Duffonomics: Ponzi and Madoff

Before I get too far into this article, let me just make a suggestion to everyone reading this; turn off the TV and don’t listen to news radio for a little while—it’s way too brutal to watch right now. Maybe instead, listen to some AC/DC or Prince and go for a run, or better yet, fuck your brains out. It’s just not going to do anyone any good to watch financial news right now…bleak at best. Okay, I’ve said it.

Today we will apparently see Bernie Madoff appear in court and, according to his lawyers, plead guilty for his part in the 15 or so year long bilking of his investors. Madoff’s reign of deceit was a well-draped Ponzi scheme that collapsed once the financial markets began their downward spiral. But what is a Ponzi scheme? How did he get away with all of this? I will now do my best to speak plainly on this subject so that we can all get a general understanding and therefore avoid anything like Madoff’s scheme happening to us!

Charles Ponzi was a young Italian immigrant who came to New York in the early 20th century to find his fortune. He came upon a clever marketing and investment tool in international postage stamps. The deal was pretty simple in that an inexpensive Italian postage stamp could be traded straight across for a U.S. postage stamp; however, the U.S. dollar was incredibly strong against the Italian lira and the profits were something like 400 percent. All of this was actually legal and thought of to be genius. The good word spread regarding the genius of Ponzi the investor. As more and more ordinary people began to invest with Ponzi’s company, it became apparent to investigators that there just weren’t enough postage stamps in circulation to actually back all of Ponzi’s claims. When his earliest clients wanted to get paid on the their investment, Ponzi would simply pay them with new money he was getting in. But most people stayed in with him –after all, if you were making 50 percent return on your money, why would you pull it out? In basic terms, he was taking from Peter (new investor) to pay Paul (old investor), and there really was no financial instrument making any money. The stamps were a ruse at that point. Homie was found out and went to jail, but not until he had bilked some $15 million in 1920s dollars from his victims—billions in today’s dollars.

Ponzi was in no way the originator of this type of financial deceit. Charles Dickens wrote in the mid-1800s of a pyramid-like money scheme in A Tale of Two Cities. I remember one of my economics professors speaking on the fact that these types of cons have been around since antiquity; Charles Ponzi just happened to do his dirty-deed in a time of modern communication: word spread and the moniker was his.

And then there is Bernie Madoff. Last December, he admitted that his asset management firm was nothing but “one big lie,” a massive Ponzi scheme. Because of Madoff’s high-esteem on Wall St. (even serving as chairman at NASDAQ), he became a trusted name and highly sought-after broker of the uber-wealthy’s investment accounts. Madoff frequented the social events of the posh and even enlisted outside agents (see Sonja Kohn, who is allegedly in hiding now, trying to avoid Russian mobsters who lost money in the Madoff scheme) to lure big fish from beyond the U.S.

Since the breadth and complexity of Madoff’s financial knowledge ran so deep, few if any questioned his investment methods—they were even marketed as “too complicated for outsiders to understand,” making a value of the opacity of his schemes. Madoff duped even the smartest of the smart, including members of the Securities and Exchange Commission (the overseer’s of U.S. stocks and bonds, simply put), and heads of many financial advisory firms. Rene-Thierry Magon de la Villehuchet of Access International Advisors committed suicide a week after Madoff’s scheme started to unravel; Villehuchet discovered that he had lost $1.5 billion of his investors’ funds.

And to top it all off, unlike a common criminal, Madoff has been permitted to continue to reside in his multi-million-dollar luxury Manhattan town home under house arrest. Seems all those connections to the wealthy and powerful are still paying dividends.

All of this points to the importance of understanding what is happening with your money. I don’t want to end up broke with my broker holed up in a luxury apartment, and I’m sure nobody else does either. Together we can do our best to avoid that situation: The key to protecting yourself is also the reason for this column—getting and using basic knowledge.

http://www.playboy.com/blog/2009/03/duffonomics-ponzi-and-madoff.html#more

It's Go Time (If You Are Ready)
02.19.09 4:01 AM CST • Duffonomics • Playboy Staff

Playboy is a high-profile publication; we are all aware of this fact. But it’s really hit home for me lately. I have suddenly been thrust into a very interesting position with newfound celebrity as Playboy’s financial columnist. Instead of people coming up to me and saying the usual, “Hey dooood, I saw you play Madison Square Garden in ’93—I was sooo stoned!” it is now suddenly, “Duff, I have some extra cash in the bank, what should I do with it?” or some such financial inquiry.

