The Madoff Bunch: Here’s the Story

That's the way they became the Madoff Bunch!!!

These three entities (since AIG isn’t a person, except legally) deserve each other. One is obsessed with motherhood – willing to do the strangest things to be pregnant – and yet, can’t take care of a Yorkie.

Then there is Bernie. Bernard Madoff swindles billions away from a host of snobby elites (and yes, they were elite, else, Bernie wouldn’t know you or I) and has zero conscience about it. Imagine that. Even wants out of jail so he can save his wife’s assets and likely, do himself before he goes to the big house.

Bernie’s Victims:

$1.8 Billion : J. EZRA MERKIN: The chairman of former General Motors Corp. financing arm GMAC is a money manager at Ascot Partners LLC in New York, which is in charge of investing funds from Yeshiva University and numerous Jewish organizations. One his most vocal investors is Mort Zuckerman’s foundation which is out $30 million.

$300 Million : Fred Wilpon, co-owner of the New York Mets

Unknown: KEVIN BACON and KYRA SEDGWICK

 $280,000: PEDRO ALMODÓVAR: The Spanish filmmaker, known for productions like “All About My Mother“ and for launching the US career of Penelope Cruz.

Millions: JEFFREY KATZENBERG: The DreamWorks Animation CEO

Roughly $230 Million : ARPAD BUSSON/UMA THURMAN/ELLE MACPHERSON: Uma Thurman’s fiancé, Arpad Busson, manages a $12.5 billion hedge fund. Macpherson is his ex.

Millions: ERIC ROTH: The Golden Globe-nominated screenwriter of “The Curious Case of Benjamin Button”

$20 Million: NICOLA HORLICK: This British investing superstar.

 

None of this though is even close to the haircut, you, the American taxpayer will take in supporting AIG. $180 Billion up in smoke. $165 Million sent out in bonuses that, while, we may recoup them, what about the other $179.8 Billion??? (You might want to start trading CDS – Credit Default Swaps – to get back some money directly from the source.)

So, to wrap up this little trio of Faces of Crass Behavior, I compose this little ditty set to the Brady Bunch theme:

Here’s the story of the Octalady

Who was bringing up shitloads of weird babies

All of them had sperm donors, like their brothers

The youngest ones in foster care.

 

Here’s the story, of a man name Bernie

Who was busy bilking thousands of his own.

They were Jews and Gentiles – screwed all together,

Yet they were not alone.

 

Till the one day when AIG met this maelstrom,

And they knew that it was much more than a hunch.

That this group would somehow form a syndicate.

That’s the way they all became the Madoff Bunch.

The Madoff Bunch, The Madoff Bunch.

 

That’s the way they became the Madoff Bunch…

Sorry that my rhyme scheme is off.

But then again, these schemers and parasites usage of a rhythm method is about as likely to succeed as I am in getting the CEO job at JPMorganChase , dating the latest it girl, and trying out and playing for Fred Wilpon’s Mets this year.

I’m very tired of being the ball vs. the louisville slugger in the game of the United States of America’s economy/casino run by MBAs that are down with OPM – Other Peoples’ Money – and don’t  give reach arounds with their screw jobs.

I have no hope at this moment that our country is going to do better if we don’t send a  very strong message to these jokers of economic jihad that we Americans are fed up with the crying game after the c-sucker job of economic destruction.

Enough!

Prediction Revisited: Decidedly Correct about The Storm

I should not toot my horn on this one, yet, my prediction came to pass: The U.S. Economy has fallen into a Great Recession, heading toward Depression, unless these policies of Obama can turn around a Titanic ship of economic failure.

On March 14, 2008, I wrote: The Bear is Yet to Come: The U.S. Economy will fall into a Depression. I was looking at the markers in the economy then:

1. Commodity Prices were unreasonably high
2. Oil Prices (and energy) were sapping our spending dollar
3. Weakness in the U.S. currency
4. Unemployment losses were starting to mount (nothing like the last 5 months)
5. Mortgage crisis finally hitting home
6. Zero GDP growth
7. Inflation

The last was a complete error – it was occuring at the moment in commodities and staples – however, the mortgage and used car markets would reflect large DEFLATION, and a much larger piece of the puzzle.

Today, the Fed reported the largest loss in family wealth on record. Since its peak in June 2007 we have loss nearly $13 Trillion in personal wealth. From Yahoo! Finance:

Family net worth had hit an all-time high of $64.36 trillion in the April-June quarter of 2007 but has fallen in every quarter since that time.

The record 9 percent drop in the fourth quarter pushed total net worth down to $51.48 trillion, a level that is 20 percent below the third quarter 2007 peak.

 Meanwhile, the U.S. stock market capitalization has lost nearly 1/2 of its value  which stood at $15.34 Trillion in May 2007. So, all total, approximately $20 Trillion dollars in lost value, twice the National Debt of the United States.

