Tuesday, May 31, 2011

YOU make the call ....

Today's press release says it all: "This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels."

Housing is no longer a big part of the market says Jim Cramer.

"Jim Cramer is a charlatan. He turns the serious issue of personal financial security into a complete joke. There is nothing that comes out of James Cramer's mouth that allows people to make intelligent investment decisions."  A quote from David Swenson in the December/January 2009 issue of Worth magazine. Mr. Swenson is the chief investment officer of Yale University.

Cigarette Dealers..........

"That's the beaver pelt of the modern era," quipped Robert Odawi Porter, president of the Seneca Nation.

Reckless Endangerment

In Reckless Endangerment, the latest book about the financial crisis, co-authors Gretchen Morgenson and Josh Rosner do what many of their high-profile counterparts failed to do: Name names for those responsible for the crisis.  "Instead of it seeming like it was an 'act of god' that couldn't have been prevented, we try to single out some of the people who were crucial at the center in the years leading up the crisis, not just when it struck," says Morgenson, a Pulitzer-prize winning journalist with The NY Times.

Congratulations to Gretchen and Josh on such a fine work.     Gretchen should run the SEC, become a Senator or run FINRA.    She would scare the living daylights out of Wall Street for sure.   For sure a shining light in the quagmire of half-truths and outright lies coming from everyone in that space.

Friday, May 27, 2011

This Memorial Day............

Stop and ponder the lives of so many who have given so much for this great nation.  I thank all of the great veterans of the wars this nation fought to defend our way of life.   When you think of the sacrifices made and offer your prayers of thanksgiving please include my Dad, Douglas Parisian.  He served proudly during WWII as a pilot being trained in the Army Air Corps.  I salute you Dad, you have always been a hero!

Roudup, Montana flooding, 2011


The whitetail fawn crop will be thinned out some with does fawning in the hills instead of the Mussellshell River bottoms.    No doubt some rattlers moving around too.   This devastation in Roundup is hard to imagine.  Notice you don't see all the looters stealing high-end tennis shoes, cases of beer and televisions?
Where are the government vouchers and FEMA trailers?  The government debit cards?  Why aren't there any Hollywood types like Sean Penn, Bono and the Dixie Chicks singing for Roundup, Montana?  Why isn't Michael Moore trying to help Roundup?  Where is the 24/7 media coverage complete with shootings at rescuers, rapes and murders?   Roundup will get along just fine by itself.  Some of the toughest people on the planet for sure.  My prayers are with you all.

Thursday, May 26, 2011

Talk about full of air! He could run for president, either party.

When he became a lorry driver, Steven McCormack probably felt he could handle the stresses of the job.


But the 48-year-old New Zealander couldn't have anticipated quite what sort of pressure he would have to endure.  Mr McCormack was blown up like a balloon after falling on to a compressed air tube in a freak accident.  The end of the tube pierced the flesh of his left buttock, forcing compressed air at the rate of 100 pounds per square inch into his body, swelling it to bursting point.

North Carolina Senator, Kay R. Hagan

This Senator should have lunch with Ron Paul instead of lobbyists to get up to speed on the Fed.  Just another reason why this country is in such dire shape with loons like this.  North Carolina deserves better but hey, they voted her in.   The real insiders (like the shareholders of the Federal Reserve) are above the law. They fleeced America for trillions.  How many sides of her mouth can she talk out of is the real question.

Dear Friend,


Thank you for contacting me regarding an audit of the Federal Reserve. I appreciate hearing your thoughts on this important issue. I apologize for my delayed response.

The Federal Reserve does currently undergo what would be considered a standard audit -- an examination of accounts and records. Furthermore, Congress already reviews semi-annual reports on monetary policy submitted by the Federal Reserve Board of Governors, as required under the Full Employment and Balanced Growth Act (PL 95-523). Under the Federal Banking Agency Audit Act (PL 95-320), the Government Accountability Office (GAO) has the authority to conduct financial and performance audits of the Board of Governors and the Federal Reserve banks and branches. However, such audits are limited, as the law stipulates that monetary policy operations, foreign transactions, and Federal Open Market Committee operations are excluded from the scope of the GAO audits.

An audit of the Federal Reserve System is an issue that has been debated several times since I began serving in the United States Senate, most recently during the 111th Congress when the U.S. Senate addressed financial regulatory reform. All Federal Reserve audit legislation proposed in the 111th Congress called for increased oversight by the Government Accountability Office (GAO) into business conducted by the Federal Reserve.

On January 26, 2011, the Federal Reserve Transparency Act of 2011 (S. 202/H.R. 459) was introduced in the Senate and referred to the Committee on Banking, Housing and Urban Affairs. The bill instructs the Comptroller General of the United States to conduct an audit of the Federal Reserve System's Board of Governors and also the Federal Reserve banks before 2013.

The formulation of monetary policy is a decision-making process that involves information gathering from a host of foreign governments and central banks. The information provided from those exchanges is critical and extremely sensitive. The immediate and broad disclosure that the Federal Reserve Transparency Act of 2011 requires could disrupt financial markets and jeopardize our country's international finance relationships. Ultimately, it would be taxpayers who would bear the brunt of any losses resulting from policies caused by untimely disclosure of sensitive information. Because of this, I do not believe the benefits of legislation like the Federal Reserve Transparency Act of 2011 outweigh the costs.

