DERIVATIVES COME TO THE MOVIES Ellen Brown, May 3rd, 2010
http://www.webofdebt.com/articles/derivatives_movies.php
As if attacks from paparazzi and star-crazed fans weren’t enough, Hollywood stars may soon have a literal price put on their heads by investors in the Cantor Exchange, a real-money trading platform where people can bet on the gross profits of upcoming movies. Sales of The Dark Knight skyrocketed after Heath Ledger died unexpectedly, and so did sales after the deaths of Michael Jackson, Elvis Presley and Marilyn Monroe. Will greed-driven investors now be laying in wait for the stars of movies they have bet on?
The Cantor Exchange (CE) is based on a virtual trading platform called the Hollywood Stock Exchange (HSX), a web-based, multiplayer simulation in which players buy and sell “shares” of actors, directors, upcoming films, and film-related options. The difference is that where the HSX uses virtual money, CE will turn the game into a real casino using real dollars.
On April 21, Cantor Exchange reported that it had just received regulatory approval from the Commodity Futures Trading Commission (CFTC), which oversees futures exchanges. “This is a significant step forward in achieving our ultimate goal,” it said in a letter, “which is to launch a market in Domestic Box Office Receipt Contracts.”
Having “contracts” out on movies and movie stars, however, has an ominous ring; and the Motion Picture Association of America (MPAA) apparently doesn’t like the sound of it. The Cantor letter said that its tentative launch date of April 22 was being delayed because the MPAA and others “raised concerns about the economic purpose of this market and its usefulness as a hedging vehicle.”
The legitimate hedgers, the moviemakers and equity holders with a real financial interest to protect, don’t want it. But Cantor is pushing forward, because gambling is big business and there are vast sums of money to be made.
Critics are worried that the new exchange will turn Hollywood into another derivatives casino, vulnerable to insider trading. Even if traders aren’t hiding behind bushes waiting to trip up the stars, the exchange could create bizarre incentives for moviemakers to manipulate and distort the market for their own products, perhaps intentionally sabotaging movies they know are losers.
The Derivative Craze
A“derivative” market is one that is “derived” from an underlying asset, but participants don’t have to own the asset to play. Like gamblers at a race track, they can bet without owning a horse. Derivatives have now become a $605 trillion industry, about ten times the gross domestic product of all the countries of the world combined. This money is not contributing capital to businesses, helping the economy to grow. Rather, it is being diverted into wagers. Money is made by taking it from someone else.
Worse, half the wagers are negative: the players want the thing to fail. Warren Buffet called derivatives “financial weapons of mass destruction.” By massively short selling a stock or a currency, speculators can actually force the price down. Derivatives can be used to sabotage not only businesses but whole economies. Derivatives have been blamed for such economic disasters as the collapse of Japan’s stock market in 1987, the Asian crisis of 1998, and the recent collapse of Greece.
Gaming the Hollywood Game
Max Keiser, who founded CE’s virtual forerunner HSX in the 1990s, has firsthand knowledge of how the Hollywood exchange can be abused. When he was CEO of HSX, he says, he came under pressure from fellow board members to give in to studio heads who were offering cash and other inducements to manipulate the prices of projects, either up (to legitimize more marketing dollars) or down (to sabotage competing projects). “These guys, including my own board of directors,” he says, “could not tell the difference between marketing and market manipulation.”
Whether a movie’s stock price rises or falls is considered to be a predictor of the movie’s future success; but Keiser warns that today, the prediction value of market pricing is largely a hoax. Traders using sophisticated computer programs have learned how to manipulate prices, and market rigging has become institutionalized.
“The only difference between the new box office futures contracts being manipulated and blowing up,” he says, “and stocks in companies like Lehman Brothers being manipulated and blowing up, is that people losing their money can imagine getting screwed by Scarlett Johansson instead of Dick Fuld.”
Keiser predicts that his altered HSX computer technology, if approved by the CFTC for use in a real-money exchange, will produce an insider trader’s paradise, with Hollywood going the way of Enron and Lehman Brothers in two years or less.
“But this is what rigged market capitalism is all about,” he says. “It’s not economics really. It’s arson. They bet against a company or a country and then burn it down.”
Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are http://www.webofdebt.com/, http://www.ellenbrown.com/, and http://www.public-banking.com/.
Showing posts with label Enron. Show all posts
Showing posts with label Enron. Show all posts
Saturday, May 8, 2010
Saturday, April 3, 2010
Enron’s Ghosts Capture Health Insurance Reform
http://seminal.firedoglake.com/diary/35854
Enron’s Ghosts Capture Health Insurance Reform
Scarecrow
Thursday March 18, 2010
Last July, I wrote a post on how Enron’s free market views influenced the original design of the California electricity market and contributed later to its collapse. I pointed out the parallels between Enron’s flawed market designs and the debate over the public option in the proposed health insurance reforms.
It’s worth revisiting, because matters are now much worse than they were then.
So what kind of structure and rules did Enron demand? First, it needed to eliminate competing institutions that might be able to connect producers and consumers more directly and efficiently. It argued for, and got, a structure that tended to require middlemen.
There was a proposal for a quasi-government "power pool" — a public pool in which producers could sell and consumers/buyers could purchase power directly without a middleman. For a year of debates, Enron and other marketers did their best to eliminate that "socialist," government-controlled concept, but the small band of bureaucrats and allies convinced the state to keep the pool.
Second, once the pool was accepted, Enron’s next tactic was to limit access to the pool. Enron argued for rules that required all non-utility buyers to arrange private contracts to cover their needs, instead of relying on the public pool. That would result in many more opportunities for Enron to be the middleman in those private contracts. The small band of bureaucrats argued against that limitation with some success, but Enron got concessions that tended to discourage many parties from using the public pool.
