EZ Reads 7/16/09: Religious Security

Some really good posts today...

• Erachet tackles Honestly Frum's rant (mentioned yesterday) on Modern Orthodoxy by discussing Religious Security. Excerpt:

  It is a call for you to start wondering where you fall. And not to look at other people so much. Just because someone seems to be of a different camp does not mean that person is any more or less frum than you, and therefore you have no business judging anyone but yourself. If you work on your own religious observance, you will feel more religiously secure. And the more religiously secure you feel, the less you'll care about anyone "looking down" on you or "trying to change you." You'll just laugh at that because you'll have a feeling of shleimus that cannot be breached. Not by something so silly as someone else being too judgmental of you.

• Great analogy by Treppenwitz in weighing the question of who is responsible when someone gets hurt in a "dangerous area".
  
• Interesting post by R' Gil on papal infallibility and Da'as Torah.

  When did papal infallibility become a binding dogma? While it had been discussed and invoked for centuries, it became official Catholic dogma in 1870. Similarly, while ideas similar to Da'as Torah had been discussed prior, the main establishment of Da'as Torah as a binding dogma -- at least in those groups that accept it -- was in the mid- to late nineteenth century.

• RafiG points out the homepage of the 18th Maccabiah Games.
• Mark Frankel with a very good introduction to learning Gemara at BeyondBT.
• Seen in a few places, links to this piece about a Madoff victim who is giving $5 million to cover the employees' 401(k)s. What a kiddush Hashem.
• Cool ad for HP (and it didn't even win!).
• Mayam Bialik (Blossom) asks Jew in the City about how Orthodox women are regarded. Interesting.
• Trailer for No Impact Man on A Negative Benefit, about a guy who has his family have absolutely no carbon footprint for a year. Strange but cute and funny, sort of. Definitely thought-provoking.
• On a similar note (via Freakonomics), you can sell (or give) your old cells to CycledCells, which either reuses parts or gives away phones to people in third world countries.
  

Enjoy!

Friday?

It's been a fast week... yet the Super Bowl seems to have occurred so long ago. A few fun [and a few less fun] reads for Friday that I found interesting and some comments on the Jewish Economics Survey so far.

Regarding the survey, I must say that I'm relatively happy with the response so far, but there's certainly a need for it to keep spreading. Firstly, thank you to Wolf, ProfK, Orthonomics, and Hirhurim for linking to the survey; and thanks to all those who have forwarded it on to family and friends. Some points worth noting, even though it's still early:

• The respondents have been from a nice, wide spread. There have been people in their teens and people who are over 60. Over 30 communities have been represented at least once so far, 14 of them in the tri-state area, three of them in other countries.
• That said, no single community has 10 responses yet. The more people that take the survey, the better it can be utilized.
• About a third of the respondents left their e-mail; most chose to remain anonymous. More interestingly, and very helpfully, people have rarely chosen not to answer a question, and a large percentage have left notes in response to the survey questions at the end.
• Over half the people who responded to "What do you think is/are the most important financial issue(s) facing the Orthodox Jewish Community?" cited tuition.

Best comment so far:

What the survey did for me was make me sit down and add up all of the usual expenses that my family has in a year (I added in the ones the survey left out). Then I realized why we are struggling so much to make ends meet - our usual expenses now that we have only one tuition to pay are still slightly more than our income. Taking the survey is something that every family-- struggling with expenses or not-- should do. I have been recommending it to friends.

One of the primary reasons for doing the survey was because of exactly that. Most people have a vague idea in their heads - or even a decent idea - of what they spend each month and think that they're coming out just ahead even if not way ahead. But when they start adding in everything, suddenly that slight cushion is a slight debt.

Other funny but not so funny comments:

• In response to what questions should be added: None. This was depressing enough at is was.
• Advice: Live in a hole. Eat grass. Don't have kids right away, and save, save, save.
  

