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Monday, December 15, 2008

The Crash of '08 Roundup — December 15, 2008

Ponzi this:

Zillow.com:
Home Equity Stripped Away in 2008; Nearly $2 Trillion in Home Values Lost This Year -- U.S. homes are set to lose well over $2 trillion in value during 2008, according to analysis of recent Zillow Real Estate Market Reports1. Home values declined 8.4 percent year-over-year during the first three quarters of this year, compared to the same period in 2007.

“Underwater” was the real estate buzzword of the year. U.S. home values2 lost $1.9 trillion from the first of the year through the end of the third quarter, and were likely to fall further in the fourth quarter, leaving approximately 11.7 million American households owing more on their mortgage than their homes are worth. One in seven of all homeowners (14.3 percent) were underwater by the end of the third quarter...

discussion:
Housing Wire: Nearly $2 Trillion in Home Equity Lost This Year: Zillow
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Bailout Nation Debate:

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mugshot of Charles PonziCharles Ponzi's mail fraud scheme in Boston in 1920 lasted less than a year and lost at most maybe tens of millions of dollars.

On November 1, 1920, Ponzi pleaded guilty to mail fraud, and was sentenced to five years in federal prison. He was released after three and a half years to face state charges. He was again found guilty and sentenced to nine years. Before entering state prison, Ponzi jumped bail and fled to Florida, where he set up a scam to sell "prime Florida property" to gullible investors. The Florida authorities quickly learned of this scheme so he fled to Texas, where he shaved his head, grew a mustache, and tried to flee the country as a crewman on a merchant ship. However, he was caught and sent back to Massachusetts to serve out his prison term...

Ponzi spent the last years of his life in poverty. He had a stroke in 1948, and died in a charity hospital in Rio de Janeiro on January 18, 1949.
NY Times:
A Look Back at Charles Ponzi the Schemer -- Mr. Ponzi duped tens of thousands of people out of millions of dollars in a short-lived craze that became the defining confidence scheme of its time. It was brief, lasting only from December 1919 to August 1920...

Dealbook / NY Times:
Some See Competition for Title of Ponzi King -- The largest Ponzi scheme in the history of the capital markets is the relationship between failed mortgage lenders and investment banks that securitized the risky overpriced loans and sold these packages to other investors — a Ponzi scheme by every definition applied to Madoff...
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Bernard L. Madoff the ultimate Ponzi artistBernard L. Madoff - the ultimate Ponzi schemer

Henriques & Berenson, NY Times:
The 17th Floor, Where Wealth Went To Die -- The epicenter of what may be the largest Ponzi scheme in history was the 17th floor of the Lipstick Building, an oval red-granite building rising 34 floors above Third Avenue in Midtown Manhattan.

A busy stock-trading operation occupied the 19th floor, and the computers and paperwork of Bernard L. Madoff Investment Securities filled the 18th floor.

But the 17th floor was Bernie Madoff’s sanctum, occupied by fewer than two dozen staff members and rarely visited by other employees. It was called the “hedge fund” floor, but federal prosecutors now say the work Mr. Madoff did there was actually a fraud scheme whose losses Mr. Madoff himself estimates at $50 billion...
related:
The Independent [UK]:
Feted by the rich, Madoff was a schemer supreme -- Bernard Madoff didn't defraud just anyone. This was an elite conman, a man with impeccable credentials built up over decades, circulating in a rarefied world where the rich and famous courted him for access to his miracle-grow investment scheme. Mr Madoff was no hawkish salesman. He often turned down the country club members competing to throw money at him...

NY Post:
List of Madoff Victims Grows -- Daily News owner and real-estate mogul Mort Zuckerman today revealed that his charity lost a whopping $30 million in swindler Bernard Madoff's alleged investment Ponzi scheme.

"That amount represents more than 10 percent of the Mortimer B. Zuckerman Charitable Remainder Trusts assets," Zuckerman said during an interview with CNBC...

WSJ:
Madoff: The Atomic Bomb for Jewish Charities -- Atomic bomb. Epicenter. Disastrous.

The adjectives can’t get much worse. But that’s exactly what people in philanthropy are saying about the effects of Bernard L. Madoff’s demise on their world...

NY Times:
A Palm Beach Enclave, Stunned by an Inside Job -- a woman joked that she now knew the proper way to pronounce his name.

“Made off,” she said. “You know, like he made off with all our money.” ...

Reuters:
Three European banks announce exposure to Madoff -- Santander put its client exposure at over 2.33 billion euros ($3.09 billion). BNP Paribas said it could face a potential loss of 350 million euro from exposure to Madoff-linked investments. And Swiss private bank Reichmuth & Co said it had about 385 million Swiss francs at stake, around $325 million...
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WSJ:
Madoff and Markets -- Shakespeare is a better investor than the SEC...

Mr. Madoff's investors will in retrospect kick themselves for not asking more questions, especially about the remarkable consistency of his returns over the years, his apparently fly-by-night auditing shop, and his small trading book despite having so much money under management. But the broker's long record of showing gains and years of rising stock prices no doubt provided reassurance. The 70-year-old Mr. Madoff wasn't some dot-com upstart but a pillar of the community and philanthropist. The best con men are always those you least suspect...
related:
Investing public not to worry: the SEC is hot on the trail of this funny money.

Reuters:
SEC sues National Lampoon for stock manipulation -- The U.S. Securities and Exchange Commission said Daniel Laikin, National Lampoon's chief executive, and a company consultant paid kickbacks of about $68,000 for the purchase of National Lampoon stock in order to inflate the stock price. The SEC also charged two stock promoters in the case.
Doug Kass / TheStreet.com:
Madoff Was Made Up -- About three years ago, an investor of mine, who already was an investor with Madoff, came to me and asked my advice as to whether he should add to that investment. I requested and received his monthly brokerage statements. Now, I am very good with math, but after hours of analysis over a weekend, I could not understand how he generated his returns and suggested that he should withdraw his capital. (The investor discarded my advice and decided to add materially to his investment.) ...

Minyanville:
Madoff's Real Victims -- It’s easy to look at what’s happening in the market and shake your head in disbelief -- so long as it isn't happening to you.

Last night, it happened to my 88 year-old grandfather Carl...

Today, I bought the New York Post on the way to the subway. Bernie Madoff was on the front page. His fund was described as a “Ponzi scheme” that lost $50 billion. My phone rang. It was my mother.

“Your grandfather just lost everything,” she said.

Overnight.

I felt sick to my stomach...
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The Fun Stuff blog:
What the real crisis is like! -- If you think that the current economic crisis is something that has never happened in history before, you may be wrong! After the collapse of the agriculture sector in Zimbabwe in 2000, the inflation in that country skyrocketed to 231 million percent a year! Just think about it - 231 000 000%! Unemployment went up to 80% and a third of country’s population left it... [photo essay]

Man carries a mountain of Zimbabwe currency worth about $100 USMan carries a mountain of Zimbabwe currency worth about $100 US
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Greek rioters use laser pointers in their clashes with copsRioters in Athens, who are protesting the police shooting of a 15-year-old boy,
use laser pointers in their clashes with police
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