Crisis Diary as it unfolds ….

Swiss banking model in question

Uncle Sam is after largest swiss bank UBS, and entire swiss banking is feeling the punch. Swiss banking has so far been a safe haven for tax evaders from around the world. For obvious reasons, Swiss court banned UBS from sharing any such information with US. But if US authorities are firm in their demand, can Swiss really dare not comply? Is it about the time for Intl. community to build pressure on Swiss to change their unfair practices of providing safety to fraudsters?

Ever since Obama took office, he has been talking a lot about transparency.
Mr. Barack Hussein Obama, are you the change we can believe in?

February 20, 2009 Posted by | News | , , , | 1 Comment

What was SEC doing?

This is a new piece of evidence WSJ has brought in light.

In Nov’2005 – yes, way back in two thousand and five – Madoff’s rival hedge fund manager Markopolos submitted this written complaint to SEC.

The title of the submission reads “The world’s largest Hedge Fund is fraud
In opening remarks he gives two likely scenarios and says scenario-2 is highly likely.
According to Markopoloas, What was this scenario-2?

Scenario-2 (Highly Likely) Madoff Securities is world’s largest Ponzi Scheme ….

Then the paper goes on to describe its premise in very compelling and coherent manner over next nineteen pages.

So what did SEC do?
SEC closed the case in Nov’07, two years later, and SEC’s conclusion can be found here.

Conclusion Reached:
The staff found no evidence of fraud. …..

Inefficient and insufficient gov’t oversight is one of the main reasons why market economy stands where it stands today – on the brink.

Thank you SEC, we’d love to have socialism back. We’d rather gov’t screwed us directly than gov’t colluded with corrupt market practices to screw us. Because in that case at least we have a visible filthy fist to fight with.

Update: (02-feb-09) Here is Markopolos prepared testimony to US finance committee

December 20, 2008 Posted by | News, Opinions | , , , , | 2 Comments

Madoff’s Ponzi Scheme

Bernie Madoff’s hedge fund blow-up was the stunning piece of news on wall-street last week. The Ponzi Scheme that his NASDAQ ex-chairman ran amounted to a fraud of the scale of $50B. The detailed news here.

The features of his Ponzi scheme that hardly invested anything in any market,

Pay steady 10% returns to old investors from the investments of new investors

Steady and modest returns which enable him to keep it afloat for years.

Don’t ask don’t tell policy about underlying investment strategy – as long as everybody was getting steady returns nobody complained

Accounting fraud to show fake trades and profits

Several charity organizations and banks like RBS and HSBC invested in his scheme without any due diligence.

Although this was a huge news and had a potential to hurt the market sentiments further, markets were quite nonchalant about the news, which is another sign of market bottom. Worst unemployment numbers with more than half a million going out of job in one month, market goes up. Investors set to lose $50B in a ponzi scheme, market reacts neutrally. Goldman Sachs reports negative revenue and record losses, Goldman Sachs shares go up. These are all the signs of fear being overdone.

December 16, 2008 Posted by | News | , , | Leave a comment