Oh, by the way. Nemo.

The spice must flow.

At least we don't have to burn the furniture to keep warm this winter and Kudlow's got an outside chance of seeing his gulf war prediction of $25 bbl come true.

Driving less with cheaper gas--why do we "need" more credit again?

CR: "it is difficult for some countries to cut production when their expenditures are $50 per barrel and oil prices are in the mid $40!"

Krugman logic says they should solve their lower-income problem by increasing their spending to $100 per barrel.

deepsouthdoug:
no that was the correct link.im going to call school board monday and see if they can use help with school lunchs or breakfasts.
i saw it when i was over at kos and yours meant twice. so time to do something or at least a little something.

If oil even drops to $30/bbl you will find me curled into the fetal position sucking my thumb chanting "75% of the people kept their jobs during GD1."

I've been officially scared for a bit. I now think there is a 40% chance of a Depression. (I like to do probabilities... a quirk of mine.)

If it hits $10/bbl... I'm buying oil futures! Heck, I'll buy them earlier.

Got Popcorn?
Neil

Is officially scared worse than scared?

Liz,

It's better to be officially scared - you don't have to wear the tin foil hat in public while it lasts.

Just wanted to clarify. My smarmy first post was aimed at Arjun Murti's fearless predictions, not CRs.

" deepsouthdoug writes:
One analyst on CNBC said oil could crash to $10 next year.

Daily Kos: State of the Nation 651601
deepsouthdoug | 12.13.08 - 9:47 am | # "

Yeh, that was the wrong link -- but everybody should read it. It's a real report from the front lines of our collapsing economy.

"MissFired writes:
A little accountability this morning. Here were Thursday night comments predicting a black Friday on news of the auto bailout collapse:"

Sometimes around here, it can get to be a little bit like fundamentalists predicting the end times. I dunno, maybe they watch too much cable news.

I've been guilty in the past, but I'm trying to quit.

MissFired - no, it's Monday. What's three days between friends?

C

Since we're talking abut cliff diving check out this skydiving commercial

Fleg Master Tlpizza Video - sevenload

The main driver of oil prices right now isn't supply/demand but the U.S. dollar.

Last week, oil was up big on dollar weakness.

In 2009, oil will start to be considered the "accepted global currency." A lot of currencies will eventually be pegged to oil-heavy baskets.

Regarding Citadel discussion on previous thread, I bet they received a lot of redemption requests when the Madoff news broke.

It is not illegal to freeze redemptions at all. When you put your money into a hedge fund, you sign a contract stating that you understand that you may not be able to liquidate your investment for a period as dictated by management, and many only allow for liquidation during certain windows anyway.

At least we don't have to burn the furniture to keep warm this winter and Kudlow's got an outside chance of seeing his gulf war prediction of $25 bbl come true.
Comrade Alexei Mikhailovich | 12.13.08 - 9:38 am | #

For all the wrong reasons - LK thought we'd have oil supply increases AND growth... instead we have recession and demand destruction. Oh well - I guess it is better to be right for the wrong reasons. For Larry that's about as good as it gets.

The tide went out and Madoff was naked.

Some formerly rich people had all their money with him. Haven't they heard about eggs and baskets? One was the dean of a famous lawschool, according to the local rag, too lazy to go downstairs to see if it was Harvard or Yale or whatever.

Hub used to be a prosecutor with Reno's ofc. Asked him why the heck these people just don't take the money and run? He said that insofar as he understood the criminal mind, it was for the thrill--of doing something anti-social, of getting away with something. Everytime they did something bad, and nothing bad happened to them, they'd get the thrill and would get more confidant, they'd be able to get away with it, and then would escalate.

Me, if I were evil, it would be to get rich, and I'd have the end game as planned out as everything else. This guy had been in business since what, 1960? And I'd be careful not to steal too much from anybody, so I'd not feel too guilty, and they'd be less likely to track me down.

He does. He has a Ph D from Hopkins and a law degree. He wanted to go to med school to and I said enough was enough. I'm the stupid one in the family. Except he can't invest his way out of a paper bag, and he can't play poker, 'cause he just can't bluff.

I imagine he was enchanted with his social standing and lost track of what it was that he was actually doing.