Elsewhere:

• (via Deadspin) The Krispy Kreme Challenge just started. Who wants to try this: Run two miles; eat a dozen doughnuts; run back the two miles - all in one hour, and without throwing up.
• Hilarious - Peyton Manning and a couple linemen shove Jay Cutler into a pool, taking his cellphone to protect it. But whoops! He's a diabetic...
• The full list of Madoff victims. 163 pages.
• Stubborn & Strong sent me this fantasticly interesting piece on how a young woman about my age lives while going deaf and blind in NYC.
• ProfK and Sephardi Lady have both linked to what should be an interesting pair of talks on birth control, tuition, and halacha.
• Freakonomics (which typically is moderately left) notes a pair of Chicago economists who rip into the 'stimulus' package. Final line:

  A very plausible alternative hypothesis is that the justifications being put forth for the stimulus package — even if those doing the justifying are economists — are based on politics, not economics.

• Speaking of brilliant ideas, guess what year this is from: (via DealBreaker)

  Fannie Mae, the mortgage-finance company under U.S. government control, will loosen rules for homeowners seeking to lower their loan payments by refinancing. Fannie Mae will drop some credit-score requirements, reduce income-documentation standards and waive the need for appraisals in some cases, according to a notice yesterday to lenders posted on the Washington-based company's Web site.

  Hint: It's newer than you think. Our brilliant government in action!

Enjoy!

Who Manages YU's Money?

Crain's reported today that YU restated its losses from $110 million to $14.5 million from the Madoff situation, citing incorrect information from Ezra Merkin of Ascot. Reading a bit further, however, shows that YU is still out all the money - merely that the rest of the $110m wasn't originally invested with Merkin/Madoff, but profits they thought they'd gained.

This raises even more questions, not less: Did YU believe it was earning some consistent outrageous percentage every single year, that a $14.5 million investment climbed to $110 million?! Unfortunately, the article doesn't say when the money was invested, but let's put it back as far as 10 years - for the money to have grown that much in that span of time, it would have had to average a 22+% gain every single year! It's hard enough to believe that people didn't catch Madoff's consistent 10%, but at least there he had "audited" financials and (fictional) data that backed up his returns.

If you're managing YU's endowments, and you have money invested through someone (Merkin, in this case), and he tells you that you're earning a huge percentage on your money every year, wouldn't you - even out of curiousity! - ask "Wow, that's amazing, how?!" Wouldn't you wonder if it was too good to be true at some point? Wouldn't you wonder how you're getting that percentage when even the fund it's invested in is only claiming 10-11% each year? And if you don't know that it's invested with Madoff, but think it's with Merkin, wouldn't you be taking a look at their financial statements and trying to figure out how they are up that percentage each year? Was Merkin's Ascot Partners even claiming to return those numbers each year?

Mind-boggling.

First Suicide From Madoff

This is sad, and it's easy to imagine it won't be the only one:

A founder of a hedge fund that lost as much as $1.4 billion in the alleged Bernard Madoff scheme committed suicide in his New York City office, according to several media reports.

Rene-Thierry Magon de La Villehuchet of Access International Advisors was found dead early Tuesday morning, reported French business paper La Tribune, Bloomberg News and The New York Times.

The 65-year-old Villehuchet had lost as much as $1.4 billion invested with Madoff, the Tribune reported.

Via Dealbreaker and FoxNews.

2nd Day of Chanukah

There's so much inspiration in life if people simply wish to see it.

It's amazing how much we have going on this Chanukah, when we were thinking it would be a rather quiet one. After Ed's vort on Sunday, we had a party last night at my grandparents with my brother, SIL, and Ben, Hen, and Shen; on our way out, my grandmother happens to slide in that "Oh, we're moving to a retirement community in Philadelphia*". Oh, really? When? "Oh, we're starting to pack now, it'll be 2-3 months." I call my mother, and did she know? No, of course not. Ahh, family. Meanwhile, I loved how this photo came out - it's one of my great-grandfather's paintings behind my grandfather's menorah.

