Curiouser and Curiouser

In a Ponzidom far far away, there lived a King who amassed a great fortune, to the tune of 64 billion, by defrauding his loyal subjects. Then the great civil war started and the king was dethroned and thrown into jail and the accountants took control of the land and started to calculate the King’s fortune to divide it back to the people. Only they made a fatal mistake in calculating the fraud based on a newfound accounting theory which showed the loses to be 21 billion. Soon the people revolted again, but this time they took the heads of the chief accountant, who was soon charged of operating a reverse Ponzi. And they lived happily ever after. OK boys, it’s late now, go to sleep.

“The sum of all of those individual account balances was more than $64 billion. By contrast, Mr. Picard has said that the eligible losses in the fraud, by his formula, total just over $21 billion”

Achieving Closure

Now this bit of news is going around, possibly as some form a psychological boost to the victims of the great ponzinator, cause unless the premium over the asking price is to the tune of 64,991 billion they sure as hell are not getting a cheque in the mail….

Title of the annual millenial monthly weekday

 

‘SEE YOU IN 150 YEARS’

Reuters. On the sentencing of Madoff. I know that the article is somehow different in feeling, but still, Reuters reporting on the verdict, is like saying what the entire business world (just world) wants to say to this guy.

Yet, somehow, i can’t escape the feeling that all of them (us) don’t realize that this isn’t some guy who was gaming the system. This is one of the guys that helped build the system, and he built it so it CAN be gamed. It’s as if nobody is realizing this yet…ts ts ts

A stressful day

I was gonna write a little song and dance on the whole bank-stress-test-oscar-winning-extravaganza show, but then i thought otherwise. You see, why not leave it to the guys who started this thing to tell their own story…

And the winner is…Only 10 banks need to raise capital and only 75bn of it!!!

75bn is a nice number. By now you guys are numb enough from the TARPnaisthisia to not really feel the pain so here’s some comp shots.

75 = 10 more than Madoff made off with

75 = 13 more than AIG lost by itself last quarter (and 35 more than it received in Fed funding in order to have the privilege to report this quarter)

75 = 70 more than AIG lost this quarter (without the 30 option payment to get to today) and last, just to list a non-negative one…

75 is a little over a third of what AIG has gotten in funding so far in order to stay alive and keep losing money, so i think we got some room to grow here

PS you know that the recession is over when the numbers thrown around fail miserably to impress anyone

Ponzi Assistant (P.A.)

-
It's been quite a while since I last wrote about Bernie, and this has left me with an empty feeling (just like the investors of his fund). As I was beginning to despair though, I came across the first ever interview of his secretary to promote the story she wrote for Vanity Fair(secretaries to financial scandals, are just like fat lady singers to the Opera - it ain't over til they sing)...

As you can imagine, Ms. Squillari had a lot to say but I have to point out two memorable quotes:

1. "Once, I looked in his address book and found, under M, about a dozen phone numbers for his masseuses. If you ever lose your address book and somebody finds it, they're going to think you're a pervert, I said." - It was either that, or somebody opening his trading book and thinking he was the largest fraudster in history.

2. Squillari wrote about a conversation she had with Madoff years ago, after a client's secretary had been arrested for embezzlement. She said she was surprised when he told her, "Well, you know what happens is, it starts out with you taking a little bit, maybe a few hundred, a few thousand. You get comfortable with that, and before you know it, it snowballs into something big." - Big to the tune of $65 bln to be exact.

For the rest of the spicy details (including Bernie's strange hygiene habits), look out for Vanity Fair's next issue...
-

Recovery efforts

We have been covering as of lately the attempts to recover funds from the Madoff ponzivaganza (see 1, 2) that crash landed 6 months ago, yet it seems that they were not as successful as hoped. Not so much.

Today though, a new era dawns, one that we realize that the money is out there. * Two points of interest, again for those of you not actually hitting those links,

1. recovered 25.5 m out of what was once worth 1 b **

2. liquidator recovered 1b so far, 3/4 of which is from returned redemptions ***

* Just not as much as we hoped for and by far not as much as was swindled

** probably the correct wording should be , what was once thought to be worth…

*** actually not recovered yet, but you better send it back or else…

A Drop in the Ocean

In the grand tradition of getting paid enormous amounts of money for adding significant value to your company (see AIG, Fannie and really every other financial institution out there) we bring you Fairfield Greenwich. Not a new entrant by any means since they have been in bed with Madoff for a long time (actually looks more and more like a golden sponsorship status rather than a basic relationship) but nevertheless they seem to have earned their bonuses this year…