NEW YORK (CNNMoney) – JPMorgan Chase executives suspected that Bernard Madoff’s investment strategy was actually a Ponzi scheme years prior to its collapse, but did nothing to stop it, according to the court-appointed trustee trying to recove assets stolen by Madoff.
The complaint contains a redacted e-mail from a JPMorgan risk officer warning as early as June 2007 that Madoff was running a Ponzi scheme, and using the bank to hold his money.
“For whatever it[']s worth, I am sitting at lunch with [JPMC Employee 1] who just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a [P]onzi scheme,” the e-mail reads.
At that time, the bank admitted in a filing made to the United Kingdom’s Serious Organized Crime Agency that Madoff’s firm’s performance was “so consistently and significantly ahead of its peers year-on-year, even in the prevailing market conditions, as to appear too good to be true – meaning that it probably is.”
SRSLY???
how many of these kinds of things does JPMC need to be involved in before a bunch of people actually start going to jail?
The entire financial system and global economy is a manipulated scam essentially. The stock market only exists to facilitate efficient wealth re-distribution from the working class to the elite few.
How anyone can expect accountability when the Fed is allowed to operate incognito is beyond me. Banks are allowed to knowingly make unrealistic loans, enable home speculation well beyond reason, create a massive bubble and somehow it’s cool the nationalize the losses? GM is allowed to fleece it’s long term shareholders, bankrupt the old stock and then come out with NEW stock without repayment even in part to the old loyal shareholders??? GM comes out with a tacky commercial thanking the tax payers and US people for the help. Shouldn’t they have saved that ad money towards their pension system or are they that confident in future bailouts? LOL
It must be ok with the masses because people hopped right back on the debt train with cash 4 clunker and new home buyer programs. I would suspect Bubble 3.0 is in process here. I expect volatility in the economy and markets to continue to rise exponentially as they have been doing since ditching the gold standard. If true then I would expect further USD devaluation and inflation. There MUST be a breaking point where inflation driven wages drive outsourcing to a level we can’t just print our way out of. What was it…1985 when we flopped from a lending nation to a debtor nation? That’s a LONG time to be living on borrowed time and money. I’m more amazed than hating to be honest. That should secure our empire as the top dog ever. We have created alot of good with our fiat currency system…it’s not all bad. I’m just trying to prepare for the day the game is over and the last chair is taken.
What’s mind blowing about it? Currency is becoming more and more electronic with less need for hard copy, like everything else. The only time a bank needs more than 5% of their balances in cash is when there’s a run on it because people don’t think they have it, and even then we have the FDIC. If there was no fractional reserve lending the economy would be permanently stagnant. Interest rates would be so damn high that owning anything of value would be reserved for the elitest of the elite.
I suppose you think insurance companies should hold enough cash to pay out every single claim they write at the same time too?
I agree that there is a massive issue with companies being debt run.
My dad’s company used to be 50% partnered up, but recently sold the other 50% to the partner because they kept getting screwed on debts. Their company does installations for large construction jobs in NYC. They couldn’t stay afloat because everyone wants to take out debt with them rather than pay it upfront. They can’t float it though, they have overhead and debt owed doesn’t pay overhead. So, they said fuck it and sold the rest of the business off to their larger partner, and they all went to to work there. I probably did a piss poor job of explaining that scenario, but it’s a real example of how living and working on debt really fucks over businesses in the long run.
I love it when people claim that money disappears when the stock market goes down.
Oh, and social security is a Ponzi Scheme, but we all know about it. It’s collapsing because all Ponzi schemes collapse. More and more people are taking profit without enough new investors putting that money in. The only way to fix it is to have more babies. I’m going to run for President with the platform Fucking for Fiscal Stability.
Joe…it’s not that people “think” the banks don’t have the cash…THEY DON’T HAVE IT!!! You even said yourself money is mostly electronic today, so the money doesn’t actually exist. I’m curious why you think there is less need for a hard copy? How long do you believe a system of intangibles can remain solvent and relevant?
What security does the FDIC provide in reality? The FDIC merely provides a false sense of security like ANY other insurance scenario. Insurance is a game of leverage, like a mortgage, car loan etc… In the end someone is always left holding the devalued bag in these scenarios.