When Congress passed the Federal Banking Agency Audit Act in 1978, the legislation attempted to balance the need for public accountability of the Federal Reserve with the need to insulate the Fed's monetary policy function from political pressures. I believe this balance must be maintained going forward. For that reason, I twice supported amendments during the 111th Congress that would have required one-time audits of the Federal Reserve System's actions in response to the financial crisis. Both amendments struck a balance between accountability to the American taxpayer and the denial of political pressure and influence on the Federal Reserve System. The result would have been increased insight and reassurance for the American people that the Federal Reserve is working in the best interest of taxpayers to strengthen and protect our financial system.

Again, thank you for contacting my office. It is truly an honor to represent North Carolina in the United States Senate, and I hope you will not hesitate to contact me in the future should you have any further questions or concerns.

Sincerely,

Kay R. Hagan

from ZeroHedge.com, the best web site on the planet

The Fed does it again. Following consistent allegations that the Federal Reserve operates in an opaque world, whose each and every action has only had a purpose of serving its Wall Street masters, led to repeated lawsuits which went so far as to get the Chairsatan to promise he would be more transparent, Bloomberg's Bob Ivry breaks news that between March and December 2008 the Fed operated a previously undisclosed lending program, whose terms were nothing short of a subsidy to banks. Says Ivry: "The $80 billion initiative, called single-tranche open- market operations, or ST OMO, made 28-day loans from March through December 2008, a period in which confidence in global credit markets collapsed after the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. Units of 20 banks were required to bid at auctions for the cash. They paid interest rates as low as 0.01 percent that December, when the Fed’s main lending facility charged 0.5 percent." 0.01% interest is also known by one other name: "outright subsidy." It doesn't get any freer than that: 0.01% interest on one month cash. Just how close to a complete implosion was the financial system if 0.5% interest seemed too high? Not surprisingly, this program was widely used: "Credit Suisse Group AG, Goldman Sachs Group Inc. and Royal Bank of Scotland Group Plc each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public...Goldman Sachs, led by Chief Executive Officer Lloyd C. Blankfein, tapped the program most in December 2008, when data on the New York Fed website show the loans were least expensive. The lowest winning bid at an ST OMO auction declined to 0.01 percent on Dec. 30, 2008, New York Fed data show. At the time, the rate charged at the discount window was 0.5 percent." Yes, that Goldman Sachs. The same one that perjured itself when it said before the FCIC that it only used de minimis emergency borrowings. Just how many more top secret taxpayer subsidies will emerge were being used by the Fed to keep the kleptocratic status quo in charge?

Tuesday, May 24, 2011

Contrast the style and debt levels...........

George W. Bush speech after capture of Saddam:


The success of yesterday's mission is a tribute to our men and women now serving in Iraq . The operation was based on the superb work of intelligence analysts who found the dictator's footprints in a vast country. The operation was carried out with skill and precision by a brave fighting force. Our servicemen and women and our coalition allies have faced many dangers in the hunt for members of the fallen regime, and in their effort to bring hope and freedom to the Iraqi people. Their work continues, and so do the risks. Today, on behalf of the nation, I thank the members of our Armed Forces and I congratulate 'em.

Barack Obama speech after killing of bin Laden:

And so shortly after taking office, I directed Leon Panetta, the director of the CIA, to make the killing or capture of bin Laden the top priority of our war against al Qaeda, even as we continued our broader efforts to disrupt, dismantle, and defeat his network. Then, last August, after years of painstaking work by our intelligence community, I was briefed on a possible lead to bin Laden. It was far from certain, and it took many months to run this thread to ground. I met repeatedly with my national security team as we developed more information about the possibility that we had located bin Laden hiding within a compound deep inside of Pakistan . And finally, last week, I determined that we had enough intelligence to take action, and authorized an operation to get Osama bin Laden and bring him to justice. Today, at my direction, the United States launched a targeted operation against that compound in Abbottabad , Pakistan ..

Monday, May 23, 2011

One of the finest compliments in our history

This client lives out in the middle of a very remote part of our great nation.  It is smack dab in the middle of Indian Country.

He told me very matter-of-factly that,  "winning is being a client of Chippewa Partners".

Enough said. 

The weekend.........

I was pulling for Animal Kingdom in the Preakness.  Just poor riding in my view.  

The cowboy calling for the end of the world was rather comical.   He'd make a great politician, promising phony predictions that never come true.  His flock was sheared, just like our children and grandchildren will be due to our disgusting financial predicament.   

William D'Antignac, thank you, thank you.........

As we approach another anniversary of the inception of Chippewa Partners I was asked an interesting question at our last Board meeting.   Somebody asked me who was a key player in the start of Chippewa Partners and that answer has to be the former bank CSR himself, none other than Bill D'Antignac.  No one did his part more than to put Chippewa Partners on the map and insure the financial success of Native American Advisors, Inc.  Bill is an Augusta boy and would make a fine marketing rep in his own right.  

Thank you Bill, where ever you, whatever TBTF bank you are still toiling at and whatever array of bank products your salesmen are pushing on unsuspecting bank clients these days.  Thank you!  

Backstopping Egypt, Obama-style.............

Just because the US is having so much success convincing the world its debt is money good (but don't anyone dare count the $6+ trillion in GSE debt to the total US debt), the good old US of A has now decided to backstop the debt of... Egypt. Bloomberg reports: "Egypt plans to raise $1 billion by selling Eurobonds this year to diversify borrowing and finance a widening budget deficit after its economy was rocked by the worst political crisis in 30 years. The five-year bonds will be backed by a U.S. “sovereign guarantee,” Finance Minister Samir Radwan said by telephone from Cairo today...President Barack Obama promised last week $2 billion in loan guarantees and debt forgiveness." And when it comes to Uncle Sam giving his assurances to the developing world, size does not matter: "The size is not significant but the backing from the U.S. will help raise the money at a relatively inexpensive cost." Uh, should Congress perhaps have something to say about the fact that America is now somehow the guarantor of recently revolutionary African countries?

