To our friends at the Comex, I say:
"Utinam barbari spatium proprium tuum invadant!" (May barbarians invade your personal space!)
–Complimentus Via CIGA Rusty Bayonetium
Jim Sinclair’s Commentary
The ABSOLUTE END of the hedge fund era is spelled "MADOFF."
SEC Said to Probe More Ponzi Schemes After Madoff Disclosures
By David Scheer
Jan. 2 (Bloomberg) — U.S. regulators working to untangle Bernard Madoff’s alleged $50 billion Ponzi scheme are probing other money managers suspected of using similar tactics, two people with knowledge of the inquiries said.
The U.S. Securities and Exchange Commission is pursuing at least one case in which investors may have been cheated out of as much as $1 billion, according to one person, who declined to name the manager and asked not to be identified because the probe isn’t public.
Regulators may discover additional Ponzi arrangements as declining stock markets prompt investors to withdraw their cash and they question how their money is being managed. This week, the SEC said it halted what the agency described as a $23 million scam targeting Haitian-Americans, and said the Florida- based operators had tried as recently as last month to bring in more investors.
Investigators haven’t found evidence the suspected frauds are of the same magnitude as in the Madoff case, which would be the biggest of its kind in history, the people said. In a Ponzi scheme, early investors are typically paid with money from later participants.
Madoff Mess Is Nothing New
William P. Barrett, 12.18.08, 06:00 PM EST
Forbes Magazine dated January 12, 2009
The scope of the unfolding Bernard L. Madoff scandal– $50 billion and counting–is breathtaking. But aside from the extra zeros, little about it is new. In fact, the ploys and plays on human nature that Madoff used to pull off his brash heist have a long, infamous history.
The Reputation Ruse
Madoff was the former chairman of Nasdaq and thus a trusted Wall Street wheel. Investors counted on his reputation, rather than on diligent inspection of his audits, to safeguard their money.
Biggest Bums Of 2008
12.24.08, 03:38 PM EST
It’s hard to surpass Bernie Madoff for being a bum, but several executves and highly placed officials come awfully close.
The biggest bum of 2008 (and for decades prior) is Bernard Madoff, whose knavish duplicity betrayed the trust of small and large investors across the globe. The Madoff Ponzi scheme is a criminal act that has decimated important foundations like the Picower and destroyed the wealth of widows and orphans.
Our bums list should include those conspirators in this scheme (family or otherwise), the handful of investors who claim they knew it was a scam but did not inform the government (they know who they are), the greedy fools behind the feeder funds that facilitated Bernie at his cheating (our sympathy to the family of Rene-Thierry Magon de la Villehuchet, the investment manager who lost more than $1 billion with Madoff and took his own life two days before Christmas).
L’Oreal Family Mixed In With Madoff
Javier Espinoza, 12.24.08, 10:40 AM EST
Fortune of billionaire heiress Liliane Bettencourt may have been exposed to Wall Street fraudster Bernard Madoff.
Liliane Bettencourt, the billionaire heiress to the L’Oreal cosmetics empire, may have become the latest victim of Bernard Madoff’s Ponzi scheme. Bettencourt entrusted part of her $22.9 billion fortune to the alleged Wall Street fraudster through a fund managed by New York-based Access International Advisors, press reports said on Wednesday. It is the second time this month Bettencourt has hit the headlines for financial reasons, having earlier provoked ire from her daughter for offering part of her fortune to a photographer friend.
According to French market regulator Autorite des Marches Financier, a total 500.0 million euros ($699.5 million) from approximately 100 French funds were exposed to Madoff’s fraud, out of which 40.0 million euros ($55.9 million) came from private individuals.
Madoff Investor Reportedly Kills Self
Andrew Farrell, 12.23.08, 04:50 PM EST
French aristocrat who managed money in New York dies, apparently by his own hand.
The fallout from Bernie Madoff’s alleged massive Ponzi scheme is far more than financial. Thierry Magon de La Villehuchet, a fund manager who invested with Madoff, apparently committed suicide at his office.
De La Villehuchet, found dead this morning, was co-founder and chief executive of Access International Advisors, which had invested $1.4 billion with Madoff.
Could SEC Have Stopped Madoff Scam In 1992?
Liz Moyer, 12.23.08, 03:22 PM EST
An investigation into a feeder fund could have led the agency toward unearthing the fraud.
In the unfolding tale of Bernard Madoff’s alleged $50 billion Ponzi scheme, feeder firms have grabbed much of the focus.
