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Market Oracle FREE Newsletter

Trading Lessons

Wall Street Corruption & Despair Continue

Stock-Markets / Scams Jan 15, 2009 - 12:53 PM GMT

By: David_Vaughn

Stock-Markets

Best Financial Markets Analysis ArticleCan you believe a 50 billion dollar ponzi scheme?

Seems a lot of folks prized their friendship with Bernard Madoff. He must have been “Uncle Bernie” to the scores of wealthy investors who trusted him and loved those guaranteed 10 to 12% investment returns. A real picture here of what our economy has evolved into these past 20 years. Many simply lost their fortunes and others lost their lives.


“The founder of an investment fund that lost as much as $1.4 billion in the alleged Bernard Madoff scheme committed suicide at his Manhattan office, reports say.” “Villehuchet, 65, had lost as much as $1.4 billion invested…” foxnews.com/story/0,2933,471725,00.html, 12-23-2008

Gee, I didn't know these kinds of things could happen any more. Thought we were protected via our government from any significant potential losses of this caliber. Anyway, that's what I've been hearing for years. And the suicides are happening to many who just a few short years ago were worth billions.

“Adolf Merckle, one of Germany's wealthiest men, committed suicide after his family business empire began unraveling amid mounting debt, his family said Tuesday.” “…one of several deaths of businesspeople tied to the global financial crisis.” “Mr. Merckle's wealth was estimated by Forbes magazine last year at $9.2 billion.” online.wsj.com/article/SB123125518158857415.html

Where is the money? Where is the 50 billion “invested” and lost? At least one investor's firm had given Uncle Bernie 1.5 billion to trust and invest. Everyone trusted Bernie. And now these billions are gone forever.

“Tracking down the money investors entrusted to Madoff is likely to be one of the longest and most complicated financial investigations on record.” guardian.co.uk/business, 12-28-2008

Who else has lost huge vast sums of money? Would you believe 7.5 billion lost by another single firm? Or 545 million lost to a single super rich magnate? Why did these people invest and entrust 100% of their personal fortunes with a single man?

“Fairfield Greenwich, the investment firm run by Madoff chum Walter Noel, lost $7.5bn in the fraud while womenswear magnate and Madoff mentor Carl Shapiro lost $545m of his personal fortune.” guardian.co.uk/business, 12-28-2008” guardian.co.uk/business, 12-28-2008

But Alan Greenspan was certainly no ones fool. He knew that at least by the year 2008 the financial markets would begin to decay. He also knew his closest friends would be bailed out by the Federal Government to the tune of multiple billions of dollars so none of his true and intimate friends and partners would lose a dime. But things were not so fortunate for so many others lacking the necessary pedigrees.

Where did these wealthy professional money investors derive the confidence that they simply could not lose their money? Greenspan went a long way in creating this false confidence. Took Alan Greenspan many years of suckering the people and leading them down the piper's street. Let's listen to his own words spoken and recorded in 1998.

“Testimony of Chairman Alan Greenspan” 7-24-1998 , “I am pleased to be here today to present the Federal Reserve Board's views on the regulation of…” “…the Board supports a standstill [decline] of attempts by the Commodity Futures Trading Commission (CFTC) to impose new regulations…” federalreserve.gov/BOARDDOCS/TESTIMONY

And on 10-23-2008 Greenspan announced to the world and to all who would listen that he was in “…a state of shocked disbelief…” Gee, I didn't do it. Don't look at me.

I don't know. I just cannot believe this extremely intelligent man to be so ignorant and stupid that he was totally and blindly unaware of the dangerous crops he was sowing for so many years. But follow the money. Always follow the money. Many of these banking institutions not only profited via fees but when their real losses hit the books in the fall of 2008 their losses were made entirely good by the United States Government.

And what about the poor little people? What about the unfortunate general public who can only count their wealth in the millions and less? Again and again Greenspan assured folks that the huge financial markets were just too large and difficult to fail.

And everyone believed these promises. Until Lehman went bankrupt followed by Bernard Madoff who would lose 50 billion. It seems the bailout rule only applied to a few privileged souls.