First off, I am going to do my best to shoot straight in this column while also keeping financial jargon to a minimum. I am qualified to write this column if only for the simple fact that I too am sick and tired of trying to figure out what the hell is going on right now in our economy. This column is a place for you and I to go back to square one and rebuild our financial confidence through knowledge.

Someone e-mailed me with timely question: Is now a good time to buy a house? In the case of this particular e-mailer, this would be a first ever foray into potential home ownership. Luckily for me, I have the go-to guy for just this question. My best friend has been buying and selling real estate in the Seattle area for the last 22 years and was more than happy to field a few inquiries from me. Here’s what I learned:

A lot of you may be sitting on a chunk of cash wondering how to time this real estate market. Markets around the country vary widely, of course, but they are all most assuredly down from the highs that we witnessed recently. How much lower will they go? No one knows for sure, but I have discovered a few factors that may help in your decision-making.

This recession will certainly not last forever and the drop in home prices will have to plateau at some point. Meanwhile, interest rates have sunken in the hopes of stimulating this economy. If you are waiting for that $300K home to perhaps reduce its price by another $5K to $15K by late summer, you’d better just hope that interest rates don’t go up in the meantime. If interest rates go up by just half a percentage point, you could end up paying 10 to 20 times the money you may have saved waiting for the “perfect” price of your home. Now, interest rates could drop further, but certainly not by much. If you are looking to get into your first home, now just may be the perfect time factoring in the massive amount of inventory out there, the “fire sale” prices and, most importantly, these low interest rates. Interest rates are what will kill you over the length of a loan.

Let’s talk about your credit score for a second. If it is below 640, forget buying for now. Rent. If it is above 720 and you have verifiable income (verified by the bank), you are golden and should qualify for the lowest-fee loans. Most of us however, have a credit score somewhere between 640 and 720 and will end up paying higher fees on a loan. Expect an additional half to two-and-a-half percent, depending on where your score sits within this range. There are things that you can do to better your credit score, such as paying off your credit cards. (Do keep the credit card, though, and make small purchases that you can pay off at the end of the month, thus building good credit). Also, pay all of your bills on time! A reported delinquent bill (to some creditors that can mean just 30 days late) will take three years to clear. There are some great non-profit organizations that will help with advice on your credit woes. Simply Google “credit counseling” and you should find something that suits your particular malady.

Federal guidelines are again being followed by loan underwriters (banks and other loan institutions) as to what percentage of your monthly income is recommended for a mortgage payment. Full documentation of workplace and income is now again being required. (Yes, they were giving loans to people without a stated or proven income before this “credit crunch.”) Just so you are aware, The Man (Fannie Mae) looks for your mortgage payment to represent 30 percent or less of your monthly income.

Once you have gotten yourself into a new home, just remember this: A house is your home and not your bank! This is where a lot of us have headed in the past. A bunch of us will buy a 300K house and start to think it is somehow wise to take out a second loan against your house so that you can buy flat-screens, Gucci, jet-skis, and hookers and cocaine to fill out this new lush pad. Three words: Bad fuckin’ idea.

Until next week fellow voyagers—breath deep and look at pictures of naked chicks!

http://www.playboy.com/blog/2009/02/its-go-time-if-you-are-ready.html

Ex-Guns N' Roses Member Writes for Playboy
Last Edited: Friday, 13 Feb 2009, 8:21 PM EST
Created On: Friday, 13 Feb 2009, 6:24 PM EST



MYFOXNY.COM - Former Guns N' Roses and Velvet Revolver bassist Duff McKagan still knows how to rock out. But he says music isn't his only passion: he's also a dedicated investor who now shares his ideas and tips with the readers of Playboy. Fox 5 Business Analyst Lisa Murphy spoke to Duff about his money-making strategies.

You can read Duff's column in Playboy and on its Web site. Plus check out some of his latest tunes on MySpace

Video is available at the link below.

http://www.myfoxny.com/dpp/business/lisa_murphy/090213_Duff_McKagan_Rocker_Investor_Columnist

Link on the playboy.com page to download Flatline!


Duffonomics: Free Music!

Editor’s note: Our financial columnist was nice enough to send us two new songs from his current group, Duff McKagan’s Loaded. The album, Sick, is set for an April release on Century Media Records. Can’t wait to hear the whole thing—and many thanks to Duff! 


http://www.playboy.com/blog/2009/02/duffonomics-free-music-1.html

NOVEMBER 5, 2008

Sleaze Factory is battling it out in the KISW cockfight tonight! Call or email your vote for Loaded!

KISW COCK-FIGHT

Jolene throws two brand new songs into the ring to duke it out every weeknight at 9pm (PST). Who is the champion.  The only place in the states where cock-fighting is legal.