They get their name because they marketed the funds that held the assets ultimately managed by Madoff. Lawsuits are filling the courthouses as burned investors attempt to recoup at least some of their losses from the firms. Last week New York Law School sued Ascot Partners, run by GMAC Financial Services Chairman Ezra Merkin, for losing $3 million of its money to Madoff. Other Ascot investors, including Mort Zuckerman, are expected to follow. Ascot reportedly steered $1.8 billion of client money to Madoff.
Blumenthal May Investigate Charities Ripped Off By Madoff
Carrie Coolidge, 12.22.08, 06:30 PM EST
Connecticut’s attorney general is looking at whether trustees did required due diligence.
The list of victims who have fallen prey to Bernie Madoff’s alleged $50 billion Ponzi scheme is growing longer by the day. Among its victims are countless nonprofit organizations, ranging from Yeshiva University and Tufts University to the North Shore-Long Island Jewish Health System Foundation.
Now at least one attorney general is asking for records to determine if trustees sitting on nonprofit boards failed to perform their fiduciary responsibility to do proper due diligence.
Jim Sinclair’s Commentary
Hey, if Enron can shred the trades why pick on goofy Madoff?
Fund Manager Ordered Not to Destroy Madoff Documents
DECEMBER 25, 2008, 11:50 A.M. ET
At a hearing Wednesday in New York state court, J. Ezra Merkin, the chairman of lender GMAC who runs funds that were invested with Bernard Madoff, was enjoined from concealing or destroying any documents related to Mr. Madoff.
Mr. Madoff was arrested for allegedly carrying out a massive fraud scheme that stretched back for decades and …
Jim Sinclair’s Commentary
Axiom = Keep in mind that it is impossible to have a loser without either a CASH winner or a winner in position value.
QUESTION = Where have all the Trillions gone? The world according to Tarp!
WISDOM = As Forest Gump says, "That is all I have to say about that."
Jim Rogers: $700 Billion Banking Bailout is ‘Horrible Economics’
By William Patalon III
Money Morning/The Money Map Report
Ask investing icon Jim Rogers about the $700 billion U.S. banking bailout, and he’ll tell you that it’s nothing but “horrible economics.”
And with good reason: Most of the major U.S. banks are already bankrupt.
“Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt,” Rogers said in a recent teleconference at the Reuters Investment Outlook 2009 Summit. “What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent. What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics.”
A long-time China bull, Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers “retired” in 1980 that the investing masses first really got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as “Investment Biker” and the recently released “A Bull in China.” He also made some historic market calls: Rogers predicted China’s meteoric growth a good decade before
it became apparent to everyone else, and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Jim Sinclair’s Commentary
With one exception, energy, I agree with every point made. Think hyper – inflation and energy in dollars. Think Pakistan and energy. Outside of that – spot on!
Ten Major Threats Facing The Dollar in 2009
By: Eric deCarbonnel Friday, January 02, 2009 11:12 AM
Ten major threats are facing the dollar in 2009.
1) Foreign central banks selling US assets
Most of the nations which have been financing the US’s massive current account deficits in recent years have either begun to sell their dollar reserves last year or are planning on selling them this year in order to support their currencies. These nations generally fall into three categories:
A) Oil Producing Nations
Oil producing nations have built up lavish spending habits and large dollar reserve in recent years as a result of profits from rising oil prices. Now that commodity prices have crashes, those profits are gone, and those Oil producing nations will have to bankroll their spending by selling their accumulated dollar assets. Saudi Arabia, for example, is projecting a 2009 Budget Deficit, which it intends to finance by selling off its US holdings. Russia, meanwhile, has already sold over 20% of its $598.1 billion reserves, and it can be expected to continue doing so this year.
B) Emerging markets that have been relying on capital flows to fund their trade deficits
Many emerging markets around the world have been running trade deficits in recent years financed by capital flows. The most prominent example from this group is India.
India’s strong capital flows from tourism, software services, and remittances not only financed its trade deficit, but also increased its foreign reserves to an all-time high of 316.2 billion in May of 2008. However, due to the global slowdown and selloff of emerging markets, those capital flows have now reversed. India’s central bank, for example, has been forced to sell off its US holdings to curb its currency’s decline, and its total reserves have decreased by $62.2 billion. The central bank’s dollar sales in October alone exceeded purchases by a record $18.7 billion. India now has $254 billion foreign reserves left, the majority of which will be sold this year to protect its currency.
Jim Sinclair’s Commentary
Are the shorts listening? Will you be left behind or lose your behind?
Don’t Miss the Coming Gold Bull
With the massive monetary expansion experienced in recent months and the promise for unprecedented levels of money and credit supply increase in coming months, the United States Federal Reserve looks on paper to be sending America straight into hyperinflation. Germany’s post-World War I Weimar Republic, post-World War II Hungary, 2001 Argentina, and present day Zimbabwe are all analogous examples of massive debt monetization, which all led to hyperinflationary disaster. Never before has the entire world’s economy been linked to one nation’s, however, as is the case today with the United States.