This morning, I attended a bris of the son of friends of ours. What's especially nice is that the family of the mother was one which I am particularly close to, and as they live out in the Milwaukee tundra, we only see each other when they have a family simcha here. Tonight, Serach is eating out with a friend while I may go to the Lander chagiga; and we're invited to/part of six more chagigot, birthday and graduation parties, a kiddush, and a bar mitzvah before Chanukah is over. A couple weeks ago, we had nothing in mind but the visit to my grandparents. Life can change fast...

There are some really nice pieces out there today, so enjoy them, and again, Happy Chanukah:

• The Jewish Week has a great piece on R' Horowitz: The Teen Whisperer.
  
• David Linn has a nice story about his grampa's menorah.
• Erachet writes a fascinating story about a (non-religious) woman who wanted to celebrate Chanukah with her daughter, and got it wrong - but so right.
• Northern Light notes some interesting details and sensitivities from her recent trip to the White House. I think it shows how attention to details can matter, even if nobody would really care, and it's really nice.
  
• Great quote:

  Chance favors those in motion. ~ James H. Austin
  

• Jewlicious hosts Haveil Havalim #197!
• Gil discusses what mussar should and shouldn't be learned by/about YU from the Madoff story (quoting the NYT piece).

* One interesting twist on why we care a bit: My grandparents are Conservative, with my grandfather leaning more to the Orthodox side and my grandmother more to the Reform. They'd been looking at two communities - one in Cleveland, which is for everyone but the shul is Orthodox; the one in Philly has a woman rabbi and is less religious, and my grandfather would probably be less comfortable there. But available is available, and they really shouldn't be living completely on their own in icy Queens.

Madoff, Regulations, & Jews

The Wall Street Journal today seems to be dedicated to discussing Bernie Madoff's $50 billion scheme, and a few pieces are particularly interesting and worth reading by readers here:

• To Catch A Thief details how regulation upon regulation missed Madoff (and the confidence in regulation let many investors assume they were safe), while the only ones who were wary were investors who did their own digging. We see over and over that it is not regulation which stops frauds but investors who don't rely on regulations to catch it.
• Madoff exploited the Jews discusses how he took advantage of trust within the community to avoid hard scrutiny. Sad but important to recognize.
• The Madoff Inheritance utilizes the play The Voysey Inheritance to note that the past year, from the housing mess to Madoff, teaches us a lesson:

  A big lesson of the past year is that we all should be talking more about money. One reason we don't talk about money is we are afraid of what we might learn. Mr. Madoff's contented investors are hardly different from the apparently uncountable number of people who put down 5% for a large mortgage without wondering, How does this work?

  I love this last line:

  "It's strange the number of people who believe you can do right by means which they know to be wrong."

Check them out.

YU Letter About Madoff ($110 Million Lost)

The following is the letter President Richard Joel of YU sent out regarding the investments YU had with disgraced ex-Sy Syms School of Business chairman Bernard Madoff as placed there by YU trustee and investment chairman J. Ezra Menkin. The basic summary: 8% of the YU endowment was with Ascot Partners (Menkin), which invested that all with Madoff. The net loss from that is $110 million, which added to previous losses amounts this year comes out as a 28% loss this year, from $1.7 billion to $1.2 billion. YU has hired a law firm to help investigate and set a higher standard of conflict policies and procedures and governance structures.

Full letter on expand.

Dear Yeshiva University Community,

I would like to speak with you, members of the Yeshiva University Community, about recent events in the news. As a result of the last week's revelations regarding Bernard Madoff, much concern and speculation has arisen regarding Yeshiva University. I write to you to make our situation clear.

Before going further let me reassure you:

• 1. The University is financially strong.
• 2. Be assured that our levels of scholarships and financial aid will not diminish.
• 3. Yeshiva University staff pensions are not impacted by this revelation.
• 4. Our leadership, faculty and students are engaged and advancing.
• 5. We will learn all appropriate lessons from this experience.
• 6. We have been engaged over the last two months in reviewing our budgets to seek ways to cut our operating costs due to global economic realities. We will continue to do so and remain committed to advancing our crucial mission of providing an education that ennobles and enables our students

Bernard Madoff is no longer associated with our institution in any way. The University had no investments directly with Madoff. Last Thursday night, we were informed by Ascot Partners, a vehicle in which we had invested a small part of our endowment funds for 15 years, that substantially all its assets are invested with Madoff. The Ascot fund was managed by J. Ezra Merkin who has served as a University trustee and chairman of the investment committee. Mr. Merkin has resigned from all University positions.

