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Wednesday, December 17, 2008

The Crash of '08 Roundup — December 17, 2008

Items of Interest:

FederalReserve.gov
FOMC statement -- The Federal Open Market Committee decided today (12/16) to establish a target range for the federal funds rate of 0 to 1/4 percent. Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain ...

discussion:
Econbrowser / Economics Roundtable: Quantitative easing
William Polley / William J. Polley: So this is how it feels...
Joey / Curbed : Free Money: The Federal Reserve cuts its benchmark...
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Wall Street Journal:
Low-Interest Mortgages Are the Answer -- Recent news articles suggest that the Treasury Department is considering a plan to offer a 4.5% mortgage for home buyers for a period of time. Let's hope it does. It would help arrest the decline in house prices that is at the base of the ongoing financial crisis and recession...
Discussion:
Calculated Risk: Bad housing policy proposals never die ...
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Agence France Presse:
Bush says sacrificed free-market principles to save economy … US President George W. Bush said in an interview Tuesday he was forced to sacrifice free market principles to save the economy from “collapse.” — “I've abandoned free-market principles to save the free-market system,” …
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Bernie Madoff and the Scam of the Century

Bernie MadoffCharlie Gasparino / The Daily Beast:
How the SEC Got in Bed with the Madoffs -- Inside the twisted loyalties and conflicts that kept Wall Street’s top cop from catching one of the biggest Ponzi schemes in history.

Since the story of Bernard Madoff’s massive Ponzi scheme broke, a recurring theme has been shock over how Wall Street’s top cop—the Securities and Exchange Commission—missed so many red flags. Knowing more about who did the SEC’s investigations makes it all less surprising...
Madoff sat in the FBI’s New York offices with one wrist handcuffed to a chair and the other holding a telephone he used to contact his attorney...
What they can’t understand is how securities regulators ignored at least one letter calling Madoff’s operations a “Ponzi Scheme,” and a slew of red flags –including nearly two decades of uninterrupted positive returns, and an auditor who worked out of a tiny one-man shop in upstate New York...
related:
Gawker:
Ponzi Schemer's Label-Whoring Niece Married SEC Lawyer -- Shana Madoff, whose uncle Bernie Madoff stands accused of defrauding investors of $50 billion, is the wife of Eric Swanson, a former top lawyer at the Securities and Exchange Commission. A goy, but well-placed!...
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NY Times:
S.E.C. Says It Missed Signals on Madoff Fraud Case -- The Securities and Exchange Commission said Tuesday night that it had missed repeated opportunities to discover what may be the largest financial fraud in history, a Ponzi scheme whose losses could run as high as $50 billion.

The commission said it received credible allegations about the scheme at least nine years ago and will immediately open an internal investigation to examine why it had failed to pursue them aggressively.

The S.E.C. issued the statement hours after Bernard L. Madoff, the 70-year-old Wall Street executive accused of operating the scheme, discussed the fraud with federal authorities at a meeting in New York on Tuesday, according to people briefed on the meeting...
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NY Times:
In Fraud Case, Middlemen in Spotlight -- As a go-between who shepherded clients and their money to Bernard L. Madoff, Walter M. Noel became so prosperous that he was only too happy to show off his good fortune to the world...
related:
Daily Beast
Madoff's Biggest Victim -- Which person owns the unfortunate distinction of being Bernie Madoff’s biggest victim? Try Walter M. Noel, manager of the Fairfield Greenwich Group. Noel lost $7.5 billion, more than half of his firm's holdings. In Greenwich, according to The New York Times, the Noels were famous for sending out Christmas cards with their five beautiful daughters—the family even posed for a spread in Vanity Fair in 2002. The Fairfield Greenwich Group charged clients a fee of one percent of assets annually and 20 percent of annual investment gains, and regularly returned 10 to 12 percent. Noel's largest fund invested exclusively in Madoff. One daughter said through a spokesman that "a very substantial part of each family member's personal assets was invested with Bernard Madoff alongside those of our investors."...
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DealBook / NY Times:
If Only the S.E.C. Had Taken Madoff’s Advice-- With Bernard L. Madoff’s ties to the Securities and Exchange Commission being put under a microscope this morning, we thought we would point out that, just a few years ago, Mr. Madoff was actually advising the commission. Yes, in 2000, Mr. Madoff was part of the S.E.C.’s Advisory Committee on Market Information, a high-powered group ...
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editorial / DCexaminer.com:
Who Will Bail Out Uncle Sam? — By EXAMINER EDITORIAL HOT ZONE — The United States of America is bankrupt. Don't believe it? Consider this: Federal obligations now exceed the collective net worth of all Americans, according to the New York-based Peter G. Peterson Foundation...
Discussion: TigerHawk: How do we pay back all this debt?
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Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia