How could these events happen ?

I still can not quite come around my thoughts after reading "No one would listen" by Harry Markopols. Well, OK, here is a short review. The book was written by the real person and is, as far as I can gather, completely real story of real life events. It describes ten years long hunt conducted by the author after Bernard Madoff and his investment fund. It started, when his bosses at Rampart company wanted him to invent a financial product which could compete with Madoff double digit returns. However, when Markolopos, equipped with excellent mathematical knowledge, started to investigate Madoff strategies, they appeared to him as bogus. He quickly discovered that Madoff could run Ponzi scheme or was involved in an illegal practice of front running:

"This is a fraud, Frank," I told him. "You're an option guy. You know there's no way in hell this guy's getting these returns from this strategy. He's either got to be front running or it's a Ponzi scheme. But whatever it is, it's total bullshit."

The book than describes the series of failed attempts to inform market supervisors, mainly SEC about the fraud. It is incredible history of ignorance and neglect by the regulator.
It is also the story of human naivety, about the incredible ease with which we sometimes trust in people who are just untrustworthy.

As I wrote before - the most horrific conclusion from reading of this book, is not the Madoff evil nature - but the complete lack of true, deep supervision by SEC and other US and international authorities.

The book ends with chapters that look like advice for authorities - how to improve SEC and make it true regulator and true protector. In this spirit, the author's lawyer, Dr. Gaytri Kachroo has offered a speech at World Legal Forum. It's audio version is available here.

We must ask the rethoric question: "Do they listen now" ???

Finally, when writing about Madoff it is hard not to contemplate on his distorted and depraved mind. Not all know, that he embezzled a lot of money from Jewish charitable institutions, Jewish educational institutions (like Yeshiva University) and foundations. See this as one of the most critical examples....

Deep devastation after "No one would listen"

The video below seems "funny", but after reading Henry Markopolos "No one would listen", I'm devastated.

We all heard about Madoff Ponzi crime, but few of us knew that it is not only his crime, but the complete failure of the most advanced regulator - SEC - what makes this story horrible.

Full review will come - on the weekend.

Meanwhile, watch this:

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Harry Markopolos
http://www.thedailyshow.com/
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No one would listen - The account on the failure of American Financial supervision

This is harbinger of full review, because, so far, I read (i.e. listen to) only the first chapter of Harry Markopolos's "No one would listen".

Well written, almost like a thriller or good detective story, is, unfortunately I could say, based on true facts, and the author was the true detective. The book describes his investigation into Bernie Madoff case and his $65 billion Ponzi scheme. What is amazing, is that for at least last 10 years, Markopolos was sending warnings, was speaking, would offer his help to SEC - but apparently no one has seriously his warnings. Why?

Failure of FCC and SEC? Bigger failure ? Maybe....

I die for listening the full book - I will do it soon ....

The New Paradigm for Financial Markets - conclusions

The book itself is not very long, so I could finish it while coming back from Paris.
In the later part of the book Soros elaborates on his theory of reflexivity and how it helps in the understanding of the current financial crisis. The theory replaces traditional "equilibrium" theories that laid ground to strong market fundamentalisms - that claim that market are always right. He proves that sometimes they are not.....
The book concludes with interesting suggestions, addressed particularly toward market regulators. One of his propositions says that regulators should care more about credit expansions and not just about monetary face of financial system.

The book is great - a year ago I read Alchemy of Finance, but for me it was more technical, so I even did not dare to post a review here. The "New Paradigm" is different. It is intriguing and breathtaking.....

Last but not least - it's nice to hear Soros talking about the ideas and about the size of the crisis.
http://www.pbs.org/newshour/bb/business/jan-june08/soros_05-13.html

Reading while in Paris: Gorge Soros's "The New Paradigm"

"The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means"

This is the book I started to read in Paris. It's quite different from my "holiday's readings" that you can see here. Soros analysis of what we perceive today as the financial crisis is deep. No question about that.

Traditionally, we think the current crisis is just "subprime" lending crisis. It is not. This is just the effect. The cause is deeper and has roots in processes and trends almost 10 years old.

Particularly I was intrigued by the conclusion that the cut of the rates of federal funds by Fed (from 6.5% to 3.5%) in the course of just few months of 2000, caused by Internet bubble, and the trend that get it down to 1% by 2003, has created a long term bubble in housing markets....
The examples he gives, are just breathtaking and almost unbelievable....

As in "Alchemy of Finance" he writes about his life's experiences and how thay influence his philosophy and activity. I know, Soros is controversial. But he explicitly says about the philosopher who was his master: Karl Popper. For this very reason I value Soros, as I'm also a pupil of Popper, and his Open Society ideas ....

I'm in the mid of the book now, I will write more when finished.