Investors fear $50bn loss in Madoff’s ‘big lie’
Financial Times
14-Dec-2008 (7 comments)

Investors around the world were rushing on Friday to assess potential losses from what could be Wall Street’s biggest fraud – a multi-billion-dollar scheme allegedly perpetrated by investment manager Bernard Madoff. A former chairman of the Nasdaq stock market, Mr Madoff was released on a $10m bond on Thursday after prosecutors said he told senior employees, including his sons, that his operations were “all just one big lie” and “basically, a giant Ponzi scheme [similar to a pyramid scheme]”. Prosecutors said Mr Madoff put his losses at about $50bn but that estimate has not been independently confirmed.

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Kaveh Nouraee

No-name

by Kaveh Nouraee on

I'm speaking from the position of years of personal experience in this particular industry, with both domestic and import brands.

SUVs represent just another step in the evolution of "family vehicles", beginning with the station wagon, then to the minivan, and then the SUV. Currently the market is seeing further evolution take shape in the form of the so-called "crossover" vehicle.

Honda and Nissan all destroyed the electric cars they built in the late 1990s, not just GM with the EV-1. Toyota destroyed all of theirs as well, except for 200 electric RAV-4s which they sold to the public. The reason for the failure of that initial production of cars was cost. The GM electric had a price of over $40000.00, and they still couldn't turn a profit. People didn't get excited over a car with a short driving range. There just wasn't enough demand beyond the celebrity environmentally-conscious crowd. They also had quality problems, such as batteries that failed in the Arizona heat.

Money that foreign manufacturers spend on engineering, research and development of new technologies, such as hybrid powertrains and alternative fuel sources, such as hydrogen, is money that simply isn't as readily available to the Big Three. The Big Three are forced to operate with a much greater overhead than their foreign counterparts.

You are correct when you say that workers at Porsche or VW, or BMW work fewer hours. However, the other side of that coin is that the efficiency of those companies is much greater. More work gets done in the same 8 hours and there's greater overall productivity in the foreign plants than in the Big Three plants.

The UAW plays a huge role in this by pressuring management into conditions that ultimately affect overall efficiency and productivity. The dues paid to the UAW by labor, in fact comes from the pockets of the Big Three. That money could be put to better use by pouring it back into the company, where they could do more R&D in new technologies, rather than seeing the overseas companies do it ahead of them.

In recent years, the Big Three gained some financial concessions from the unions, which allowed them to at least partially address a concern that was really doing a number on them, which is product quality. All of these car companies, whether from Detroit, Asia or Europe, use the same group of suppliers and vendors for parts and components. It's really a tidy little (almost incestuous) network where everyone knows each other and does business together. The difference is in the final product.

When Detroit dominated the industry, the UAW rightfully and successfully fought for the workers, and utimately ensured that workers were paid fairly, worked under safe conditions, had proper medical coverage for themselves and their families, and made provisions for their retirement. Back then without the union, if workers didn't like it, there was no alternative. They had nowhere else to go.

Now, the entire landscape has changed dramatcially. Toyota builds vehicles and components in California, Kentucky, Indiana, Texas, W. Virginia and Alabama, with tentative plans to open a Prius assembly plant in Mississippi. Honda has plants in Ohio, Georgia, California and South Carolina. Add the companies I mentioned previously, with their plants all over the U.S. and you will see that the competition is enormous. And these foreign companies attracted a significant portion of their labor force from the Big Three. The UAW has made numerous attempts to unionize these shops, with believe it or not, the workers themselves rebuffing the UAW's advances, believing that there is no benefit, and that it could only lead to an adversarial relationship between labor and management.


IRANdokht

Kaveh

by IRANdokht on

Did the United Auto Workers union also make the wrong decisions to destroy the GM electric cars? spend more funds in design and production of extra heavy utility vehicles instead of lighter compacts and hybrids?

The problem is with the top management and the decision makers of these companies. The union is concerned with the employee's benefits, health care, work schedule, safe environment etc...

why are you always blaming the unions when it's clear that the corporations are run by thiefs who have each other's backs? The oil company had the automakers back and vice versa, that's why their designs were contradictory to the needs of the society, that's why Honda and Toyota made a killing in America!

IRANdokht


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Kaveh don't be too brainwashed

by no_name (not verified) on

I think "dahanet goozeed" blaming the union is the script from some aspect of media. Did the unions forced the management to put a roof on a truck and call it a SUV and sell it year after year for high profit?

Did the union forced the big 3 not to invest in hybrid technology?

The automakers who work at european car makers like Porsche, VW, BMW or others are paid more and work less. Yet they seem to be doing fine globally. Big 3 is falling because they operate the companies with little long-term vision and only look at quarterly numbers!


Kaveh Nouraee

If this guy is convicted

by Kaveh Nouraee on

I hope they lock him up and throw away the key.

Gol-dust....the reason the Big Three are not getting the bailout so readily is because of the United Auto Workers. The UAW's stranglehold on GM, Ford and Chrysler has been a major contributing factor in why imports such as Toyota and Honda have been consistently beating Detroit in quality, value and profitability.

Underscoring the point is the fact that both Toyota and Honda build their best-selling products right here in the U.S., as does Nissan, Subaru, Mazda, Hyundai and Mitsubishi. Mercedes-Benz and BMW also have factories here. Workers at these "foreign" companies earn wages that are in line with Detroit, in cleaner, safer, more state of the art plants with good benefits and perks.

The big difference? No United Auto Workers union to bully either management or labor. Their strongarm tactics may have been useful in order to get management to treat labor humanely and pay them a decent and fair wage. But back then, there was no competition. It was buy American or take the bus. Now, the market is saturated with car brands from all over the world. The union refuses to either recognize or respect that fact and that's why they are in the situation they're in today.


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Bailout money will save them

by no_name (not verified) on

Don't worry the bailout money will save these criminals. Here is another one: //www.forbes.com/fdc/welcome_mjx.shtml

As another person commented, most of these criminals have strong ties with Israeli Lobbies and of course the main media will cover it up....


I Have a Crush on Alex Trebek

"Jewish Socialites Worried about $50 B Ponzi scheme"

by I Have a Crush on Alex Trebek on

LOL. Bail them out! The country clubs need their dues. The maids, cooks, decorators, party planners must all be paid! Most importantly, the liquor distributors.... 


gol-dust

What most these crooks have in common is AIPAC!!!!!!!!!!!!!

by gol-dust on

Lehman, Goldman scacks, Bear Stearns, etc,,, Isn't that intersting! That's why big 3's  don't get bail out, since none of them has any stakes there! No wonder they stole Palestianian lands too! They really don't care what they do to other people's lives! All about money!