Another Government bailout for the Victims of the Madoff Ponzi scheme

Rumors of another Government Bailout?! What are we.. the USSA.. United Socialist Sates of America!

http://wcbstv.com/business/madoff.ponzi.scheme.2.888036.html

Let’s start by going over what a Ponzi scheme is then look at what is happening currently with Bernard Madoff’s scheme. A Ponzi scheme is simple in principle but can become very complex, as in the case with Madoff. Essentially an investment firm offers potential clients above average rates of returns (usually dumb investors, as educated investors should be diligent in the analysis of their returns), takes the new investors assets and will use it to pay towards the returns on the earlier investors and so on. These types of scheme are obviously going to fall apart at some point since there is no true business here or product. Its a scheme that will make one an incredible amount of money, that is until it collapses.

Recently the famed investor, Bernard Madoff got caught running one of these types of Ponzi Schemes. In which it is estimated that it could reach total losses of about $50 Billion!! That is a staggering amount of money that is now lost. There were a large number of investors impacted of coarse mostly top1% investors, including large banks, charities, pension funds, institutional funds, corporate funds and big wig CEOs. My biggest questions here is what are these firms doing chasing abnormal returns? Most banks are borrowing our tax dollars right now in order to stay operational, and yet there are banks using the liquidity they do have in this type of investment firm? Seeking abnormally higher returns? Bernard must be one hell of salesman, I can see the charities and personal investors falling into this, but the hedge fund managers and institutional investors? The corporate, the banks and pension funds? They didn’t have questions? His scheme must have been going on for at while, and no one notices something out of whack? the scheme relies on the buy and sell of unregistered securities, so what was our SEC doing? Busting the Dallas Mavericks owner for insider trading worth about 800K? Or were they busy worrying about Martha Stewarts insider trading practices? Ooops.... they missed this jack ass robbing hopes and dreams? (Charities)
(http://www.huffingtonpost.com/2008/11/17/mark-cuban-insider-tradin_n_144320.html)
(http://www.sec.gov/news/press/2003-69.htm)

"U.S. District Judge Louis L. Stanton ordered that clients of Madoff's private investment business seek relief under a federal statute created to rescue cheated investors. Stanton also ordered that business be liquidated under the jurisdiction of a bankruptcy court and named attorney Irvin H. Picard as trustee to oversee that process. Stanton signed the order after the Securities Investor Protection Corporation asked that steps be taken to protect investors in the scheme, which has ensnared several major banks and prominent figures as victims and could result in as much as $50 billion in losses."
"Congress created the SIPC in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts. Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash."

So now there are rumors that the government will do a full Bailout… I’m torn about this.. its another example of the upper echelon of our society are going to get out of their unfavorable situation and not take any ownership. These investors took extra risk with their investments, looking to make fast cash now! Then when the pyramid falls apart its ok to loose a couple billion dollars because you’ll get bailed out… I’m sure a lot of folks made a lot of money on this while it was working including some of the investors themselves... I agree of with allowing the SIPC coverage, of up to 500k per investor but going above this amount per investor is letting them off easy on being irresponsible. I don’t know the whole situation, I’m sure Bernard was very convincing, but were these investors diligent? I don’t think so.

So what are we left with? These companies went after abnormal returns and offerings, taking on extra risk with their investments, probably received an incredible return while things were good. And when the scheme collapses... Again a scheme that relies on gullible investors, we the tax payers are going to bail these guys out!! This is maddening. I want to take incredible risk personally, I’m going to quit my job, start my own company spend all my assets, poorly manage this company and when it fails I’m going to hold out my hands to uncle Sam to pay me back, and make things whole! Right