This is a particle repost that bears repeating

Corporations, which control the levers of power in government and finance, promote and empower the psychologically maimed. These companies exist in a pathological world where identity and personal worth are determined solely by the perverted code of the corporation.  It rewards the most compliant, craven and manipulative, and discards the losers who can’t play the game, those who do not accumulate wealth or status fast enough, or who fail to fully subsume their individuality into the corporate collective.The employees who advance are vacant and supine. They are skilled drones, often possessed of a peculiar kind of analytical intelligence and drive, but morally, emotionally and creatively crippled. Their intellect is narrow and inhibited.  They demand that they not be treated as individuals but as members of the great collective of Goldman Sachs or AIG or Citibank. They talk together. They exchange information. They make deals. They compromise. They debate. But they do not think. They do not create. All capacity for intuition, for unstructured thought, for questions of meaning deemed impractical or frivolous by the firm, the qualities that always precede discovery and creation, are banished.” The iron goals of greater and greater profit, order and corporate conformity dominate their squalid belief systems. And by the time these corporate automatons are managing partners or government bureaucrats they cannot distinguish between right and wrong. They are deaf, dumb and blind to the common good.
These deeply stunted and maladjusted individuals, hold the fate of the nation in their hands. They have access to trillions of taxpayer dollars and are looting the U.S. Treasury to sustain reckless speculation. The financial and corporate system alone validates them. It defines them. It must be served.

My Dad

I love you the stars and blue whales. You taught me to dance on top of your feet when I was small enough to hold your hands above my head and look up at you to see that you were at least 10 feet tall. Because of you, I got the unbelievable privilege of giving birth to 4 amazing souls, that asked me to teach them how to dance with girls! Because of you, I have an independent mind, a free thinking spirit, and an incredible amount of enthusiasm for the best of what can be. Because of you I learned to ride dirt bikes on  put-in-bay,I learned to fire a hand gun safely and how to build a fire safely. I learned that even if I cannot understand the way another person express's  the love they feel for me, it is the proper way for them to exhibit is correct to them and accept it to be true to their heart. I learned that the popular way is not the way for my heart to go, and that I will and always will do, the right thing, for my heart, my loves, my beliefs...Because of you I will always fight for the underdog. You Dad, are and always will be the first true love of my life.

 

Every definition of a Ponzi scheme

Barry Rotholtz at The Big Picture has a great find today, a McClatchy article by Greg Gordon, published December 30. From the Gordon article:

McClatchy has obtained previously undisclosed documents that provide a closer look at the shadowy $1.3 trillion market since 2002 for complex offshore deals, which Chicago financial consultant and frequent Goldman Sachs critic Janet Tavakoli said at times met “every definition of a Ponzi scheme.”

Another astounding statement from the article is:

In some of these transactions, investors not only bought shaky securities backed by residential mortgages, but also took on the role of insurers by agreeing to pay Goldman and others massive sums if risky home loans nose-dived in value — as Goldman was effectively betting they would.

If these statements are true, then it seems to me that criminal action is called for in the first case, since Ponzi schemes are illegal (unless perpetrated by governments that can print money).

And if criminal action has not occurred in the second case, laws are deficient. It is inconceivable to me that a situation should exist where an investment is sold that could legally require the investor to pay more money if the investment declined in value. The only situation that I can see where that could be legitimate would be if the investment was sold on margin. Then a decline in value could trigger a margin call. However, if that was the case (margin call), then McClatchy would be guilty of gross misrepresentation of facts and, I would think, liable for slander unless a retraction was issued.

Another piece by Ritholtz carries a video in which former U.S. Senator, New Jersey Governor and Goldman Sachs executive John Corzine says that the unpopularity of Goldman Sachs is a matter of envy. When paired with McClatchy article, the opinion seems ludicrous.