Enron’s third tactic was to demand operating rules that would force the public pool to operate at higher costs. The bureaucrats objected to these rules and took the dispute all the way to the Governor’s office, but they lost to the Governor’s largest campaign contributors (he still had debts from a failed Presidential run). It was an important defeat.
The Power Pool was eventually created, but it’s rules hobbled it and forced it to operate at higher costs. One particular rule required the public pool to ignore feasible cost-savings and instead deliberately choose higher cost energy when serving customers of the public pool. That made non-pool contracts more attractive and drove non-utility buyers/sellers to Enron’s traders.
Enron and its gullible supporters convinced state and federal regulators that since they were market competitors, their competition would always achieve the lowest cost results, so the public plan should be deliberately forced not to achieve the lowest cost, because that would drive marketers out of business, and they should be protected. California’s largest electricity customers, and federal regulators, bought this ridiculous argument.
Finally, Enron demanded, and got, rules that required the grid system operator to be separated from a part of the public pool — the market separation fallacy. When combined with other ill-advised rules, this meant that the public plan and system operator were often flying "blind," unaware of grid conditions when Enron and other parties were manipulating the market. The result: Enron and others manipulated the market with virtual impunity, raking off hundreds of millions (and some claim billions) of dollars.
If you recognize this pattern, it’s because we’re seeing analogous tactics and strategies in the current health care reform debates.
We see a powerful group of middlemen, the insurance industry, trying to structure the market to require that they remain in the middle of, and extract a rent from, all money flows between providers and patients, as though that’s the only logical structure, even though it’s not.
We see efforts to eliminate any public alternative — the public plan (operating inside a public exchange) — that might be more efficient in reducing and covering costs.
And we see the middlemen and their political supporters in Congress deliberately hobbling the public plan, raising its costs, and restricting access to that public option, on the theory that we shouldn’t do anything to undermine the current private insurance industry. After all, they argue, private markets are always more efficient than a government operation.
That was how I saw the parallels last July, when the public option was still a possibility, but I warned that differences between products, markets, institutions, etc, made such comparisons risky. Yet the sad and astonishing part is that as the health care debate has evolved, the Enron free market view from 15 years ago has triumphed in the proposed health insurance reforms.
There is no public option, so there will be no public insurance altenative and safety net to protect consumers from private insurance discrimination, excessive rates, and other abuses. The insurance market now embedded in the Senate bill is worse that what Enron and its political allies helped design for California’s electricity markets.
We can now see other parallels and predict what might occur in this new insurance market. In California, state and federal regulators failed to pay attention to the concentration of producers — only a few large firms controlled most of the generation, even after the utilities were induced to divest much of their generation monopolies. The predictable problem of market power would then combine with the ability of Enron and other financial marketers to manipulate Enron’s flawed rules. They would then create artificial shortages, exacerbate real shortages (from droughts, nuclear outages, etc) and then bilk consumers for hundred of millions of dollars. And on top of that, state regulators imposed a mandate on utilities to purchase all their residual power from the new flawed "exchange" market. Sound familiar?
Will something analogous happen in health insurance markets? We don’t know, and all crises are different. But we know the health insurance and provider markets are egregiously concentrated — one or two mega-firms control most of the market in most states. We know the industry is still protected from anti-trust laws; until that’s fixed, there’s no way for state or federal governments to bust up the firms with the most market power or prevent collusion to fix prices. And we know consumers will be forced to purchase insurance within this concentrated market and given subsidies to help them do it.
We know there won’t be any meaningful rate regulation. That is what the demise of the rate regulator means. Insurers and providers are essentially free today to raise rates at will; there is nothing to change that. This Administration and Congressional leaders are apparently content to throw up their hands and have this important public policy decided by a virtually unknown "parliamentarian," but it’s their sin, not his.
And we know that the very nature of health insurance is such that the theories of efficient competition and competitive pricing simply do not apply. Economists since Ken Arrow have told us this. Yet we still have governments and institutions enthralled by the virtues of free enterprise.
Without rate regulation, without anti-trust enforcement, without a viable public option as escape hatch, without a credible theory of competition, and with virtually no constraints on the industry’s ability to bribe and control the Congress and the White House, there is no way consumers can win in the new health insurance markets. Only an idiot [e.g., a member of the Texas School Board] would believe this will turn out well.
The only question we have left is how the inevitable market collapse, consumer crisis and government bailout will occur. And they will occur.
A reconciliation bill could have fixed much of the Enron-designed market structure in the Senate bill, but the White House didn’t want that. It cut its deals, just as California’s Governor cut his deals in 1996. But no one remembers Pete Wilson.
Enron’s Ghosts Capture Health Insurance Reform
Scarecrow
Thursday March 18, 2010
Last July, I wrote a post on how Enron’s free market views influenced the original design of the California electricity market and contributed later to its collapse. I pointed out the parallels between Enron’s flawed market designs and the debate over the public option in the proposed health insurance reforms.
It’s worth revisiting, because matters are now much worse than they were then.
So what kind of structure and rules did Enron demand? First, it needed to eliminate competing institutions that might be able to connect producers and consumers more directly and efficiently. It argued for, and got, a structure that tended to require middlemen.
There was a proposal for a quasi-government "power pool" — a public pool in which producers could sell and consumers/buyers could purchase power directly without a middleman. For a year of debates, Enron and other marketers did their best to eliminate that "socialist," government-controlled concept, but the small band of bureaucrats and allies convinced the state to keep the pool.