Greenspan, 12-28-2008 “Inappropriate regulation distorts the efficiency of our market system and as a consequence impedes growth and improvement in standards of living.”

Well, Greenspan, it seems that the lack of that “inappropriate regulation” sure guaranteed long term growth, right? Just look at the prosperity abounding around us because of your time at the wheel as Federal Governor of the Fed Reserve. I know the US automobile industry must have invited you to every Christmas party. Your friends now are all just waiting in line to pat you on your back and thank you for your historical and financial judgmental insight for these past ten years.

Greenspan, 12-28-2008 “…regulation of derivatives… is unnecessary.” “…simply do not require the customer protections that may be needed by the general public.” “Banking examiners, for example, find it difficult to unearth fraud and embezzlement in their early stages.”

Let's read again part of that last text right above us.

“Banking examiners, for example, find it difficult to unearth fraud and embezzlement in their early stages.”

Make no bones about it. The scandals of these past many years have been well known for years and years.

“…the SEC began receiving tips from Madoff's enemies (rival brokerages, private investigators working for rival hedge funds, etc.) several years ago. The commission made inquiries, but took no action.”

Even as far back as 1987 the ground work was being laid out for the scandal that would rule our financial houses for the next 20 years. This was no mistake. All this pattern of deceit has been designed to suck money away from the middle class and make them poorer.

1987 - “then Treasury Secretary Nicholas F. Brady referred to the clearance and settlement system as the weakest link in the nation's financial system…”Gerald Corrigan, President of the Federal Reserve Bank of New York noted: ‘The greatest threat to the stability of the financial system as a whole was the danger of a major default in one of these clearing and settlement systems…” “Now that our financial system has come to a screeching halt, read those words for clues as to how much worse things can get…” deepcapture.com/a-ponzi-scheme-that-is-bigger-than-bernies

Actually, all the booms of the past 20 years have in a sense been nothing more than complicated giant Ponzi schemes. It seems though that Bernie Madoff is going to become the ultimate poster child.

“…this episode should be the final straw which convinces the American public the investment game is rigged and they do not have a chance.” opednews.com/articles/2/An-American-Tragedy-by-Jim-Quinn-081216-550.html

And the biggest Ponzi scheme is still brewing and growing.

“Another American Tragedy is in the making. A much bigger Ponzi scheme that will shock every person in America is still operating. It is being conducted by the U.S. government and your elected politician leaders. It is called our National Budget. With most of our spending on automatic pilot, the aging of the baby boom generation will put tremendous strain on our economic system in the coming years.” seekingalpha.com/article/110913-how-we-can-avoid-another-tragic-ponzi-scheme

And where will gold's ultimate role come out in all of this?

“I thought gold might reach $600 an ounce. It reached $1,000 an ounce and is poised to go much higher.” seekingalpha.com/article

My favorite personal Greenspan quote is the beauty right below.

[Hedge Funds] …are essentially free of government regulation, and I hope they will remain so. Why do we wish to inhibit the pollinating bees of Wall Street?” seekingalpha.com/article, 12-16-2008

Click here to order Gold Letter

We've just completed an article recommending six gold stocks whose prices have been driven to a ridiculous low. These are quality mining companies with the gold in the ground. And their market cap is less than their cash in the bank? Buy! These are the type of companies to acquire that have the potential to make a lot of money as the precious metals market turns around.

Inflation is coming.

Massive. It's inevitable. And inflation is the best scenario for higher gold prices. Speculate only what you can afford to lose. Gold is still going to be around even after all this economic mess settles down a bit in twenty years. Gold mining stocks are at the bottom of a life time opportunity. Be brave. Buy low. Sell higher.

David Vaughn
David4054@charter.net

The future legacy of the United States will be the refined art of financial leverage.

© Copyright 2009, Gold Letter Inc.

“The Worldwatch Institute, an organization that focuses on environmental, social and economic trends, says the current rate of global demand for resources is unsustainable.”  

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2008, Gold Letter Inc.

David Vaughn Archive

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