From Mark Cuban:

Im taking a flyer here, but if they were to put me on the case, the first people I would talk to are the software developers.  Somewhere along the line there was a software program written or modified that allowed Madoff to enter the numbers he made up, who they were paying out cash to and would print the checks and  statements.  Its very unlikely that it was off the shelf software because it would be impossible for all the numbers to balance, or he would need to use suspense type of accounts that would raise red flags for even the smallest of accounting firms. Maybe I have missed it, but I have yet to see an article written or any commentary about the software Madoff Investments used or read about any programmers that have come forward that worked for him. Someone had to outline the details of what they wanted the software to do, and in a scam of this size, could it be anyone but Madoff himself ? Someone had to take that information and either create or modify software to keep the whole mess running smoothly for him. Find the programmers who wrote the software and you will find out how the whole thing worked.

I’ll bet Dick Fuld of Lehman thought no one would notice that he sold his $14 million dollar house to his wife last November for $100.

An interesting article:

Based on reported Berkshire holdings as of September 30, and the stock moves since then, Doug Kass estimates Buffett’s firm has lost:

* Wells Fargo: $6.3 billion lost on 290 million shares
* American Express: $2.9 billion lost on 151 million shares
* Coca-Cola: $2.1 billion lost on 200 million shares
* Burlington Northern Santa Fe: $1.8 billion lost on 63 million shares
* ConocoPhillips: $1.5 billion lost on 60 million shares
* U.S. Bancorp: $1.5 billion on 73 million shares

From Bloomberg:

OPEC wants U.S. regulators to curtail oil trading by hedge funds and speculators who helped make last year the most volatile in crude oil trading. Abdalla el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, is seeking rules to ‘limit the level of speculation’ by investors who buy oil without planning to use it. Oil surged 46 percent in the first half of 2008 to a record $147.27 only to plunge by the end of the year, prompting OPEC to make its biggest ever supply cuts. “OPEC has repeatedly called for the need to reduce the role of excessive speculative activity in the market,” el-Badri, who will attend this week’s World Economic Forum in Davos, Switzerland, said in an e-mailed response to questions. “Today, it is impossible to know who is actually buying and selling oil futures.”

Don’t you love it? The world’s most prominent oligopoly is bitching that they can’t control things and looking for sympathy all at the same time. Nice job guys.

Congressman Jim Moran is a dolt. An excerpt from a local DC newspaper followed by comments from the von Mises blog:

The bill, which was introduced last week, will contain more than $500 billion in spending that — coupled with more than $200 billion in tax cuts — Congress hopes will stimulate the economy and drag the country out of recession. But where will all this spending go? No one’s exactly sure, [Congressman Jim] Moran said, and that is why now is the time for localities across the country to be lobbying for a piece of this federal funding. “The biggest threat, these economists tell us, is that whatever the government does it will be too little and too late. So we’re going to act posthaste,” Moran said. “Those communities, those organizations that are ready with projects that can begin immediately are the ones who are going to get the money.”

I love this excerpt about the Moran comments:

So, if we follow Moran’s argument, the best economic policy is to blindly spend money in a panic based on who organizes the most effective lobbying campaign. Nothing could go wrong with this plan…Moran’s wisdom is evident: You can easily employ millions of people in government-financed jobs if you’re just willing to incur enough debt. Obviously, these jobs will continue to exist after government financing ceases and it becomes apparent there’s no market demand for these positions. Seriously, how can one refute Moran’s superior economic reasoning? Government spending = prosperity. It’s amazing it took humanity until 2009 to realize this self-evident truth.

Where does it all end? I can’t help but think of the scene from Pink Floyd’s The Wall where school kids walk the conveyor belt ultimately being ground into hamburger:

Apparently, this is the new American way: the secure feeling of being like everyone else all the while headed nowhere except toward ground chuck (see time code of 4:11 in video). I almost forgot the animated version of the grinder from ‘The Wall’ too. A screen shot:

Maybe the “collective” will not be so bad. I found this little bit on socialism. It makes me want to sign up!