Second, once the pool was accepted, Enron’s next tactic was to limit access to the pool. Enron argued for rules that required all non-utility buyers to arrange private contracts to cover their needs, instead of relying on the public pool. That would result in many more opportunities for Enron to be the middleman in those private contracts. The small band of bureaucrats argued against that limitation with some success, but Enron got concessions that tended to discourage many parties from using the public pool.
Enron’s third tactic was to demand operating rules that would force the public pool to operate at higher costs. The bureaucrats objected to these rules and took the dispute all the way to the Governor’s office, but they lost to the Governor’s largest campaign contributors (he still had debts from a failed Presidential run). It was an important defeat.
The Power Pool was eventually created, but it’s rules hobbled it and forced it to operate at higher costs. One particular rule required the public pool to ignore feasible cost-savings and instead deliberately choose higher cost energy when serving customers of the public pool. That made non-pool contracts more attractive and drove non-utility buyers/sellers to Enron’s traders.
Enron and its gullible supporters convinced state and federal regulators that since they were market competitors, their competition would always achieve the lowest cost results, so the public plan should be deliberately forced not to achieve the lowest cost, because that would drive marketers out of business, and they should be protected. California’s largest electricity customers, and federal regulators, bought this ridiculous argument.
Finally, Enron demanded, and got, rules that required the grid system operator to be separated from a part of the public pool — the market separation fallacy. When combined with other ill-advised rules, this meant that the public plan and system operator were often flying "blind," unaware of grid conditions when Enron and other parties were manipulating the market. The result: Enron and others manipulated the market with virtual impunity, raking off hundreds of millions (and some claim billions) of dollars.
If you recognize this pattern, it’s because we’re seeing analogous tactics and strategies in the current health care reform debates.
We see a powerful group of middlemen, the insurance industry, trying to structure the market to require that they remain in the middle of, and extract a rent from, all money flows between providers and patients, as though that’s the only logical structure, even though it’s not.
We see efforts to eliminate any public alternative — the public plan (operating inside a public exchange) — that might be more efficient in reducing and covering costs.
And we see the middlemen and their political supporters in Congress deliberately hobbling the public plan, raising its costs, and restricting access to that public option, on the theory that we shouldn’t do anything to undermine the current private insurance industry. After all, they argue, private markets are always more efficient than a government operation.
That was how I saw the parallels last July, when the public option was still a possibility, but I warned that differences between products, markets, institutions, etc, made such comparisons risky. Yet the sad and astonishing part is that as the health care debate has evolved, the Enron free market view from 15 years ago has triumphed in the proposed health insurance reforms.
There is no public option, so there will be no public insurance altenative and safety net to protect consumers from private insurance discrimination, excessive rates, and other abuses. The insurance market now embedded in the Senate bill is worse that what Enron and its political allies helped design for California’s electricity markets.
We can now see other parallels and predict what might occur in this new insurance market. In California, state and federal regulators failed to pay attention to the concentration of producers — only a few large firms controlled most of the generation, even after the utilities were induced to divest much of their generation monopolies. The predictable problem of market power would then combine with the ability of Enron and other financial marketers to manipulate Enron’s flawed rules. They would then create artificial shortages, exacerbate real shortages (from droughts, nuclear outages, etc) and then bilk consumers for hundred of millions of dollars. And on top of that, state regulators imposed a mandate on utilities to purchase all their residual power from the new flawed "exchange" market. Sound familiar?
Will something analogous happen in health insurance markets? We don’t know, and all crises are different. But we know the health insurance and provider markets are egregiously concentrated — one or two mega-firms control most of the market in most states. We know the industry is still protected from anti-trust laws; until that’s fixed, there’s no way for state or federal governments to bust up the firms with the most market power or prevent collusion to fix prices. And we know consumers will be forced to purchase insurance within this concentrated market and given subsidies to help them do it.
We know there won’t be any meaningful rate regulation. That is what the demise of the rate regulator means. Insurers and providers are essentially free today to raise rates at will; there is nothing to change that. This Administration and Congressional leaders are apparently content to throw up their hands and have this important public policy decided by a virtually unknown "parliamentarian," but it’s their sin, not his.
And we know that the very nature of health insurance is such that the theories of efficient competition and competitive pricing simply do not apply. Economists since Ken Arrow have told us this. Yet we still have governments and institutions enthralled by the virtues of free enterprise.
Without rate regulation, without anti-trust enforcement, without a viable public option as escape hatch, without a credible theory of competition, and with virtually no constraints on the industry’s ability to bribe and control the Congress and the White House, there is no way consumers can win in the new health insurance markets. Only an idiot [e.g., a member of the Texas School Board] would believe this will turn out well.
The only question we have left is how the inevitable market collapse, consumer crisis and government bailout will occur. And they will occur.
A reconciliation bill could have fixed much of the Enron-designed market structure in the Senate bill, but the White House didn’t want that. It cut its deals, just as California’s Governor cut his deals in 1996. But no one remembers Pete Wilson.
Thursday, August 13, 2009
Robert Larson's Out The Rabbit Hole
Today from 5-6 PM (Pacific Time) I will be on KUCI 88.9 FM in Irvine, CA (also streaming at www.kuci.org ) for host Robert Larson's Out The Rabbit Hole.
With the recent blockbuster allegation that Blackwater CEO Erik Prince murdered people helping federal investigators of his company, Larson and I will discuss the exploding Blackwater scandal, and use it as a jump off point for discussing the recent history of curiously convenient deaths.
Among the greatest hits: Paul Wellstone, David Kelley, DC Madam Debra Jean Palfrey, Enron's Kenneth Lay & J. Clifford Baxter, Gary Webb and Pat Tillman.
I'll try to sneak in some dirty jokes. Hopefully, they won't lose their FCC license.
