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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.

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

Boston.com:
What do Social Security and Madoff have in common?

The Johnsville News:
The Great Bacon Conspiracy
----
WSJ:
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...
---
WSJ:
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...
----
Bloomberg:
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...
---
Observer:
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...
related:
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.

MSNBC:
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...
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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
Discussion:
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...

related:
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®.
----
Fortune.com:
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...
discussion:
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...
related:
Deadmalls.com
----
Bloomberg:
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----

Thursday, December 25, 2008

Hark the Rutland Herald

Rutland Herald: We Are VermontHark the Rutland Herald's come
Read it 'till your brain is numb

To your wond’ring eyes unfurled
All the troubles of the world

Global warming, unemployment
Whoosh we're going down the toilet

Can't escape it if you want
Even up here in Vermont

Hark the Rutland Herald's here
Filled with gobs of Christmas cheer

Troubles on the Earth abound
Hear the market crash resound

Troubles for investment bankers
Troubles for the auto makers

Chaos in Afghanistan
Centrifuges in Iran

Hark the Herald also brings
Arts and Food and ads for things

Skip the markets' disarray
Skip that stuff in Section A

Check out sports and read the funnies
Do the crossword, 'specially Sunday's

Hark the Rutland Herald's come
As for me, I'll just stay dumb

by John Prittie © 2008

Thursday, December 18, 2008

The Crash of '08 Roundup — December 18, 2008

Items of Interest:

---
The Bernie Madoff Ponzi

Bernie Madoff runs into media scrum as he returns to his NY City apartment from courtMadoff, who is free on bail(?), runs into media scrum at his apartment

Bloomberg:
Madoff’s Wife Said to Be Investigated Over Ponzi Scheme Records -- Ruth Madoff, the 67-year-old wife of alleged fraud mastermind Bernard Madoff, is being investigated by U.S. regulators over whether she helped maintain secret records used in a $50 billion Ponzi scheme, a person familiar with the matter said.

The Securities and Exchange Commission, combing through files at her husband’s New York firm, found evidence she may have helped track payments, the person said, declining to be identified because the inquiry isn’t public. Two people with knowledge of the probe said on Dec. 14 that the agency is also examining why her name appears on related transactions...
---
NY Times:
Madoff Scandal Shaking Real Estate Industry --Almost no segment of New York City’s real estate industry was spared in the Madoff scandal, which may be history’s largest Ponzi scheme: commercial brokers large and small, little-known developers and prominent families like the Wilpons and Rechlers all lost money to Bernard L. Madoff, industry executives say.

The outsize impact on the industry may have resulted largely because Mr. Madoff (pronounced MAY-doff) managed his funds much the way that real estate leaders have operated successfully for decades: He provided little information and demanded a lot of trust...
----
Bespoke:
If You Ever See a Chart Like This, Run Away Fast -- We've all heard how Bernie Madoff's returns sounded too smooth and consistent to be true. In picture form, however, the returns are even more eyebrow raising. The chart below shows the cumulative returns of $1 invested in the hedge fund Fairfield Sentry Limited, which was a fund run by Fairfield Greenwich Group that essentially directed all of its assets to the stewardship of Bernie Madoff...

Chart of Bernie Madoff's performance 1990-2008
The Nasdaq bubble of 2000-2002 didn't even dent Madoff's performance.
----
----
Banks will need another $250 Billion

Alan Greenspan / Economist:
Banks Need a Bigger & Better Capital Cushion -- In a guest article, Alan Greenspan says banks will need much thicker capital cushions than they had before the bust.

GLOBAL financial intermediation is broken. That intricate and interdependent system directing the world’s saving into productive capital investment was severely weakened in August 2007. The disclosure that highly leveraged financial institutions were holding toxic securitised American subprime mortgages shocked market participants. For a year, banks struggled to respond to investor demands for larger capital cushions. But the effort fell short and in the wake of the Lehman Brothers default on September 15th 2008, the system cracked. Banks, fearful of their own solvency, all but stopped lending. Issuance of corporate bonds, commercial paper and a wide variety of other financial products largely ceased. Credit-financed economic activity was brought to a virtual standstill. The world faced a major financial crisis...

... another $250 billion would bring the [LIBOR] spread back to near its pre-crisis norm. This arithmetic would imply that investors now require 14% capital rather than the 10% of mid-2006. Such linear calculations, of course, can only be very rough approximations. But recent data do suggest that, while helpful, the Treasury’s $250 billion goes only partway towards the levels required to support renewed lending...
----
Jordy Yager / The Hill:
With economy in shambles, Congress gets a raise -- A crumbling economy, more than 2 million constituents who have lost their jobs this year, and congressional demands of CEOs to work for free did not convince lawmakers to freeze their own pay.