Comrade Kristina, here is my answer to your request about no-Detroit-bailout scenarios: Not One Cent: Detroit Big 3 Bailout Misses Supply-Demand Big Picture

It was a person that I read about, not an endowment. Tho it couldabin the endowment too, wasn't discussed.

How do you know he hated the wealthy?

According to the WSJ, he started his business with $5,000 saved from a lifeguard job and installing sprinkler systems.

I wonder how many regulators he bought off.

Yep, I still haz love after almost 43 years. He's out playing with his
ham radio antenna at the moment.

I personally don't have the nerve to short anything. Just sitting on the sidelines, twiddling my thumbs, waiting for the dow to drop to what I think is ridiculously low.

Oh, the sons were senior employees 1 & 2? I read the first few pages of the brief.

Wondered if SE 1 & 2 REALLY knew something funny was going on when I read it. Brief said they had money in it too. So he stole from his sons?

Sometimes I'll refresh and it just won't. That's been going on for a week. I right click and hit open.

I guess we will find out.

Son demanding use of the computer. I should do the dishes.

google exposure to madoff (he was almost like a one man lehmans) lot of money and a lot of doubt.

as for refresh, i post and that seems to get. never thought about right click and open.duh will try it next time. thanks lawyerliz

Interesting factoid; it costs 'vard more to charge tuition than to give free rides because of administration and overhead. 
--Rob Dawg

No offense is meant, but where did you get this (ludicrous, incredible, stupid, ... insert whatever adjective fits) factoid?

Interesting factoid; it costs 'vard more to charge tuition than to give free rides because of administration and overhead.

I remember a fable about being too fat to eat and then starving to death....

"repukes_suck writes:
Our wonderful regulatory system did not even detect this 50 billion dollar scam."

That gives you some idea of what to expect in next year's emergency stimulus programs.

I would imagine that Madoff didnt start off with the intentions of launching a Ponzi scheme.

His fund probably had a loss at some point in the distant past, and he covered up the loss by paying out from his in-flows. Just a one-time fix, he thought. Then he did it again, with ever increasing amounts of money. Eventually the lie becomes so big that there is no way to pull the plug (without going to jail). So he keeps on lying and bringing in more new money to cover the old.

Not clear how much he was personally making in the racket, as he may have just been funneling most of the $ to people who withdrew, in order to keep up confidence in the scam. As long as he could keep kicking the can forward, no one was hurt. Their paper wealth remained, and they were able to cash out smaller sums as needed, so long as he could find new investors.

When its all said and done it'll be interesting to see how much he personally looted, and how much of the $50B was just distributed to earlier cash-outs.

What a lunatic.

I'll take you idea one step further. There is a good chance that all the major oil fields ( billion bbl. or more) fields have been discovered.
trader walt

More oil has been extracted from the Continental US since 1975 than was proven to exist in 1975 and we still have nearly the same proven reserves available. The recent collapse in world demand has also moved years of oil left back into it's traditional multidecade range.  Another interesting thing is depleted fields recharging.  The drop in demand is actually making it cheaper to get oil out of the same holes.  . 

I see us re-testing the $9/barrel low of 1998.

The day you see $9 oil again is the day you can drive along any freeway and see only a couple of other cars per mile.

How can you square $9 oil with packed U.S. highways?

Who would trade nine vastly diluted U.S. dollars for a whole barrel of oil?

Oil is the world's real wealth. If you own it, you can keep it safe and sound in the ground for a day, year, decade or century. It only goes up against currencies over time.

"A little accountability this morning. Here were Thursday night comments predicting a black Friday on news of the auto bailout collapse:"

MissFired, you don't read too good. Conjure wasn't predicting a "Black Friday." Conjure is talking about the likelihood of a global depression.

He stands by his clock update of December 11, 2008.

Anyway, Conjure is completely out of the market, has been for some time, and is currently uninterested in what the market does day-to-day.

Please, quote Conjure accurately.

Last Thread

Politician's with a Trillion

Can they put 1 trillion in perspective.... it's only 66 miles into space when stacking 1000 dollar bills flat.

Now if US could remove one 1000 bill per day = 2.74 million years

Almost forgot there's an addional 55 stacks already in place......

Wonder if Madoff will be paroled in time.

I wouldn't be surprised if PPT is shorting oil like crazy.

