Managing editor FORTUNE
Now that the Madoff fraud has been exposed there are still a slew of fundamental questions outstanding.
How did one man, Bernard Madoff, run such a massive, self-described Ponzi scheme? Is it really true no one else was involved? How much money has really been lost? Is it $50 billion? And even if it is only several billion, how does someone burn through that much cash? Where did it go?
And then there's the heart-breaking question one of my elderly neighbors - a Madoff investor - asked me: "Will I ever see any of my money again?"
I have no idea, I told her sadly, maybe you'll get some, but you should assume that it's all gone.
Of course there are thousands of stories like my neighbor's. It's outrageous that someone like Bernard Madoff - a former NASDAQ chairman - could operate such a vast conspiracy right under the noses of the regulators.
American homeowners will collectively lose more than $2 trillion in home value by the end of 2008, according to a report released Monday.
The real estate Web site Zillow.com calculated that home values have dropped 8.4% year-over-year during the first three quarters of 2008, compared with the same period of 2007.
Some 11.7 million Americans are now "underwater," owing more on their mortgage balances than their homes are worth.
Zillow collects home values and analyzes home price trends in 163 markets; all but 30 registered price drops over the nine months ended Sept. 30, compared with the same nine-month period of 2007.
"This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values," said Stan Humphries, Zillow's vice president of data and analytics. "Homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values."
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/12/15/art.vert.bush.afghanistan.jpg width=292 height=320]
En route to Afghanistan, the President had a lengthy interview with the pool about the incident and a number of other topics. Here's the transcript:
11:39 P.M. (Local)
Q Quick ducking there, sir.
THE PRESIDENT: I was worried about you. I thought you were going to have a heart attack.
Q I thought I was, too. (Laughter.) I'm with you on that.
THE PRESIDENT: Okay, my opening statement: I didn't know what the guy said, but I saw his sole. (Laughter.) You were more concerned than I was. I was watching your faces.
Q I saw something black and round go by my face.
Q Just to see that -
THE PRESIDENT: - his first - other than shoes. (Laughter.)
Q - to duck. (Laughter.)
THE PRESIDENT: I'm pretty good at ducking, as most of you will know -
Q You were quick.
Q - ducking -
THE PRESIDENT: I'm talking about ducking your questions. (Laughter.)
Q So you weren't a lame duck. (Moans and groans.)
CNN Financial News Producer
President Bush says he may use money from the Treasury’s $700 billion financial system bailout to help Detroit’s automakers avoid bankruptcy, but he would not provide a timeline. In an interview with reporters on Air Force One en route to Afghanistan, Bush said that "an abrupt bankruptcy for the autos could be devastating for the economy." But White House officials say they do not expect an announcement on any funding for the car companies today. A proposed $14 billion bailout for General Motors, Ford and Chrysler remains in limbo after the Senate failed to pass the measure last week.
The auto industry employs workers in all 50 states - including Alaska and Hawaii. More than 2 million jobs - from manufacturing, to parts to auto dealers - depend on carmakers for their pay. Checkout CNNMoney.com’s interactive map to see how many jobs related to the auto industry there are in your state.
Stocks are off to a slow start in this final full week of trading for 2008, reflecting uncertainty over the fate of the auto industry. Wall Street is also watching Washington as the Federal Reserve kicks off a 2-day meeting today. The central bank is widely expected to cut its key short-term interest rate by a half-percentage point to 0.5% on Tuesday as it tries to heal the financial system. If Fed chief Ben Bernanke and company do lower the rate, it will be the 10th cut since September 2007. Rate cuts are supposed to stimulate the economy, but so far there's been no evidence of that happening.
One-time Wall Street titans Goldman Sachs and Morgan Stanley are set to report earnings this week, and analysts continue to slash quarterly estimates for battered duo. Morgan Stanley is expected to post a loss of $351 million on Wednesday, while Goldman is expected to report a loss of $1.45 billion on Tuesday. Both firms have been hit hard by the credit crisis.