In a case of economic mutually assured destruction, foreign creditor nations and their central banks can’t afford to spark a run on the US Dollar, because it would kill their own export-based economies, as well as devalue their debt repayments and foreign exchange reserves. But the United States has been financing consumption through debt for decades and has resorted to monetary expansion to finance its debt and deficit spending, which is only going to increase with Barack Obama’s infrastructure and social programs. The Troubled Assets Relief Program (TARP) itself amounts to $700B, all of which will essentially be "printed." Foreign demand for US debt is all but gone, as creditor nations are now attempting to unwind their USD positions. Huge creditor nations like China and Iran were net sellers of US Treasuries in recent months, attesting to the weakening of the American debt bubble. So where’s all this excess liquidity go?
The answer is gold, and it is the only way to prevent the hyperinflationary scenarios referenced above from materializing in the United States.
The Fed has been on a money printing binge of unprecedented proportions, but has been able to thus far "trap" the excess liquidity from reaching the consumer level, which is what causes price inflation. It started a massive foreign currency sale this summer through the Exchange Stabilization Fund (ESF) that led to a supply increase of Euros and suppression of dollar usage. It has been liquifying troubled banks by issuing them T-bills financed through monetization in exchange for toxic assets by utilizing reverse repurchase agreements. And it has used the recent deleveraging and commodity collapse (partially caused by credit defaults in many of the overleveraged institutions that were supporting the commodity bull) to supply the temporary demand for US Dollars and feeding its own foreign exchange reserves.
But the excess liquidity thus far is trapped in time-sensitive and manipulated instruments now, and without a demand for American debt, it has to go somewhere. As T-bills expire and the stock market descends further, actual currency is going to be released out of sequestration into the economy. The Fed cannot allow the market to breach below its November lows, unless it wants widespread insolvency in insurers and banks, which are legally required to halt operations in the event of insolvency. I’ve heard estimates of 7500 and 8000 in the Dow as being minimum support levels that, if broken for an extended time, would lead to economic collapse in America as financials would all go under. To prevent this and to finance Obama’s deficit spending, actual dollars will have to be injected into the system and they will be.
Jim Sinclair’s Commentary
Law & Order – Special Victims Unit.
Paper gold has NO LIMIT, unless YOU and I limit it.
Join me in the Good Fight. Reduce the Comex warehouse holdings by 50%. Stop the daily price theft.
They did it this Africa morning again, yet they are paper tigers
More money, less Gold to push gold price to $2000
Is more money chasing less and less gold every day? Yes, it is true. And that should be one reason why gold prices could zoom to a record $2000 levels in 2009!
According to a 2009 forecast from Mumbai-based Commtrendz Risk Management Services, all over the world broad money supplies in developed nations generally have an average growth rate of around 7% annually, while world gold supplies have hardly gone up by 1-2% over years.
In 2008, central banks around the world have acted in concert to lower interest rates to such levels that low interest rates themselves start to stimulate economies. The ECB, BOE has cut short-term interest rates by 0.75% to 2.5%, 1% to 2% respectively of late.
Japan and the US Interest rates are just about at zero. The fiscal spending programs of US could expand into multi trillions.
of dollars. The above efforts coupled with monetary stimulations in the form of direct injections into the money system, if happen to get the world out of deflationary grip could leave explosive inflationary situation on the back of high crude oil prices.
Nominal paper money increase will lead to inflationary push to whole commodities complex and crude oil should not escape from it.
Jim Sinclair’s Commentary
Remember that thing called Jim’s Formula?
Cash-poor states eager for a piece of Obama plan
By BETH FOUHY
NEW YORK (AP) — President-elect Barack Obama’s plan to jolt the economy by overhauling the nation’s roads, bridges and transit systems has local officials clamoring for their share despite questions as to whether the program will actually work.
"California’s fiscal house is burning down," state Treasurer Bill Lockyer declared recently after a California regulatory board halted financing for some 1,600 infrastructure projects because of the state’s nearly $15 billion deficit.
California’s woes are far from unique, as the deepening economic crisis has wreaked havoc on state budgets across the country. At least 40 states are running deficits, forcing governors to raise taxes and trim spending while postponing urgent repairs to roads, bridges, hospitals and ports.
"Because of the downturn in revenues, we’re all starting to delay construction projects that are clearly maintenance. That risks public safety," said Maryland Gov. Martin O’Malley in an interview.