...and the complexity of crude price determination begins to emerge.

Thanks, energyecon, for an illuminating and concise contribution.

Right now I'm looking at that graph that CR posted. It reminds me of graphs of, perhaps, subprime loan volumes, housing starts, etc., except of course the spike occurs at a different point in time.

When oil was $140 and gas was $4, a lot of smart people (including, if I recall correctly, Dr. Krugman) were saying that the price appeared to have been driven by fundamentals and would probably stay up there. The poor Goldman Sachs guy went even farther than that...

So was that spike, in fact, driven by fundamentals at the time, or was it just another speculation-driven bubble? Again, looking at the chart, that recent spike seems to go well beyond the kind of cyclical movement in petroleum prices that you explain so well. What I'm saying is, I would love to read another paragraph or two of your insights.

Liz:

The NYT had links to the SEC docs as well as to a report from one investment advisor basically bragging about how they had been suspicious of Madoff for years and had steered their people away from him.

If only I had enough money to make a difference!!!

I'm outta here.
Anonymous | 12.13.08 - 12:11 pm | #

Bye-bye.

I've got my Ken Cooper CR Home Companion turned up to "full blast" and now the only commenter whose comments can get through is Nobel prize-winning economist, Dr. Paul Krugman (PBUH).

I'm with you that something shady is embedded in Wall Street's business model(s), but I am skeptical that there are very many true Ponzi schemes.
j marston | 12.13.08 - 12:04 pm | #

I agree - pretty hard to hide a full blown ponzi of the Madoff caliber - how he did it will become legendary on 'The Street'.

I also agree something shady and unwholesome is embedded - and when all the little 'exaggerations' are exposed the damage is likely to be larger in aggregate than Madoff alone.
 

Thanks for the complaint; do want the brief.

Wouldn't have liked the get the 2nd letter.

Hey, guys, there isn't any money left. Suing will be useless, unless there was proof of a reason to know on the part of the earlier investors and that's who you are suing.

Statutes of Limitations are prolly in effect depending on how long this went on.

How do we know it's the sons who turned him in? The WSJ article? Haven't read it yet, but will.

How could it not be noticed that 50b was missing? One of the posts sez 17 to 50b. Media exaggeration?

And I bet there are some others that will come to light, but I bet this is the biggest.

Seems like the secret to Madoff's "success" was the fact that he tapped into a pool of extremely wealthy investors who started out entrusting him, prudently enough, with small sums of their money. Pleased with the results, they then gave him a little more, and encouraged their acquaintances to do the same. And he's paying out 10 percent, 11 percent a year in "interest," while his total take keeps growing, probably faster than that until recently.

I reported on a similar deal on a much smaller scale here in the Northwest, based in Tacoma. Rich, smart people. They heard about this investment program from friends at the yacht club. They plunked down $10,000 and started getting two percent checks in the mail. Every month. So they invested more, and more, and more. And it all worked fine right up to the point that it didn't.

The complaint said a form they filed said that they had 11-25 investors. People? Funds?

I guess we can't believe the form either!!!

MW

I have received three calls this morning from friends offering me their jewels, boats, houses, cars.

What kind of weird "friendships" do you have that you're the "go to guy" among your "friends" for pawning high ticket assets?

"I mean, that appears to be the implication and sentiment of the discussion here thus far, so how many are going to short it to $25?
\t Morocco Bama | \t \t \tHomepage | \t12.13.08 - 10:55 am | # "

Seems like a loser bet with Russia in talks with OPEC.

MW isn't quite pulling off his "super-wealthy guy who knows what its like to have 750 million in the bank fielding calls from frenzied jews trying to pawn their luxury yachts, jewels, and purebred horses within days of a fund collapse shrieking about the holocaust" in a very believable manner. Perhaps if you reduced the lie to one or two elements, like, "I'm a rich guy" or "I heard a friend of a friend say that rich people were hurt" or such it would be more plausible.

Hey I can ski pretty well and can talk a good story, how do I get into this ponzi business?

Hoopajoops, we are in dollars because it is our home currency. We also have some euro and some gold. Mainly dollars.

We are afraid of treasuries. As you probably know, Conjure is waiting for the long bond to crash. He says it is a question of when, not if.

We don't want to be in, near, or around any market when that happens.

