First, the rage. As Clusterstock notes, its a bit weird to see the red mist descend over Business Week columnist, and see her barking like a starving hyena, but that’s what happened! In her piece “Why I Hate Bernie Madoff” she describes her sleepless nights boiling with anger at Madoff, before applauding one reader’s suggestion to “Take him and the people he ripped off out where nobody can hear the screams and let the bunch of them work things out”, saying “I like Dingbat’s suggestion the best!”

Meanwhile Donald Trump got a chance to practice his role as mixed-martial-arts mediator, as some post-Madoff beef was aired at a party he held in Palm Beach this week. Bob Jaffe, a philathropist who channelled investors’ money into Madoff Securities and received a cut for his trouble, got a tongue-lashing from Jerome Fisher, who lost $150m in the fraud, before some “pushing and shoving” went down. All the stress of the last couple of months is coalescing into a Madoff-shaped Wicker Man, and we’re prancing around it like pagan loons.

In the face of such anger and human misery, the head of the SEC has been frightened into saying what you must never say in America, “sorry”. Litigation beatdown to follow! “Credible and specific allegations regarding Mr. Madoff’s financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the Commission for action…I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them”. In short: “we dropped the ball”.

But while that might hearten those who lost big, its not the same as money in the bank. Bloomberg has the headline “Madoff Scandal Seen As Biggest Setback for Jewish Charities Since 1930s”, which sounds like a crass joke when you first read it but it’s actually pretty serious. A quick glance over the names of the big losers from the fraud and its not too hard to determine the geneology of the charitable foundations: Zuckerman, Spielberg, Lautenberg, Julian Levitt, Elie Wiesel, Carl Shapiro, Robert Lappin. The FT has a sad story today of the Chais Family Foundation, a programme to help poor Israelis get to university, having to close down after being defrauded.

No matter what your stance on Zionism or the Israeli-Palestinian conflict, there are innocent people being royally shafted by this whole thing. Not if you’re a rabid anti-Semite though, and they’ve come out in force after the Madoff scandal. Over at anti-Zionist blog Wake Up From Your Slumber, the writers overlook how Jews are losing the most from this fraud, instead saying that Yeshiva University “should certainly be investigated as possible recipients of stolen money”. Right, Madoff stole from Jews to fund a “Zionist criminal structure” via a Jewish university. Hey and don’t forget Jews did 9/11! “The Zionist criminals involved in 9-11 and the cover-up of the truth are all tied to the Jewish Theological Seminary in New York, which is a similar Zionist institution.”

More Jew-bashing here, here, here and here. The general tone is a muddle-headed mixture of gloating at the downfall of Jews while still maintaining a massive Jewish conspiracy. But when you’ve got blogs devoted to exposing ”conspiracy nuts, and anti-Semites, especially the Jewish anti-Semitic variety”, then you know this kaleidoscopic strain of hatred isn’t going anywhere.

But to lighten the mood, check back soon for our guide to Madoff-branded Christmas gifts! No, really.

But according to NoDPI, an anti-Phorm site, the statement that “BT’s expectation is to move towards deployment” comes from Phorm alone, not Phorm and BT as reported in the FT and others. And it doesn’t take a genius to read between the lines and work out that BT haven’t actually said yes yet. Nice way to jumpstart those share prices though!

We’ve had a look at Phorm recently, as they’ve been trying to beef up their legitimacy by adding the likes of Norman Lamont and Ofcom founder Kip Meek to their board. Their website is nice and clean and curvy, like posh smoothie packaging, and it all seems above board. They say they don’t keep any records of who you are or where you surf, and that you can opt in or out of the program at any time.

But according to NoDPI, they don’t meet legal standards for opting in or opting out: “Phorm break the law by intercepting every unencrypted web communication by a customer of a participating ISP - AT THE ISP LEVEL.  There is no way to avoid this interception and the Opt-In requirements under the law are not being met.” Moreover, Phorm has never really recovered from the revelation and PR nightmare that BT customers were secretly monitored by the technology in early tests.

