U.S. Economic/Financial News
Madoff Money Laundered Through London and Caymans
March 13 (EIRNS)Bernard Madoff pleaded guilty on March 12 to, among other crimes, "international money laundering, related to transfer of funds between [Madoff's] New York-based brokerage operation and [his] London trading desk," the Associated Press reports.
Madoff, whose $65 billion Ponzi scheme collapsed last December, is reported to have laundered vast sums through his British operations, reportedly with the cooperation of British banks.
Now, as he was sent to prison from a courtroom packed with enraged investors, Madoff is vowing to keep his mouth shut. His life is clearly in danger from more than one angle: On the one hand, the mob rage, as seen in the courtroom, which led the authorities to provide him with a bullet-proof vest for the appearance; and on the other, those financial powers for whom he was a front man in his international Ponzi scheme.
Lee Richards, a receiver for Madoff overseas companies, told a a Federal court in February that he had documented transfers of $194 million from Madoff Securities Internationalthe London officeto Madoff's New York firm last November.
The Serious Fraud office of the U.K. national police is probing the London money laundering, among other Madoff crimes.
The office of New York State Attorney General Andrew Cuomo has subpoenaed records of Madoff cohort J. Ezra Merkin, in connection with the Madoff affair. Merkin steered billions of dollars through the Madoff money funnel from his own hedge funds, such as Ariel, based in the British offshore crime capital, Cayman Islands. Merkin bought Israel's Bank Leumi in 2006, and Merkin's family is closely associated with Madoff in the control of Israel Discount Bank.
California Budget Continues To Unravel
March 13 (EIRNS)Less than a month after patting himself on the back for achieving what he called an historic budget compromise, Gov. Arnold Schwarzenegger was informed this morning that the deficit hole was not only not plugged, but continues to grow. The budget deal crafted by Arniewhich included massive spending cuts, which devastated the state's social safety net, forced major pay cuts and layoffs on state employees, introduced billions in new taxes, and saddled the state with billions in new borrowingwas supposed to cover a $40-plus billion shortfall. It came after months of haggling among legislators, and passed by the one vote in both the State Senate and Assembly.
Today, the state's budget analyst, Mac Taylor, announced that revenues continue to plunge, because the state's economy is on an accelerated downward collapse. Taylor's office produced a revenue forecast that shows that, at present, revenues have collapsed so far, that there is now an additional shortfall of $8 billion in the current fiscal yeari.e., that the $40 billion in cuts, new taxes, and borrowing is not enough. Taylor warned that even this could grow, while forecasting increased deficits for the budget in fiscal year 2010-11.
Taylor's report confirms Lyndon LaRouche's forecast, as he responded last month to Schwarzenegger's claim that he had succeeded in solving the crisis, by warning that California's economy would continue into free fall, and the would-be Mussolini's latest deal would not last for a month. LaRouche, once again, has been proven to be right. There are legitimate concerns that Schwarzenegger may now move for even more draconian cuts than those in his now-discredited budget compromise.
Senator Shelby: It's Time To Close the Big Banks
March 8 (EIRNS)Sen. Richard Shelby (R-Ala.), ranking member of the Senate Banking Committee, told ABC-TV host George Stephanopoulos March 8 that the approach of Treasury Secretary Geithner and President Obama would not work. Instead, Shelby said, "I think they've got to close some big banks. They don't want to do it. We're going down the same road Japan was going down."
Asked if he wanted to nationalize the banks, Shelby emphasized, "I don't want to nationalize them. I think we need to close them ... close them down, get them out of business. If they're dead, they ought to be buried. We bury the small banks; we've got to bury some big ones and send a strong message to the market."
When Stephanopoulos brought up the auto companies, Shelby said, "Subsidization of anything for very long never works. The automobile businessthose companies, Chrysler, Ford, and General Motorsthey're in deep trouble. We know that. I've suggested they go into Chapter 11. That's where they belong. And they could reorganize."
Asked why he was one of the few Republicans who voted for the budget bill, Shelby said, "First of all ... these are a compilation of nine appropriations bills. A lot of people voted for a stimulus bill, a TARP. That's $1.5 trillion. Now they say, 'Oh, we'd better not vote for a $400 billion bill to fund the government.' I think we ought to fund the government and move on."
A Child's Weekly Allowance Could Buy a House in Detroit
March 9 (EIRNS)Realcomp, a multiple listing service in suburban Detroit, reports that median prices of single-family homes and condominiums plunged more than 49% from February 2008 to last month. Median prices were down 23.3% in Livingston County to $172,000; down 44.6% in Macomb County to $115,000; down 46% in Oakland County to $144,000; down 32% in the St. Clair area to $97,000; down 43.9% in Wayne County to $28,500; and down 42.6% in Detroit to $5,737. That's not a typo.
Some 1,800 homes in metropolitan Detroit are now for sale at less than $10,000, which used to be valued at more than ten times that, according to the Associated Press, which also notes, "In extreme cases, homes are on sale for $1 or less, which has enticed investors to Detroit from as far away as the United Kingdom and Australia."