Ex-Nasdaq chief accused of running a Ponzi scheme losing $50 billion

The time of the financial crisis is a good time for all bad investments to collapse. When everything goes well and everybody believes you, you can create a virtual business empire and nobody will ask you to prove it’s real. But now, everyone starts asking. That’s why we have so many companies going bankrupt. And now we have a real financial scandal - Nasdaq’s ex-chief, Bernard Madoff, was accused of losing $50 billion in his “investment fund” which turned out to be a “Ponzi scheme”.

In 1960 Madoff founded “Bernard L. Madoff Investment Securities”. It was an investment fund in which some big investors alocated millions of dollars. For a long time the fund had the reputation of a steady and trusted investment.

This week, Madoff confessed to his closest friends and emplyees that the whole fund was in fact a “Ponzi scheme” and that everything is lost. The losses are around $50 billion, and what has remained in the fund is only $300 million.

The funny thing is that Madoff was arrested on Thursday for a $50 billion fraud and he was released on a $10 million bond.

Interest rate cuts continue throughout Europe

Yesterday we had another episode of the “interest rates cutting” story. European Central Bank decreased the rates from 3.25 to 2.50, and Bank of England cut rates from 3.00 to 2.00. These are another radical cut rates in recent weeks.

The rates were cut also in Sweden and Denmark. Almost all countries in Europe struggle with the crisis and the lower expectations about the economic growth. Central banks are clearly engaged now not only in monetary policy, but in a way - in a fiscal policy as well. Of course inflation stopped to be a problem at the moment (for example in EU inflation went down from 4 to 2.1 percent in just couple of months). However, nobody can assess at this time, whether these rate cuts are big enough to stop the recession and at the same time - are they not giving us a risk of stagflation in the near future.