Wednesday, December 17, 2008

Ripples from Madoff

I am still working on a post on oil, the Peak Oil meme and this long dark twilight of negative mood that we are entering. In the meantime, I ran across an article on the Madoff Scandal that just reinforces my belief that when the dust settles on this crash, the "investment industry" will be a bare chemical trace of what they are today. The trust in these "geniuses" built up over generations will be wiped out as the few people left with significant capital learn more and more about the arcane rules that the Wall Street - Beltway Kleptocracy is and will use to siphon off unearned wealth from producers.

Case in point:

Madoff fraud could burn those who pulled out early
By Jason Szep - Analysis
BOSTON (Reuters) - Disgraced money manager Bernard Madoff's suspected $50 billion fraud scheme looks set to burn even those who pulled their investments out long before the scandal rippled into the global financial system.

Such investors may have counted themselves fortunate, withdrawing their money years ago to buy a house or to pay for a daughter's education, and may have even sighed with relief because they ended ties with Madoff long before the scandal erupted late last week.

But they, too, could face trouble, lawyers say. Because of a legal concept known as "fraudulent conveyance," they could be forced to return their profits and even some of their initial investments to help offset losses incurred by others entangled in the long-running Ponzi scheme...

..."I'm sure it will be a surprise to those who had no idea about his position but wanted to buy a house, and took the money out," said Tamar Frankel, who teaches securities law, corporate governance and legal ethics at Boston University...

I'm sure it will. And I'm sure that these folks will never trust an investment advisor ever again.

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