KUCI 88.9FM in Irvine, Orange County Public Radio
KUCI.org
Orange County, California's public radio station, broadcasting from the University of California at Irvine... eclectic music and engaging talk
With the recent blockbuster allegation that Blackwater CEO Erik Prince murdered people helping federal investigators of his company, Larson and I will discuss the exploding Blackwater scandal, and use it as a jump off point for discussing the recent history of curiously convenient deaths.
Among the greatest hits: Paul Wellstone, David Kelley, DC Madam Debra Jean Palfrey, Enron's Kenneth Lay & J. Clifford Baxter, Gary Webb and Pat Tillman.
I'll try to sneak in some dirty jokes. Hopefully, they won't lose their FCC license.
KUCI 88.9FM in Irvine, Orange County Public Radio
KUCI.org
Orange County, California's public radio station, broadcasting from the University of California at Irvine... eclectic music and engaging talk
Tuesday, April 28, 2009
Freddie Mac acting CFO found dead
http://www.marketwatch.com/news/story/Freddie-Mac-acting-CFO-dead/story.aspx
Freddie Mac acting CFO found dead in apparent suicide
U.S. officials express condolences to Kellermann's family and colleagues
By Sam Mamudi & Ronald D. Orol, MarketWatch
April 22, 2009
NEW YORK (MarketWatch) -- The acting chief financial officer of Freddie Mac was found dead at his home Wednesday morning in an apparent suicide.
David Kellermann, acting chief financial officer at the government-controlled mortgage company, was found dead at his home in Fairfax County, Va.
Kellermann was named acting CFO in late September, three weeks after the government took charge of Freddie Mac. He had previously been senior vice president and corporate controller there.
His death came as staff from the Securities and Exchange Commission and Justice Department were probing the home-finance company about issues including possible accounting violations.
Freddie disclosed the investigation in a March 11 filing, and the firm said it was "cooperating fully in these matters."
According to the SEC filing, Freddie said it received a federal grand jury subpoena Sept. 26 from the U.S. attorney's office for the southern district of New York. The subpoena sought documents related to accounting, disclosure and corporate-governance matters, according to the filing.
But that subpoena was later withdrawn and the investigation was taken over by the U.S. attorney for the eastern district of Virginia.
According to the filing, on Oct. 21, Freddie said the SEC had begun its own investigation, asking Freddie for documents. Specifically, on Jan. 23, Jan. 30 and Feb. 25, the SEC issued subpoenas for documents. The agency also began its own interviews of company employees, Freddie said in the filing.
In addition to the investigation, Freddie Mac received a request from the House Committee on Oversight and Investigations on Oct. 20 seeking documents for a hearing it held on Dec. 9.
Freddie Mac has received more than $30 billion in government support as the mortgage and credit crisis intensified.
Kellermann's apparent suicide surprised some key regulators in Washington, who expressed their condolences.
"On behalf of the Treasury family, we are deeply saddened by the news this morning of David Kellermann's death," said Treasury Secretary Timothy Geithner in a statement. "Our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time."
The Federal Housing Finance Agency issued this statement: "For many years, we have known David as a person of the utmost ethical standards who was hardworking and knowledgeable in his field. As the Acting Chief Financial Officer of Freddie Mac during particularly challenging times, David was an inspiration to his staff and many others who were privileged to work with him. We extend our condolences to his family, friends and colleagues."
Kellermann's apparent suicide would be the latest of several putatively motivated by the financial crisis. French financier Rene-Thierry Magon de la Villehuchet killed himself in December after losing roughly $1 billion of his own and clients' money to the Ponzi scheme orchestrated by Bernard Madoff.
Seventy-four-year-old German billionaire Adolf Merckle in January committed suicide after the conglomerate he controlled, with investments in pharmaceuticals, cement and other sectors, experienced problems related to the global financial crisis.
In 2002, J. Clifford Baxter, a former Enron Corp. vice chairman, was found dead in his car in Houston, in an apparent suicide, after the company collapsed in a massive corruption scandal and bankruptcy filing.
Ronald D. Orol is a MarketWatch reporter, based in Washington.
Freddie Mac acting CFO found dead in apparent suicide
U.S. officials express condolences to Kellermann's family and colleagues
By Sam Mamudi & Ronald D. Orol, MarketWatch
April 22, 2009
NEW YORK (MarketWatch) -- The acting chief financial officer of Freddie Mac was found dead at his home Wednesday morning in an apparent suicide.
David Kellermann, acting chief financial officer at the government-controlled mortgage company, was found dead at his home in Fairfax County, Va.
Kellermann was named acting CFO in late September, three weeks after the government took charge of Freddie Mac. He had previously been senior vice president and corporate controller there.
His death came as staff from the Securities and Exchange Commission and Justice Department were probing the home-finance company about issues including possible accounting violations.
Freddie disclosed the investigation in a March 11 filing, and the firm said it was "cooperating fully in these matters."
According to the SEC filing, Freddie said it received a federal grand jury subpoena Sept. 26 from the U.S. attorney's office for the southern district of New York. The subpoena sought documents related to accounting, disclosure and corporate-governance matters, according to the filing.
But that subpoena was later withdrawn and the investigation was taken over by the U.S. attorney for the eastern district of Virginia.
According to the filing, on Oct. 21, Freddie said the SEC had begun its own investigation, asking Freddie for documents. Specifically, on Jan. 23, Jan. 30 and Feb. 25, the SEC issued subpoenas for documents. The agency also began its own interviews of company employees, Freddie said in the filing.
In addition to the investigation, Freddie Mac received a request from the House Committee on Oversight and Investigations on Oct. 20 seeking documents for a hearing it held on Dec. 9.
Freddie Mac has received more than $30 billion in government support as the mortgage and credit crisis intensified.
Kellermann's apparent suicide surprised some key regulators in Washington, who expressed their condolences.
