The winds of feigned outrage promise to blow hard from Washington, D.C. today. The new president will announce limits on executive pay for companies slopping at the TARP trough. And at the other end of Pennsylvania Avenue, Congresscritters will hold hearings on Bernie Madoff’s Ponzi scheme.
The financial press has been flooded the last few weeks with stories of the billions of dollars lost in the giant Ponzi scheme orchestrated by Bernie Madoff. No one knows for sure, but it is likely that the number of investors that lost everything will run into the thousands.
A few weeks ago, when the U.S. Federal Reserve announced a strategy designed to bring down long-term interest and home mortgage rates through unlimited Treasury bond purchases, government debt staged a spectacular rally.
A worsening economy has pushed the market down. A global recession has pushed it down further. Will the latest Wall Street scandal push it down more? Some of the hundreds of losing hedge funds have written letters to investors saying that they won’t accept requests for redemptions until a later date.
A lot of investors woke up recently to find their money had ‘disappeared’ in Bernie Madoff’s $50 billion Ponzi scheme. And it all happened under the noses of the regulators. Byron King says there are probably many more scammers out there. And the US government is among them. He says this just strengthens the case to buy gold and silver.
Who can honestly say he isn’t enjoying this financial crisis? It has unhorsed cavalier fund managers …it has turned the masters of the universe into servile waiters…it has made Nobel Prize winners look like morons. The rich…the proud… the pompous…the vain…the incompetent…Wall Street – surely there is a God…an ‘invisible hand’…giving them all a whack on the head!
Underlying the credit crisis gripping the U.S. and world economies is a crisis of confidence. Blame has been laid at the feet of the U.S. Federal Reserve, and an investment bankers’ brew of toxic financial products. Ultimately, however, it was the supposedly trustworthy rating agencies that got everyone to drink the poisoned Kool-Aid.
Bernie Madoff looks set to be this year’s Grinch, at least for stock investors. His $50 billion ‘Ponzi’ scheme suckered many high-profile institutional investors. And as full details emerge, Frank Hemsley says it could shatter the fragile confidence in the market. This could mean a sharp leg down for stocks before the New Year.
The Bernie Madoff scandal has investors newly terrified of money manager fraud. But fraud is actually not all that hard to avoid – the real lesson goes deeper than that. “Madoff with ya money.”