Bernie gets his day in court

[Hosakawa Tito]

Madoff sentenced to 150 years. Personally I think he shouldn't do any jail time. Instead I think the most appropriate sentence would be "poverty for life". Let Bernie and his wife try living on medicare & social security and nothing else. If they get two nickels to rub together one should be confiscated. Give the greedy glutton what he fears most...poverty.

[Hooahguy]

What I want to know, is where are they going to put this scumbag? A real prison, or one of those semi-comfortable prisons for rich and famous people?

probably the latter

[KukriKhan]

Where'd the money go? He can't have spent it all himself. Somebody, or several somebodies, are sitting on some huge assets somewhere.

Meanwhile, rich people signing over their granma's inheritances to Uncle Bernie to get 15% guaranteed returns, when the rest of the world was pulling 7% on the best days... are hard to sympathize with. They had to know that Bernie was either a rocket scientist, or a crook.

But still: where's the money?

[Ice]

Meanwhile, rich people signing over their granma's inheritances to Uncle Bernie to get 15% guaranteed returns, when the rest of the world was pulling 7% on the best days... are hard to sympathize with. They had to know that Bernie was either a rocket scientist, or a crook.

Greed

[Aemilius Paulus]

Let Bernie and his wife try living on medicare & social security and nothing else.

Living on welfare is actually none-to-shabby if you do not spend like an American and go to restaurants/eat pre-fab dinners all the time. That said, Bernie may not adapt to the new environment.

or one of those semi-comfortable prisons for rich and famous people?

I doubt it. Contrary to popular opinion, few such prisons exist, and the ones that do exist are entirely randomly placed and receive random inmates from a non-posh area. Bernie will go to a Federal Prison, and from what the prison experts (former inmates) say, Bernie will be ganged up on. Hopefully those inmates will treat him well . American prisons alone are not enough punishment for him. Not tough enough. Try French prisons, which Economist called worse than "many of the Eastern European ones". Or Russian/Chinese prisons.

They had to know that Bernie was either a rocket scientist, or a crook.

Bah, hindsight. 15% returns are huge in America, but as I have stated in a Frontroom thread, the savings account I have in Russia gives me 13% returns. Who knows what people thought. I read Steven Spielberg invested quite a hefty amount in Madoff, among other celebrities.

[Ser Clegane]

but as I have stated in a Frontroom thread, the savings account I have in Russia gives me 13% returns. Who knows what people thought.

Well - I think that, considering a ~14% inflation rate in Russia in 2008, that would have left you with a -1% profit last year.
Of course I do not know the exact structure of the investment you made (e.g., currencies) - but I would strongly recommend to keep in mind that higher returns are always linked to higher risks.

Example: I also invested money in a fund for bonds from emerging markets. The bonds (e.g., from Latin America, Russia) in this fund also have returns of around 10% - guess what - when the crisis fully developed the value of this fund nose-dived and lost around 30%, because for some countries there was a tangible risk of going bankrupt and not being able to pay back the money (the value recovered significantly since then, BTW).

How secure is your investment? Could the bank where you have your savings account go bankrupt (like Lehman)? If yes - is there a "deposit insurance", i.e. would you still get your money back in case of bankruptcy?

[Lemur]

Looks like he won't be serving in Club Fed:

Madoff will probably be sent to a medium- or high-security prison, probably in the northeastern U.S, according to lawyers and prison consultants. Even worse for Madoff, fellow inmates serving life sentences may want “to make a name for themselves” by harming the ex-money manager, a former inmate said. The Federal Bureau of Prisons, which will decide where he’s jailed, may isolate Madoff to protect him from other prisoners.

“If they see an opportunity to take that man out and be in the paper and make a name for themselves, what do they have to lose,” Steve Vincent, a former police officer jailed for theft who now runs Federal Prison Consultant Services in Louisville, Kentucky, said in an interview. “Wherever he goes, they’re going to put him in solitary.” [...]

Inmates serving more than 10 years aren’t eligible for the unfenced and un-walled camps, Ponce said.

“The vast majority of people he’ll be incarcerated with will be people who committed violent offenses,” said Barry Pollack, a lawyer who represents white-collar defendants and isn’t involved in the Madoff case.

[Aemilius Paulus]

Well - I think that, considering a ~14% inflation rate in Russia in 2008, that would have left you with a -1% profit last year.

