30th Birthday Prediction

Brittany Callen

4B

30th Birthday Prediction

     I think that out of the possibilities of A and B, option A would be more likely. Honestly, I don't see our economy getting better. Plus, Us Americans don't really work on the solution until the problem explodes in our faces. If it was thirty years later and our economy was like the one we had today we would be in a lot of trouble. If option A did occur and I was thirty years old: I would most likely be in debt from college, like many other Americans  And the nation would be failing. We would most likely have a bad reputation and people may be leaving the country for another country with a better economy. I imagine the american debt would just get worse and we would be pulled into a huge black hole of national debt. There could also be variables that could happen that would make our economy worse: Like if china pulled out of their bonds. Like I said in the last paragraph option A is hard, but would be the most likely occurring option. Life would be much harder. 

     Either way both options are difficult, option B is proactive for our countrys future, and is also the option I WOULD CHOOSE. Yet I find it is more unlikely to happen than option A. If we had a GREAT leader, who had efficient plans to get out of debt It would be easier, but at this rate of time every single american, man, woman and child,  would have to pay $48,700. That's ridiculous  I find that not every citizen would be willing to give that money, and once (if we did) get out of debt, we would have to be able to STAY out of debt! There is so many variables that go into this option, and so many things that could impact it and that's why I feel like it's the one to be less likely to happen. Us Americans need to learn how to SAVE and not SPEND. 

Question: If China pulled out their bonds, could it cause a war? What would happen?

Economic Research Project- Bernie Madoff (Ponzi Scheme)

Brittany Callen

4B

Bernie Madoff’s Ponzi Scheme

Bernie Madoff can be described in many adjectives: thief, liar, ex-businessman, and father, many adjectives not admirable considering he founded the Ponzi Scheme, the largest financial fraud in the U.S. history. Investor account statements in 2008 showed $65 billion in false paper profits, but SEC estimates the fraud could be between $10-$17 billion dollars. Bernie Madoff chose to commit fraud against millions, as a result: civilians suffered loss of future retirement plans, many investors lost money, and some businesses even had to close.

The ponzi scheme affected many; largely small investors, who were relying on the income to create retirement funds. Other people that were hurt from the scandal were financial institutions, charity foundations, and even celebrities. Many of them are well known; Elie Wiesel, Steven Spielberg, and even the owner of the Mets, Wilpon family. The scheme led a ripple effect through the lives around Bernie; Mark Madoff, Bernies oldest son, committed suicide two years after his father's arrest. R. Thierry Magon de la Villehuchet also committed suicide after losing $1.4 billion in the scandal.

Irving Picard has recovered $10 billion and has created around 1,000 lawsuits to fund money for the people who have been stolen from. According to the PR Newswire, the US Labor Department is funding $220 million dollars to compensate for the money that has been stolen in the scandal. This settlement is still pending approval, yet if it’s authorized many investors and victims will be reimbursed. Although most were hurt from the scandal, some benefited from it. Around half of Madoff’s investors were “net winners” who earned more than their investment. There were lawsuits, called “clawbacks” which returned the money.

Many wonder why Bernie was able to pull off this 20 year long scandal. One reason is the SEC, Securities and Exchange Commission, ignored the 6 complaints that were filled towards Bernie. Even he himself thought multiple times he would be discovered by SEC investigators. The financial analyst and fraud examiner Harry Markopolos realized in 1999 that Bernie was committing a scandal, as it wasn’t possible to have earnings of which Madoff was claiming. Harry presented evidence to SEC in 2000, and 2001, yet again in 2005 and 2007. Harry unfortunately was ignored, and surprisingly Bernies sons, Andrew and Mark, turned in their father. This is when Bernie admitted, it was all “just one big lie.”

Madoff pleaded guilty to the 11 felony courts against him, including money laundering, perjury, and security fraud. During the trial Madoff apologized to the victims hurt by what he did, “I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This is something I will live in for the rest of my life. I’m sorry.” Madoff's wife, Ruth, had little input but said, “I am breaking my silence now because my reluctance to speak has been interpreted as indifference or lack of sympathy for the victims of my husband Bernie’s crime, which is exactly the opposite of the truth. I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years.” He will now be facing his consequences and living the rest of his life in prison.

Bernie Madoff made the decision to commit fraud, and with help from others he was able to pull it off. He faces his consequences with his guilt, he destroyed his families life and took from many others. For his crime he hides behind bars, bars that are saving him from the vicious victims he took so much from.

Citations

Belson, Ken, and Richard Sandomir. "Mets' Owners Agree to Deal In Madoff Suit."New York Times 20 Mar. 2012: A1(L). Gale Student Resources In Context. Web. 29 Nov. 2012.

"Bernie Madoff Arrested for Ponzi Scheme, December 11, 2008." Historic U.S. Events. Detroit: Gale, 2011. Gale Student Resources In Context. Web. 29 Nov. 2012.

Nocera, Joe. "Suspense Is Over in Madoff Case." New York Times 26 June 2012: A23(L). Gale Student Resources In Context. Web. 29 Nov. 2012.

"Psychology Of Fraud: Why Good People Do Bad Things." All Things Considered 1 May 2012. Gale Opposing Viewpoints In Context. Web. 30 Nov. 2012.

"US Labor Department recovers nearly $220 million for Madoff victims." PR Newswire13 Nov. 2012. Gale Student Resources In Context. Web. 29 Nov. 2012.

Explaining the Fiscal Cliff

     The Fiscal Cliff is the impact that is predicted to occur when the AMT, Payroll Tax Holiday, Sequester, and Bush Tax Cuts expire, as well as the Budget Control Act of 2011 coming into regulation. It's a metaphor known as the increase of taxes to more than $500 billion, and across the board spending cuts starting January 1st. If we "fall off" the cliff, it will result in tax rises for every tax payer and business. Spending would be cut in the emergency unemployment compensation program, medicare payment, and a whooping budget cut of  65 billion dollars across the board for federal programs over the nine months between January through September.The fiscal cliff is occuring because all of our programs are expiring at one point of time: December 31st.
     The 2011 deal takes effect the same time as changes to the AMT adjustment occur. AMT stands for Alternative Minimum Tax. The AMT is a extra tax people have to pay on normal taxes, when it was first created it was targeting people with very high incomes who could use special tax benefits to pay little to no taxes. The problem with it now however is that the AMT is applying to civilians who don't have a very high income. People don't have to pay AMT taxes if their payment reaches regular income tax. But if the regular tax is below the minimum you have to also pay AMT. One tax that was DEDUCTED was the payroll tax holiday; its was a deduction of 2% of payroll tax. This expires on December 31st as well. It was helping the economy however the government is planning on letting it expire. Many citizens making 500,000 dollars a year were getting 80 dollars a month, This helped families pay for ridiculously expensive gas prices as well as purchasing food.
     This brings us to our last topic: The Sequester. It's a package of automatic spending cuts. The sequester begins in 2013 and ends in 2021. According to the White House Report the total cuts for 2013 will be $109 Billion. If the cuts do occur there could be unemployment and budget cuts from defense and health care. The sequester can be avoided but only if congress passes another budget deal with at least 1.2 trillion in deficit reductions. 
    All of these put together: Bush Era Tax Cuts, Payroll Tax Holiday, The AMT, Sequestration, and The Debt Calling create the Fiscal Cliff.