Category Archives: Finance

The Wizard of Lies: Diana Henriques

By Russel Kinnel | 05-24-2011

What Investors Should Learn From Bernie Madoff

Author Diana Henriques believes that the Madoff scandal underscores the importance of vigilance and research in selecting an investment advisor.

Russel Kinnel: Hi. My name is Russ Kinnel. I am director of mutual fund research for Morningstar, and today I’m going to be talking with Diana Henriques, author of The Wizard of Lies, a book about Bernie Madoff who pulled off the greatest Ponzi scheme ever.

The first question I want to ask you is about some of the research you did looking into his early life, and it’s really striking to see the signs of what would later become a giant Ponzi scheme were really there early on if you knew where to look.

Diana Henriques: That’s true, Russ, and I was quite surprised at that, as well. One of the mysteries I’m afraid, that will live as long as Madoff does, is when exactly the Ponzi scheme started. But I was able in my research to uncover an incident in 1962 when he was a very young over-the-counter trader with his own little firm.

He had invested money that was given to him by friends and family in very speculative, risky, over-the-counter stocks. In a market air pocket in May 1962 the bottom just dropped out of those stocks, and they lost all their money. But rather than confess that to them, he covered it up. He bought the shares back from their portfolios at what they paid for it and didn’t reveal but for that they would have been completely wiped out.

Now, he insisted to me, after the prison interview I had with him in August of 2010, that he kept it a secret from the investors because he knew that if he told them about it, they would insist that they take the losses and that he not nearly bankrupt himself to cover them up for him. But I don’t really buy that. I think he burnished his own reputation as the boy genius in the family and managed to hang on to those investment clients by lying to them about what he had done to prevent those losses in their accounts.

Now, that’s not the beginning of the Ponzi scheme, there’s no doubt about that. But it certainly was a very telling experience in the young life of the young Madoff.

Kinnel: You certainly get the sense that he, and maybe even his father to a degree, were trying to put a veneer on things that made things look better. And maybe all along he was trying to make it look like maybe he was a little more skilled investor than he was and that everyone was better off than they really were?

http://www.morningstar.com/cover/videocenter.aspx?id=382418

The Gold Series: Gold as an Investment (Part 4)

http://www.visualcapitalist.com/portfolio/the-gold-series-gold-as-an-investment-part-4

Gold as investment...Infographic

HOW THE WORLD SUPER RICH AVOID PAYING TAXES

How The Super Rich Avoid Paying Taxes

How The Super Rich Avoid Paying Taxes

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<a href=”http://www.topaccountingdegrees.org/taxes/”><img src=”http://www.topaccountingdegrees.org/taxes/rich.jpg” 

 

Positive Money UK’s Photo

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Photo: http://www.positivemoney.org/2013/01/financial-times-pre-school-lessons-for-the-bankers/

” DOW 14,000, A Grand Deception…pump and dump….” Gregory Mannarino

Must Watch. DOW 14,000, A Grand Deception. By Gregory Mannarino

Published on Feb 1, 2013

How to Make a Million Dollars an Hour….LES LEOPOLD

How to Make a Million Dollars an Hour – Hedge Funds are Siphoning Away America’s Wealth–and You Can, Too

http://www.kobobooks.com

How hedge funds make money by taking it from the rest of us-and how you can join them!

Top hedge fund managers make more than Oprah, Rupert Murdoch, and A-Rod combined-but they aren’t running news and entertainment empires or playing baseball for the New York Yankees. Aren’t you curious about how these hedge fund dudes make so much doing who knows what? You may even wonder if you can get there, too. After all, this is America!

This book gives you the answers in a twelve-step guide to accumulating vast riches the way hedge fund managers do-by playing trillion-dollar poker with a marked deck. Through each easy step, you’ll learn the sleight of hand and disregard for basic morality you’ll need to move from making tens of dollars an hour to millions an hour! Along the way, you’ll also question whether these hedge fund moguls make markets work better-as they and their apologists insist-or cause instability, siphon off capital, and destroy value without adding so much as a single widget to the economy.

  • Takes a fascinating tour of the wild side of fantasy finance to explain just how hedge fund managers make so much money-and whether or not the million-an-hour crowd produces anything positive for society and the economy
  • Teaches you hedge fund secrets that make it possible to pull down astounding sums in the space of minutes-from rigging your bets to milking millions in special tax breaks-if you’re willing to bankrupt your morality for the cash
  • Counters many of the most common arguments about why speculating in financial markets is somehow “worth more” than creating entertainment, electronics, or consumer goods that consumers want
  • Written by Les Leopold, the popular AlterNet writer and author of The Looting of America

 

http://www.kobobooks.com/ebook/How-Make-Million-Dollars-Hour/book-InkCjfeGdU-GRWmnSddAhw/page1.html

Ponzi Planet: The Danger Debt Poses to the Western World…By Alexander Jung

Ponzi Planet: The Danger Debt Poses to the Western World

By Alexander Jung

Countries around the world, particularly in the West, are hopelessly in the red, with debt rising every day. Even worse, politicians seem paralyzed, unable — or unwilling — to do anything about it. It is a global disaster that threatens the immediate future. But there might be a way out.

When Carlo Ponzi, a dishwasher from Parma, Italy, immigrated to the United States in 1903, he had $2.50 in his pocket and a million-dollar dream in his head. He was able to fulfill that dream, at least temporarily.

Ponzi promised people that he would multiply their money in a miraculous way: by 50 percent in six weeks. With his carefully parted hair and charming accent, Ponzi beguiled investors and fueled their avarice. The first investors raked in fantastic returns. What they didn’t know was that Ponzi was simply using the next investors’ money to pay them their profits.

 

The scheme continued. Ten investors turned into 100, and 100 investors turned into 1,000, until the scam was discovered. Ponzi spent many years in prison, and he died a pauper in 1949. But his name remains important to every criminologist today — and every economist.

Economists use the term “Ponzi scheme” to describe a disastrous mechanism in which someone pays off old debt by constantly taking on new debt. The repayment of the debt — the most recent loans, plus interest — is deferred into the distant future, fueling an eternal process of debt refinancing.

It’s the classic pyramid, or snowball scheme, practiced by thousands of con artists after Ponzi. The most spectacular case was that of New York financier Bernard Madoff, who was responsible for losses of about $20 billion by 2008. Snowballs are set into motion, becoming bigger and bigger as they roll along. In the worst case, they end in an avalanche that takes everything else with it.

Western economies have not acted much differently than the fraudster Madoff. In 2011, they were virtually inundated with bad news and old sins. Almost everyone — in Europe and in the United States — has been living beyond their means, from consumers to politicians to entire countries. Governments have become servants to the markets upon which they have become dependent.

Bigger Snowballs

On an almost weekly basis, the reports have become more worrisome and the sums of money involved more staggering. Many are now concerned that, as 2012 begins, the snowballs will only get bigger — and roll faster: ….goto web

 

http://www.spiegel.de/international/world/ponzi-planet-the-danger-debt-poses-to-the-western-world-a-806772.html