taking advantage of the "moron longs" -- all in an attempt to enhance profits and get a bigger bonus at year-end.

"What's important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it's important to create a new truth, to develop a fiction," Cramer says.

Regulators abandon the public

His role in manipulation, or whatever it was, should bring consequences. But that should be a minor concern compared to getting the true culprits in all this: regulators.

CONTINUED...

http://www.marketwatch.com/news/story/jim-cramers-big-mouth-reveals/story.aspx?guid=%7BEFABFEB9-4FC7-45A8-A14A-6318372C33E2%7D

For some reason, depreciating property values, harder job situation, etc., I think my zip code is on the latter planet. Perhaps we can flip the place, eh, my Friend?

[Julius Civitatus]

28. DEREGULATION.... NEVER AGAIN!

See what happens when you let these bastards "regulate themselves"? That the go back to their thieving, scamming, conning ways.

What this son of a bitch Bernie Madoff was doing was the good old PONZI SCHEME. Yes, the very same Ponzi Scheme from the 1920s:

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

Deregulation is a Republican wet dream that only gives the worst con-artists room to do what they do best.

[Octafish]

34. They make money the old-fashioned way. They steal it.

Absolutely, Julius Civitatus:

Their dreams are the nightmares we live.

Know your BFEE: Goldmine Sacked or The Best Way to Rob a Bank Is to Own One

Know your BFEE: Phil Gramm, the Meyer Lansky of the War Party, Set-Up the Biggest Bank Heist Ever.

Good thing we can do something about them, besides Lunesta, I mean...



Heh heh heh.

[hootinholler]

36. Until corporate law is rewritten so that the fiduciary responsibility

Is moved to maximize benefits to society over benefits to shareholders, we will continue the ugly cycle of boom and bust.

Thanks, Der Fishie, you always amaze.

Will you be in DC for the 20th?

-Hoot