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Saturday, September 23, 2023

Bernard Madoff and It's Your Money, The Way I See It (2009-Part II)

By Andrew Robbins

CSMS Magazine Staff writer

I was asked to comment on Mr. Bernard Madoff’s alleged $50 billion Ponzi scheme. Many of us are amazed how the wealthy became victimized. Yet, scripture suggests the wealth of the Ungodly transfers to the Godly. Was Mr. Madoff in fact a servant of God as the Bible suggests in Proverbs, Chapter 13, Verse 22, “… and the wealth of the sinner is laid up for the just?” Makes you think, perhaps the defense’s opening remarks will read, “God made him do it.” $50 billion disappeared, that much money wasn’t all clean!

Madoff may or may not be a servant of God! But, we can learn from this event. Diversify, do not place all your assets with one institution, and if an organization pays out exceptional dividends, become suspicious! Many corporations are dispensing dividends that exceed earnings. They cannot forever continue to make those distributions, and you do not want to own their stock if share price falls.

We also learned due diligence is required when selecting a fiduciary to administer assets. Entering into a trust agreement with an unknown organization may be viewed as wandering aimlessly through a mine field.

Banks are reporting record negative earnings, yet their stock price moves higher. Why? Speculators are betting bank share price will continue to move upward. Their hedge is based on Congress injecting additional taxpayer dollars into the financial sector. There are suggestions for creating a Bad Bank, one that removes nonperforming assets from the bank’s balance sheet and places all of Wall Street’s failed projects on the back of the taxpayer. Another Taxpayer bailout!

Wall Street’s lobbyists continue to snooker your elected officials. What did the financial industry do with the first TARP funds (Troubled Assets Relief Program)? AIG held a party at a swank resort. Next, PNC Financial purchased National City Corporation (NCC) and guaranteed NCC’s top echelon, after taxes, a $50 million split among themselves. And lastly we should not forget the New York banker who renovated his office at a decorating cost exceeding $1 million.

Wall Street’s geniuses are on the talk circuit claiming the 7,000 profitable small banks need to be dissolved and consolidated into a few large institutions—a sneaky move designed to eliminate competition. But, don’t give up hope, for just last week one of the insiders screamed, “Big banks got us into this financial meltdown, we need to break up the big banks. Don’t consolidate the smaller ones. BREAK-UP THE BIG BANKS!”

This is the environment speculators invest in: Politicians failed to address the undocumented workers, they displace Americans. Then, there are corporations that moved offshore, leaving millions additional US workers unemployed. As more Americans are displaced, there exist fewer consumers to purchase the goods or services that your employer provides. Combining those thoughts, one finds an economy that is snowballing downward while many employers further reduce their workforce.

Globally North American wages and benefits are the highest. Just as water seeks its own level, employers are constantly searching for lower price inputs; and that suggest a reduced standard of living for many Americans. The Democrats may soon release their stimulus package, and it may include an overdue road improvement—a capital injection. However, here in the Midwest, on a hot August day, road crews have few Whites, Blacks, or Asian workers. The work is hot, dusty, and sometimes dangerous. Yet, employing workers who send their money outside our country to families left behind will not stimulate the US economy. Yes, road improvement will transfer wealth to producers and shareholders of steel, aggregate, and concrete. How much of the stimulus package that will reach the US economy is debatable.

To exit the current crisis, it will require consumer-instilled confidence. Consumers must have faith they will be employed next week, next month, and that many opportunities exist far into the future. Jobs moving offshore, illegal workers, and continued government fumbling in the financial sector suggest a prolonged crisis.

Investment opportunities exist; they do not knock at your door, stop wasting your valuable time following the Madoff story and stay focused on your investments.

Note: CSMS Magazine and the author are not in the business of providing financial services or advice. Prior to investing, readers should seek professional assistance.

Andrew Robbins is the author of: It Took My Breath Away; One Man’s Experience May Save Your Life. He may be reached by email at: awrobbins1@earthlink.net

Also see It’s Your Money, The Way I See It (Part VII)  

It’s Your Money, The Way I See It (Part VI) 

t’s Your Money, The Way I See It (Part V)

It’s Your Money, The Way I See It (Part IV)

It’s Your Money, The Way I See It (Part III)

It’s Your Money, The Way I See It (Part II) 

It’s Your Money, The Way I See It 

 Telling us the truth: Bailing out Wall Street or bailing out the country? 

The financial crisis in the US and the mirage of an enlightened global capitalism

Global stock markets stumbled in the aftermath of the Wall Street downslide on Monday

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