It’s uncertain whether other broadband providers are up for Phorm. Orange ruled themselves out last month, saying “Privacy is in our DNA, so we need to be honest and clear about what we are doing. We have decided not to be in Phorm because of that… The way it was proposed, the privacy issue was too strong”, while Tiscali and Sky have both also said no. Virgin Media are a bit more confusing – CEO Neil Berkett once said their advertising ”would not be with the Phorms of this world”, but now he’s saying: “There will be a point in time when we use the intelligence of our network for targeted advertising, will it be with Phorm, will it be with a modification of their product? I think it is a technique, but it is not something I want to rush into. We have got a fantastic brand and we want to take our customers with us”.

Even if BT is totally up for Phorming, it doesn’t look like the company’s share price is going to hit the £35 highs it once commanded. And from the comments of broadband providers, they don’t seem to think their customers are going to be convinced by Phorm’s cute explanation of its technology, with little Flash animations of hats and incinerators; the fact that BT didn’t reveal the figures of how many signed up during its latest test seems to suggest that their customers aren’t convinced either.

Being part of a media company affected by low ad revenues, part of me almost wants it to work and create higher ad premiums, but the total-privacy argument just doesn’t convince. And as astute commentor “oldghosts” mentioned in our last Phorm post, packet-based information delivery may not even have a future in a cloud-computing environment, so Phorm’s technology could become redundant. While Phorm gets exasperated at the refusal of people to sign up to something that would revolutionise revenue generation online, the public isn’t ready for total surveillance just yet, and that’s heartening.

Worst of all of the latest victims is probably Dutch bank Fortis, whose nationalised arm could lose nearly £900m after it lent money to hedge funds who invested in Madoff’s snake oil. Ordinary Dutch folk screwed over by a confidence trickster – go directly to jail Madoff, do not pass Go, do not collect £200.

But as for the hedge funds themselves, some really should have heeded the warnings. As the Ronseal-named hedge fund adviser Jim Hedges says in today’s FT: “This was a train wreck that happened in broad daylight”. He advised against investing with Madoff, as did fellow hedge fund advisors Aksia. But folks looked at Madoff’s consistent monthly return rate and instead of thinking “that’s odd”, just dove straight in. Or, as we shall see, just turned a blind eye and looked at the fat cut they were getting.

Perhaps the real bastards in all of this are the feeder funds, who acted as middlemen and channelled funds from regular folk into Madoff’s funds. Madoff didn’t charge them any fees, to make his investment vehicle more attractive; he got his money from the brokerage fees made off trading stocks in the accounts. The feeder funds on the other hand charged huge fees – Fairfield Greenwich took 20% of profits and a 1% management fee, Tremont took a well-over-the-odds 1.25% management fee. Both didn’t have conditions set for them, “such as ones requiring that minimum returns be reached before fees would be paid”, according to the FT.

So the news that Fairfield lost over $7.5bn and that Tremont’s Rye Investment had $3.1bn (virtually the whole fund) invested in Madoff Securities makes the blood boil. Some fund managers made a Faustian pact to pump other people’s money into a dodgy fund because their returns were so good and uncomplicated. Pass the flaming pitchfork. 

So what of individuals with stakes in these various funds? If you’re able to invest in a hedge fund, you’ve probably been dealt a pretty good hand in life, and probably aren’t going to default on your house/find it hard to feed your children even if you got stung. So when I read Bloomberg’s email correspondence with panicking folks with money invested with Madoff, part of me wants to gloat over the Icarus-like fall of the wealthy, but it’s pretty hard to read the stuff about grandmothers with their life savings signed up to these charlatans.

Some are suggesting that the scandal could be what finally destroys confidence in hedge funds altogether, those betting shops dressed up in Armani rather than Reebok. Hedge fund advisory body IGS said yesterday that it expects a third of all hedge funds to fail after investors, spooked by the diminishing returns and general financial malaise are pulling money out. After the number of funds reached over 10,000 in June, the highest ever level, they’re waning hard. Despite the first half of the year bringing these record levels, fund levels have fallen 18% year-on-year since last November. That’s a lot of money gone in the last couple of months.