In the most recent statement from Ascot, Yeshiva's investment was valued at about $110 million, which represents about 8% of our endowment. While these facts are disappointing, we need to remain focused on the larger picture. We are but one of many institutions and individuals that have been impacted.

Let me be clear regarding our financial position: the University's endowment, taking into account the Ascot loss, is currently estimated to be approximately $1.2 billion, down from approximately $1.7 billion on January 1, 2008. That loss of 28%, calendar year-to-date, compares with an S&P loss of 38% and Dow Jones loss of 32%. While certainly this represents a painful decline, we are in the same or better position as many universities. Although this decreased endowment must factor into our long term fiscal plans, it will have minimal impact on day-to-day operations. Total income from endowment last year represented 13% of the University's operating income. Much more critical to our future health is the continued level of financial support from the YU family, philanthropists, and friends. So, while we are in a healthy and strong position to move forward, we must use the moment to address all concerns that this situation has illuminated.

In light of recent developments, we have decided to examine our existing conflicts policies and procedures, and governance structures. To assist us in this process, we have engaged Sullivan & Cromwell and Cambridge Associates, internationally renowned and respected institutions with recognized expertise in corporate and institutional governance, to ensure that our policies, procedures and structure reflect not only best practices, but the gold standard -- the standard to which we aspire for all our endeavors. We will be working closely with our advisors over the coming weeks and months and I'm confident that we'll emerge stronger than ever.

I must add a more personal thought. We all should use these times to reflect on our blessings but also to reflect on our responsibilities. We should constantly be communally introspective and focus on advancing our ideals. The times are appropriate for us to focus on our core values, to practice and refine them and to share them with the world. We can and should always advance. Yeshiva University is committed to engaging in that conversation with other people of good will. I thank you for your interest, commitment and support.

Sincerely,

Richard M. Joel

President, Yeshiva University

Ezzie's Blog Roundup, 12/16

UPDATED

• R' Enkin at Hirhurim discusses whether one should make the blessings when lighting for a public Chanukah menorah lighting. I found it especially interesting after watching the White House Chanukah event, where you should listen closely to Ben-Gurion's grandson making the bracha. President Bush spoke very nicely, and I think that it's interesting to see him making comments about Truman which would in theory somewhat apply to him sometime in the future as well. Kol Zimra sang after the grandsons of Truman and Ben-Gurion lit the menorah.
  (Thanks Greg for this video link.)
• Jewlicious totals the losses to Jewish organizations from Madoff at at least $600 million, with possibly as much as $1.5 billion.
• JoshWaxman linked to this interesting piece about getting images directly from people's brains. Could be cool if true... also could be scary.
• Cool photo on SoccerDad.
• Forgot this one I saw yesterday which is excellent: Bas~Melech has some really specific points and suggestions regarding the education system that seem quite wise to me.
  

Madoff's Victims

The impact of Bernie Madoff's Ponzi scheme on the Jewish community is going to be huge. Collecting from a bunch of different sources... (Bloomberg's link has some of the numbers for the hedge funds who were invested with Madoff - insane.) And the New York Times has a piece from Palm Beach which is just sad.

• Two charities have shut their doors:

  The Robert I. Lappin Foundation in Salem, Mass., announced Dec. 12 that it would close after losing $8 million -- all of its money -- through investments with Madoff. And the Chais Family Foundation, which gives out some $12.5 million each year to Jewish causes in Israel, the former Soviet Union and Eastern Europe, announced Dec. 14 that it had closed after losing all of its money through investments with Madoff.