German bonds are the true safe haven and buying now is the bottom of the currency range. Greece, Belgium, Netherlands and Italy are risky at almost any yield.

Hahahahaha, Bama.

Maybe their wealth is pure chance, a la Taleb?

I mean it, what's it like being rich?

I'm genuinely curious and never met anybody worth more than a few million. Which isn't rich by today's standards. And most of them lost it invesing in real estate.

Would you say you are happier than most? Is it an albatross around your neck?

Lawyerliz rests her head on hands are stares fascinated at MW.

that's "and".

The concept that Madoff hadn't intended to implement a Ponzi scheme, that it just ended up that way, is fascinating. I talked to a friend earlier this week who was down after having lost 50K in a housing-related deal in Huntington Beach, CA. He said the initial returns were good, and then the money just stopped one day and the company he had invested in vaporized. It sounded like a classic Ponzi to me, but my friend was adamant that the developers were legitimate, but things just went south. I can't make up my mind about either of them and this has me wondering if there won't be a whole slew of unintended Ponzi schemes showing up soon.

New Excutive Order: The word "problem" shall be removed and replaced by "challenge" or better yet "opportunty"

The Jewish people I knew in my old Balto neighborhood were better off than the rest of us, but not at all rich. Great food. Great homemade Italian food too. Sigh.

I think MW is furiously googling at this very moment, shortly before coming to the realization that the real deal shops will barely have any net presence at all.

Thanks for your observations, MW. I for one value them. I have thought from the first I heard of this that it would be bigger than most news we have heard about lately.

Protection money for the 2Tril?

What MW reveals is that he doesn't understand what it is to be rich, to be hooked into that social circle. The last thing the super-rich will do upon discovering that they've been busted financially is call their other rich friends and advertising this fact by offering to pawn their frickin cars and other crap. What the hell, that is the kind of retarded story that betrays a sheltered existence of extremely modest means. Someone who has never been "connected" or "in" with other connected, wealthy people. The last thing you do is phone up even a single one of your rich friends and tell him you're poor and desperate. No, you do the opposite. You embezzel, steal, play-act, do whatever to keep up appearances, until that is absolutely impossible.

Except for the commissions and bonuses paid to move the money around.

And I still miss CSC. Come baaaaaack!!!

Dawg sez he's legit and I do trust dawg.

Hey Hoop, go to a jewelry store and report!!

CDS guy writes:
PonziMonetizaCoruptiCapitalism

CDS isn't a ponzi, it's a zero-sum reserveless CDS insurance scam.
CDS guy | 12.13.08 - 1:03 pm | #

beg to disagree

because the swaps have been securitized, used as collateral, and traded and there has been leverage applied along the way

it is a tangled spaghetti mess

Here's the RDI ponzi thing out of Tacoma that I mentioned above:

404 Not Found

This one was smoke and mirrors from day one, but it managed to run for several years--nowhere near as long as Madoff, but it wasn't a short-term thing either.

Then you have Metropolitan Mortgage out of Spokane, a decades-old outfit with real insurance companies under its corporate umbrella, along with an investment arm that began to pay investors in a ponzi-like manner at some point until the roof fell in:

Metropolitan Mortgage bankruptcy :: Ongoing coverage from The Spokesman-Review

Point being that some are born ponzi, and some have ponzihood thrust upon them. Or something.

I dunno how really rich people act. That's why I asked.

It's interesting to read MWs comments.  Time will tell.

Last night I was helping a friend who owns and operates a botique winery in the Santa Ynez area.  Great stories.  The 60 year olds in the beat up pickup looking for some wine to drink on their boat while fishing.  They then buy 2 cases at $48/bottle and ask him to deliver it to the wine steward on his "boat."  The nice old black guy who "writes songs you've never heard of" until after the sale my friend googles and sees 60 charted credits.  But he says the fun ones are the thirtythousanaires.  Think Sideways II. 

The point is that he's seen no stress in the client list and with $80 bottles in the library he knows whereof he speaks. 

MW could be being straight up with us but my experience with my betters says they don't panic so obviously.  There's lots of resources to call in and less obvious ways to raise cash than pawning jewels and "selling" boats they more than likely don't own so much as lease from a shell corp who in turn is making payments from cashflow.  Boats don't get sold they get brokered.  Like I said, we'll see. 

