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alstry (< 20)

Are we all broke????



December 14, 2008 – Comments (9)

Most of us measure our net worth from the statements we receive from the various institutions where we keep our money and investments.  How can we distinguish what is a Ponzi Scheme and what is not?

Bernie Madoff was a reputable investment advisor.  Businesses, individuals, universities, and foundations depended on the integrity of the financial statements they sent him.  Landlords, employees, and many others depended on his clients.  Now many may be forced to shut down triggering further implosions.  Here is one example:

The programs of the Robert I. Lappin Charitable Foundation and the Robert I. Lappin 1992 Supporting Foundation are discontinued, effectively immediately. This includes Youth to Israel and Teachers to Israel.

The money used to fund the programs of both Foundations was invested with Bernard L. Madoff Investment Securities and all the assets have been frozen by the federal courts. Mr. Madoff was arrested Thursday morning by the FBI and charged with criminal securities fraud by federal prosecutors. The money needed to fund the programs of the Lappin Foundations is gone.

The Foundation staff has been terminated today.

This is just many will be affected by the shuttering of this foundation alone?   What about the counterparties to his market making activities?

How do we know what is legit when someone of Madoff's status can be a fraud?  What about Tom Petters and the Poloroid brand?  What about all those businesses that existed simply because easy credit was extended to their customers regardless of ability to pay?  What about all the banks that are sitting on Trillions of loans that may default?

How do we know that what we see on our monthly statements actually exists or is exposed to evaporation?

9 Comments – Post Your Own

#1) On December 14, 2008 at 7:27 PM, Option1307 (30.45) wrote:

How do we know what is legit when someone of Madoff's status can be a fraud?

We cannot know anymore, and that is the biggest problem. This will only further destroy our countrys confidence in our entire economy. Everyone expects that there are shady characters out there, but I'm not sure many could have foreseen someone such as Madoff being this much of a fraud...

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#2) On December 14, 2008 at 8:19 PM, alstry (< 20) wrote:

Who is going to be paying taxes as tax revenues evaporate???

Love Motors in Seaside has closed its doors for good after 25 years....

The dealership's closure is a major fiscal blow to Seaside, said City Manager Ray Corpuz.

"Our largest industry here is the car industry," he said, adding that it provides 60 percent of sales tax revenues, "millions of dollars," to the city.

“The fiscal news is getting worse at Marin County Civic Center, where officials expect the county to face a $4.8 million budget gap next year, about $1 million more than predicted little more than a month ago.

Deterioration now monthly??

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#3) On December 14, 2008 at 10:24 PM, JGus (28.23) wrote:

How about weekly deterioration...

Los Angeles Times: California's Budget Gap to Reach $42 Billion by 2010

California now faces an unprecedented $41.8-billion budget gap by July 2010, with the cascading economic crisis forcing state economists to increase the already dismal projections they made just a few weeks ago, according to documents obtained by The Times. The shortfall amounts to nearly half the $86 billion in revenues the state expects to generate in the upcoming fiscal year. Unless lawmakers can quickly rein things in, it will become the largest gap in modern California history, according to revenue forecasts by the state Department of Finance. The projections are relied on by the governor and legislative leaders in drafting state spending plans. The dark estimates come a day after the state controller announced that the government could run out of cash as soon as February, a month earlier than previously forecast. Gov. Arnold Schwarzenegger faulted legislators -- particularly Republicans - for continued inaction in addressing the situation.

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#4) On December 15, 2008 at 2:16 AM, starbucks4ever (89.25) wrote:

Why address the situation when Sammie bails everybody out? So he will print another $40 billion, big deal. 40 billion more, 40 billion less...

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#5) On December 15, 2008 at 3:12 AM, jester112358 (28.24) wrote:

As in all economic activity there is a huge element of trust and faith.  In the case of Madoff, his returns seemed too steady and consistently positive to be true.  He reported positive gains post 9/11 for example when every other mutual and hedge fund was suffering.  In general, if is sounds too good to be true, it probably is.  But many of his long time investors believed he was insider trading using his position as a market marker to front run trades.    Quite plausible as this goes on all the time under the "watchful eye" of the SEC.  

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#6) On December 15, 2008 at 6:43 AM, dinodelaurentis (85.75) wrote:

"You are sooo smart.

up is down, black is white.

we'll so see which of you yags is right."

            Eddy- Miller's Crossing.

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#7) On December 15, 2008 at 7:34 AM, DGCmagazine (< 20) wrote:

I have three kilos of gold bullion in my briefcase. I'm not broke now, nor do I intend to be broke even if every financial market in the world collapses tomorrow.

Paper investments at this time? can keep 'em. My money is in bullion.


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#8) On December 15, 2008 at 10:11 AM, Timh0rt0n (94.74) wrote:

Hmm anyone know any good recipes with gold them? Does gold burn very well because it’s minus -30C outside today?  I need some new underwear can you make me some gold thread?


Money has a value because we assigning it a value. Gold is no different. We were running out of oil a few months back and now we are almost giving it away. Homes were the fad last year. Hoarding one store of wealth does not work because everyone will drive up the price causing yet another bubble.

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#9) On December 15, 2008 at 10:30 AM, Mary953 (83.45) wrote:

In Fiddler on the Roof, Tevye's daughters are singing about their 'someday' husbands.  "Make him rich.  Make him handsome."

My mother taught me that a man was handsome if you were proud to be by his side.

A man was rich if he knew how to earn money to live on.

I, in turn, added that it goes both ways, "And you should both always know what you bring to the marriage. That includes both of you knowing how to earn a living and doing it until there are children." 

I also believe girls should learn to do home repairs, minor car repairs (including change tires),  and defend themselves (tae kwan do and jiu jitso are good).  Boys should learn to cook and do laundry.  These are survival skills.  Every one should know a marketable, barterable skill.  I just never expected to need the last one.  If you have a marketable skill, useful even in a barter community, you will be able to find some way of surviving.

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