I’m sorry but I must disagree with your comment about how fractional lending allows common folk to own “anything of value”. First, how do you determine value when the nominal value is constantly decreasing? Now while I agree that leverage allows people to live a lifestyle that they otherwise couldn’t, they typically don’t “OWN” anything. The banks essentially own everything…and they paid nothing to accomplish this feat. Ownership was achieved through many cycles of debt and usury. (Usury - Wikipedia) And while I agree it looks or seems to be opening up common folk to the life of luxury, it does so at what cost? I’ll tell you at what cost…the future generations cost of living and suffering. The wealth gap continues to grow and grow and GROW! How is it the majority continues to slave and suffer while the few elite profit from our efforts? That’s my take anyhow…so I suppose I agree to disagree.
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That made me LOL. Just because they don’t have it in their account anymore doesn’t mean it disappeared. HAHAHAHAHAHA.
Sheep…give me your fleece.
The system of intangibles can remain solvent and relevant as long as it is backed by the faith of the public. There is less need for hard copy because how many big transactions, short of drug deals, do you actually need cash for? Houses, cars, boats, planes, etc. are bought with wire transfers. In addition, the banking system gives protection against money laundering and theft that you don’t get with cash or commodity money. If the bank gets robbed, it’s not your problem. If you get robbed, you’re SOL. The FDIC protects you against everything short of a collapse of the entire system. I am in reg reporting, I see how hard they are on the banks. If a bank’s balance sheet drops below safe levels, they DO NOT hesitate to step in, seize everything, and tell management to GTFO, within a matter of days.
Fair enough on the FDIC. It’s good to know they are putting forth some effort into restricting things. You did nail what I was getting at though…in a collapse it’s all a shallow promise on a shiny plaque in the bank.
You also touched on what I believe along with you…that things will remain as long as there is faith backing the currency. We still have faith as do foreign countries in us, so for now I’m with you in thinking it’s biz as usual for the US.
What I’m striving for is to gain enough knowledge so I won’t be stuck when the balloon runs out of hot air. In no way am I saying there’s no need for banks, nor am I bashing electronic transfers. I’m saying the abusive usury and dilution will at some point catch up with us. Banks can store and facilitate trade without fabricating money that doesn’t exist. Or for arguments sake I’ll even say that I think some level of fractional reserve lending is good and stimulating. BUT…it has to be reasonable, balanced and in line with a countries expected production/exports. In this country the debt level is such that we can’t backtrack or recede even a tiny bit without collapse. We can determine this by the amount of capital they needed to inject just to back-fill for the deflationary losses. Also look at the stock market for clues. IMO we won’t be in a true bull till we’re above 14k raw (without QE2 and stimulus packages). To require artificial boosting to recover proves to me how frail the system is once pushed as far as we have pushed it.
Currency is just one in a long list of financial things where prophecies are self-fulfilling. If you can call the collapse of the dollar, or the banking system, or the stock market, and get enough people to believe you, you cause it. The stock market right now has no business being as high as it is, but the big investment banks bought the lows in 08-09 and started the rally, and nobody wants to miss the boat on the recovery/next bubble.
Swimming upstream is futile. Just do whatever Goldman Sachs does. They are always one step of the gov’t at finding loopholes to take the middle class’s money. For those of you who still don’t know too much about how the financial crisis happened, and want to, check out The Big Short by Michael Lewis. (Guy who wrote Moneyball, The Blind Side, and Liar’s Poker) It’s largely written in terms anyone can understand and gives you the experiences of a few guys and how it related to them.
Meh. Fiat money isn’t any less valuable than gold. You can’t eat either one and neither one’s going to keep the cold and wind off your back. As long as everybody agrees to use the same thing to keep score of their productivity it’s valuable, and stock jobbers and money men (18th century language always makes economics easier to understand, modern buzz words like financial product and leverage are verbiage designed to deceive) will always try to cheat the get their productivity score higher without actually producing anything.
I shall meet you under the buttonwood tree at high noon a fortnight from now to discuss the acquisition of currency and casting of females by the wayside. We can then wager on who shall emerge victorious in the dual between the vice president and the secretary of the treasury. I dare say the vice president is a bit quicker than the treasurer…
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Wouldn’t that be sweet if Joe Biden shot Tim Geithner? Ah the good old days.
You damn finance guys and your Livermore chat.
J/K I’m down…even though I’m not formerly trained on the subject of economics.
I agree with the recent posts. I endorsed this message.
“I shall meet you under the buttonwood tree at high noon a fortnight from now to discuss the acquisition of currency and casting of females by the wayside”
