Daily Archives: March 30, 2009

Blumenthal in all his ignorant, arrogant bloom

I don’t know who the interviewer is who is mentioned in this story but he exposes Dick Blumenthal for exactly the toad that he is. Great job.

Beck interviewed Connecticut Attorney General Richard Blumenthal on his March 30 broadcast. But, the radio and TV host took the opportunity to tell Blumenthal what he thought of his investigation into the bonuses received by American International Group (AIG) executives – whose company received federal bailout money.

“Look, you know what you have done, know what you have done?” Beck said. “You have – you are an insult to George Washington, sir. George Washington made it very clear that we are a respecter of laws, not of men. For your own political gain, you have decided to go after these people at AIG because it is a popular thing.”

“And while I may agree with you that it is obscene, I would like to know, is not what’s right as a rule of thumb – not what makes us feel good,” Beck continued. “You, sir, are to protect people and, and to stand for the law in Connecticut, so, again, I ask you, sir – what law gave you the right to go after them? What law did they break?”

Blumenthal claimed the AIG executives were “undeserving” of the bonuses. Blumenthal also pointed out the bonuses paid out were to increase next year. However, Beck pressed Blumenthal on the legality of that and Blumenthal came up blank in this exchange:

BECK: Is that against the law?

BLUMENTHAL: Well, it is against public policy. And it is unsanctioned by law.

BECK: Is that against the law?

BLUMENTHAL: It should be against the law.

BECK: Is it against the law?

BLUMENTHAL: It’s against the public policy and against the taxpayer…In my view it is unrequired by law.

BECK: It is a yes or no question. Counselor, it is a yes or no question. Is it against the law?

BLUMENTHAL: It is not against the law and I have never said that it is against the law, and I have never said that we would bring an action.

An idiot reader called me anti-Semetic because of my earlier criticisms of this ma. I call the reader an idiot because, had he bothered to read my columns and posts over the years, he’d know that I have always attacked Blumenthal for exactly the behavior displayed here. It has everything to do with abuse of power by a publicity-hound crazed by his own ambition, and nothing to do with anything else. Reread the interview and see for yourself.


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Judge freezes Noel assets

Attorney David Golub, representing the town of Fairfield as it seeks to recover the millions it lost with Madoff feeder fund Maxam of Darien (yes, the fund that was run by a women to “empower women and minorities” turned out to have sunk every penny entrusted to it with Bernie – it closed the day Bernie was arrested), has persuaded a judge to grant a temporary restraining order freezing all the Madoff players’ assets until a full hearing on April 13th.

The restraining order granted by the judge is a “who’s who” of players in the Madoff scandal: Madoff, his wife Ruth, brother Peter, and son-in-law Andres Piedrahita; sons Andrew and Mark Madoff and Walter M. Noel Jr., a partner in the Fairfield Greenwich Group, all of whom live in Greenwich; Sandra L. Manzke, the founder of Maxam Capital; Robert I. Schulman, the former chairman of Tremont Group Holdings; and Jeffrey H. Tucker, the co-founder of the Fairfield Greenwich Group.


The restraining order prevents not only the sale of any real estate owned by any of the defendants, but also extends to all accounts at any financial institution and all personal property. That includes, but is not limited to, stock certificates or certificated securities and “any other assets in any of the defendants’ possession, custody or control,” according to court documents. 

The motion, filed by David Golub, a lawyer hired by the town for the Madoff case, states there is probable cause the town’s pension programs could receive a $75 million judgment and seeks to secure that sum by attaching Andrew Madoff’s home at 57 Tomac Ave., Mark Madoff’s home at 21 Cherry Valley Road, and Noel’s at 175 Round Hill Road home, all in Greenwich, as well as garnish all of the defendants’ accounts at financial institutions.”There is a reasonable likelihood that the defendants Andrew H. Madoff, Mark D. Madoff and Walter M. Noel Jr. are about to remove themselves or their property from this state, or are about to fraudulently dispose of or have fraudulently disposed of their property, with intent to hinder, delay or defraud their creditors,” the motion states.