Eric Holder sees no evil; won't prosecute evil, bankers bonus's at record highs

In its headline article "Prosecutors Faulted for Not Catching Credit-Crunch ‘Bandits’" Bloomberg has done what every other media was supposed to do years ago, namely ask the well-rested Eric Holder what the hell is the reason that not a single criminal investigation being launched against an entire generation of criminal and corrupt bankers (granted, not all of them....just the multi-millionaires). "In November 2009, Attorney General Eric Holder vowed before television cameras to prosecute those responsible for the market collapse a year earlier, saying the U.S. would be “relentless” in pursuing corporate criminals. In the 18 months since, no senior Wall Street executive has been criminally charged, and some lawmakers are questioning whether the U.S. Justice Department has been aggressive enough after declining to bring cases against officials at American International Group Inc. (AIG) and Countrywide Financial Corp."

Saturday, May 21, 2011

It's Saturday morning.......

Just finished my morning exercise.  What a gorgeous morning!  Have a 9:53 tee time and for the second time in 48 hours am headed out to swing on the links.  I hope not to hit too many Obama shots this morning.  An Obama shot is one that starts out real fine, sounds like it is a perfect shot, has all the makings of a hole-in-one and then, much to my dismay, goes all to hell real fast.

Two more fold in Georgia........

Taxpayers are coughing it up again this week in Georgia!

Georgia has been one of the hardest-hit states for bank failures. Sixteen banks were shuttered in the state last year. The two shutdowns Friday brought to 12 the number of bank failures in Georgia this year.

Hardest-hit really means the most amount of shenanigans pulled by the good-ole-boys without any of them going to jail.     They only go after the little fish. These sharks will be left unpunished. Remember what happened to Angelo Mozzillo. Not a thing.

Friday, May 20, 2011

First time in my life..............

Last night I got out the bag and headed out for a beautiful outing on a gorgeous course in Alpharetta.

My partner, a long-time pal, is a far better player and a much needed coach.  I play usually once a year although I missed playing last year so it has been over 2 years since I hit the links.  When I do play it is usually with him.   Anyway, he hit a shot far up the fairway and we both saw the ball spray into the sand trap.  Low and behold,  it being egg-eating season for every crow in Georgia, one of the adaptable birds swooped in and flew off with the ball!     

Linked-In IPO

Linked-In.

You can put lipstick on a pig but it is still a pig.

No truer words were ever spoken about a company.  

Wednesday, May 18, 2011

November, 2012 Presidential election

Let's see if America can show and take some personal responsibility. We have become a country of blamers, excuse makers and self-pitiers and it's amazing that we've gotten away with it as long as we have.

Tuesday, May 17, 2011

U S A is B R O K E

There are certain times in life when a man is faced with overwhelming adversity… times when he has no reason to adhere to society’s norms anymore. It is in these instances that the true quality of his character comes shining through. One of these situations is when he’s broke. Dead, flat broke. Some people, even when staring deep into their own financial abyss, still hold to their moral principles, honor their obligations, and keep their word. For others, the boundaries of morality are quickly blurred into shades of gray, and things like fraud, thievery, and deception become perfectly legitimate tactics in their minds. Speaking of broke, faced with what is tantamount to the official insolvency of the United States of America, policymakers have opted to seize funds from the retirement accounts of public sector workers in order to keep the government running. Wow. America’s leaders are willing to engage in cannibalistic thievery in order to continue funding government operations. I wonder what sorts of operations are so important that they are willing to steal from their own people in order to finance? Any ideas?

Monday, May 16, 2011

Thinking about retirement???

In its annual report to Congress last week SS acknowledged that its condition had sharply deteriorated in 2010. This sentence from the report is all you really need to know about what the status is:
The open group unfunded obligation over the 75-year projection period has increased from $5.4 trillion (present discounted value as of January 1, 2010) to $6.5 trillion (present discounted value as of January 1, 2011).
Note that this is a present value calculation. The total unfunded obligation has grown by a cool $1.1 trillion in just a year. In other words, if we had to shore up the TF to the level that it was just a year ago the USA would have to write a check for $1.1 T. The unfunded status was a disaster a year ago at $5.6T, it got worse by 20% during 2010. The cost of “fixing” SS goes up as a result. To put things in balance one of these two extremes are now required:
For the combined OASDI Trust Funds to remain solvent, the payroll tax rate could be increased an immediate and permanent 2.15%, (or) scheduled benefits could be reduced by an immediate and permanent 13.8%.

If you think this a ho-hum result, think again. If benefits get cut across the board by 14% we will have many seniors who will fall into a hole. An increase in payroll taxes of 2.15% is simply not going to happen anytime soon. There is no support in Congress for an increase like that. It would mean that taxes on all workers/employers would have to go up by $110b in the first year and rise every year thereafter. This would be a very regressive tax increase that hurts lower end workers the hardest. For 2011 there is already a payroll tax holiday of 2%. If the required increases take place in 2012 it would mean a 3.2% reduction in wages. Kiss the economy goodbye under that scenario.