Email your votes to: jolene@kisw.com

Rocklines: 206.421.ROCK or 800.783.ROCK(7625)

Ha ha! Love the last one..finally someone TALLER than Duff (Nick Simmons)
Great shots! thanks for posting

Thanks Angelika!

Duff mentioned, during his recent radio appearances, that he would be contributing to Seattle Weekly.  Here's the first installment:

Faith in Rock
Posted yesterday at 11:20 pm by Duff McKagan

Duff McKagan

A few months back, Velvet Revolver had an opportunity to play a rock show in Dubai as a predecessor to a European tour. Before the gig was booked, I heard all the usual warning hoo-hah that we in the U.S. hear about an “Arab” or “Muslim” country—most notably that Americans are reviled and I should “watch my ass and say that I am Swedish, if asked.” Well, this was my first foray into an Arab or Muslim country post-9/11. Maybe things had changed since I’d toured there in the early ’90’s.

The thing that really got my attention first, however, was an e-mail I received from our tour manager before we left: NO MARIJUANA, NO COCAINE, NO PRESCRIPTION CODEINE, NO PRESCRIPTION VALIUM OR XANAX: ONE YEAR IN JAIL THEN DEPORTATION. Wow, OK. I’ve been clean and sober for a long time but my mind still thinks of an out, like “How ‘bout deporting me first?!” Of course, the next line in the e-mail reminded me of a much larger problem: NO ISRAELI PASSPORTS OR ISRAELI STAMPS IN YOUR PASSPORT: INSTANT DEPORTATION. Really? Is that shit for real?? C’mon people now, smile on your brother—oh yeah, fuck that, it’s a new millennium (read Thomas Friedman’s Longitudes and Attitudes to really bum yourself out on this particular subject).

I have always tried to let my faith in humankind guide me when it comes time for decisions and options in life. Sure, I’ve been screwed a few times because of it, but more often than not this guidance system has strengthened my belief that mostly everyone is born with a ton of good in them, and that it’s not until much later that things like greed and power dilute members of our species into an almost unrecognizable mask of darkness and rage. I am not going to say “no” to playing Dubai or anywhere else because of political or religious beliefs, etc. I believe I can actually do more good by seeing what’s indeed happening than by just sitting back here in the good old U.S.A., safe, protected, and spoon-fed hogwash on the nightly news. Fuck that! I’m going…

The first leg of the flight was from L.A. to Frankfurt, Germany. The second leg, however, really started to pique my interest: Just what is the route from central Europe to northwest Africa? Well, thanks to the massive GPS screen at the front end of our Lufthansa plane, a map was right in front of me at all times. This portion of the flight was mostly at night, so I had to trust the GPS screen that I was indeed over Iran (the desert part) for a few hours. Then, to my surprise, the arrow on the screen had us headed straight to Baghdad! “We must surely be taking a left or right at some point soon…” I asked the next available flight attendant. “Uh, no sir, our flight path is right over downtown Baghdad.” Shit! We’re gonna get Scud-ed, or something! But downtown Baghdad came and went with no incident (by the way, it looked just like that shit on CNN!). Next stop: United Arab Emirates.

I must say, there was quite a bit of bluster at customs when we did finally land in Dubai…the agents were almost embarrassingly polite, but still kept us there for nearly three hours. Before leaving the U.S., I feared they could have found some 15-year-old bundle of drugs lost in a dark recess of a coat pocket of mine (truth be told, because of this type of paranoia, I discarded all my old luggage and most of my old [but killer] rock clothing). I could see it now: calling my wife from some prison holding cell, telling her I’d “be going away for awhile.” Nope, they stamped our passports and wished us a great stay. Onward.

We arrived at the hotel around 2 a.m., but were still met by a small throng of eager fans. “Hey Duff, thank you so much for coming all of this way,” said a teenaged young man to me in broken English. “We feel that we are, like, on Mars over here, but we just want to rock!” I assured him I would indeed do my best to, well, “rock” him. I took note that he didn’t say anything about me being a puppet of Bush, or even a heathen infidel (which I kinda am!). Come to think of it, he didn’t seem to care about that shit at all!

