http://www.forbes.com/2008/12/12/mad...oesus_inl.html

Sorry I meant 70 billion as the story unfolds....


James Campbell
January 11, 2009 12:00am

HE was one of the most respected men on Wall Street, a founder and former chairman of the NASDAQ and a giant of philanthropy.

But it was all built on lies.

One month after Bernard Madoff was arrested by the FBI at his New York apartment, the scale of the destruction he caused is still coming to light.

The FBI alleges Madoff has confessed to running a pyramid - or Ponzi - scheme worth $70 billion, which, if proved, would make him history's biggest swindler.

And while it is a cliche to say Madoff's victims "read like a Who's Who" - in his case it is literally true.

Film directors Steven Spielberg and Pedro Almodovar, actors Kevin Bacon and wife Kyra Sedgwick, screenwriter Eric Roth as well as Hollywood mogul Jeffrey Katzenberg and Nobel Laureate Elie Wiesel are the best-known celebrities to emerge so far from the wreckage of Bernard L. Madoff Investment Securities.

Madoff has also inflicted damage to the rich across European and American high society.

The names of the victims keep trickling out - Spain's richest woman, Alicia Koplowitz, was clipped for almost $20 million, Liliane Bettencourt, the 86-year-old heiress to the L'Oreal cosmetics empire, lost an undisclosed sum, while in Austria, Bank Medici founder Sonja Kohn was this week forced to deny she was in hiding from her far-from-thrilled Russian clients as the Government took control of her bank, which had lost over $4.2 billion.

In the US, Walter Noel, the financier-socialite with houses in New York, Palm Beach and the island of Mustique is under a big cloud for shovelling billions to Madoff through his hedge fund.

These so-called "feeder funds" were the key to Madoff's success.

By rounding up the syndicates of the wealthy investors, they allowed Madoff to go from retail to wholesale fraud.

They are also why the scale of Madoff's crimes has taken so long to emerge - many of his victims had no idea their money was invested with him.

So far, none of the managers of the feeder funds have been shown to be complicit in Madoff's schemes.

But it was the shame of the knowledge that he and many of his clients were ruined that drove French aristocrat and fund manager Thierry Magon de La Villehuchet to slit his wrists at his desk in New York a week before Christmas.

The list of institutional investors taken in by Madoff is staggering.

In addition to Bank Medici, the Royal Bank of Scotland, the Royal Bank of Canada, UBS and French banking giant BNP Paribas have also been caught.

And along with the money, some of the biggest reputations have gone up in smoke.

Spare a thought for Stephen Greenspan, the clinical Professor of Psychiatry at the University of Colorado, one of the world's leading experts on financial scams and the author of Annals of Gullibility: Why We Get Duped and How to Avoid it.

Prof Greenspan has lost a big percentage of his retirement savings.

The hardest hit of Madoff's victims is America's Jewish community and the charities it supports.

"It's an atomic bomb in the world of Jewish philanthropy," Mark Charendoff, president of the Jewish Funders Network, was reported to have said.

"There's going to be fallout from this for years to come."

As the shock of Madoff's alleged crimes wears off, two questions keep being asked.

The first is how did a former lifeguard, who started his business on Wall Street with $5000 in 1960, manage to persuade so many wealthy and otherwise sceptical investors to give them their money?

The second is how was he able to get away with it for so long, when the authorities had been given ample warning Madoff was possibly a crook?

Until Madoff was turned in by his two employee sons, Mark and Andrew, after confessing his entire company was "just one big lie", he was in no apparent danger of discovery.

Indeed, he took his last $14 million off an investor five days before his arrest.

http://www.news.com.au/heraldsun/sto...52-664,00.html

 

Well, he has the right name for the job.

 

There is a larger Ponzi Scheme than Madoff's that literally effects all of us... it's called Social Security.

 

Why do you say that?

 

A Ponzi Scheme is by definition an investment where early investors are paid off with funds raised from later ones. Which is exactly what the Social Security plan is. Those who no longer pay into SS: ie retirees, are being paid out a dividend that is being subsidised by payments made by you, and I , and anyone else who is currently paying into the SS system. There is absolutely no way everyone can get a return on their money. At some point the gig is up and the fund is broke...

Madoffs scam has met it's end; SS just hasn't gone belly up yet but it is close. The money just isn't there.

 

Dont confuse people.
If you live more than 10 years and are moderately healthy (1 hospitalization) you will get your money you put in back and then some annually. At best it's loaning the government your money interest free. The longer people live the more imbalanced it gets in the participant's favor unless the population grows which is why some say it's a loss because it has to be subsizided because of high health care cost...
Taxpayers and the Government pay more than almost anyplace in the world for our current health care system is why it doesn't work.

Madoff and his Ponzi Scheme (or Pyramid scheme) took and spent peoples money.
The majority will never see their money again.
People at the top of the pyramid are the only ones who get any of their money back.

 

Today, there are just 3.3 taxpayers for each retiree. This is a sharp drop from 1950, when there were 16 taxpayers per retiree. In order to work properly, Social Security needs about three taxpayers per retiree. But with millions of baby boomers about to retire, and a much smaller number of new workers, by 2018 the program will have fewer than three workers per retiree and begin spending more each year than it takes in. That number will keep dropping until, around 2030, there will be two workers per retiree. At that point, a married couple will have to support themselves, their children -- and their very own retiree.

Since 1939, federal law has required Social Security to “invest” its extra money in Treasury bonds. In other words, the government lends the money to itself. Those funds are then mixed in with all other tax revenue and spent on programs such as education, foreign aid and defense.

So in 2018, when the Social Security program tries to redeem these bonds, the Treasury (having already spent that money over the previous 35 years) won’t be able to repay Social Security from any pre-existing store of cash. Taxpayers will be forced to pay extra taxes in order to fund Social Security’s 40 million retiring baby boomers.
http://www.heritage.org/Press/Commentary/ed111004b.cfm

Sure sounds a lot like a Pyramid scam to me. When you have to "hope" people don't retire, or "hope" that they die, or "hope" that the money will be there then it is a gamble. The money is not there for the future.

 

The high cost of healthcare is a well-known problem. Recently, costs of health insurance premiums have experienced double-digit percentage increases. In the past, small employers have had a harder time than large employers in affording health coverage for their employees, but as health coverage costs have spiraled higher and higher, many large employers are also finding it harder to provide health coverage for workers. The self-employed also struggle to find and afford health insurance.
Health Care Expenditures in the United States, 1970-2010
1970
2002
2010
(Projected)
Total Health Care Spending per Capita (2002 Dollars)
$1313
$5449
$9216
Total Health Care Spending as a % of GDP
7.0%
14.9%
16.8%
Another factor that has caused healthcare costs to increase is that the consumer is insulated from the true cost because third parties pay most of the healthcare expenses. In 1960, individuals paid about 50% of total health care costs. Now, third-party payers, including the government, private insurers and employers, pay about 80% of total healthcare costs.
Many experts believe that because consumers do not pay for the care themselves, they are more likely to receive unnecessary care, not shop around for the best cost, and are unlikely to question costs. Because the consumers are not paying the expenses directly, they tend to demand healthcare services that might not have been demanded if the consumer were paying more of the cost themselves.
This leads to higher costs for healthcare as a whole, especially for those who can just bill uncle sam for a unGodly amount, therefore screwing the government plans such as SS out of the principle that they have invested to get a return or at least interest on.
So yeah, SS is good, as long as you don't use too much healthcare, but unfortunately, unless we come up with a standardized national healthcare plan or more privatized HSAs (or the like), a lot of us will be screwed when it comes our time to get our return on our investment in SS.