I underlined the TF’s use of the words immediate and permanent as this language highlights the fact there can be no delaying on the fixes necessary at SS. One thing that you can take to the bank is that nothing will happen with SS in 2011 or 2012. This is a problem that will simmer for at least another 24 months. This delay will prove to be very costly for all involved. Both the required tax increases and/or the required cutbacks will be much larger than today.

The NPV of the unfunded liabilities at SS are now growing by at least $100b a month. One would think that this massive cost would spur some response in D.C. Don’t count on it. As a result, SS is going to come off the rails in about two years.

Thursday, May 12, 2011

Local Alpharetta police catching another NFL speeder

ATLANTA – Authorities say former NFL quarterback and ESPN analyst Kordell Stewart has been charged with driving with a suspended license and speeding.  Fulton County sheriff's spokeswoman Tracy Flanagan said Stewart was booked into jail in the Atlanta suburb of Alpharetta Wednesday and freed on $3,000 bond about four hours later.

Stewart is scheduled to appear in court July 12. It wasn't immediately known whether he has an attorney.

The Louisiana native played in the NFL for 11 seasons. He played eight with the Pittsburgh Steelers from 1995 through 2002. He also played for the Chicago Bears and the Baltimore Ravens. In college, he played for Colorado.

Wednesday, May 11, 2011

Goldman Sachs on Trial..........

The People vs. Goldman Sachs

Tyler Durden and Matt Taibbi

Maybe the singlest best "person" to grace the financial web in the history of earth.

Without a doubt, my pick for "TIME Man of the Year" for 2011.

Tyler Durden at Zerohedge

Tyler aside, Matt Taibbi is the best investigative journalist in the business.  Bar none.

Balls and brains thumping Blankfeins minions.

Dean Parisian and Ted Nugent tonight...........

Ted and I will be on CMT tonight (Well at 1am tomorrow). Its going to be on late, so set your DVR's or get the Red Bulls flowing.


Running Wild with Ted Nugent will air on CMT on May 12 starting at 1 am. I believe that the schedule is for EASTERN TIME so if you are in CENTRAL TIME or MOUNTAIN TIME please note the time difference. In each episode Nugent instructed three competitors on what he calls the ‘Big Five of Survival,’ which included psychology of Survival, Shelter, Water, Fire, and Food, and then designed an obstacle centered on that skill. The lessons learned in each episode will be put to the test in the ‘big hunt,’ as the competitors try to survive on their own, all while Nugent and Rocco [his 18-year-old son], attempt to hunt them down. In this twist on the competition/elimination format, Nugent determined the outcome himself at the end of each episode. Imagine being hunted by a madman, Ted Nugent himself tracking me down! This is a show you won't want to miss. After filming I was required to sign a 36-page legal contract to prevent me him from revealing too many details from the show. There were lots of booby traps. Aside from the contract, the scariest part of the experience was the constant scrutiny of all the cameras and microphones.

Tuesday, May 10, 2011

America's line-in-the-sand...........

How do you change a system in which political, legal and regulatory capture has been achieved and the electorate either does not care or does not give a "you know what?" The biggest laugh is that people believe the Madoff was caught, he wasn't, he turned himself in. Eventually he found a conscience. It is remarkable that the populace remains effectively paralyzed. I am convinced that the status quo remains until the US discovers how broke they are. We have lost our country, we watched it happen and stood by like cowards. We still are cowards. They know it. It's actually not surprising in historical terms at the ending of any 'Empire' (Ceasers Rome, Venice, Greece, British, Napolean etc). They end came by always being saturated in crumbling money, servants, luxury, corruption and self-delusion. That's where we're at I'm afraid.

This from the author of the Milken expose', "Den of Thieves"

By James B. Stewart, contributor

Pulitzer Prize-winning journalist James B. Stewart has written for years about business and politics, but as the scandals of the last decade mounted -- Enron, WorldCom, Adelphia, Tyco, culminating in the shocking Bernie Madoff Ponzi scheme -- it occurred to him that they all shared a common thread: lying. In his new book Stewart explores how and why instances of perjury and false statements are on the rise at the highest levels of business, politics, sports, and culture. Perhaps no case illustrates it better than that of Madoff. Judged by the duration and magnitude of his fraud, Madoff would seem to be the most cunning and skilled of liars. But as the following excerpt from his book, Tangled Webs, shows, Madoff repeatedly changed his story, he contradicted himself at every turn, and written records flatly disproved many of his assertions, had anyone bothered to check. Worst of all, the SEC knew he was lying and was one phone call away from catching him.

Thomas Thanasules paused as he sifted through a pile of e-mails he'd gotten from Renaissance Technologies, arguably the most successful hedge fund in the world. "Please keep this confidential," one said. "I have kept this note to a restricted circulation," read the reply. What was so secret? It was April 2004, and as a young compliance examiner for the Securities and Exchange Commission in New York, Thanasules was struggling to keep up with the burgeoning number of new investment vehicles known as hedge funds.

Some of the most mysterious of the funds were the so-called quantitative, or "black box," funds, which used complex computer programs. Renaissance Technologies had soared to the top of this secretive world. RenTec, as it was known to traders, was founded in 1982 by James Simons, an MIT- and Berkeley-trained mathematician who used sophisticated mathematical models to invest in markets. He hired theoretical physicists, philosophers, statisticians, mathematicians like himself -- but no MBAs. His was the ultimate black-box trading operation. Renaissance had several funds; its best known, the Medallion fund, was largely restricted to Simons himself and other Renaissance employees. Medallion had racked up astounding average returns of over 30% a year.