 We are in unprecedented waters with a monster cyclone churning over us. The Great Depression did not have the National Debt problems we currently have – the government had room to allow for deficit spending – and so, pumping money into the system made sense and worked to bring us at least back to the same point we were at in 3-4 years. (1929 the Depression started, 1933 it bottomed, 1937 we were back to 1929 values…WWII brought us to a better point, oddly enough.)

We also did not have a medical crisis – retirees, health concerns, and Social Security claims – piling up on our balance sheet. This made it doable to start such programs back in the 1930’s. Which is why we need a major overhaul of the system else we fall into a quagmire of unimaginable depths.

We had a still growing and developing America. Land was still open; manufacturing still growing; grand infrastructure projects still on the horizon. We are now locked into a complacent viewpoint that we should not redevelop, tear down bad ideas and systems, and unlock the innovative and unique spirit that drove us to the position we still hold as the richest country on the Earth. This is paramount to not slipping further down the slope of economic woe.

We are in these uncharted waters due to poor planning, ideological shifts and the blaming of common folk (that made their mistakes) for the elitist and greediest amongst the Wall Street and Washington power gangs. The latter have the power; the connections; the education; and the we know what is best attitude that comes from their MBAs, Ph.Ds., J.Ds., and billions made off the common rabble making their daily bread.

A History of Worst Days on Wall Street

So, it is up to common folk to make opportunity where little seems to exist. To batten down the hatches, set a new course, and make a new discoveries during an Economic Perfect Storm.

They’re will be likely worst days on this choppy, tsunamic-laden horizon – predictions like mine were made during a bad stretch – however, we Americans have to be better than our educated, snooty and self-absorbed elite. And their predictions of all is well in a free-market, free-for-all but those that ultimately pay for their misguided attempts to casino the market daily. 

And let us hope our President sides with us more than the morons of money in our desire to change the path and make a new America that can weather any of the self-induced problems of the Gangs of New York Finance made.

The clouds are dark, but we can weather through the storm.

The Perfect Storm of 2008: Working Preface

A Cover of The Financial Crisis 2008?

 

Here is the working preface. (meaning: I just had the overall book idea this morning.)

October 6, 2008. It was early in New York on Rockefeller Plaza at NBC.
A place where the mention of Rockefeller drew contrasting opinions
based on what economic class you came from or currently held at
present. His was a fortune made in Standard Oil; Rockefeller’s behemoth
was then broken apart into 27 companies, and the famed ‘seven sisters’:
Exxon, Mobil, Shell, BP, Chevron, Gulf and Texaco. By 1999, these oil
giants would remarry with almost zero objection to their offspring. But
today was not about oil – even as it had soared to all-time highs just 3
months prior of nearly $150 per barrel – but instead, about the
economics of the “credit crunch.” 

   
Before another hectic day of following the casino-like markets would
take hold of an imperiled nation’s imagination, the mood was decidedly
uncertain even after the announced $700 Billion dollar ‘bailout’ or
‘workout plan’ was approved during a 2-week span by U.S.
congressional leaders on the Friday prior. The leaders had thrown
together a bill at the insistence and design of Treasury Secretary Henry
Paulson, ex-Goldman Sachs CEO, to buy up mortgage back securities
and other illiquid assets that banks and finance companies were unable
to sell amidst the crisis of confidence seen on the Wall Street markets,
European floors and newly emerging Asian trading sectors.
With more news of national banks from across the pond being 100%
insured by their governments, namely Germany, the 4th largest economy
by GDP, people with enormous financial stakes and reputations to
protect were speaking to Americans.
 
Jim Cramer, a 25-year trader of stocks, a former Goldman Sachs
employee and host of CNBC’s Jim Cramer’s Mad Money was a guest on
NBC. His call to action for folks nearing retirement age was “ to remove 5
years worth of money,” from the market. This after a weekend of
contemplation about where the markets where heading. Many folks
called this a ‘chicken little’ panic call, shouting ‘fire’ in a smoke-filled
room and other ways to express over reaction to recent events. Cramer
though was panicking back as far as August 2007 during the first shock wave of events that would inevitably become the worse banking collapse since the days of Herbert Hoover and the Great Depression.

 
The string of collapses in long-standing institutions, some that
survived through the Depression Era, made it harder to swallow for
people like Cramer that had more than one CEO of an investment bank
tell him things: “We’re ok. Just a short-term hiccup. Just need an infusion
of fresh capital.” Lehman Brothers had been one of those firms – now
gone after establishment back during honest Abe’s timeframe. [Added: And Kramer's own Bear Stearnes dilemma.]
 