All this brings me to the March Investment Outlook newsletter from Bill Gross of PIMCO. He raises the question of whether added debt can solve a debt crisis. He has some thoughts about when this might be a viable strategy and when not. But what he comes around to is the thought that as sovereign debt becomes more and more used to resolve private debt issues, shouldn't the yields of the two classes of debt converge? Gross says:

It is interesting to observe that over the past few months when investors have begun to question the ability of governments to exit the debt crisis by “creating more debt,” that increases in bond market yields have been confined almost exclusively to Treasury/Gilt-type securities, and long maturities at that. There has even been a developing debate in the press (and here at PIMCO) as to whether a highly-rated corporation could ever consistently trade at lower yields compared to its home country’s debt. I suspect not, but the narrowing in spreads since late November solicits an interesting proposition: Government bailouts and guarantees such as those evidenced and envisioned in Dubai and Greece, as well as those for the last 18 months with banks and large industrial corporations across the globe, suggest a more homogeneous “unicredit” type of bond market. If core sovereigns such as the U.S., Germany, U.K., and Japan “absorb” more and more credit risk, then the credit spreads and yields of these sovereigns should look more and more like the markets that they guarantee. The Kings, in other words, in the process of increasingly shedding their clothes, begin to look more and more like their subjects. Kings and serfs begin to share the same castle.

Note: The underlining represents Gross's emphasis.

Gross goes on to say:

This metaphor doesn’t really answer the critical question of whether a debt crisis can be cured by issuing more debt. The answer remains: It depends – on initial debt levels and whether or not private economies can be reinvigorated. But it does suggest the likely direction of sovereign yields IF global policymakers are successful with their rescue efforts: Sovereign yields will narrow in spreads compared to other high-quality alternatives. In other words, sovereign yields will become more credit like. When sovereign issues become more credit-like, as evidenced in Greece, Spain, Portugal, and a host of others, they move closer in yield to the corporate and Agency debt that supposedly rank lower in the hierarchy. That process of course can be accomplished in two ways: high-quality non-sovereigns move down to lower levels or governments move up. The answer to which one depends significantly on future inflation, the aftermath of quantitative easing programs, and the vigor of the private economy going forward. But the contamination of sovereign credit space with past and future bailouts is a leveler, a homogenizer, a negative for those sovereigns that fail to exert necessary discipline. Only if global economies stumble and revisit the recessionary depths of a year ago should the process reverse direction and place Treasuries, Gilts, et al. back in the driver’s seat.

All this provokes the following questions:

1. If some of the debt securities created by the investment banks are in fact Ponzi schemes and "heads I win tails you lose" deals with the banks' customers, how can a convergence of credit rating between sovereign debt and these securities possibly put Treasuries, Gilts, etc. back in the driver's seat under any circumstance if the dubious private securities are, in effect, government guaranteed?

2. Wouldn't repeating the recessionary depths of 2009 be a disastrous outcome? Wouldn't the driver's seat be in a flaming wreck?

3. Isn't the failure to address the TBTF (too big to fail) problem in a timely way just compounding the exposure to risk of a "super nova" end game?

4. Why is it that the potential here that seems so terrifying to me is apparently not on the radar screens of the various governments around the world, the central banks and the investment banking behemoths that seem to have resumed the operations that preceded and led to the collapse in the fall of 2008?

5. How can John Corzine, a man who presumably has great insight into the inner workings of the investment banking world, both from within and as an elected official for more than a decade, have such a dismissive attitude toward the situation?

6. Am I stupid?

Declare war on Goldman Sachs

Declare war on Goldman Sachs and other global financial firms that created this mess. Send the troops, the planes, the tanks, and the ships. Attack every outpost of the saboteurs on European soil. Blockade the airports and ports. Make Wall Street traders and CEO's fear for their lives, or at least for their freedom to travel. Build some Guantanamo-like facility to hold these enemy financial combatants until they can be tried, convicted, and properly punished.