Given its prominence, size, and remarkable returns, RenTec had naturally attracted the interest of the SEC, which had asked it for numerous documents and records, including internal e-mails. So far, Thanasules hadn't found anything suspicious, but as he sifted through the assets of Meritage, Medallion's sister fund run out of San Francisco by Simons's son Nat, he discovered that Meritage didn't simply invest directly in other hedge funds, like most funds-of-funds. It had entered into a so-called total return swap with another fund-of-funds, HCH Capital, effectively paying HCH for the returns and risk associated with one of its investments. So far it looked as if it had been a very profitable investment for Meritage, since the fund it had swapped into had delivered extraordinarily consistent and quite high returns. It looked as if it had never had a down quarter, even after the technology bubble, and only a handful of down months.

Meritage had to gain access to the fund using a swap because the fund was so sought-after that only the chosen few were allowed to invest, handpicked by the fund's manager. Given Simons's reputation and track record, most funds would have been thrilled to have Meritage among its investors. But when Meritage tried to invest, the fund's manager, Bernard L. Madoff, had turned Simons down.

The name Madoff meant nothing to Thanasules. But from the RenTec e-mails, he could tell that Madoff was a subject of concern to the people there, who were, after all, some of the most sophisticated in the hedge fund world. Since they were only indirect investors in the Madoff fund, they didn't get account statements or have direct contact with Madoff, relying instead on what they could learn from HCH and other sources. They didn't really know what strategies Madoff used, or how he earned such consistent returns -- more consistent than even their Medallion fund. On Nov. 13, 2003, Nat Simons wrote an e-mail to his father and other investment committee members:

We at Meritage are concerned about our HCH investment. First of all, we spoke to an ex-Madoff trader (who was applying for a position at Meritage) and he said that Madoff cherry-picks trades and "takes them for the hedge fund."

This alone was a red flag, since cherry-picking is illegal unless the practice is fully disclosed to investors. Cherry-picking consists of executing many trades, and then allocating the most profitable ones to favored investors, inflating the returns at the expense of others.

The e-mail continued:

He said that Madoff is pretty tight-lipped and therefore he didn't know much about it, but he really didn't know how they made money. Another person heard a similar story from a large hedge fund consultant who also interviewed an ex-trader. The head of this group told us in confidence that he believes Madoff will have a serious problem within a year ... Another point to make here is that not only are we unsure as to how HCH makes money for us, we are even more unsure how HCH makes money from us; i.e., why does [Madoff, who charged minimal commissions] let us make so much money?

Simons suggested pulling out of the HCH position entirely.

To Thanasules, the e-mails raised a host of troubling questions and carried extra weight because they came from Renaissance. If Renaissance executives couldn't figure out what Madoff was doing, who could? He called the compliance officer at RenTec, who said that Meritage had reduced its exposure to Madoff, though not because of the concerns expressed in the e-mails. Still, Simons later said that "we were very worried about the position" and cut it in half because of the concerns expressed in the e-mails. He added that they would have eliminated it entirely except for one reason: They understood that the SEC had examined Madoff and given him a clean bill of health. But eventually they got rid of it entirely.

Armed with copies of the e-mails, Thanasules went to his supervisor, branch chief Diane Rodriguez. The facts they alleged -- a nonindependent auditor, incomprehensibly consistent returns with near-perfect timing, and, most of all, the inability of Paul Broder, RenTec's risk manager, to identify any trading volume or counterparties essential to execute the strategy -- led Thanasules to wonder "whether Madoff is doing these trades at all," as he described his thinking. On April 20, he sent an e-mail to Rodriguez.

Eight months later Robert Sollazzo, co-head of the SEC's broker-dealer examination program, referred the Madoff case to John Nee, the compliance division's assistant director. Sollazzo also recruited two young examiners, Peter Lamore and William Ostrow.

Sollazzo especially wanted Lamore, since he was one of the few examiners who had firsthand experience working for a hedge fund and trading options, and had waited to begin the examination until Lamore was available. Lamore was stocky, with neatly clipped brown hair. He had the upright demeanor of a military man, and he'd spent five years in the U.S. Coast Guard after graduating from the Coast Guard Academy. Ostrow had more experience, having been at the SEC for five years. He joined the agency right after graduating from the New York Institute of Technology with a degree in finance. The name Madoff meant little to either Lamore or Ostrow, although both knew that his firm was a large market maker.

Madoff snows the novices.  Madoff said he was "astonished" that the SEC's investigation hadn't exposed his fraud.  When Lamore and Ostrow arrived at Bernard L. Madoff Securities on April 11, 2005, Madoff himself came into the lobby to greet them. The examiners were impressed that Madoff -- the head of the firm -- was handling their examination. Usually it was the compliance officer, or someone else designated to act as a liaison with the SEC. Madoff didn't know why they were there, and they hadn't wanted to tip their hand. Lamore and Ostrow may have been a little unsure themselves. Contrary to policy, no branch chief was assigned to supervise them. They'd never been given any formal instructions, nor had they drafted any planning memorandum.

After two days of gathering documents and reconciling account statements, they had their first official interview with Madoff. They hadn't seen anything that suggested he was running or advising any hedge funds, so Ostrow asked a basic question: "Do you do a retail business?" "No," Madoff answered, "I don't manage money." Madoff insisted that his firm was simply a market maker and traded for its own accounts. It didn't generate investment advice or execute strategies. As Ostrow later put it, "According to Bernie, there was no investment advisory business."

