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Written by José D. Roncal
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Sunday, 14 December 2008 00:28 |
An epic fraud has just been uncovered – this time it doesn’t involve those new exotic and complex securitized debt/credit default swap packages. No, this one is a good old-fashioned Ponzi scheme—and it’s so big it could surpass Enron!
Bernard Madoff, former Nasdaq Stock Market chairman and founder of privately held Bernard L. Madoff Investment Securities LLC, has been arrested and charged with securities fraud in what federal prosecutors called a Ponzi scheme that could involve losses of up to $50 billion.
Here’s how it worked. Madoff’s clients included several prominent hedge funds. Even though business had been insolvent for at least four years, he kept paying out returns to investors. How did he do it? By using money received from new investors, because Ponzi schemes need net inflows of money to work.
Who would have doubted the integrity of one of the most reputable firms on Wall Street run by an individual that was instrumental in framing the structure of the SEC?
Once again, where were the auditors/accountants? Did it not raise any red flags that the company had reported consistent earnings for the past 20 years? And how could this privately-held company managing that amount of money not be regulated, audited, controlled or provide any safeguards to their so called “investors?”
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Written by José D. Roncal
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Friday, 12 December 2008 17:14 |
I’m nearly lost for words! The House has approved an emergency $14 billion for GM and Chrysler but Senate said, “No Deal!” even though Bush had endorsed it. The brunt of the stalled deal rests with Republicans from southern states, long known for being anti-union and anti-Detroit. Now, Bush wants to pull out some of the remaining Wall Street bailout money and throw it to the carmakers, even though he had emphatically refused that idea earlier.
What I want to know is, how did they come up with a figure of $14 billion in the first place? We don’t have a clue how much these companies will actually need, or how long it’s going to take for them to get their act together. Look, I predict they’ll be back for at least another $100 billion anyway, so to see Congress haggling over these details, strikes me as a waste of precious time.
Since the U.S. has become a Bailout Nation, why don’t we just give them the $100 billion now, check it off Obama’s to-do list and stop wasting time and taxpayer’s money on a Congress that seems to be operating without a compass. This has already dragged on too long.
In my opinion, any so-called Car Czar that can rescue these two companies with $14 billion, also wears a cape and can leap off tall buildings. This whole deal strikes me as a way to buy time. The auto industry has a long row to hoe before they reap any results, what with restructuring, slashing their work force, closing plants, dealing with UAW, etc not to mention actually producing cars that consumers want.
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Written by José D. Roncal
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Tuesday, 09 December 2008 05:37 |
The big news of Monday was the DOW hitting the 9,000 mark. The big question now is, “Have we hit bottom”? Our answer is, “Maybe, but don’t rush into anything on a single day’s news just because you’re worried that you might miss out.”
The pundits tell us, "The market is a discounting mechanism." But relying on market "fundamentals" falls far short of explaining what’s really happening. Colorful trend charts can’t gauge the true intentions of buyers and sellers, and plugging in discount rates, risk premiums or annualized growth rates into a formula is no measure of the true fair market value of a financial asset.
But there are a few facts that the market has apparently already discounted which might explain the rally of the past few days:
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