OK, if a literal armed attack on Goldman is too far-fetched, then go after the firm using the full force of the regulatory and legal systems. Close the offices and go through the files with a fine-tooth comb. Issue subpoenas to all non-clerical staff for court appearances. Make the internal emails public. Post the names of all managers and traders on Interpol. Arrest anyone who tries to board a plane, train, or boat; confiscate their passports; revoke their visas and work permits; and put a hold on their bank accounts until culpability can be assessed. Make life at least as miserable for them as it now is for Europe’s tens of millions of unemployed workers.

We know that the Obama administration will not go after the banksters that created this global financial calamity. It has been thoroughly co-opted by Wall Street’s fifth column—who hold most of the important posts in the administration. Europe has even more at stake and has shown somewhat more willingness to take action. Perhaps our only hope for retribution lies there.  

Some might believe the term “banksters” is too mean. Surely Wall Street was just doing its job—providing the financial services wanted by the world. Yes, it all turned out a tad unfortunate but no one could have foreseen that so many of the financial innovations would turn into black swans. And hasn’t Wall Street learned its lesson and changed its practices? Fat chance. We know from internal emails that everyone on Wall Street saw this coming—indeed, they sold trash assets and placed bets that they would crater. The crisis was not a mistake—it was the foregone conclusion. The FBI warned of an epidemic of fraud back in 2004—with 80 per cent  of the fraud on the part of lenders. As Bill Black has been warning since the days of the Saving and Loan crisis, the most devastating kind of fraud is the “control fraud”, perpetrated by the financial institution’s management. Wall Street is, and was, run by control frauds. Not only were they busy defrauding the borrowers, like Greece, but they were simultaneously defrauding the owners of the firms they ran. Now add to that list the taxpayers that bailed out the firms. And Goldman is front and center when it comes to bad apples.

Lest anyone believe that Goldman’s executives were somehow unaware of bad deals done by rogue traders, William Cohan reports that top management unloaded their Goldman stocks in March 2008 when Bear Stearns  crashed, and again when Lehman collapsed in September 2008. Why? Quite simple: they knew the firm was full of toxic waste that it would not be able to continue to unload on suckers—and the only protection it had came from AIG, which it knew to be a bad counterparty. Hence on March 19, Jack Levy (co-chair of M&As) sold over $5 million of Goldman’s stock and bet against 60,000 more shares; Gerald Corrigan (former head of the NY Fed who was rewarded for that tenure with a position as managing director of Goldman) sold 15,000 shares in March; Jon Winkelried (Goldman’s co-president) sold 20,000 shares. After the Lehman fiasco, Levy sold over $6 million of Goldman shares and Masanori Mochida (head of Goldman in Japan) sold $56 million worth. The bloodletting by top management only stopped when Goldman got Geithner’s NY Fed to produce a bail-out for AIG, which of course turned around and funneled government money to Goldman. With the government rescue, the control frauds decided it was safe to stop betting against their firm. So much for the “savvy businessmen” that President Obama believes to be in charge of Wall Street firms like Goldman.

From 2001 through November 2009 (note the date—a full year after Lehman) Goldman created financial instruments to hide European government debt, for example through currency trades or by pushing debt into the future. But not only did Goldman and other financial firms help and encourage Greece to take on more debt, they also brokered credit default swaps on Greece’s debt—making income on bets that Greece would default. No doubt they also took positions as the financial conditions deteriorated—betting on default and driving up CDS spreads.

But it gets even worse:  An article by the German newspaper, Handelsblatt, (“Die Fieberkurve der griechischen Schuldenkrise”, Feb. 20, 2010) strongly indicates that AIG, everybody’s favorite poster boy for financial deviancy, may have been the party which sold the credit default swaps on Greece (English translation here -  http://www.eurosavant.com/2010/02/21/cds-just-another-evanescent-bubble/ ).