This was an astounding proposition, since the premise of the Renaissance e-mails was that Madoff was managing money for hedge funds (including Renaissance) and generating returns that seemed impossible to explain. And what about all the feeder funds that the published reports said were funneling money to Madoff? If Madoff was simply a market maker, there was no reason for Ostrow and Lamore to be there. Neither believed him, but Madoff managed to divert them from this line of inquiry, regaling them with stories about Wall Street trading and the evolution of the business. Afterward, Lamore e-mailed a colleague to report that the interview lasted more than two hours and ended after 6 p.m. But he made no mention of Madoff's startling claim, and seemed in a lighthearted mood. "Was there a storytelling class when you attended Hofstra because this guy has a story about everything? ... Does everyone miss me in the office yet?" he wrote.

By late May, Lamore and Ostrow had been on the Madoff premises for nearly two months. They spent the entire time in a conference room, and neither ever ventured onto the 17th floor, which is where Madoff indicated that routine back-office tasks were conducted. Madoff continued to regale them with stories about the evolution of Wall Street, which Lamore found simultaneously "captivating" and "distracting," and impressed Lamore with his "incredible background of knowledge." Madoff dropped names of SEC officials he knew and mentioned that he was on the "short list" to be the next SEC chairman.

But Madoff was also becoming impatient with the investigators' presence. On May 25, Ostrow and Lamore scheduled a meeting to confront Madoff about his assertions that he didn't manage money. They laid two articles on the table and pointed out that both flatly contradicted his repeated claim that he didn't advise any hedge funds or manage their money. With the articles in front of him, Madoff abruptly reversed himself. "We do execute trades on behalf of brokerage firms and institutions, which include a number of hedge funds," he now acknowledged. "They use a model – algorithm -- that we developed." At first he said there were just four hedge funds using the model, and named Fairfield Sentry, Thema, Tremont, and Kingate Global. But then he said there were actually 15 clients, including two corporate accounts, but all of them were foreign.

Lamore and Ostrow asked Madoff how the model worked. Madoff said he had developed it eight years earlier and that he was the only person allowed to execute trades using it. He said he used a computer server separate from the firm's market-making activities. He called the strategy incorporated in the model a split-strike conversion strategy, but described something quite different: a "basket" of about 50 stocks used to replicate the S&P 100, but said it was a "long only" position with no options trading or selling short. He said the model had stopped using options about a year before.

Lamore and Ostrow were flabbergasted that all this information was only now being volunteered, after Madoff had repeatedly and flatly denied that he had any outside clients. At this juncture, Madoff effectively pulled the rug out from under them. He said he had already disclosed all of this trading to the SEC about a year and a half earlier, when the SEC's Office of Compliance Inspections and Examinations (OCIE), a separate, Washington-based operation whose primary mission is to detect fraud, examined him. "Lori Richards has a whole file I sent her with this info," Madoff said. "They have it." (Richards was a compliance official with the OCIE.) Ostrow and Lamore were embarrassed that this was the first they had heard of it. Madoff sensed he had them at a disadvantage and adopted a "condescending" tone, as Lamore later put it. Ostrow and Lamore were reduced to asking whom Madoff had dealt with besides Richards so they could follow up. Despite the bombshells Madoff had lobbed, Ostrow and Lamore, as well as their superiors, were diverted by the embarrassing disclosure that, as one put it, "the left hand didn't know what the right hand was doing" at the SEC.

In a conference call five days later, OCIE officials confirmed that they had indeed investigated Madoff, and although it was still an open investigation, "for all intents and purposes it was finished." They hadn't reached any conclusions or issued a final report, which Lamore thought was strange. It also struck him that the Washington officials kept stressing how important Madoff was. Ostrow noted that "I don't know who said it -- someone from OCIE basically: 'He's a very powerful person, Bernie, and you know, just remember that.' But basically just 'He is a very well-connected, powerful person.' "

Ostrow was eager to continue the investigation, and was planning visits to Fairfield Sentry and other Madoff feeder funds. He was especially eager to see how the split-strike conversion strategy could be executed without Madoff trading options. But on June 16, Nee met with Ostrow and Lamore and directed them not to visit or contact any of Madoff's feeder funds. Ostrow recalled that Nee warned them that Fairfield "is a $7 billion customer and if you go and raise red flags there and they go ahead and pull all of their money from Bernie and we're wrong, then we'll be sued personally or the SEC itself." (Nee denied that fear of lawsuits was a factor, but acknowledged, "We'd have to be very careful about going to a hedge fund client.") Nee told them it was time to end the examination and move on to their next assignment.

Ostrow and Lamore completed their report on Madoff on Sept. 8, 2005. It cited three minor technical violations they'd discovered in Madoff's market-making operation.  Madoff breezes past more red flags
A few months later, in October 2005, after Harry Markopolos came forward with his now famous report alleging Madoff was running a Ponzi scheme, the SEC launched another investigation out of New York. Markopolos's report was assigned to Meaghan Cheung, a branch chief in the enforcement division, and Simona Suh, a staff attorney. Suh did some Internet research on Markopolos, which she forwarded to Cheung, including a quote from Markopolos: "I can teach you how to spot fraud and what to do about it, so you aren't in the hot seat."

"I have some qualms about a self-identified independent fraud analyst, but who knows," Cheung responded, betraying an almost immediate skepticism of Markopolos.