"On behalf of the Treasury family, we are deeply saddened by the news this morning of David Kellermann's death," said Treasury Secretary Timothy Geithner in a statement. "Our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time."
The Federal Housing Finance Agency issued this statement: "For many years, we have known David as a person of the utmost ethical standards who was hardworking and knowledgeable in his field. As the Acting Chief Financial Officer of Freddie Mac during particularly challenging times, David was an inspiration to his staff and many others who were privileged to work with him. We extend our condolences to his family, friends and colleagues."
Kellermann's apparent suicide would be the latest of several putatively motivated by the financial crisis. French financier Rene-Thierry Magon de la Villehuchet killed himself in December after losing roughly $1 billion of his own and clients' money to the Ponzi scheme orchestrated by Bernard Madoff.
Seventy-four-year-old German billionaire Adolf Merckle in January committed suicide after the conglomerate he controlled, with investments in pharmaceuticals, cement and other sectors, experienced problems related to the global financial crisis.
In 2002, J. Clifford Baxter, a former Enron Corp. vice chairman, was found dead in his car in Houston, in an apparent suicide, after the company collapsed in a massive corruption scandal and bankruptcy filing.
Ronald D. Orol is a MarketWatch reporter, based in Washington.
Sunday, March 22, 2009
Mystery of Madoff's rapid confession
http://www.guardian.co.uk/business/2009/mar/13/bernard-madoff-usa
Mystery of Madoff's rapid confession
Legal experts were flummoxed by the fraudster's willingness to admit every criminal charge laid before him, but was he trying to protect others who may have been implicated?
Andrew Clark in New York
Friday 13 March 2009
It was a brutally casual way to inform a man of his fate. After listening to a lengthy monologue by Bernard Madoff's defence lawyer on why the fraudster should remain on bail in his Manhattan penthouse, Judge Denny Chin waved away the prosecution.
"I don't need to hear from you because it is my intention to remand Mr Madoff," said the judge. He spoke almost as an aside, as if Madoff wasn't in the room.
There was a collective intake of breath. In the overflow room at New York's federal courthouse, full of hard-bitten hacks watching proceedings on a video link, a few people started clapping. The old man was finally going behind bars.
If the 70-year-old fraudster himself was surprised at being sent directly to jail, he didn't show it. He would have been warned by his defence team that he ran the risk of instant incarceration by pleading guilty to 11 counts of fraud, perjury and money laundering.
In fact, throughout the 90-minute hearing, Madoff looked as if he had been drugged. He stared fixedly at some point in the middle distance, slouched slightly forward with his arms resting on a table. His speech of "apology" was delivered in a flat monotone.
The only time he showed any tangible reaction was when one of his victims, George Nierenberg, aggressively demanded that Madoff meet his eye, moving towards him and saying: "I don't know whether you've had a chance to turn around and look at your victims."
Madoff, rather reluctantly, swivelled round and briefly eyeballed his former client before Judge Chin ordered Nierenberg to cool off.
Being Bernie Madoff's defence counsel is a job from hell, even by the standards of white-collar litigation. Madoff seems to have been intent on self-immolation from the moment his $65bn (£47bn) fraudulent scheme came to light in December.
Many legal experts were flummoxed by Madoff's decision to confess to every criminal count on the table this week without any sniff of a deal with prosecutors. If he had gone with "not guilty", he could have bought himself another year of bail. Or by co-operating with the feds and by talking them through the paperwork, he might have won a delay and a shorter term. Instead, he's probably in jail until he dies.
The probable explanation is that Madoff hopes to take the bullet for his family and colleagues. Peter Henning, a former fraud prosecutor turned law professor at Wayne State University in Detroit, says: "I think he's protecting his family. Any plea deal would definitely have required him to implicate others."
During his words of penance to the court, Madoff was at pains to emphasise that while his investment advisory outfit was a fraudulent hole, his company's proprietary trading and market-making operations were "legitimately and honestly run businesses". His sons, Andrew and Mark, were senior executives on this "honest" side of the Chinese wall. Madoff's 63-year-old brother, Peter, was in charge of trading.
It is almost inconceivable that Madoff could have spent 20 years squirreling away clients' money in a Chase Manhattan bank account, conducting virtually no legitimate transactions, without anybody at Madoff Investment Securities smelling a rat – even if, as he asserts, he was deliberately employing under-qualified staff with no expertise in the securities industry.
For the feds, catching the kingpin before they get to any henchmen poses an unusual difficulty – because of his reputation as America's biggest liar, Madoff is a radioactive witness. Any evidence he gives in future trials can be easily and quickly discredited.
"He's the king of this fraud. That's not someone you'd ever want to use as a witness," says Sam Buell, professor of law at Washington University in St Louis. "You could never use him in court – a jury would be outraged at having this guy testify against somebody who's less culpable."
So there are virtually no grounds for clemency towards Madoff – he clearly isn't being very helpful and, even if he was, his aid is of dubious utility.
The record sentence for a white-collar crime in the US is the 24-year term handed to Enron's Jeffrey Skilling in 2006 (although an appeals court ruled this was too harsh and that it should be recalculated). Madoff could find himself exceeding that.
Some argue Madoff's crime is worse than those of the bosses of corrupt companies such as Enron, WorldCom and Tyco. After all, many of Madoff's victims lost their life savings. In the case of, say, Enron shareholders, the damage is spread relatively thinly among a larger number of people.
"In some ways, this is a worse kind of fraud – it's preying on individuals rather than a fraud on the market," says Buell. "The victims here run the gamut from the very, very wealthy to the not-all-that-affluent."