Generally, speaking, these CDSs lead to credit downgrades by ratings agencies, which drive spreads higher. In other words, Wall Street, led here by Goldman and AIG, helped to create the debt, then helped to create the hysteria about possible defaults. As CDS prices rise and Greece’s credit rating collapses, the interest rate it must pay on bonds rises—fueling a death spiral because it cannot cut spending or raise taxes sufficiently to reduce its deficit.

Having been bailed out by the Obama Administration, Wall Street firms are already eyeing other victims (and for allowing these kinds of activities to continue, the US Treasury remains indirectly complicit, another good reason why one shouldn’t expect any action coming out of Washington). Since the economic collapse is causing all Euro-nations to run larger budget deficits and at the same time is raising CDS prices and interest rates, it is easy to pick off nation after nation. This will not stop with Greece, so it is in the interest of Euro- land to stop the vampires now.

With Washington unlikely to do anything to constrain Goldman, it looks like the European Union, which is launching a major audit, just might banish the bank from dealing in government debt. The problem is that CDS markets are essentially unregulated so such a ban will not prevent Wall Street from bringing down more countries—because they do not have to hold debt in order to bet against it using CDSs.  These kinds of derivatives have already brought down an entire continent – Asia – in the late 1990s, and yet authorities are still standing by and basically doing nothing when CDSs are being used again to speculatively attack Euro-land.  The absence of sanctions last year, when we had a chance to deal with this problem once and for all, has simply induced even more outrageous and fundamentally anti-social behavior. It has pitted neighbor against neighbor—with, for example, Germany and Greece lobbing insults at one another (Greece has requested reparations for WWII damages; Germany has complained about subsidizing what it perceives to be excessive social spending in Greece).

Of course, as far as Greece goes, the claim now is that these types of off balance sheet transactions in which Goldman and others engaged were not strictly "illegal" under EU law.  But these are precisely the kinds of "shadow banking transactions" that almost brought down the global financial system 18 months ago. Literally a year after the Lehman bankruptcy - MONTHS after Goldman itself was saved from total ruin, it was again engaging in these kinds of deals.

And it wasn't exactly a low-level functionary or “rogue trader” who was carrying out these transactions on behalf of Goldman.  Gary Cohn is Lloyd "We're doing God's work" Blankfein's number 2 man.  So it's hard to believe that St. Lloyd did not sanction the activities as well in advance of collecting his “modest” $9m bonus for last year’s work. 

If these are examples of Obama’s “savvy businessmen”, then heaven help the global economy.  The transaction highlighted, if reported that way in the private sector, would be accounting fraud. Fraud - "Go to jail, do not pass Go" fraud. That senior bankers had no problem in structuring/recommending/selling such deals to cash-strapped governments should probably not surprise us at this point. However, it would be interesting to know if the prop trading desks of those same investment banks, purely by coincidence of course, then took long CDS (short the credit) positions in the credit of the countries doing the hidden swaps.  A proper legal investigation by the EU could reveal this and certainly help to uncover much of the financial chicanery which has done so much destruction to the global economy over the past several years.

In this country, we have had a “war on terror” and a “war on drugs” and yet we refuse to declare war on these financial weapons of mass destruction. We all remember Jimmy Carter’s “MEOW”—the attempt to attack creeping inflation that was said to sap the strength of the US economy in the late 1970s. But Europe—and indeed the entire globe—faces a much more dangerous and immediate threat from Wall Street’s banksters. They created this mess and are not only profiting from it, but are actively preventing recovery. They are causing unemployment, starvation, destruction of lives, and even violence and terrorism across the world. They are certainly more dangerous than the inflation of the 1970s, and arguably have disrupted more lives than Osama bin Laden—whose actions led the US to undertake military actions in at least three countries. That should provide ample justification for Greece’s declaration of figurative war on Manhattan.

However, in an ironic twist of fate, it was just announced that Petros Christodoulou will take over as the head of Greece’s national debt management agency. He worked as the head of derivatives at JP Morgan, and also previously worked at Goldman—the firm that got Greece into all this trouble!