I think highly of David Golub and I wish him luck in chasing down everyone who profited from Bernie Madoff’s fraud but in this instance, I don’t see how he reaches the Noel’s property. The town didn’t have any direct dealings with FGG, at least none are reported in the article, so it’s stuck with the rather weak argument that FGG and its partners were an integral part of the fraud and made it all possible. Maybe so, but freezing assets on so tenuous a claim seems a bit dubious. Still Connecticut’s judges, perhaps harkening back to the days when they passed out these ex parte orders like candy bars, still grant them with far more alacrity than judges in other states, and God bless them: it makes suing people so much more fun. And notice,by the way, that the judge granted the full $75 million invested. Fairfield invested $22 million, watched it “grow” to a phony $41 million and still got a $75 million attachment, no doubt to cover Goleb’s fees. I do like judges who protect litigators!
Bernie Madoff is unlikely to contest this order on April 13th – why should he care? – but Walt’s lawyers, Andres’ and Mark and Andy Madoff’s should all be in Bridgeport Superior Court that day. I may go up myself just to watch the fun.


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The WSJ chats with Walt’s son in law

Andres Piedrahita sits down with a Journal reporter and denies knowing anything. He sold, got rich, and never questioned a thing. Smart guy, just like Corina’s dad.

After graduating from B.U., Mr. Piedrahita knocked around New York working variously as a commodities broker, selling penny stocks and as an investment adviser. His budding financial career was almost clipped in the early 1980s. At the time, Mr. Piedrahita, who was working for a small commodities dealer then called Balfour Maclaine, got a number of his father’s Bogota friends interested in investments that quickly went south. Many of his investors “stayed quiet and lost their money with dignity,” says one of the investors. “They valued their friendship with the father over their investment.” 

But one investor didn’t. He says he asked Mr. Piedrahita frequently for information on how his investment was doing. Mr. Piedrahita avoided the issue, even claiming on one visit to Bogota from New York that he had forgotten to bring along the client’s accounts. Growing suspicious, the client says he hopped a plane to Manhattan, went to Mr. Piedrahita’s office and confronted his boss, asking for the information Mr. Piedrahita had avoided providing. “It was catastrophic,” the client says, remembering the state of his account.

Bottom line: Mr. Piedrahita lost his job, says the client, who recovered all his money. Mr. Piedrahita says eight clients lost a total of about $600,000. “Everybody has some bounces,” he says. “I sold something that turned out to be bad. I sold it with the best intentions, and it didn’t work. That’s the nature of commodities.” He disputes the client’s claim that he was fired from Balfour. “Not true,” he says. “I moved to Prudential Bache.”

Here’s an intriguing bit of history:

Friends say Mr. Piedrahita settled down after his marriage to Ms. Noel. He merged Littlestone with Fairfield Greenwich in 1997. Shortly after, he moved to London to a mansion on Chester Square. In Madrid, where he moved in 2003, Mr. Piedrahita’s lifestyle became even grander. He commuted between Madrid and London on a private Gulfstream jet which was parked at a military base close to Madrid. He was invited to a costume party at a Russian estate where everyone dressed up as czarist-era aristocrats. He went hunting for pheasants with the cream of Spanish society.

Relatives of Piedrahita have told me that he “had to leave Greenwich” and then “had to” flee London. Why? So far, no one’s talking.

But here’s the bottom line. The man was dirt poor, living above a delicatessen in New York, and sold penny stocks. No one sells penny stocks who isn’t a crook because, by their very nature, those securities are solely vehicles for fraud and price manipulation. So a poor, penniless crook meets up with Walter Noel, starts peddling Madoff “investments” and within a few years is flying around in Gulfstream II jets and hunting with the aristocracy. When crooks get rich, I suspect the worst, but Piedrahita denies everything:

“I look at myself in the morning, and I’m very proud of what I have done, and so are my partners,” says Mr. Piedrahita. Then he adds, referring to the Madoff scam: “Nobody knew anything about anything.”

Somehow, I think litigation and criminal investigations will eventually prove otherwise.


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Market wrap up, 3/30/09

1 Pheasant Lane

1 Pheasant Lane

No sales reported today but we did get a spurt of new listings just at the close. One Pheasant Lane, off North Maple, was last listed in 2005 for $4.795 and eventually sold in 2006 for $3.850. It asks $3.975 today. The seller is an LLC, often an indication that a builder owns a place. If so, he’s changed his mind.

33 Dairy Road, listed as both a residence and land, sold for $1.6 million in 1996 and asks $3.595 now. No indication that much has been done to it so the price increase must be attributable to inflation and the passage of time.

And that’s about it for real estate excitement today.