The inflation rate is high because of the recession. Normally, it is, of course, much lower. Also, my deposits are in dollars. makes no sense for me to exchange the dollars to roubles, losing some money, and then having to deal with the inflation and instability of the rouble. All Russian banks welcome dollars, and pay higher dividends if you invest in hard currency.
Of course I do not know the exact structure of the investment you made (e.g., currencies) - but I would strongly recommend to keep in mind that higher returns are always linked to higher risks

How secure is your investment? Could the bank where you have your savings account go bankrupt (like Lehman)? If yes - is there a "deposit insurance", i.e. would you still get your money back in case of bankruptcy?

Ser Clegane, you are of course correct that higher return equals higher risk, but this is Russia. Hungary, Pakistan, Mexico, South Africa, Argentina, Egypt, Indonesia, Brazil and Russia all feature economies that sag under the weight of high interest rates. It is not as much about safety. The Fed in US sets the rates, and Russian Gov't does the same. In Russia you win in deposits, but then lose when you have to borrow yourself. It is not so much about risk as it is about nationwide policy.

Yes, DIS (Deposit Insurance System) was recently implemented in Russia. Putin has saved huge reserves of dollars, and he readily shells them out right now, propping up the banks. Nothing big has went bankrupt et. The stock market crashed, but then rebounded. Russia is a land of big ups and bigger downs.

[Rhyfelwyr]

What's the point in sending someone to solitary for life? Just give him the death penalty, its best for everyone.

[LittleGrizzly]

Surely there is a prison out there with other serious non violent offenders that he could join. Im very unhappy with the guy for messing up so many peoples lives... but a lifetime in solitary confinment where he will see only prison gaurds is a fate worse than death...

Personally i would be willing to either take my chances in general prison population or actually seek death from the prison population...

Screw solitary confinement for life...

[Ser Clegane]

The inflation rate is high beacsue of the recession. Normally, it is, of course, much lower.

The inflation rate of 14% is well in line with the past years (in the current recession the inflation should actually tend to go down).

Since your investments are in USD and you get paid back in USD the inflation rate should however indeed not be a major concern for you.

Ser Clegane, you are of course correct that higher return equals higher risk, but this is Russia. Hungary, Pakistan, Mexico, South Africa, Argentina, Egypt, Indonesia, Brazil and Russia all feature economies that sag under the weight of high interest rates. It is not as much about safety.

If a bank or a state is willing to pay double-digit interest rates while you get less than 5% in Western countries you can bet that they are not doing this because they are so generous, but because the market thinks there is a much higher risk in lending them money and therefore demands a significant premium. This risk might be a bankruptcy risk or it might be a risk of political instability.

High interest rates are not set by the government (or actually the central bank) for fun - they are there to counter e.g. inflation - and the interest rates given or asked for by banks do not necessarily reflect the interest rates set by the central bank/government, e.g. on the German market interest rates did not decrease in the same way as the ECB rates due to the higher perceived risk on the financial markets.

Don't get me wrong - I also have invested in bonds from e.g., Russia and enjoy higher returns in good times - I am just saying that there are no free rides. If you get returns that are very high you are paying for these returns by accepting a higher risk of losing money (remember that somebody has to pay these returns and this somebody would not pay these returns if he would be considered credit worthy enough to get the money at a lower interest rate).

[Aemilius Paulus]

The inflation rate of 14% is well in line with the past years (in the current recession the inflation should actually tend to go down).

Hmm, I thought it was around 10-12%, and it was, in 2003-2007 I believe.

If a bank or a state is willing to pay double-digit interest rates while you get less than 5% in Western countries you can bet that they are not doing this because they are so generous, but because the market thinks there is a much higher risk in lending them money and therefore demands a significant premium. This risk might be a bankruptcy risk or it might be a risk of political instability.

Yes, investment in Russia is risky for foreigners with all the seizing of assets, Putin's interventions (Yukos), political instability (who knows what will happen when Putin dies), war (Georgia, possibly Ukraine, Russia is still opposed to NATO), etc, but mostly, the risks are great for foreign investment, and not as much for Russian citizens.

High interest rates are not set by the government (or actually the central bank) for fun - they are there to counter e.g. inflation

Aber naturlich. Although not all countries do it to the extent of the aforementioned ones, even if their inflation is high. Putin still faces criticism over his reluctance to lower the interest rates. You can also counter inflation through a tight, conservative fiscal policy of lower spending and higher taxes. Especially taxes, since Russia's personal income and property taxes are quite low. And from what I have read, the corporate taxes are also very moderate, but to raise them would impede investment.