Gone was the ability of banks to lend to each other too. They had free-
wheeled hundreds of billions of dollars in the housing market from coast
to coast, sea to overseas, at sub-prime lending rates with adjustable
kickers. As a result, the borrower usually got overmatched intellectually
and financially, and took their only recourse: skip out on the house and
leave the bank or lending institution to resell the home. Meanwhile,
packaging up thousands of homes of various investment qualities and
labeling them Mortgage Backed Securities, Credit Default Swaps,
Collateralized Debt Obligations to be offered on an open market only lent
more fuel to this 3-alarm fire. As these packages got divvied up further,
combined in unique ways that only a Rubix Cube master could solve or a
Ph.D. candidate in quantum physics might find interest to mull over, the
investment bankers suddenly looked like Masters of a Failing Urban
Housing Project more than any Universe known to these bonus-baby
millionaires.
 
The U.S. Economy has grinded to a standstill. Hefty layoffs have
ensued. The U.S. car industry is in steep decline due to lack of loan
approvals and abysmal choices of inefficient cars, trucks and SUVs.
Financial services have taken a beating. Construction of new homes is
nearly non-existent in several key markets, such as California, Nevada,
Florida and Michigan. The commodities exchange have rollercoastered
from all-time highs and back down as asset deflation on homes and cars
has strangled people’s ability to shed or service debt or live within their
means.   The Perfect Storm of 2008 has not come to an end. It has reached
landfall status, hitting the United States, Europe and Asia at nearly cat 5
strength. The devastation of this financial crisis will be measured in
trillions of dollars lost.  The economic machine of the United States is a
$14 trillion dollar-per-year economy, but this storm will suck possibly 50-
100% of 300,000,000 Americans productivity for an entire year before it
is all done.
 
The explanation of why it happened, who got victimized and what the
events were to cause such a catastrophe will be seen through the prism
of an ordinary citizen with his eyes and ears tuned to this channel of
economic despair and policy blunders. 
 
The overall goal may be seen as two fold: to shed light on behavior
and ideas behind the financial hurricane and to see the ramifications to
all people of various social-economic backgrounds. The calm before the
storm that contributed to lagging response to the problem from decision
makers may ultimately prove to be the most salient topic broached. 
 
No matter the analysis, many have and will suffer from the greatest
crisis of nearly 4 generations. And no one will forget how they survived
during it.

The Perfect Storm (part 1): The Recent Failures of the U.S. Economy

The Perfect Storm

In the perfect storm, several mutually supportive events must occur before what started as a batch of thunderstorms coming off the coast of Africa turns into an enormous energy pit capable of expenditure of 10,000 nuclear bombs in its 2-week existence.

Our U.S. Economy has reach the eye of what is a perfect storm of a credit crisis cum mortgage foreclosures, faltering manufacturers (GM, Ford, their tier 1 suppliers and major airlines bankrupt), energy prices soaring (oil & natural gas), embedded inflation in consumer staples (corn-based products) and long-term foreign and domestic policies mistakes coming home to roost.

No one is totally to blame. It takes years upon years of mismanagement, fingerpointing and apathy to get to this critical landfall.  Liberals blaming Conservatives. Conservatives blaming Liberals. Independents blaming both. Blame, blame and more blame. The thunderstorms swirl into a tropical depression.

The outer bands of storm hit

Friday, So Cal’s IndyMac Bank was the latest causality as it became the 2nd largest bank failure in FDIC’s 75-year history.  Bear Stearnes, a respected investment bank, considered the 5th largest in America, was taken under by competitor JPMorganChase back in March. It is reported CitiGroup, once known as Citibank, which was bailed out less than 2 decades ago by ‘fuzzy definition’ of the word ‘default’, is expected to post losses for the 3rd straight quarter. CitiGroup is the largest bank by assets in the United States.  Lehman Brothers has been in line to be the next take under candidate by the remaining giants of the likes of Goldman Sachs, the gold standard of investment banking.

The Federal Reserve has thrown out ‘free market’ Capitalism to save these entities, as it now is backstopping Fannie Mae and Freddie Mac, the largest quasi-governmental entities on Earth. 50% of Americans pay mortgages (in some way) to these two colussus of their industries. It has opened lines of credit to major investment banks because they are too big to fail.

The eyewall is well-formed.

Countrywide Financial was also a major contributor (largest non-bank lender in the nation) to this current cat 5 hurricane spreading out ominously at wildfire rate around Wall Street.

But why is this all happening at once?  Why is the storm swirling in our backyards?

In the next post (or two) I will try to reason out the predicaments that have put us behind the eight ball of a tornatic-spinning monster.

It goes back historically around 65 years (no crap) and the decisions made and shifts in America’s design, ideology and focus, has likely put us in a less-than-ideal future standing. If we refuse to make hard choices, sacrifices and turn around the way we are going, then the U.S. will make Rome seem like a model for stability. The destruction is real.

Stay tuned…