Begin forwarded message:
From: "Alamaine, IVe" <fratl...@gra.midco.net>
Date: December 16, 2008 6:56:28 AM PST
To: c...@yahoogroups.com
Subject: [ctrl] The Madoff scandal
Reply-To: c...@yahoogroups.com
http://www.wsws.org/articles/2008/dec2008/pers-d16.shtml
World Socialist Web Site
wsws.org
The Madoff scandal
16 December 2008
The repercussions from the collapse of Bernard L. Madoff Investment
Securities
LLC, whose founder and owner was arrested last Thursday after
admitting that
his $17 billion investment advisory business was "a giant Ponzi scheme,"
continue to widen. According to a criminal complaint filed by the FBI
and a
civil action brought by the Securities and Exchange Commission (SEC),
the
elderly Madoff estimated that the losses from his fraud exceeded $50
billion.
The tally of losses already reported by banks, hedge funds and wealthy
investors climbed over the weekend to nearly $20 billion.
Banks and hedge funds around the world-in the US, Britain, Italy, Spain,
France, Switzerland and Japan-are reporting hundreds of millions and
even
billions in losses. University endowments, charities and other
institutions
that entrusted their money to Madoff or to hedge funds that invested in
Madoff's company are reeling from the news that their investments are
worthless.
Prominent and wealthy individuals-including J. Ezra Merkin, the
chairman of
GMAC, Fred Wilpon, the principal owner of the New York Mets, Norman
Braman, the
former owner of the Philadelphia Eagles professional football team,
Frank
Lautenberg, the multimillionaire Democratic senator from New Jersey, and
Mortimer Zuckerman, the owner of the New York Daily News-are among
those who
have lost millions. Among the thousands and even tens of thousands of
individuals likely to be affected is no small number of retirees of
relatively
modest means whose life savings were tied into Madoff's operation.
The fallout from the Madoff scandal will inevitably result in the
failure of
other investment firms, impacting thousands more individuals and
hundreds more
businesses.
Madoff's scam could not have been carried out without the complicity
of the
highest echelons of the financial elite and the government.
US officials now allege that Madoff was engaged in a Ponzi scheme-
using new
revenues from investors to meet payments due to existing investors-at
least
since 2005. As of yet, no one really knows how long Madoff, a former
chairman
of the Nasdaq Stock Market and current member of the board of
governors of the
National Association of Securities Dealers, was paying his old clients
with
money obtained from new ones. The scheme collapsed after clients
requested some
$7 billion in redemptions.
As the New York Times reported Saturday, "There is fragmentary
evidence that
Mr. Madoff's alleged scam may have lasted for years or even decades...
It is
not even clear whether Mr. Madoff actually made any of the trades he
reported
to investors."
One thing is clear, Madoff, known as a Wall Street legend, was a man
with many
connections in high places. Since 2000, he has given at least $100,000
to the
Democratic Senatorial Campaign Committee and more than $23,000 to the
party's
candidates, including Senator Charles Schumer of New York, the
chairman of the
Joint Economic Committee of Congress, and Senator Lautenberg. His
legal defense
team includes Mark Mukasey, the son of the current attorney general.
There were ample signs that Madoff's operation was fraudulent. He made
his
reputation and his millions by delivering solid returns of 1 or 2
percent a
month to his investors month in and month out from the day he launched
his
investment advisory business as an adjunct to his brokerage firm.
Wealthy
investors and hedge fund operators marveled as Madoff worked his
"magic" in
bull markets and bear markets alike, regardless of the gyrations on
the stock
market.
But there were also those who realized that such consistent returns
could not
be achieved through legal means. They looked at Madoff's amazing
record, the
secretive nature of his investment funds and the fact that his
auditing firm
was an obscure one-room operation based in New City, New York, and
concluded
that Madoff was working a scam.
One executive in the securities industry, beginning in 1999,
repeatedly urged
the SEC to investigate Madoff. "Madoff Securities is the world's
largest Ponzi
scheme," he wrote in one letter to the SEC. Other investment firms
steered
their clients away from Madoff.
The SEC, which had investigated and cleared Madoff in 1992, refused to
intervene. On the contrary, he was appointed to a committee of
academics,
regulators and executives formed in 2000 by former SEC Chairman Arthur
Levitt
to advise the agency on new stock market rules in response to the
growth of
electronic trading.
The role of the SEC epitomizes the transformation of government
regulatory
agencies into the facilitators of financial fraud on a colossal scale.
Its job
has become running interference for the skullduggery of brokerage
houses, hedge
funds and banks.
The removal of any regulatory restraint on the operations of the banks
and
finance houses over the past three decades is itself an expression of
the
crisis and decay of American capitalism. The hallmark of this process
is the
growth of financial parasitism. It is the other side of the coin of the
systematic dismantling of large sections of industry and the
relentless attack
on the jobs and wages of the working class. This assault, in tandem
with the
unfolding economic crisis, is entering a new and even more brutal stage.
The very fact that the Madoff scandal has had its impact on the most
privileged
social layers testifies to the depth of the underlying crisis that
produced it.
It has, moreover, shed light on the social physiognomy of those elite
sections
of the population that have benefited from the vast redistribution of
wealth
from the bottom to the top. So manic is the drive for personal
enrichment that
supposedly savvy investors and Wall Street insiders barely bothered to
examine
Madoff's operations, so long as he delivered a steady stream of solid
returns.
What is being widely reported as the largest financial fraud in
history goes
far deeper and extends far wider than the machinations of a single
broker and
fund manager. It marks a new stage in the disintegration of the US and
world
financial system-the convulsive outcome of decades in which a vast
accumulation
of personal wealth at the top has been achieved on the basis of semi-
criminal
forms of financial manipulation unrelated to production and the
creation of
real value. To a great extent, the entire economy has been transformed
into a
giant Ponzi scheme. The collapse of trillions in paper assets will
assume ever
more malignant forms.
Barry Grey
Copyright © 1998-2008 World Socialist Web Site - All rights reserved
~ ~ ~ ~ ~ ~ ~
Alamaine, IVe
Grand Forks, ND, US of A
~ ~ ~ ~ ~ ~ ~
"All are lunatics, but he who can analyze his delusion is called a
philosopher." - Ambrose Bierce (1842-1914)
"Being ignorant is not such a shame as being unwilling to learn." -
Poor Richard's Almanack, 1758 (Benjamin Franklin)
~~~~~~~
In accordance with Title 17 U.S.C. Section 107, the material is
distributed without profit to those who have expressed a prior
interest in receiving the included information for research and
educational purposes.
------------------------------------
www.ctrl.org
DECLARATION & DISCLAIMER
==========
ctrl is a discussion & informational exchange list. Proselytizing
propagandic screeds are unwelcomed. Substance—not soap-boxing—please!
These are sordid matters and 'conspiracy theory'—with its many half-
truths, mis-directions and outright frauds—is used politically by
different groups with major and minor effects spread throughout the
spectrum of time and thought.
That being said, ctrl gives no endorsement to the validity of posts,
and always suggests to readers; be wary of what you read. ctrl gives
no credence to Holocaust denial and nazi's need not apply.
There are two list running, c...@yahoogroups and
c...@listserv.aol.com, c...@yahoogroups has unlimited posting and is
more for discussion. c...@listserv.aol.com is more for informational
exchange and has limited posting abilities.
Let us please be civil and as always, Caveat Lector.
Omimited posting abilities.
Let us please be civil and as always, Caveat Lector.
OmYahoo! Groups Links