Igor(Unrated) writes:
Hoopajoops, LTD writes:
What MW reveals is that he doesn't understand what it is to be rich, to be hooked into that social circle.

Or sheer panic and desperation leaves you with no other options.

"No other option" stage does NOT come within days of a fund collapse. There are ways to stretch things out; even to the point of just not paying your bills and waiting for consequences. No. The story just does not check out in any way shape or form.

"The drop in demand is actually making it cheaper to get oil out of the same holes. ."

mmm should do wonders for the green movement. Guess mother nature's not going to protect us from ourselves after all.

Hoopajoops - I see there's a Tourneau at 175 Worth.

Can't vouch for Palm Beach, but their NYC store is the go to spot for trading off your interesting timepiece for something more interesting or more of-the-moment - or for lucre.

lawyerliz(Very Good) writes:
Hoop--Were they ever REALLY rich? Or, was it always fake?

I've seen a few instances of rich person collapse. From what I gather, it's very rare for a sprinkler repairman to destory 50 billion dollars. New money collapses are also different from old money collapses. I've had the most experience with new money collapses. A shocking percentage of our new money rich people become wealthy not through skill, acumen, or any sort of merit, but instead they end up getting rich by being really, really, really lucky. Right skill, right pitch, right place, right time. When you take a nobody and make him rich, it changes his identity; he becomes his wealth. The story of his success becomes the story of his personhood. Few people I know of get lucky, rich, and then retire to a horse farm, and those that do tend to not get in trouble. The guys who keep rolling the dice, who need to continue the story of success, tend to get in trouble. I've got a lot of opinions about these types of people but it would take me too long to type them out and I have to go grab some breakfast.

I guess I'll summarize it by saying that most of the rich people whose books I've crawled through make me sick. They're preserved by virtue of the myth in our country that merit attracts wealth, that these people deserve the rewards that have fallen on them through chance and luck. If this myth were shattered, these people would be hunted down.

The Primex website;

The Primex Auction

And you should also check out the updated version of Madoff's own website--color scheme is mostly black. I think it's meant to indicate mourning, not "in the black..."

Bernard L. Madoff Investment Securities LLC Liquidation Proceeding

Karl Denninger  analyzes the Madoff implosion:

"Madoff's company, just so we're all in the know here, is a market maker on Nasdaq, which means that a lot of other people's money (and shares) pass through his hands. T+3 will come, but will your shares be there when it does? . . . .Finally, let us never forget that there is never only one cockroach."

Liz only got a "Very Good" rating? That's sad.

Naturally, I reserve (excellent) only for myself!
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(I need to be able to look at all the posts I've made in a thread super-easy).

By March, that will be impossible, I'd bet.

Lawyerliz,

At first it scared me to death, but I realized that it don't mean a damned thing, just makes the opportunity costs non financial, only personal. I'm not happy or sad about myself, I merely exist. If my actions make others happy, that's what truly matters; however if you're a bad actor I will come down on you like a ton of bricks even though I have no power beyond my two fists and my mind.

My brother and sister do nothing with it and just watch the pile grow and I don't know how they to it, my parents wonder about me sometimes because I actually put my money into the greater economy. On the deals I do I'm just looking to come out a little bit ahead because as a rent seeker I do nothing but provide capital. When I actually work I expect proper compensation.

None of us are greedheads with solid BS detectors and most of our trading is macro in nature.

I don't know if that actually answers your question but it's as close as I can get.

Where else can you earn the same return?
rich

Here: The page cannot be found

[I'm thrilled. Finally I'm convinced we're going to get to where we need to be.
CDS guy ]

Sorry, but I am afraid you are suffering from delusion if you think we are going to get out of this deep hole by getting the religion of honesty. Better take a step back and take a hard look at the macro economy. We are deep in the hole on every measure, govt fiscal & current acct deficits and getting worse, as far as the eye can see. The sooner we become honest the faster we collapse.

The approach here is to keep the game going until we inflate our way to some measure of near term equilibrium.

Who in this country is going to make money when price signals are not shrouded in some way?

I hope The Donald had some money invested with Madoff, and leveraged it.
\t bearly

What makes you think The Donald has any money?  We are talking about someone so inept he can't turn a profit with a monoply protected casino.