Instead, they will get a $4,700 pay increase, amounting to an additional $2.5 million that taxpayers will spend on congressional salaries, and watchdog groups are not happy about it...
Discussion:
Allahpundit / Hot Air: Palin: No pay raise for me, thanks
-----
NY Times:
States’ Funds for Jobless Are Drying Up -- With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments.

Thirty states are at risk of having the funds that pay out unemployment benefits become insolvent over the next few months, according to the National Association of State Workforce Agencies...
----
Kevin Depew / Minyanville:
Point of Recognition Still Ahead of Us -- Deere Apparently Not Caught in Headlights After All

The unorthodox tools, the weirdness, they know no bounds. Yesterday the Federal Deposit Insurance Corp. - yes, the agency created by Congress to insure deposits and supervise financial institutions - said it would guarantee $2 billion of debt issued by farm-equipment maker John Deere (DE).

The FDIC's Temporary Liquidity Guarantee Program has been used mostly by large banks like Goldman Sachs (GS), Morgan Stanley (MS) and Citigroup (C), though according to the Wall Street Journal both General Electric Capital (GE) and American Express (AXP) have used the program to access funds.

Nevertheless, Deere, which the Journal points out at least does maintain a few small industrial banks used to finance consumer purchases, marks a bizarre turn in the government's intervention in credit markets...
----

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...
----
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 ...
----
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,” …
----
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!...
----
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...
----
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."...
----
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 ...
----
----
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?
----
----

Tuesday, December 16, 2008

The Crash of '08 Roundup — December 16, 2008

Items of Interest:

The Numbers:

  • November Housing Starts 625,000 vs. 736,000 consensus estimate, October starts revised to 771,000 from 791,000 [based on an annual rate]
  • November Core CPI +1.1% vs +1.5% consensus, prior +3.7%
  • November Core CPI month/month comparison: +0.0% vs +0.1% consensus
  • November CPI y/y +1.5% vs +1.1% consensus
  • November Building Permits 616,000 vs 700,000 consensus
-----
CNNMoney:
Housing permits, starts hit record lows -- Housing permits fell more than 15% to an annual rate of 616,000 last month, the Commerce Department said, while starts slid nearly 19% to an annual rate of 625,000....

CNNMoney:
Consumer prices fall by record 1.7% -- Prices fell by the greatest amount since the Department of Labor began publishing seasonally adjusted changes in February 1947...
----
Bailout Nation Debate:

Washington Post:
Majority of Public Opposes Auto Rescue — Poll Finds Most Blame Industry for Problems, Believe Failure Won't Hurt Economy — Most Americans continue to oppose a government-backed rescue plan for Detroit's Big Three automakers as majorities blame the industry for its own problems …
Discussion:
James Joyner / Outside The Beltway: Public Opposes Auto Bailout
Doug Mataconis / Below The Beltway: American Public Continues To Oppose Auto Bailout
Eugene Robinson / Washington Post: Only a Lunatic Wants Big Three to Fail

Related:
Kurt Brouwer / Fundmastery
GM & Toyota - A Tale of Two Car Companies - Last year, both companies sold lots of car and trucks. In fact, total worldwide sales were almost the same so each company did pretty well...

Todd J. Zywicki / Wall Street Journal:
— Washington hates the idea because it would lose leverage. — While Washington tries to arrange a bailout, the Detroit Three auto makers and their union, the United Auto Workers, keep insisting that bankruptcy would be the kiss of death. ...
Discussion:
Andy McCarthy / The Corner:
----
Reuters:
Shock waves spread from Madoff scandal -- Shock waves from Bernard Madoff's alleged fraud spread globally on Monday, as charities, wealthy individuals and banks disclosed losses from the prominent Wall Street trader's investment management business.

Britain's HSBC Holdings Plc was the latest bank to join the growing list, saying it had exposure of around $1 billion, making it one of the biggest victims of the alleged $50 billion fraud.

Royal Bank of Scotland Group Plc and Man Group Plc in the United Kingdom, Japan's Nomura Holdings Inc and France's Natixis SA also said they were hit by the worldwide scandal...
----
Diana Olick / CNBC Realty Check:
Foreclosures: Are Home Buyers Missing An Opportunity? -- You’d think now would be a great time to buy a foreclosed property, but a majority of Americans don’t think so. A new survey from real estate search site Trulia.com and foreclosure sale site RealtyTrac.com finds that only 47 percent of those surveyed would consider buying a foreclosed property, that’s down from 54 percent last spring....
----
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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
----
Bailout Nation Debate:

----
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...
----
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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