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I did what?

Reader Krazy Kat sends this link to a New York Magazine article written by the guy who wrote the computer program that set traders free to play with securitized bonds. the rest, as we’re discovering, is history. Long, but entertaining and easy for dummies like myself to understand.


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Land Prices

I’ve written before about the collapse of land prices – a temporary collapse, I hope, while buyers regroup, get their bearings and regain the courage to invest in building a new house – and here’s an example illustrating at least a decline in that category: 5 Kenilworth Terrace, off lower North Street, joined another land sale on that street, asking $1.495 (the other is asking in the $1.6s). Everything there is about an acre, so comparisons are at least similar. 25 Kenilworth asked $1.375 back in July, 2000 and sold for $1.525. 23 Kenilworth sold for $1.940 in 2003 and 27 sold for $2.7, full asking price, in 2006.

Twenty-seven may have been more than a mere land sale, at that price, but not the other two. So at $1.495, we’re back below 2000 prices and, of course, the place hasn’t sold yet.


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New Listings?

A reader asked if people were still putting their houses up for sale or waiting out the current market. Good question, so I pulled some statistics. To my surprise, we seem to be adding new listings even faster than we did before. For instance, this month saw 104 new single family listings, compared to just 75 in 2007. For the year so far, 275 new listings, compared to 204 in 2007.

What we aren’t duplicating is the speed with which houses are moving off the market, so our inventory is soaring: 650 houses now, vs. 552 in ’07 and just 443 in ’06.


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It’s so damn hard to keep up with these wily Reds!

Remember when taking us off the gold standard was a communist plot, right up there with putting fluoride in our water? Now Putin and his fellow commies are proposing to return us to it. I know they’re plotting something, but what?


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Saab Story

Saab 96

Saab 96

Well darn. Saab is probably getting out of the production business. I didn’t like mine when they were made under General Motors’ ownership (quelle surprise) but the old ’96 two-stroke that required you to mix oil in the gas was a blast. Amazing cars, great torque and one of them saved my friend’s life when, as a Williams’ boy with a tad too much to drink, he went airborne, flipped a couple of times end-over-end and then rolled over a few more times before smashing into a telephone pole. The car didn’t survive but a band of Ephmen did, and no doubt the world’s a better place because of it. No doubt.

But I’ll miss those Saabs.


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Sparks of activity

28 Welyyn, Rvsd

28 Welwyn, Rvsd

28 Welwyn Road, off of Indian Head, has gone to contract today. Listing price is $3.650 million so that’s a nice sign. Good house, built in 2003 either for the present owners or they bought it from its builder but a solid home and Welwyn’s a great street.

35 Sunshine Ave. also in Riverside but north of the Post Rd. was reported as under contract before, I think, but in any event, it’s there now. This house needs replacing, even though (or because) it served as home for those rowdy Kaye kids, and was listed as land, first at $790,000 back in July and then this February at $650,000. The last reduction seems to have done the trick.

Thene there are some price cuts reported today that, while they aren’t yet sales, at least show that their sellers are getting serious. 173 Stanwich, a contemporary on 2 acres, originally came priced at $3.595, today it’s $2.195. Two Grimes Road, in Shorelands, sold for $1.250 million in 2000, was put back up for sale in 2004 at $1.745 and sold in a bidding war for $1.904 (remember 2004?). Those buyers tried getting $2.795 in May, 2007, and after two years of waiting for a buyer to appear have reduced it today to $2.325. Twenty-sixValley Road, a speck of a lot in Cos Cob, debuted at $640 in May and has now dropped to $425,000. Thirty-seven Midwood, off of Glenville Road, tried things out at $1.750 for awhile and is $1.395 now.  And then we have 98 Glenwood, in Belle Haven, which must have had a beautiful setting when it was built in 1838 but which now overlooks the Belle Haven Club. Nice water views and how painful can it be to look over a beach club, but still, its first price of $16.8 million brought to mind Crazy Eddy and not necessarily in a positive way. It’s got a new broker and a new price today: $12.5 million. Still a tad out of my range, but an improvement.


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Tanned, fit and rested, Walter’s back from Mustique!

And sending links so that anyone who wants to can check in on Patriot Bank’s insiders’ stock sales. (use stock symbol, PNBK). The CEO, Angelo DeCaro, seems to have been busy unloading shares, as has Marcus Zavattaro but Marcus, at least, has an excuse – as of last Thursday, he’s gone from the bank. He left behind some of the spec house loans he extended, however, which wasn’t very nice of him, given their non-performing status.


