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Tuesday, December 30, 2008

The Crash of 2008 Wrap Party

Items of Interest:

Six Degrees of Madoff

Bernie Madoff’s Latest Victims: Kevin Bacon and Kyra SedgwickNYMag.com:
Madoff’s Latest Victims: Kevin Bacon and Kyra Sedgwick --The crap thing about being Kevin Bacon, it turns out, is that sometimes you find yourself six degrees from the wrong kind of guy. Such as, for instance, Bernie Madoff. We'd heard that along with Hollywood boldfacers Jeffrey Katzenberg and Steven Spielberg, Bacon and his wife, Kyra Sedgwick, lost money in Madoff's devastating $50 billion Ponzi scheme, and Bacon's rep, Allen Eichorn, confirmed it for us...

Just think about it: Footloose money: gone. Wild Things residuals: gone. The Singles stash: obliterated. If there's anyone in Hollywood who didn't deserve this, it's Kevin Bacon and Kyra Sedgwick. Those two have worked. It sincerely pains us. At least they have The Closer to fall back on.

Eugene Robinson / Washington Post:
Lessons From the Year of Bernie Madoff

What do Social Security and Madoff have in common?

The Johnsville News:
The Great Bacon Conspiracy
Austria to Take Over Bank Medici Management -- Austria's government said Wednesday it will take over management of Bank Medici but will not supply it with funds, after the Vienna-based bank suffered large losses on investments with the alleged New York Ponzi scheme run by Bernard Madoff.

Austrian authorities began investigating Bank Medici earlier this month, following reports it had placed about $2.1 billion in funds controlled by Mr. Madoff, according to people familiar with the matter. On Dec 11, prosecutors announced Mr. Madoff's arrest on charges he defrauded investors of up to $50 billion in a Ponzi scheme...
UBP Scrambles to Explain Madoff Ties --As investors around the world size up losses on Bernard Madoff's alleged Ponzi scheme, one purveyor of investment services to the world's wealthy -- Swiss private bank Union Bancaire Privée -- is scrambling to explain its ties to the New York financier...
Houston Chronicle:
Madoff's Texas tracks -- The financial scandal costs the Innocence Project funding, but Houston lawyers plot a counterattack...

Perhaps the most stinging impact of the scandal in the Lone Star state was felt in Dallas, where a foundation that had provided funding for the Innocence Project to conduct DNA testing of convicts closed because of donor losses. The JEHT Foundation had already provided $400,000 for the testing, which has exonerated more than a dozen persons wrongly convicted in Dallas County. The loss of funding may cripple attempts to expand the testing program to other Texas counties...
Dan Nardello / FoxNews:
How He Did It: The Wizardry of Bernie Madoff -- Amid the hue and cry over the Madoff fraud is the chorus of those wondering how he avoided detection for so long. That’s the wrong question. Precious few appeared to have looked closely at Madoff, but many of those who did their due diligence steered clear of Wall Street’s Wizard of Oz...
Yeshiva’s Madoff Losses Based on ‘Fictitious’ Profits -- Yeshiva University said its previously reported profits in a fund tied to Bernard Madoff were ‘fictitious,’ underscoring how customers of the money manager may have been misled about the investment gains they had amassed.

The school said it had a net investment of $14.5 million tied to Madoff as of Dec. 11, the day he was arrested, according to an e-mail today from J. Michael Gower, the New York school’s vice president for business affairs and chief financial officer. Yeshiva said a financial statement from Ascot Partners, which fed to Madoff, valued the investment at $110 million as of Dec. 16...
Madoff probe focuses on tax havens -- The hunt for funds allegedly cheated out of investors by Bernard Madoff, who faces fraud charges in New York, has turned to offshore tax havens where investigators believe he may have salted away hundreds of millions of dollars.

Stephen Harbeck, chief executive of America's Securities Investor Protection Corporation (Sipc) and official receiver of Madoff's now defunct brokerage business, said the hunt for funds was likely to spread all over the world. "We will trace funds wherever the trail goes," he said on the steps of the US Bankruptcy Court for the Southern District of New York.

Sources close to the investigation said forensic accountants examining Madoff's books believed he had regularly sent large sums of money to offshore accounts in the Caribbean and Europe...
NY Post:
MADOFF'S OFFSHORE CASH STASH -- Investigators believe that Bernard Madoff has stuffed hundreds of millions of dollars in Ponzi profits into offshore tax havens from which they could prove tricky to recover.

In the weeks since his Dec. 11 arrest, forensic accountants have been scouring Madoff's books as federal officials ready an indictment against the hated hedge-funder, who remains under house arrest in his $7 million Upper East Side penthouse.

The accountants believe Madoff regularly sent bundles of money to offshore accounts in the Caribbean and Europe, the Observer newspaper in London reported today.

Report: Madoff's Ponzi Profits Hidden Offshore -- Investigators could be following an around-the-world paper trail as they try to find if and where Bernard Madoff may have socked away hundreds of millions of dollars.

Reports in both the New York Post and the London Observer suggest the alleged Ponzi schemer shoveled money to offshore accounts, particularly in Europe and the Caribbean...
Kiss My Babushka

Russian professor Igor Panarin predicts United States will disintegrate in civil war in 2010Wall Street Journal:
As if Things Weren't Bad Enough, Russian Professor Predicts End of U.S. -- In Moscow, Igor Panarin's Forecasts Are All the Rage; America 'Disintegrates' in 2010

For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument -- that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. -- very seriously. Now he's found an eager audience: Russian state media.

