Monday, August 29, 2011
Thursday, August 18, 2011
Page xxiv: Madoff's construction of the biggest Ponzi scheme in history was enabled by the Wall Street he had helped to build. He played a prominent role in shaping the modern market, from computerized NASDAQ trading to the mystique of hedge funds to the proliferation of specious derivatives. He spotted the trends, saw the opportunities, helped write the rule book, and abetted the weaknesses that we all live with, even now. And he was a creature of the world he helped create, a world that was greedy for riskless gain, impatient with regulation, arrogantly certain of success, woefully deluded about what could go wrong, and selfishly indifferent to the damage done to others. [Italics mine]
Page 55: Frank Avellino had the curious habit of referring to himself in conversation in the third person, by his full name. Asked in subsequent testimony about any bank loans the partnership had obtained, Avellino said, "All I could say to you is, at one point in time, Michael Bienes and Frank Avellino borrowed millions of dollars from Chemical Bank, unsecured, period...We voluntarily turned in our loan to the bank. They hated us for it."
Page 155: Despite the clarity of the warning, people on the [SEC] team would later recall that they never truly thought it was credible that a man like Bernie Madoff could be a criminal--he simply didn't fit their ill-informed image of the "typical" Ponzi scheme artist.
Page 156: For a quant, the human equation is often the most difficult to solve.
Page 163: By then, after so many years of caution and bureaucratic inertia at the SEC, that lie apparently was simply too large to fit into the agency's limited imagination.
When the SEC tried to raise the "accredited investor" minimum net worth from $1 million to $2.5 million in December 2006:
Page 172: By doing so, however, [the SEC] walked into a buzz saw of opposition from people who were already invested in hedge funds but would not qualify under the new standard. As one Congressional Research Service report observed, "These investors did not wish to be protected from risks that the SEC might view as excessive." The effort was shelved.
Page 175: But these and other Madoff-linked derivatives--which would soon be offered by HSBC, Citibank, Fortis, Merrill Lynch, and several other global institutions--were also a significant milepost in the evolution of Madoff's Ponzi scheme. Initially, people had invested with Madoff because they trusted him. In time, they invested because they trusted whichever prominent accountant, lawyer, or pension fund adviser opened the door to Madoff. Then they invested with prominent individual investors who knew Madoff, such as J. Ezra Merkin and Sonja Kohn, or in feeder funds such as Fairfield Greenwich and Tremont Partners, whose founders knew him. Now people who had never heard of Bernie Madoff were tying their fate to his because they trusted the giant banks that were selling these complicated contracts, banks whose chief executives probably had never heard of Madoff either.
Page 176: If Madoff had guessed wrong about where investors were in their perpetual journey between fear and greed, the move could have been disastrous...
Page 296: True, [Madoff] paid relatively modest returns--roughly equal to an S&P 500 index mutual fund--but his results were far less volatile and, hence, much safer than an index fund. How was that possible? If he was a lot safer than an index fund, shouldn't his returns have been a lot lower?
Page 297: So they substituted trust and gut instincts for the fine print and legalese that regulators expected them to study. Some trusted Vanguard and Citibank, and others trusted Madoff--but it was a leap of faith for everybody. That should have worried everyone much more than it apparently did.Quoting Madoff talking about how he and his wife, Ruth, got through his house-arrest prior to conviction:
Page 338: "Ruth held herself together--and I tried to hold myself together for her." That is what they do, apparently.
Page 340: Such is the Ponzi scheme. It is the crime of the egotist, not the sadist. One need not enjoy others' pain to run a Ponzi scheme. Until the final moments, there is no pain. One is helping, not hurting. That delusion, based on a lie, is reinforced every day by every thankful customer who says, "Bless you, Bernie!"
Page 341: Regulators, even very good ones, are from Mars; investors, even very rich ones, are from Venus.
Page 342: Regulators believe in the fine print. Investors never, ever read the fine print--never.
Page 343: And as Bernie Madoff learned, once trust is earned, it will protect a con man from every red flag. After all, "con man" is short for "confidence man," someone who inspires enough confidence to blind his victims to his crime.and later
Fines are just money--Wall Street makes money like clouds make rain.
Tuesday, August 16, 2011
|Dr. Bunnell's Embalming Practice outside Fredericksburg, VA. "Free from Odor," he advertises.|
|Dr. Richard Harlan (1796-1843)|
|General "Stonewall" Jackson|
|Lincoln's Coffin Displayed in Chicago|
|Lincoln's Funeral Procession Down Pennsylvania Avenue|
Faust, Drew Gilpin. This Republic of Suffering: Death and the American Civil War. New York: Alfred A. Knopf, 2008.
Habenstein, Robert W. and Lamb, William M. The History of American Funeral Directing. National Funeral Directors Association, 1981.
Laderman, Gary. The Sacred Remains: American Attitudes Toward Death, 1799-1883. New Haven: Yale University Press, 1999.
Mitford, Jessica. The American Way of Death. New York: Simon & Schuster, 1963.
Walker, Juliet E.K. The History of Black Business in America: Capitalism, Race, Entrepreneurship. The University of North Carolina Press, 2009.
Please also see Dr. Harlan's translation of J.N. Gannal's book and The American Cyclopaedia from 1875 has an entry on embalming.
Monday, August 8, 2011
Wednesday, August 3, 2011
Steve read a beautiful piece of literary non-fiction entitled "My God, My God, Why Have You Forsaken Me?", both very funny and very moving. It was a packed house and his reading, as always, was beautifully done. Congratulations, Steve!! For those of you who missed it, do not fear. You can get a chap-book style copy of the piece with photographs here.
In the story, Steve returns to his youth at a time when he was cast as Jesus in the Easter pageant at his church and when his family was dealing with his mother's breast cancer diagnosis. The story is skillfully structured, managing the emotion without sentimentality and using a wicked sense of humor to balance the whole. A pleasure to read and to hear.