Federal inmates in the US have to serve at least 85% of their sentences before they qualify for early release on grounds of good behaviour. If Madoff, 70, gets a relatively lenient 20 years and lives beyond the age of 87, he could conceivably see daylight again. But it's not very likely.
To his victims, it's hard to extend forgiveness or compassion to somebody who won't help prosecutors unravel the details of his crime, irrespective of Madoff's claim that he is "deeply sorry and ashamed".
One investor, 71-year-old Judith Welling, raised her arm in a victory salute as she exited the courthouse on Thursday. She put $1.5m into Madoff's fund and thought her nest egg had grown to $2.5m until she learned that the financier's empire was based on a pack of lies.
"Frankly, in my book, he's the lowest of the low," she said.
Mystery of Madoff's rapid confession
Legal experts were flummoxed by the fraudster's willingness to admit every criminal charge laid before him, but was he trying to protect others who may have been implicated?
Andrew Clark in New York
Friday 13 March 2009
It was a brutally casual way to inform a man of his fate. After listening to a lengthy monologue by Bernard Madoff's defence lawyer on why the fraudster should remain on bail in his Manhattan penthouse, Judge Denny Chin waved away the prosecution.
"I don't need to hear from you because it is my intention to remand Mr Madoff," said the judge. He spoke almost as an aside, as if Madoff wasn't in the room.
There was a collective intake of breath. In the overflow room at New York's federal courthouse, full of hard-bitten hacks watching proceedings on a video link, a few people started clapping. The old man was finally going behind bars.
If the 70-year-old fraudster himself was surprised at being sent directly to jail, he didn't show it. He would have been warned by his defence team that he ran the risk of instant incarceration by pleading guilty to 11 counts of fraud, perjury and money laundering.
In fact, throughout the 90-minute hearing, Madoff looked as if he had been drugged. He stared fixedly at some point in the middle distance, slouched slightly forward with his arms resting on a table. His speech of "apology" was delivered in a flat monotone.
The only time he showed any tangible reaction was when one of his victims, George Nierenberg, aggressively demanded that Madoff meet his eye, moving towards him and saying: "I don't know whether you've had a chance to turn around and look at your victims."
Madoff, rather reluctantly, swivelled round and briefly eyeballed his former client before Judge Chin ordered Nierenberg to cool off.
Being Bernie Madoff's defence counsel is a job from hell, even by the standards of white-collar litigation. Madoff seems to have been intent on self-immolation from the moment his $65bn (£47bn) fraudulent scheme came to light in December.
Many legal experts were flummoxed by Madoff's decision to confess to every criminal count on the table this week without any sniff of a deal with prosecutors. If he had gone with "not guilty", he could have bought himself another year of bail. Or by co-operating with the feds and by talking them through the paperwork, he might have won a delay and a shorter term. Instead, he's probably in jail until he dies.
The probable explanation is that Madoff hopes to take the bullet for his family and colleagues. Peter Henning, a former fraud prosecutor turned law professor at Wayne State University in Detroit, says: "I think he's protecting his family. Any plea deal would definitely have required him to implicate others."
During his words of penance to the court, Madoff was at pains to emphasise that while his investment advisory outfit was a fraudulent hole, his company's proprietary trading and market-making operations were "legitimately and honestly run businesses". His sons, Andrew and Mark, were senior executives on this "honest" side of the Chinese wall. Madoff's 63-year-old brother, Peter, was in charge of trading.
It is almost inconceivable that Madoff could have spent 20 years squirreling away clients' money in a Chase Manhattan bank account, conducting virtually no legitimate transactions, without anybody at Madoff Investment Securities smelling a rat – even if, as he asserts, he was deliberately employing under-qualified staff with no expertise in the securities industry.
For the feds, catching the kingpin before they get to any henchmen poses an unusual difficulty – because of his reputation as America's biggest liar, Madoff is a radioactive witness. Any evidence he gives in future trials can be easily and quickly discredited.
"He's the king of this fraud. That's not someone you'd ever want to use as a witness," says Sam Buell, professor of law at Washington University in St Louis. "You could never use him in court – a jury would be outraged at having this guy testify against somebody who's less culpable."
So there are virtually no grounds for clemency towards Madoff – he clearly isn't being very helpful and, even if he was, his aid is of dubious utility.
The record sentence for a white-collar crime in the US is the 24-year term handed to Enron's Jeffrey Skilling in 2006 (although an appeals court ruled this was too harsh and that it should be recalculated). Madoff could find himself exceeding that.
Some argue Madoff's crime is worse than those of the bosses of corrupt companies such as Enron, WorldCom and Tyco. After all, many of Madoff's victims lost their life savings. In the case of, say, Enron shareholders, the damage is spread relatively thinly among a larger number of people.
"In some ways, this is a worse kind of fraud – it's preying on individuals rather than a fraud on the market," says Buell. "The victims here run the gamut from the very, very wealthy to the not-all-that-affluent."
Federal inmates in the US have to serve at least 85% of their sentences before they qualify for early release on grounds of good behaviour. If Madoff, 70, gets a relatively lenient 20 years and lives beyond the age of 87, he could conceivably see daylight again. But it's not very likely.
To his victims, it's hard to extend forgiveness or compassion to somebody who won't help prosecutors unravel the details of his crime, irrespective of Madoff's claim that he is "deeply sorry and ashamed".
One investor, 71-year-old Judith Welling, raised her arm in a victory salute as she exited the courthouse on Thursday. She put $1.5m into Madoff's fund and thought her nest egg had grown to $2.5m until she learned that the financier's empire was based on a pack of lies.
"Frankly, in my book, he's the lowest of the low," she said.
