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Madoff And Realistic Returns
In a piece about the fall of Madoff’s $50 billion Ponzi scheme, two NYT writers show a profound misunderstanding of basic economics:
Mr. Madoff’s promised returns were relatively realistic — about 10 percent a year — though they were unrealistically steady.
The quasi risk free return on 10-year U.S. treasuries over the last 10 years was less than some 5 percent. A return of 10 percent per year can then only be relatively realistic if the risk of a loss of the invested capital is relatively high. That is the point Madoff's investors failed to understand too.
On another aspect of that fall: In a comment dan of steele says:
[O]ne possible positive outcome outcome from all this will be a bit less cash available to AIPAC.
That is likely as the NY Times emphasizes the Jewishness of many Madoff investors:
The Wilpon family, the main owners of the New York Mets, and Yeshiva University both confirmed that they had invested with Mr. Madoff, and a Jewish charity in Massachusetts said it would lay off its five employees and close after losing nearly all of its $7 million endowment. Other investors included prominent Jewish families in New York and Florida.
In another piece the Jewish charity from above is specified:
The news was equally devastating for the Robert I. Lappin Charitable Foundation in Salem, Mass., which works to reverse the dilution of Jewish identity through intermarriage and assimilation by sending teenagers to Israel and supporting other Jewish education efforts.
Sound a bit like Lebensborn to me. It is better for all if such stuff loses its financing.
Bit more:
Bernard Madoff and the Jews of Palm Beach
http://www.huffingtonpost.com/laurence-leamer/bernard-madoff-and-the-sh_b_150624.html
Bedfellows:
The firm is one of the top market maker firms on Wall Street.
Madoff served as the Chairman of the Board of Directors of the Sy Syms School of Business at Yeshiva University.
Madoff who is Jewish, and has actively supported American Zionism, served as the Chairman of the Board of Directors of the Sy Syms School of Business at Yeshiva University.
Madoff started his firm in 1960 with an initial investment of $5,000,[right…] after attending Hofstra University Law School.
http://en.wikipedia.org/wiki/Bernard_L._Madoff
So it was becoming interesting and I followed, looked up Hofstra:
Home of the last debate hosted by Bob Schieffer :
Presidential debate
Hofstra was one of 19 facilities vying for the opportunity to host one of the three presidential debates, or the vice presidential debate.
Stuart Rabinowitz said of Hofstra’s application. “And we had tremendous support from our public officials.”
The final cost to the university came out to $3.2 million, as was announced by President Stewart Rabinowitz in his speech prior to the beginning of the debate. He also stated that the cost was covered by three of the university’s trustees, one of which was David Mack who the Mack Sports Complex, where the debate was held, is named after.
http://en.wikipedia.org/wiki/Hofstra_University
So I looked up Mack, bet he had input into questions:
Public Service
Mack serves on the boards of Boys Town of Jerusalem, Hofstra University, Israel Bonds, Joseph L. Morse Geriatric Center, New York Holocaust Memorial Committee, North Shore Long Island Jewish Health System Foundation, Palm Beach Community Chest and United Way, Pratt Institute, and UJA of Greater New York and Long Island
Which of course lead me to Israeli Bonds:
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State of Israel Bonds are debt securities issued by the Government of Israel.
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State of Israel Bonds is also the more familiar name of the underwriter of the bonds in the United States. The company is officially known as the Development Corporation for Israel (DCI). DCI is headquartered in New York City, and is a FINRA-registered broker-dealer.
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On April 17, 2008 Moody’s Investors Service raised Israel’s government foreign and local currency bond ratings from A2 to A1 . In a report issued a few weeks earlier citing the possibility of an upgrade, Moody’s referred to State of Israel Bonds as a mitigating factor. The report praised Israel Bonds as a source of funding ‘at favorable costs.’
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Initial investors in Israel bonds were largely members of the Jewish community who wanted to help Israel strengthen its economic foundations. However, as securities became more diverse and market-responsive, the investor base became increasingly widespread. Israel bonds were seen as a two-fold investment that not only helped Israel, but were a useful means of portfolio diversification.
Purchasers now include more than 1,700 labor unions, over 1,800 foundations, and numerous states, municipalities, corporations, insurance companies, associations, union pension funds, banks, financial institutions, universities, synagogues, and private investors. Over 70 state and municipal public employee pension and treasury funds have invested more than $1 billion in the bonds.
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Half of the states in the US have invested in State of Israel bonds. In 2003, the State of New Jersey pension system purchased $20 million in bonds. In 2005, the Texas Treasury purchased $2 million in the bonds, bringing its total investments to $20 million,[5] and Louisiana purchased $5 million.[6]
In 2007 Florida adopted a bill authorizing county and local governments throughout the State to invest surplus funds in State of Israel bonds. More than $100 million in the bonds are purchased every year within Florida by various individuals, corporations, pension plans, universities, hospitals, foundations, unions, banks and insurance companies. The same year, New Mexico announced the purchase of $5 million in State of Israel Bonds, adding to the $10 million that the State had purchased in 2003.
On September 18, 2008, the city and state of New York each announced their intention to purchase $15 million in Israel bonds.
http://en.wikipedia.org/wiki/Israel_Bonds
So now half the states are invested in Israel. Great. Gives new meaning to “connected at the roots”.
Washington State has attempted to divest from any enterprise related to Jews/Israeli settlements, they have not been successful.
Sorry for long post.
Posted by: mattes | Dec 14 2008 19:40 utc | 14
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