Dimitri Papadimitriou has recently made what we consider to be an important plea for moderation of the hysteria about Greece’s debt. Writing in the Financial Times, he complained that “The plethora of articles in your pages and others, some arguing in favor and other against a bail-out, contribute to market confusion and drive the country’s financing costs to record levels. It is not yet clear that a bail-out is even needed, but this market confusion is rendering the government’s ability to achieve its deficit goals ever more difficult.” 

Indeed, we suspect that the same financial firms that helped to get Greece into its predicament are profiting from—and stoking the fires of—the hysteria. He goes on, “what Greece really needs now is a holiday from further market confusion being created by contradictory, alarmist public commentary”. Greece, Euroland in general, and the rest of the world all need a holiday from the manipulation and destruction of our economies by Wall Street firms that profit from speculative bubbles, from burying firms, households, and governments under mountains and debt, and even from the crises that they create. Governments all over the globe should use all legal means at their disposal to ferret out the bad faith and even fraudulent deals that global financial behemoths are foisting on us.

Marshall Auerback is a market analyst and commentator. He is a brainstruster for the Franklin and Eleanor Roosevelt Intitute. He can be reached at MAuer1959@aol.com

L. Randall Wray, a professor of economics at the University of Missouri at Kansas City (UMKC).

The End of the Goldman Sachs Glaze

by Zachary Adam Cohen on February 26, 2010

Where I’m from, which, incidentally, is still where I am and always hope to be, working for Goldman Sachs was the pinnacle of achievement and success.  I went to the best private schools, I was given every opportunity; tutors, music lessons, access to high culture in the form of theater and museums. My college education was paid for. I came into adult life without any obligations or debts. I was bred to be either a lawyer or a banker. And coming out of college just after the turn of the millennium, Goldman Sachs was where everyone wanted to be.

How Far The Mighty Have Fallen

I am going to say this loud and clearly. If I worked for Goldman Sachs today, I resign as soon as I possibly could. This is starting to make me sick to my stomach:

As far back as 2000 and 2001, Goldman helped Athens quietly borrow billions to mask its poor finances by creating derivatives that essentially transformed loans into currency trades that Greece did not have to disclose under European rules.

They make money helping a sovereign country hide its debt. And then…

Mr. Bernanke said the Securities and Exchange Commission was also concerned about how derivatives — financial instruments that are largely unregulated and do not trade on public exchanges — have contributed to Greece’s problems. “Obviously, using these instruments in a way that intentionally destabilizes a company or a country is counterproductive,” he said.

Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the Senate Banking Committee, also took aim at credit-default swaps, which allow banks and hedge funds to wager on whether a company or country might default.
Critics say the swaps have contributed to Greece’s problems and increased the odds of a financial collapse.
“We have a situation in which major financial institutions are amplifying a public crisis for private gain,” he said.

“Amplifying a public crisis for private gain.” What was done was technically legal. And I don’t care. It is still clearly wrong, and that is precisely what is so decrepit about our society right now. Just because you can do something, does not mean you should.
Although that is not how I was raised. I was raised to “get mine.” Not by my parents, or my teachers, or tutors or professors. Nah, they were all good people. Moral, honest, authentic. It was my culture. It was the culture around me that said it was OK, in fact, that it was advisable, to seek out my own private gain at all costs. No thought should be paid to the effects of my private gain. No thought given to what society gained or, more likely, lost by my singular attention on my own situation.

Next Steps For Goldman Sachs

Prosecution is probably the most appropriate action that could be taken, but since there is no justice in this world, or if there is, its probably being directed by former Goldman employees, I’m not holding my breath. So what are the next steps for Goldman?
Lloyd Blankfein, Goldman’s Chief, should immediately hold a very public press conference and apologize. But what would he be apologizing for?