In recent weeks, he's been interviewed as much as twice a day about his predictions. "It's a record," says Prof. Panarin. "But I think the attention is going to grow even stronger."

Prof. Panarin, 50 years old, is not a fringe figure. A former KGB analyst, he is dean of the Russian Foreign Ministry's academy for future diplomats. He is invited to Kremlin receptions, lectures students, publishes books, and appears in the media as an expert on U.S.-Russia relations.

But it's his bleak forecast for the U.S. that is music to the ears of the Kremlin, which in recent years has blamed Washington for everything from instability in the Middle East to the global financial crisis. Mr. Panarin's views also fit neatly with the Kremlin's narrative that Russia is returning to its rightful place on the world stage after the weakness of the 1990s...

Divided United States, Russian professor predicts US will disintegrate in civil war in 2010
Owen Thomas / Gawker: With Russia Gone to Pot, Diplomat Predicts U.S. Split
Fausta / Fausta's Blog: Panarin's Fantasyland...
Chad The Elder / Fraters Libertas: Under Siege…
Ntodd / Dohiyi Mir: Fall Of Empire
Ryan Grim / Slate: Lebanese Do-Over...

Andrew Krame / NY Times: Gazprom, Once Mighty, Is Reeling
Famous Last Words for 2008

National Association of Realtors, December 2007:
Existing-Home Sales to Trend Up in 2008 --
Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors®.
21 Dumbest Moments in Business 2008 --

#1 Detroit pleads poverty - in style -- Like someone arriving at a food bank in a limousine, the chief executives of the three major U.S. automakers spark outrage when they fly their corporate jets to Washington D.C. to beg Congress for a multi-billion dollar bailout.

#7 Paulson's 'bazooka' backfires -- Actions speak louder than words, Mr. Paulson. As shares of Fannie Mae and Freddie Mac plunge in mid-July on worries about their viability, Treasury Secretary Henry Paulson assures Congress that merely promising to give the beleaguered mortgage lenders access to Treasury funding would calm market fears - at no cost to Uncle Sam.
"If you've got a squirt gun in your pocket, you may have to take it out," Paulson tells legislators. "If you've got a bazooka and people know you've got it, you may not have to take it out."
Congress delivers the bazooka, but investors aren't buying it. Two months later, Treasury takes over both companies in a move that could cost taxpayers billions of dollars.

#8 Fannie's delusions of grandeur -- Fannie Mae CEO Dan Mudd proves once again that his crystal ball is malfunctioning. In May, Mudd predicts that the government-sponsored mortgage lender will "feast" on weakened competition in the mortgage market - even as its own prospects dim amid mounting credit losses and asset writedowns.
Doug Kass / TheStreet.com:
20 Surprises for 2009 --
  1. The Russian mafia and Russian oligarchs are found to be large investors with Madoff...
  2. Housing stabilizes sooner than expected...
  3. The nation's commercial real estate markets experience only a shallow pricing downturn in the first half of 2009...
  4. The U.S. economy stabilizes sooner than expected...
Jeff Matthews: The Peerless Prognosticator of Palm Beach
U.S. malls will struggle with thousands more store closingsMSNBC:
As More US Retailers Fail, Malls Could Be Next Victim -- The dismal holiday shopping season may sink some retailers and could take down some U.S. malls struggling with rising vacancies, softening rents and their own large debt loads.

"This is probably going to go down as the worst season in history as far as retail sales," said Victor Calanog, director of research for real estate research firm Reis. "The difficulty of ascertaining what the effect would be at the property level is because we're already heading toward a train wreck."

At the end of the October, the International Council of Shopping Centers (ICSC) forecast that national chains would announce 6,100 store closings in 2008 and 3,100 in the first half of 2009...
October Home Prices in 20 U.S. Metro Areas Fall 18% -- Home prices in 20 U.S. cities declined at the fastest rate on record, depressed by mounting foreclosures and slumping sales. The S&P/Case-Shiller index declined 18 percent in the 12 months to October, more than forecast, after dropping 17.4 percent in September. The gauge has fallen every month since January 2007, and year-over-year records began in 2001...

Economists forecast the 20-city index would fall 17.9 percent from a year earlier, according to the median of 21 estimates in a Bloomberg News survey. Projections ranged from declines of 17 percent to 18.4 percent. Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in October, led by a 33 percent drop in Phoenix and a 32 percent decline in Las Vegas.

"The bear market continues," David Blitzer, chairman of the index committee at S&P, said in a statement. The declines in Atlanta, Seattle and Portland surpassed 10 percent for the first time, he said...

The 20-city index is down 23 percent from its 2006 peak. Fourteen of the 20 metropolitan areas showed record declines in the year ended in October...
John Leland / New York Times:
Breaking Up Is Harder to Do After Housing Fall — When Marci Needle and her husband began to contemplate divorce in June, they thought they had enough money to go their separate ways. They owned a million-dollar home near Atlanta and another in Jacksonville, Fla., as well as investment properties...
Joseph Duggan / RealClearMarkets
The Evaporation of the U.S. Newspaper -- As politicians in Washington debated the week before Christmas whether to spend billions of taxpayer dollars to bail out the century-old smokestack industry of automobiles, another relic of America’s Gilded Age, the daily newspaper, lay in extremis without hope of a life-saving intervention from the government. Panic has suppressed the sense of irony, and legislators are unlikely to recall that the automobile and its chatty vade mecum, the radio, contributed to the obsolescence of the urban newspaper...
Barry Ritzholtz / The Big Picture:
For Sale: 5 BR Detroit Manse, $8995 --

For Sale: 5 BR Detroit Manse, $8995----

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