Socialism would also enable us to raise our living standards dramatically by ending the billions of dollars thrown away on arms production and “defense,” by ending the waste, duplication and inefficiency of capitalist industries, and by returning millions of soldiers and unemployed workers to useful occupations. In socialist society there would be no wage system. Workers would receive the social value of their labor. And since the people would collectively own the industries, anyone would be free to select any occupation in which he or she has an interest and aptitude. No longer would workers live under the fear of being laid off, or be compelled to spend their lives at some job they hate or are unsuited for. Also, since the people would collectively own the colleges and universities, no longer would workers be denied education or training because they lack the money to buy it. Furthermore, under socialism we would produce for use and to satisfy the needs of all the people. Under capitalism the industries operate for one purpose—to earn a profit for their owners. Under this system, food is not grown primarily to be eaten. It is grown to be sold. Cars are not manufactured primarily to be driven. They are made to be sold. If there are enough buyers here and abroad, then the capitalists will have their factories turn out cars, appliances, pianos and everything else for which buyers can be found. But if people lack money, if the domestic and foreign markets cannot absorb them, then these factories shut down and the country stagnates, no matter how much people need these commodities.

You just scratch your head.

I had an interesting experience with her (MP3) for my film.

I Am CNBC: Maria Bartiromo from Broadcasting & Cable on Vimeo.

I caught this article about a Madoff client. One person responded with my sentiment:

The guy was horrible to many. I’m sure this is one of the worst and most devestating stories that will come out of the mess. That being said, GIVING over your power to someone else and then expecting never to lose is an unreasonable and a little frightening idea that we are giving credence to. I am very concerned that the government is going to try to make these people whole. If that’s the idea, I know of a xxx camps endowment fund that has taken a huge hit in the last couple years. And I’ll bet almost everybody knows a fund or a person that cannot do what they want or need to do now after the price collapse. I do not feel responsible in that way as a tax payer. Feel bad and help people lick their wounds. Help them try to recover what they can. Maybe educate the public with more than Cramer and Orman before they are out of school.

Supposedly, I should now not rip lottery players:

A 2002 nationwide survey found that lotteries are by far the most popular form of gambling, with some 66 percent of United States adults having played in the previous year, and 13 percent on a weekly basis.

The question is why. Mega officials put the odds of winning the next big score, $12 million, at 1 in 175,711,536, and anyone with a semester of high school math can see what a fool•s bet that is. Generally, experts say, state lotteries return players about 50 cents on the dollar. And there are many people who seem to compound their folly by buying hundreds of tickets at a time.

Addiction researchers and some economists struggle to explain this behavior, describing it at best as an irrational fever, and at worst a pathological addiction to a regressive, government-run numbers game.

But researchers spend little time in corner-store lines.

“The people who denigrate lottery players are like 10-year-olds who are disgusted by the idea of sex: they are numb to its pleasures, so they say it’s not rational,” said Lloyd Cohen, a professor of law at George Mason University and author of an economic analysis, ‘Lotteries, Liberty and Legislatures,’ who is himself a gambler and a card counter.

Dr. Cohen argues that lottery tickets are not an investment but a disposable consumer purchase, which changes the equation radically. Like a throwaway lifestyle magazine, lottery tickets engage transforming fantasies: a wine cellar, a pool, a vision of tropical blues and white sand. The difference is that the ticket can deliver.

And as long as the fantasy is possible, even a negligible probability of winning becomes paradoxically reinforcing, Dr. Cohen said. “One is willing to pay hard cash that it be so real, so objective, that it is actually calculable – by someone, even if not oneself,” he said.

The mundane simplicity of the lottery only reinforces the attraction. Casino card tables can be intimidating, an opaque world of rules and hard-to-master strategies; ditto for the track.

Because it is pure luck, the lottery is easy to grasp and allows for plenty of perfectly loopy – and very enjoyable – number superstitions. Your birthday digits never won you a dime? Try your marriage date; your favorite psalm verse; the day your bullying father-in-law died. Or, perhaps, reverse the order. In studies, psychologists have found that ticket holders are very reluctant to trade their tickets for others, precisely because they have an illusion of control from having picked magical numbers.

This sense of power infuses the waiting period with purpose. And the hope of a huge payoff, however remote, is itself a source of pleasure. In brain-imaging studies of drug users, as well as healthy adults placing bets, neuroscientists have found that the prospect of a reward activates the same circuits in the brain that the payoffs themselves do.

“It’s not just winning the money but anticipating winning the money that is exciting, and the two experiences are similar neurobiologically,” said Christine Reilly, executive director of the Institute for Research on Pathological Gambling and Related Disorders, in Medford, Mass.

I am not on the exact same page as this author, but there is no doubt many business school degrees are worthless.

A recent comment seen:

I am just curious why trend-follwing [sic] often does not work. Is it because many people are doing trend-following, therefore, interrupt the trend?

The long term track records of professional trend following traders indicates trend following as a strategy works very well. But ‘working’ for trend following traders does not mean making money every month. I don’t see any evidence that trend following doesn’t ‘work’.

If they say so…