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Return of the bumper sticker


My pal has made this sticker available at Cafe Express (see “bumper stickers” on right or click here. No, I don’t get any money from this and my friend is not planning on retiring on the proceeds. We both just think it’d be fun to see some around town. Maybe on that Brunswick kid of your’s Lexus – beats him wearing a Che tee shirt.


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UBS to fire another 8,000?

While we wait for Greenwich real estate news to appear – nothing so far this morning, except for the reappearance of a pathetic redo job that’s already dropped $1.5 million and probably has half its remaining price still to go – this is business news that could affect our market if some of these firings are centered here.

It’s not much of a story that UBS is still trying to dig itself out of the hole it crawled into but this explanation as to why it’s got such trouble valuing its portfolio of collateralized loan obligations probably extends to other firms, too:

“We’ve had a lot of enquiries on CLO values recently. The big issue is that they are even more opaque than CDOs (collateralized debt obligations), which lay at the root of the sub-prime crisis,” Haydon-Rowe said.


“A lot of these products don’t have the documents of the underlying loans, many are private loans, and in many cases the staff who originally structured the CLOs – and so can understand them – have moved on.” 

Clueless in Zurich – how firing still more people who might understand what UBS owns will help the problem escapes me, but that’s why they pay these banker chiefs the big bucks.


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Another Greenwich Avenue chain store vacates

According to Greenwich Gossip, handbag seller Coach has cleared out and off the Avenue. The Gossip sees this as good news and I sympathise with its wish that the old, local stores would return, but I don’t join in the joy. I abandoned the Avenue long ago and find what I need on line, especially now that Amazon sells everything one could possibly need (except for guns and ammo, but since Grannick’s quit supplying those, the Ave is still no solution). However, a thriving shopping district, even one mostly patronized by Westchester residents and newcomers to Greenwich, is still important for our local economy and, out-of-town or not, a retailer is a retailer and, besides, locally-owned stores can only benefit of a big chain draws foot traffic to the street.

So I won’t miss Coach, but neither will I exult in its demise. Plywooded windows are nosubstitute for ongoing enterprises.


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Al Gore reads this blog!

No, he hasn’t dropped the price of his 9,000 sq.ft. Nashville mansion – in fact, as far as I know, it’s not up for sale – but he did leave his lights on during the “Celebrate Civilization” hour last Saturday. Whatta guy.

Comments Off on Al Gore reads this blog!

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Here comes the Trabant

180px-trabant_601_mulhouse_fra_0011News that Obama has fired GM’s Rick Wagoner doesn’t surprise me and, I suppose you can’t retroactively fire his predecessors of the past 40 years who guided GM to build cars that were poorly made and unwanted. Just as it seems within the power of the government to rescind bonus contracts for AIG executives now that taxpayers own 80% of the company, dumping the chief executive of a company begging for billions of dollars of taxpayer money is probably overdue and fitting.

What worries me though is the fact that our largest companies are, in exchange for these billions, ceding control to the government. Today the president of the United States fires Wagoner. Tomorrow, won’t Nancy Pelosi and Harry Reid, goaded by their Green constituency, demand new products from that same company? If we own these companies or they are in our debt, shouldn’t we have a say in what they produce? What they pay their workers? The benefits they must supply? It’s not hard for me to envision the cessation of fuel-guzzling, wasteful pickups by GM and the introduction of new products, designed and approved by Ralph Nader and Green Peace, that will have 2 cylinder, 15 horsepower electric motors and cost $55,000 apiece. No one will want them, but they’ll be all that’s available, like East Germany’s  beloved Trabant.  

Socialism specializes in producing waste and inefficiency – we’re watching it come here and no one seems to care. Better, I think, to let GM fail and disappear than set the model for a new “partnership” between government and what’s left of private enterprise.


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A.I.G. – taxpayer money being used to bailout banks surreptitiously?

That’s what ZeroHedge is reporting.

Exclusive: AIG Was Responsible For The Banks’ January & February Profitability

Zero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good.

[L]et me explain in layman’s terms:
AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.

In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).

What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner’s (and thus the administration’s) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.

For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this “one time profit”, which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers’ money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.


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