The next day was gig day, and I rode to the outdoor festival sound check with a couple of “rock” writers I knew from the U.K. The scenery was straight out of a 60 Minutes piece; huge paintings of the two ruling sheikhs (pronounced “shakes”) were everywhere. These dudes looked like they must rule with an iron fist…I’m in for some serious shit now; here simply to entertain sons and daughters of the oil-rich elite. We arrived at sound check to see the usual thing—kids, just plain ordinary kids, milling around. (They were all wearing brand-spanking-new black rock shirts they’d bought that day, since there haven’t been that many rock concerts in Dubai. There are no real record stores either. And no Urban Outfitters!) As I got out of the van, a bunch of these kids came running over to see if I had a tail or horns (I think), but as we all started to converse (I had a translator at this point), I realized these fans represented a huge cross-section of that part of the planet: Pakistani migrant workers, Iraqis, Iranians, Indians, and Arabs. Not once did our long conversations veer to the political. No emotion but joy ever entered our little arena, and there was a curiousness not unlike what you see in Dubuque, Iowa or Inverness, Scotland. These people were just like me, they just wanted to rock. The gig that night was full and the weather was beautiful. Just as in any other show, the fans sang along and jumped up and down when prompted by the general mood. The crowd looked like any other crowd from my vantage point, and my vantage point is that of a world citizen…now more than ever.

The next day we flew to Dublin, Ireland. The hotel we stayed in happened to be right next door to a life-size bronze statue of Thin Lizzy frontman Phil Lynott. I am sure some of my Arab brethren would have been just as stoked as I was to see it.

http://blogs.seattleweekly.com/reverb/2008/08/faith_in_rock.php#more

Duff and Marc Canter
http://www.youtube.com/watch?v=BNqIsKTMAkY

http://tinyurl.com/gnr87dm  (downloadable link)

Slash
http://www.youtube.com/watch?v=9vHJsZ5qLfQ&feature=user

http://tinyurl.com/gnr87sh  (downloadable link)

Steven
http://www.youtube.com/watch?v=E6iDfpPaU_A&feature=user

http://tinyurl.com/gnr87sa  (downloadable link)

Thanks to www.recklessroad.com

thanks Angelika! goin to check it out now!

It's a Loaded show.

Thanks for posting Angelika!!

But how come no McKagan mention on the promotional poster??

WOW!!!! 

I'd like to join that church please! I'll be sure to be at that mass EVERY sunday

Thanks for these Angelika!

Musicians saving planet

Saturday, May 24, 2008

The inaugural Save the Planet Invitational hosted by longtime and popular PGA Tour member Peter Jacobsen will feature a number of notable rock musicians playing alongside amateurs, but will not be open to the public.

The tournament will be at the private Members Club at Grande Dunes on Monday, June 2, as part of a grand opening celebration of Hard Rock Park. It may become an annual event, according to Ed Kiernan, executive vice president and chief marketing officer of Peter Jacobsen Sports, and there's a chance the public may be invited in the future.

"Our goal right now is to have this as an annual event in Myrtle Beach tied in with the park," Kiernan said. "It's a great market, and for the right mix of celebrities and entertainment, it can be wildly successful."

Expected to join Jacobsen in the initial tournament are Duff McKagan of Guns N' Roses and Velvet Revolver; Ricky Phillips of Styx; Robin Zander and Rick Nielsen of Cheap Trick; Frank Beard of ZZ Top; John Lodge and Graeme Edge of Moody Blues; Will Turpin and Ed Roland of Collective Soul; Simon Kirke of Bad Company; Tom Hamilton and Joey Kramer of Aerosmith; Edwin McCain, Andrew WK, members of Sister Hazel; ESPN's Neil Everett and Sign Boy Matt Greisser. Non-golfers include Brad Whitford of Aerosmith and Chris Daughtry of American Idol fame. Proceeds will benefit the Rock My World Children's Village at Hard Rock Park.

For kids of all ages and backgrounds, the village will have facilities designed to cater to the needs of children with life-threatening illnesses, and programs to help troubled kids or kids who have lost loved ones.

The tournament is sold out with 26 four-person teams of amateur golfers. Each team will be playing with a celebrity in fivesomes. Kiernan said 75 percent of the amateurs are coming from out of town. He said many traveling amateurs are bringing families and planning to make a week of it by going to the beach, the Hard Rock Park, etc. "The ability to stay and play is a unique offering," Kiernan said. "It's been very well received."

The Park’s Grand Opening will be an exclusive, three-day extravaganza in early June 2008 which will showcase Hard Rock Park’s 65 acres of music, rides and fun, feature live performances by the Eagles, Sister Hazel and The Moody Blues and include a private charity golf tournament, the Save The Planet Invitational, featuring rock legends, celebrities and golf professionals. On July 5, 2008, the two-day celebration, including the concerts and star-studded celebrity golf tournament, will air on NBC.

http://www.myrtlebeachonline.com/sports/story/461733.html

http://www.peterjacobsensports.com/sports_marketing_clients_hard_rock.htm

Thanks for those pics! Love the photog god Ross!