1. For profiting on both ends of a very fucked up trade whereby Goldman made money helping Greece hide its debt obligations so that it could gain entry into the Eurozone, and then, when Greece was weakened, deploying sophisticated derivatives to bet on Greece’s default. Blankfein should simply say, “We got this wrong, and although nothing illegal occurred, it still wasn’t right and we are immediately going to refund our profits from these activities and donate our time and advice to the Greek government, to help them find a way out of this.”
2. Blankfein should then go on and apologize for the larger problem of which Goldman is a very big part. That problem is the short-term lunacy of Wall Street’s demands, of minimizing long term financial, environmental and cultural sustainability to the demands of quarterly earnings. He should apologize for putting Goldman’s profits above societies well-being.
3. He should announce a commission made up of internal and external independent experts to examine Goldman’s actions, philosophies and culture over the past decade. That commission should be given the power to make sweeping changes to Goldman’s operating ethos. Futhermore, he should announce that 6 months from today, the results of that commission will be made public and that he will be present at another press conference to take questions from the press, for as long as they wish to ask them.
4. Blankfein has an opportunity to show real leadership. As the head of the most prominent investment bank, and a private citizen, he can show, by example, that changing the culture of greed, of “getting mine,” is no longer functioning, and that furthermore, it is clearly and without a doubt hurting the whole of society. Our political class is not capable of this kind of leadership. Republican and Democrat alike. But private citizens can show true leadership, and in times like these, can have even more of an effect than even our elected officials.
5. Blankfein should immediately announce pay caps. I don’t care how hard you work, or the risks involved in what you do; no one should make more than $10 million a year. He should put these caps in place for 10 years, and mandate there will be no workarounds, no hiding of actual payments. He should urge every other bank and financial institution to follow his lead. He should openly dare people to quit. “If you think that $10 million is too little, then we don’t want you here.” Let them leave. The people who do, and there will certainly be a handful, are NOT the people that Goldman wants. I don’t know who would want them, but remind me not to invest my money with them, mmkay?

Look, I had a short, barely noticeable career in finance. I wasn’t that good. I have many friends at Goldman Sachs and sprinkled all over the “Street.” I love and care for many of these people. It is true I am growing apart from them, a natural consequence of a new line of work, a new, less conventional lifestyle; in general I am becoming interested in things that no longer interest many of my friends. I try hard not to treat my friends in finance so badly. But I am finding it tougher and tougher to explain away why so many smart and talented people would sacrifice their lives for the illusions of security and financial well-being. I wish I could reach out their future selves and just tell them it’s not worth it.
The entire financial services industry has lost its moorings. It’s lost its fucking mind, and it needs drastic and immediate shock therapy knock it back into place. And there is a place for financial services in the 21st Century. But it is going to have to do some serious self-examination and self-correction. Because if it doesn’t, a whole lot of people are going to find themselves in jail. And whether its a jail with cells or a prison of the mind, an emptiness of the soul, doesn’t really make a difference. The fact is they’ll be imprisoned.