Now that the Madoff case had been designated an informal investigation, it was finally entered into the SEC database, and the staff could issue subpoenas and take sworn testimony. On Friday, May 19, 2006, Madoff arrived at the SEC's New York office for his testimony with Cheung and Suh. It was the first time Madoff had been required to leave his home turf in Midtown, and to testify under oath. As he had before with Lamore and Ostrow, Madoff recounted at length his humble origins, his rise on Wall Street, the history of trading commissions, and how the firm came to "execute" trades for hedge funds. He rarely missed an opportunity to digress on an irrelevant topic, such as the intrusion of television screens onto trading floors.

"Let's get back to the point," Suh said. "If you could, please explain what makes you the trader?"

"Forty-some-odd years of experience," Madoff answered. "To me that's the best answer I can give you ... I have a relationship with the regulators and the firms in general in the Street, and I have never, ever -- I know the rules and regulations better than most people because I drafted most of them." He continued: "It's experience and using what tools are available to me which are perfectly open, legal tools to use," he said. "The advantage I have and the reason I don't need to be represented by lawyers is I'm not doing anything wrong."

Madoff seemed eager to discuss the split-strike conversion strategy and proprietary model that was uniquely his creation. He likened it to cooking using a blender: "So I'm saying that you're cooking a meal. You put in carrots and oranges and a whole bunch of stuff. You put it into a blender. If you let it run for two minutes, it's going to have one consistency. If you let it run for three seconds, it's going to be a different consistency and so on and so forth. Depending on what you're looking for, everybody is looking for different things, so people design their systems to say, 'I don't care about this stuff, I care about that.' Again, I don't attach too much importance to the information that flows out of that stuff. It's available to anybody. It's not unique data ... Some people 'feel' the market."

The rest of Madoff's testimony was replete with contradictions. He said he maintained segregated accounts with the Depository Trust Co., or DTC; previously he'd said there was just one account. He said he traded options over-the-counter through the New York office, not in London, as he'd told Lamore. He said he had electronic records of the options contracts; earlier he'd said no documentation existed. And with a firsthand witness who could contradict him sitting at the table, he baldly denied he had told Lamore that he'd stopped trading options. Just about the only consistency was his assertion that "some people can just feel the market."

Lamore was furious at Madoff's testimony, which implied that Lamore had either lied about or misstated his previous accounts of Madoff's answers. "I just remember sitting there in the testimony thinking, 'He's lying,' " Lamore later said. "It was just remarkable to me." According to Ostrow, Lamore "was jumping up and down at the attorneys and letting them know about all the discrepancies."

Lamore thought there was enough to refer the case to the Justice Department immediately. At the least, Madoff was lying under oath, which raised the question why. As Lamore put it, "So I'm sitting there thinking, You got to be kidding me. I mean, this is huge. This guy just lied on the record to your face." But the enforcement lawyers, especially Cheung and her superior, didn't seriously entertain the possibility. As Ostrow put it, "Peter [Lamore] was extremely upset that the [enforcement lawyers] weren't taking seriously the fact that everything was a lie. There were so many contradictions to what Bernie said in testimony or [Madoff lieutenant Frank DiPascali] said to what we were told on our exam." Suh later explained, "Meaghan [Cheung] did not think that this was likely to lead to an enforcement action or this was likely to lead to anything." Lamore was assigned to other matters and had no further involvement in the Madoff investigation.

Madoff "astonished" that the SEC had blown it.  On Dec. 16, 2008, five days after Madoff confessed to FBI officials, chairman Christopher Cox announced an internal investigation into the SEC's failure to detect the Madoff fraud, and referred the matter to David Kotz, the SEC's inspector general. After months of negotiations with Madoff's lawyers, Madoff agreed to be interviewed, and on the afternoon of June 17, 2009, Kotz and a colleague arrived at the Metropolitan Correctional Center. Madoff was expansive and seemed almost eager to unburden himself of the secrets he had held so long.

Madoff said he was "astonished" that the SEC's enforcement investigation hadn't exposed his fraud, and added there were two times when he "thought the jig was up": during the on-site exam by Lamore and Ostrow, because he thought they'd check with third parties, and when Suh asked him for his DTC account number, and he assumed the SEC would go to the DTC. "I thought it was the endgame, over," he said. Madoff indulged his disdain for Lamore and Ostrow, referring to them dismissively as "two young fellows" who "didn't understand what they were looking for." He was especially annoyed by Ostrow, who "came in here like Columbo" and wasted his time looking at canceled checks. He said he was "astonished" they didn't go to either the DTC, as Madoff had offered to let them do, or his purported trading counterparties. "It would've been easy for them to see," he said. "If you're looking at a Ponzi scheme, it's the first thing you do."

Kotz issued a detailed and unsparing 457-page report in August 2009. It should be required reading for every current and future staff member of the agency. Kotz concluded that there was no "misconduct" or inappropriate influence exerted on any individual staff member. Rather, the staff "never took the necessary and basic steps to determine if Madoff was misrepresenting his trading," and "there were systematic breakdowns" in the investigation, which, if anything, seems an understatement. They narrowed the investigations to minor technical issues rather than confront the possibility of massive fraud. They didn't reach out to the Renaissance officials and treated Harry Markopolos as a meddlesome fortune-seeker who was making their lives more difficult. They seemed more interested in proving him wrong than in catching criminals.