Sunday, March 2, 2008
Exxon suxx. McCain duxx.
http://www.gregpalast.com/exxon-suxx-mccain-duxx
Exxon suxx. McCain duxx.
by Greg Palast
For TomPaine.com and OurFuture.org
Thursday, 28 February 2008
Nineteen goddamn years is enough. I’m sorry if you don’t like my language, but when I think about what they did to Paul Kompkoff, I’m in no mood to nicey-nice words.
Next month marks 19 years since the Exxon Valdez dumped its load of crude oil across the Prince William Sound, Alaska. A big gooey load of this crude spilled over the lands of the Chenega Natives. Paul Kompkoff was a seal-hunter for the village. That is, until Exxon’s ship killed the seal and poisoned the rest of Chenega’s food supply.
While cameras rolled, Exxon executives promised they’d compensate everyone. Today, before the US Supreme Court, the big oil company’s lawyers argued that they shouldn’t have to pay Paul or other fishermen the damages ordered by the courts.
They can’t pay Paul anyway. He’s dead.
That was part of Exxon’s plan. They told me that. In 1990 and 1991, I worked for the Chenega and Chugach Natives of Alaska on trying to get Exxon to pay up to save the remote villages of the Sound. Exxon’s response was, “We can hold out in court until you’re all dead.”
Nice guys. But, hell, they were right, weren’t they?
But Exxon didn’t do it alone. They had enablers. One was a failed oil driller named “Dubya.” Exxon was the second largest contributor to George W. Bush’s political career. Enron was firstr. They were a team, Exxon and Enron.
To protect their corporate backsides, Enron’s Chairman Ken Lay, prior to his felony convictions, funded a group called Texans for Law Suit Reform. The idea was to prevent consumers, defrauded stockholders and devastated Natives from suing felonious corporations and their chiefs.
When Dubya went to Washington, Enron and Exxon got their golden pass in the appointment of Chief Justice John Roberts. On Wednesday, as the court heard Exxon’s latest stall, Roberts said, in defense of Exxon’s behavior in Alaska, “What more can a corporation do?”
The answer, Your Honor, is plenty.
For starters, Mr. Roberts, Exxon could have turned on the radar. What? On the night the Exxon Valdez smacked into Bligh Reef, the Raycas radar system was turned off. Exxon shipping honchos decided it was too expensive to maintain it and train their navigators to use it. So, the inexperienced third mate at the wheel was driving the supertanker by eyeball, Christopher Columbus style. I kid you not.
Here’s what else this poor ‘widdle corporation could do: stop lying.
On the night of March 24, 1989, the Exxon Valdez was not even supposed to leave harbor. Here’s why. Tankers are not allowed to sail unless unless a spill containment barge is operating nearby. That night, the barge was in dry-dock, locked under ice. Exxon kept that fact hidden, concealing the truth even after the tanker grounded. An Exxon official radioed the emergency crew, “Barge is on its way.” It wasn’t.
Had the barge been in operation, it would have surrounded the leaking ship with rubber skirts - and Paul’s home, and Alaska’s coast, would have been saved. But Exxon couldn’t wait for its oil.
Paul’s gone – buried with Exxon’s promises. But the oil’s still there. Go out to Chenega lands today. At Sleepy Bay, kick over some gravel and it will smell like a gas station.
Tort Tart
What the heck does this have to do with John McCain?
The Senator is what I’d call a ‘Tort Tart.’ Ken Lay’s “Law Suit Reform” posse was one of the fronts used by a gaggle of corporate lobbyists waging war on your day in court. Their rallying cry is ‘Tort Reform,’ by which they mean they want to take away the God-given right of any American, rich or poor, to sue the bastards who crush your child’s skull through product negligence, make your heart explode with a faulty medical device, siphon off your pension funds, or poison your food supply with spilled oil.
All of the Democratic candidates have seen through this ‘tort reform’ con – and so did a Senator named McCain who, in 2001, for example, voted for the Patients Bill of Rights allowing claims against butchers with scalpels. Then something happened to Senator McCain: the guy who stuck his neck out for litigants got his head chopped off when he ran for President in the Republican Party. One lobbyists’ website blasted McCain’s “go-it-alone moralism.”
So the Senator did what I call, The McCain Hunch. Again and again he grabbed his ankles and apologized to the K Street lobbyists, reversing his positions on, well, you name it. In 2001, he said of Bush’s tax cuts, “I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us at the expense of middle-class Americans.” Now, in bad conscience, the Senator vows to make these tax cuts permanent.
On “Tort Reform,” the about-face was dizzying. McCain voted to undermine his own 2001 Patients Bill of Rights with votes in 2005 to limit suits to enforce it. He then added his name to a bill that would have thrown sealhunter Kompkoff’s suit out of federal court.
In 2003, McCain voted against Bush’s Energy Plan, an industry oil-gasm. This week, following Exxon’s report that it sucked in $40.6 billion in earnings, the largest profit haul in planetary history, Senators Clinton, Obama and several others in both parties sponsored a bill to require a teeny sliver of oil industry super-profits go to alternative energy sources. Technically, it involved ending a $14 billion tax giveaway granted oil companies by the Bush Administration in 2004. Senator McCain wouldn’t support George and his oil patch buddies then. But now, Candidate McCain won’t back the repeal of this gawdawful tax break.
In this showdown with Big Oil, McCain is AWOL, missing in action.
Well, Paul, at least you were spared this.
I remember when I was on the investigation in Alaska, bankrupted fishermen, utterly ruined – Kompkoff’s co-plaintiffs in the suit before the Supreme Court – floated their soon-to-be repossessed boats into the tanker lanes with banners reading, “EXXON SUXX.”
To which they could now add, about a one-time stand-up Senator: “McCain duxx.”