• Yeshiva University has lost "tens of millions, if not more", which it had invested with Madoff - who was the Chairman at Sy Syms School of Business. Rumor has it that it's around $150 million, on top of the $400 million they'd announced they'd lost recently due to the market.
• Lots of individual Jews around the country were invested with him:

  The investor was close to a number of prominent Jewish donors, both on Wall Street and elsewhere. The Wall Street Journal reported that members of the Boca Rio Golf Club in Boca Raton and the Palm Beach Country Club in Palm Beach were heavily invested with Madoff's firm. Both clubs are heavily Jewish.

• During golf-course and cocktail-party banter, Mr. Madoff's name frequently surfaced as a money manager who could consistently deliver high returns. Older, Jewish investors called Mr. Madoff " 'the Jewish bond,' " says Ken Phillips, head of a Boulder, Colo., investment firm. "It paid 8% to 12%, every year, no matter what."

• Merkin, who last week told investors in his hedge fund, Ascot Partners, that all of their money had been defrauded by Madoff, is of particular interest to the Jewish community. He has philanthropic ties to a number of Jewish organizations and institutions, serving as an investment adviser for many of them, including Y.U. Among other causes that he is said to be connected to are the SAR Academy -- a Jewish day school in the Bronx -- as well as State of Israel Bonds, The Jewish Campus Life Fund, Elaine Kaufman Cultural Center, The Ramaz School, Congregation Kehilath Jeshurun and the Fifth Avenue Synagogue.

• North Shore - LIJ Health System lost $5 million.

• There is no evidence that either Mr. Shapiro, who is 95 and joined the club in 1974, or his son-in-law, Mr. Jaffe, who is 64 and joined in 1992, knew of the fraud. Both men, who give millions every year to countless charities, are also said to have been duped of hundreds of millions of their own money, according to friends of their families.

Oy.

Oh My Goodness ($50 Billion)

UPDATE: Madoff is also the chairman at YU's Sy Syms School of Business. I'd assume that will now be a was.

That's what Elianna would say if she understood securities fraud and Ponzi schemes... this could impact the Jewish community in a very big, bad way:

Bernard L. Madoff, a former chairman of the Nasdaq Stock Market and a force in Wall Street trading for nearly 50 years, was arrested by federal agents Thursday, a day after his sons turned him in for running what they said their father called "a giant Ponzi scheme."

The Securities and Exchange Commission, in a civil complaint, said it was an ongoing $50 billion swindle, and asked a judge to seize the firm and its assets. "Our complaint alleges a stunning fraud that appears to be of epic proportions," said Andrew M. Calamari, associate director of enforcement in the SEC's New York office.

Bernie Madoff was not only viewed as a very respected, trusted guy on Wall Street, but almost everybody was invested with him. CNBC has a good clip on this article explaining what happened and what Madoff is about. More importantly for the Jewish community, a very large number of Jewish people were invested with him. He was viewed as a guy who got steady positive returns, as the firm would announce profits of about 11% consistently each year for fifteen years, and that enticed large numbers of fund of funds (hedge funds which invest in other hedge funds) and high-net-worth individuals to invest with him.

Madoff apparently realized that it was going down recently, as large numbers of people withdrew funds due to the market, and called in his sons. They called the FBI, who came in. DealBreaker has an excerpt from the FBI memo about it, which is kind of sad... at least Madoff was honest about his dishonesty and expects to go to jail. CNBC and a commenter on DB both note that the supposed auditor was a small office in Monsey/Rockland County.

Just as an idea of how much of an effect we're talking about... a commenter noted that a family he knows had $50 million with Madoff. Families in New York and Florida had millions. The Mets' owner is rumored to have had a billion dollars with him. DB (which can be VERY sarcastic) lists the "victims", ending with JEWS. And the Post started its piece with "Suicide hotlines in Greenwich, Conn., could be lit up today as investors in the posh suburb begin to realize how much they've lost in the rip-off scheme perpetrated by Wall Street legend Bernard Madoff."

This is going from bad to OMG... really, really fast.