Still, for all the missteps by the SEC, it came amazingly close to catching Madoff. Thomas Thanasules deserves a promotion and recognition for spotting the Madoff issues in the Renaissance e-mails and bringing them to the attention of his superiors. Michael Garrity and others in the SEC's Boston office [who were eager to pursue Markopolos's claims] also showed genuine enthusiasm and an investigative bent. Would that their instincts had extended further into the agency.

Judged by the duration and magnitude of his fraud, Madoff would seem the most cunning and skilled of liars. That's what David Kotz assumed when he began his investigation. "I assumed Madoff was a genius, a master, that nobody would have had a prayer of figuring him out," Kotz said. But in fact, Madoff was no better than average, if that. Written records flatly contradicted his lies, had anyone bothered to check them. He repeatedly changed his story on numerous points: whether he did or didn't trade options; whether he did or didn't manage money for individuals; who did or didn't handle his trading; how many clients he had; and how much money he managed. Madoff had the temerity to lie about what he said to Lamore to Lamore's face. "He wasn't a good liar," Kotz concluded. "He couldn't keep his story straight. He was no evil genius."

As of late 2010, two years after the Madoff scandal broke, the SEC had taken no disciplinary or other measure against anyone involved in the various Madoff investigations. The SEC officials' collective failure is, as Madoff himself put it, astonishing. It will surely rank as one of the greatest regulatory failures ever, not just because of the size of the fraud, but because it was staring them in the face.

Friday, May 06, 2011

Politician.......

The 2012 Webster's definition for "politician" will say it means “those you elect to screw you and help the rich get richer”.

Trillion Dollar Man........

Last night I was chatting with a colleague about Osama bin Ladens purported death.  After nearly a decade, two wars, an over 81% increase in the military budget, thousands of deaths and disabilities, following the tragic loss of life on 9/11 this was a man who has been responsible for no less than a trillion dollars of additional spending for America's "safety".

I would like to see a picture or two.  I bet you would too.  There won't be an end to any of this for a long time.  America needs to remain vigilant but I am more fearful of the Congresscritters and this President in putting the real hurt on this economy and this great nation. 

Al Qaeda has vowed not to deviate from the path of armed struggle and said bin Laden's blood "is more precious to us and to every Muslim than to be wasted in vain."


"It (bin Laden's blood) will remain, with permission from Allah the Almighty, a curse that chases the Americans and their agents, and goes after them inside and outside their countries," the militant network said in a statement released on Islamist Internet forums and translated by SITE.

"Their happiness will turn into sorrow, and their blood will be mixed with their tears," al Qaeda said.

"We call upon our Muslim people in Pakistan, on whose land Sheikh Osama was killed, to rise up and revolt to cleanse this shame that has been attached to them by a clique of traitors and thieves ... and in general to cleanse their country from the filth of the Americans who spread corruption in it."

Best Buy, Billings, MT

Roger, you admitted that on March 28, 2011, you pursued a shoplifter and engaged in physical force to apprehend this shoplifter," the one-page notice reads. "This is a violation of Best Buy's Inappropriate Conduct Policy which states that employees are prohibited from 'pursuing shoplifters under any circumstance or using physical force to detain shoplifters' and ground for termination. Your employment with Best Buy is terminated, effective immediately."

A guy gets fired for doing the right thing.  I am going to do the right thing and stop shopping at Best Buy.

Wednesday, May 04, 2011

Rashard Mendenhall

This bozo tweeted on the Sept. 11 attacks: “We’ll never know what really happened. I just have a hard time believing a plane could take a skyscraper down demolition style.”

Fact.

This bozo is also one of the finest running backs ever to grace an NFL field.

Fact.

It doesn't take intelligence or common sense  to play in the NFL. 

Fact.

He should get his facts straight.

Monday, May 02, 2011

Tango Uniform

Now that the maggot has gone T.U. and  been given the celestial dirt nap we must get the boys out of Afghanistan!  America will be a better America with them on US soil.

Did you hear the groans coming from the military industrial complex this morning? Now it's all about oil, minerals and campaign contributions.

Sunday, May 01, 2011

Solid zinger......

I was sitting with my 88-year old Dad at breakfast this morning when one of the other residents of the Assisted Living Center walked over to our table for a quick one-liner.

She looked at me and said, "You don't have to be crazy to live here but it sure does help!"

No truer words were ever spoken.    Those who toil and strain for these older Americans who are in the twilight of their own "winter" are truly blessed.   Underpaid, overworked and honest to a fault.  The Africans, from Ghana and Kenya are a treat to work with.    

Native American Advisors CHIPPEWA PARTNERS

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CHIPPEWA PARTNERS, Native American Advisors, Inc. is a Registered Investment Advisor, founded by Dean Thomas Parisian in 1995. The firm is a manager to an exclusive clientele and is closed to new clients. As a Registered Investment Advisor, our expertise developed over 35 years balances experience, integrity and tremendous work ethic. Dean Parisian is a member at the White Earth Reservation of the Minnesota Chippewa Tribe, a former NYSE and FINRA arbitrator and trader who began his career with Kidder Peabody and later worked for Drexel Burnham Lambert in LaJolla, CA. His philanthropic interest is in Native American education and he's endowed a significant scholarship for Native Americans at the University of Minnesota. His greatest accomplishment includes raising two sons and 26 years of marriage. The Parisian family enjoys outdoor pursuits at Pamelot, their farm in Tennessee and at the Ghost Ranch, their ranch on the Yellowstone River in Montana. For media requests contact the firm via email: ChippewaPartners (at) gmail dot com, on Twitter: @DeanParisian. Global 404-202-8173