Markopolos's book excerpt

The SEC proved equally inept when it came to Markopolos's other cases. He claims he gave the agency 20 cases of market timing, which proved that various companies had stolen billions of dollars from investors. The SEC, Markopolos says, turned down all of them. One of his examples included a huge mutual fund that had monthly turnover percentages in its international equity funds of 1,100 to 1,300 percent range per month.
Markopolos is withering in his dismissal of just about every SEC employee whom he approached, including New York Branch Chief Meghan Cheung -- "the strongest impression that I got from her was that I was bothering her" -- and Assistant Director Doria Bachenheimer. The notable exception was Ed Manion in the SEC's Boston office who "was more determined to expose Bernie Madoff's scheme than I was," but was stymied by jurisdictional issues.
When he first brought his concerns -- and a voluminous file -- to the SEC in 2000, Grant Ward, the agency's New England regional director of enforcement, was woefully unprepared to handle the assignment, writes Markopolos. "As I explained this massive fraud to Ward, it very quickly became clear he didn't understand a single word I said after hello... if blank looks were dollar bills, I would have walked out of that room a rich man. He was coldly polite, but he didn't ask a single probing question. I never knew if that represented a lack of interest, a lack of comprehension, or simply a desire to go to lunch."
Even his buddy, Manion, was devastated with Ward's non-response. When Markopolos asked him if he thought Ward got it, Manion replied: "Not one single word of it."
For years, Marokopolos took extra precautions, out of concern for the safety of his family. He says he lived under a death sentence, terrified that his pursuit of Madoff was putting his family in jeopardy since billions of dollars were at stake, "and apparently some of that money belonged to the Russian mafia and the drug cartels - people who would kill to protect their investments... So I wouldn't start my car without first checking under the chassis and in the wheel wells. At night I walked away from shadows and I slept with a loaded gun nearby..."
He started carrying an lightweight Model 642 Smith and Wesson everywhere he went and asked the local police department in his small town of Whitman, Massachusetts for 24/7 protection.
In addition, his wife got her handgun license, he upgraded the alarm system around his house and imagined the ways that Madoff's hit men would kill him: "if Madoff wanted to kill me he was going to use professionals, and that meant a double-tap with two bullets to the back of my head."
Media Failure: Didn't Anyone Want a Pulitzer?
And Makropolos slams the media, expressing his incredulity at their lack of initiative. In early March of 2002, Markopolos claims he sent a copy of his SEC submission on Madoff to a senior reporter at Forbes but it was ignored. "The lack of serious interest was astonishing. I think the editors at Forbes, like so many others we were to encounter, were victims of their own hubris... In fact, I suspect that the only way he would have taken it less seriously was if it had been written in crayon. He was just too smart to recognize the truth."
Two reporters who did stories on Madoff were MARHedge reporter Mike Ocrant, who become an integral part of Makropolos's team and Barron's reporter Erin Arvedlund, who followed up on Ocrant's original story. But Markopolos was frustrated that both stories failed to make a ripple, especially at the SEC. And he attributes the agency's deafening silence to the fact that they never read the stories because they don't have a publication budget, "meaning staff members have to pay out of their own pockets for any industry material," including even the Wall Street Journal.
The Most Tragic of Ironies
The most poignant part of the book involves Markopolos's tragic failure to prevent French money manager Thierry de la Villehuchet from losing billions to Madoff -- and then committing suicide weeks after Madoff's arrest. In the bitterest of ironies, Markopolos first learned about Madoff in 2000 from de la Villehuchet, spurring Markopolos's decade-long obsession.
When the Frenchman bragged about how his funds were handled by Madoff, who guaranteed him an amazing one to two-percent monthly return, that raised eyebrows and Markopolos and his associates began to dig into Madoff.
Within minutes of scanning Madoff's numbers, Markopolos says he knew he was a fraud, telling one of his associates, "There's no way this is real. This is bogus". The more he looked, the more problems began emerging as "clearly as a red wagon in a field of snow... and that's when we began chasing Bernie Madoff," writes Markopolos, who has a fondness for colorful metaphors.
Markopolos and his associates repeatedly warned de la Villehuchet over the next eight years to no avail. At one point, when they warned him and questioned his faith in Madoff, de la Villehuchet said, "If I'm wrong... Then I'm a dead man," explaining that he had invested billions from Europe's wealthiest families in Madoff.
Markopolos says he wept on and off for three days when he learned that de la Villehuchet had slit his wrists with a boxcutter:
"And truthfully, I've never stopped wondering if I could have saved his life."

Brooksley Born, Brooksley Born, Brooksley Born

Greenspan humiliated and bullied Brooksley Born of the Commodity Futures Trading Commission under Clinton when she accurately predicted that credit default swaps were going to crash the market. Had Greenspan had the capacity to listen, the coming market disaster might have been averted. I'm not saying that other economists didn't do their bit to bring us all down, but Greenspan was out in front, arrogantly confidant in his own judgment until it all came crashing down.