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/POLITICS/12/09/patrick.fitzgerald.bio/art.patrick.fitzgerald.gi.jpg caption="U.S. Attorney Patrick Fitzgerald spearheaded the investigation that led to the arrest last week of the governor of Illinois."]
The Wall Street Journal
Illinois Gov. Rod Blagojevich's "conduct would make Lincoln roll over in his grave," according to U.S. Attorney Patrick Fitzgerald. But Mr. Fitzgerald's statement would, at the very least, make well-regarded former Attorney General Robert Jackson flinch in his.
Almost seven decades ago, Jackson admonished a meeting of U.S. attorneys that they should be dedicated "to the spirit of fair play and decency . . . . A sensitiveness to fair play and sportsmanship is perhaps the best protection against the abuse of power . . . ."
In the Dec. 9 press conference regarding the federal corruption charges against Gov. Blagojevich and his chief of staff, Mr. Fitzgerald violated the ethical requirement of the Justice Department guidelines that prior to trial a "prosecutor shall refrain from making extrajudicial comments that pose a serious and imminent threat of heightening public condemnation of the accused." The prosecutor is permitted to "inform the public of the nature and extent" of the charges. In the vernacular of all of us who practice criminal law, that means the prosecutor may not go "beyond the four corners" - the specific facts - in the complaint or indictment. He may also provide any other public-record information, the status of the case, the names of investigators, and request assistance. But he is not permitted to make the kind of inflammatory statements Mr. Fitzgerald made during his media appearance.
I am as repulsed by the governor's crude statements - captured on tape by investigators - as anyone. And although I am a Republican, I am first an officer of the court. Thus, I take no joy in a prosecutor pursuing a Democratic politician by violating his ethical responsibility. I fear for the integrity of the criminal justice system when a prosecutor breaks the rules.
Wall Street Journal
In his election-night victory speech, Barack Obama said he would be a president for all Americans, not just those who voted for him. But as a candidate he didn't campaign with equal vigor for every vote. Instead, he and John McCain devoted more than 98% of their television ad spending and campaign events to just 15 states which together make up about a third of the U.S. population.
Today, as the Electoral College votes are cast and counted state-by-state, we will be reminded why. It is the peculiar mechanics of that institution, designed for a different age, that leave us divided into red states, blue states and swing states. That needs to change.
The Electoral College was created in 1787 by a constitutional convention whose delegates were unconvinced that the election of the president could be entrusted to an unfiltered vote of the people, and were concerned about the division of power among the 13 states. It was antidemocratic by design.
Under the system, each state receives votes equal to the number of representatives it has in the House plus one for each of its senators. Less populated states are thus overrepresented. While this formula hasn't changed, it no longer makes a difference for the majority of states. Wyoming, with its three electoral votes, has no more influence over the selection of the president or on the positions taken by candidates than it would with one vote.
William D. Cohan
When the most powerful men in American capitalism convened at the New York Federal Reserve Bank's Italianate palazzo in lower Manhattan on Friday evening, September 12, to try to save Lehman Brothers from certain death, what confronted them was nothing less than the knowledge that whatever actions they took – or did not take – that weekend could push the financial system into the abyss.
Over the next stressful 72 hours, CEOs and their top deputies from Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase, Citigroup, Credit Suisse and other firms worked alongside Treasury Secretary Hank Paulson and Timothy Geithner, then the president of the New York Federal Reserve and now Barack Obama's choice to replace Paulson at Treasury.
Three months to the day that the bankers emerged from that fateful weekend, though, it is clear that the ideals and egos of the participants in those meetings have reordered the American business landscape.
On Friday September 12, there were four major investment banks. Today, there are none recognizable as such. On that Friday, the Dow closed well above 11,000. Today, it is 3,000 points lower. On September 12, a form of "compassionate conservatism" was still the doctrine of the Bush administration.