***
Greg Palast is author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy. Subscribe to his investigative reports at http://www.gregpalast.com/
Exxon suxx. McCain duxx.
by Greg Palast
For TomPaine.com and OurFuture.org
Thursday, 28 February 2008
Nineteen goddamn years is enough. I’m sorry if you don’t like my language, but when I think about what they did to Paul Kompkoff, I’m in no mood to nicey-nice words.
Next month marks 19 years since the Exxon Valdez dumped its load of crude oil across the Prince William Sound, Alaska. A big gooey load of this crude spilled over the lands of the Chenega Natives. Paul Kompkoff was a seal-hunter for the village. That is, until Exxon’s ship killed the seal and poisoned the rest of Chenega’s food supply.
While cameras rolled, Exxon executives promised they’d compensate everyone. Today, before the US Supreme Court, the big oil company’s lawyers argued that they shouldn’t have to pay Paul or other fishermen the damages ordered by the courts.
They can’t pay Paul anyway. He’s dead.
That was part of Exxon’s plan. They told me that. In 1990 and 1991, I worked for the Chenega and Chugach Natives of Alaska on trying to get Exxon to pay up to save the remote villages of the Sound. Exxon’s response was, “We can hold out in court until you’re all dead.”
Nice guys. But, hell, they were right, weren’t they?
But Exxon didn’t do it alone. They had enablers. One was a failed oil driller named “Dubya.” Exxon was the second largest contributor to George W. Bush’s political career. Enron was firstr. They were a team, Exxon and Enron.
To protect their corporate backsides, Enron’s Chairman Ken Lay, prior to his felony convictions, funded a group called Texans for Law Suit Reform. The idea was to prevent consumers, defrauded stockholders and devastated Natives from suing felonious corporations and their chiefs.
When Dubya went to Washington, Enron and Exxon got their golden pass in the appointment of Chief Justice John Roberts. On Wednesday, as the court heard Exxon’s latest stall, Roberts said, in defense of Exxon’s behavior in Alaska, “What more can a corporation do?”
The answer, Your Honor, is plenty.
For starters, Mr. Roberts, Exxon could have turned on the radar. What? On the night the Exxon Valdez smacked into Bligh Reef, the Raycas radar system was turned off. Exxon shipping honchos decided it was too expensive to maintain it and train their navigators to use it. So, the inexperienced third mate at the wheel was driving the supertanker by eyeball, Christopher Columbus style. I kid you not.
Here’s what else this poor ‘widdle corporation could do: stop lying.
On the night of March 24, 1989, the Exxon Valdez was not even supposed to leave harbor. Here’s why. Tankers are not allowed to sail unless unless a spill containment barge is operating nearby. That night, the barge was in dry-dock, locked under ice. Exxon kept that fact hidden, concealing the truth even after the tanker grounded. An Exxon official radioed the emergency crew, “Barge is on its way.” It wasn’t.
Had the barge been in operation, it would have surrounded the leaking ship with rubber skirts - and Paul’s home, and Alaska’s coast, would have been saved. But Exxon couldn’t wait for its oil.
Paul’s gone – buried with Exxon’s promises. But the oil’s still there. Go out to Chenega lands today. At Sleepy Bay, kick over some gravel and it will smell like a gas station.
Tort Tart
What the heck does this have to do with John McCain?
The Senator is what I’d call a ‘Tort Tart.’ Ken Lay’s “Law Suit Reform” posse was one of the fronts used by a gaggle of corporate lobbyists waging war on your day in court. Their rallying cry is ‘Tort Reform,’ by which they mean they want to take away the God-given right of any American, rich or poor, to sue the bastards who crush your child’s skull through product negligence, make your heart explode with a faulty medical device, siphon off your pension funds, or poison your food supply with spilled oil.
All of the Democratic candidates have seen through this ‘tort reform’ con – and so did a Senator named McCain who, in 2001, for example, voted for the Patients Bill of Rights allowing claims against butchers with scalpels. Then something happened to Senator McCain: the guy who stuck his neck out for litigants got his head chopped off when he ran for President in the Republican Party. One lobbyists’ website blasted McCain’s “go-it-alone moralism.”
So the Senator did what I call, The McCain Hunch. Again and again he grabbed his ankles and apologized to the K Street lobbyists, reversing his positions on, well, you name it. In 2001, he said of Bush’s tax cuts, “I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us at the expense of middle-class Americans.” Now, in bad conscience, the Senator vows to make these tax cuts permanent.
On “Tort Reform,” the about-face was dizzying. McCain voted to undermine his own 2001 Patients Bill of Rights with votes in 2005 to limit suits to enforce it. He then added his name to a bill that would have thrown sealhunter Kompkoff’s suit out of federal court.
In 2003, McCain voted against Bush’s Energy Plan, an industry oil-gasm. This week, following Exxon’s report that it sucked in $40.6 billion in earnings, the largest profit haul in planetary history, Senators Clinton, Obama and several others in both parties sponsored a bill to require a teeny sliver of oil industry super-profits go to alternative energy sources. Technically, it involved ending a $14 billion tax giveaway granted oil companies by the Bush Administration in 2004. Senator McCain wouldn’t support George and his oil patch buddies then. But now, Candidate McCain won’t back the repeal of this gawdawful tax break.
In this showdown with Big Oil, McCain is AWOL, missing in action.
Well, Paul, at least you were spared this.
I remember when I was on the investigation in Alaska, bankrupted fishermen, utterly ruined – Kompkoff’s co-plaintiffs in the suit before the Supreme Court – floated their soon-to-be repossessed boats into the tanker lanes with banners reading, “EXXON SUXX.”
To which they could now add, about a one-time stand-up Senator: “McCain duxx.”
***
Greg Palast is author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy. Subscribe to his investigative reports at http://www.gregpalast.com/
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