What with low interest rates as well, I think I’m just going to hand over my finances to fate and chuck my savings into Premium Bonds. It’s like the lottery for unadventurous people!

The fraud comes to around $50bn, and affects clients worldwide, from individual investors to large banks like HSBC, to charitable organisations owned by the likes of Steven Spielberg; Bloomberg has the whole list here. It was exposed not after some well-aimed sniffing by financial regulators, but after Madoff apparently got bored of maintaining the facade and announced to his sons that his operations were “all just one big lie” and “basically, a giant Ponzi scheme”, ie a pyramid scheme built on sand, that had been insolvent “for years”. The sons are his business partners, and potentially it was one of them who shopped pop to the FBI; any road, Madoff went quietly, saying “There is no innocent explanation”.

The deception is unravelling at pace, with many large firms annoucing their exposure today. Nomura: $303m. Man Group, the UK-based, world’s largest hedge fund: $360m. RBS, for whom life just gets worse: £400m. HSBC: $1bn. None of these are as bad as the US hedge fund Fairfield Greenwich, who estimated a $7.5bn loss at the weekend. The FT is doing a running tally of the fallout, which currently stands at $24.1bn.

Looking back now, you can see giant flashing neon signs reading “SKETCH” above Madoff’s vehicle. He didn’t allow clients access to the digital trading platform, instead providing easily-doctored paper copies of trading records; ran all deals with an inhouse brokerage team; amazingly consistent high monthly returns. But my favourite should-have-seen-it-coming detail is the fact that the companies accounting firm only had three people in it. All we know about them is that one wore “tight pants and tie-dye shirts”, not a look that screams “trustworthy audit”.

He was “very close with the regulators”, and his niece married one, according to some digging by Time. Conspiracy theorists can start getting all sweaty then, but its probably the far more prosaic explanation that firms can be utterly opaque and there’s nothing the regulators can do about it. Madoff says he has no more than $300m left, so it’s not looking good for anyone hoping for reimbursement. Just ask for a bailout guys - the US government’ll do anything these days!

Wow. Wouldn’t it be hi-larious if you played for Oxford University’s under-21 rugby team and went to a society dinner dressed as a Hasidic Jew with a bag full of monopoly money? One student did. In fact by all accounts, so did the entire first 15.

Billed in mid-November this year as a “bring a fit Jew party”, the event was just one of a number of shindigs organised by the U21 team, that have elsewhere included a “Safari Bop,” in which attendees blacked up like Al Jolson. Whatever next, eh? A bar mitzvah ceremony sponsored by Pork Farms? Just thank your lucky stars Prince Harry wasn’t invited in on their fancy dress shenanigans.

Yesterday, following an investigation by the university’s administration, the team were ordered to attend a “cultural diversity” lecture as punishment for the gaffe. Rumours that academics at the School of Geographical Sciences are taking time out from their essay marking schedules to petition for full suspensions remain unconfirmed, however.

In a statement given afterwards, Oxford skipper, Phil Boon, was reserved about the debacle: “I can understand why it might have offended some people, but it would have been an awesome social.”

News of the seminar was broadcast far and wide. Girls were invited, even Jewish ones. Unfortunately, members of Oxford’s Student Union council weren’t up for the gig, suggesting the rugby team might have been better advised to run a “bring a fit girl party” instead. 

Their advice fell on cauliflower ears though, and the affair hasn’t done much to help Oxford University escape its reputation for naughtiness. End of term frolics and May Day diving aside, the pub-smashing malarkey of its most infamous “dining” society, The Bullingdon Club, has also drawn fire in recent years.

In 2004 four of its members (that have previously included Tory big-wigs David Cameron and Boris Johnson) were arrested after a ruckus broke out at a 15^th Century pub near Oxford. Naturally the owner was reimbursed for any damage…

Still, the university can’t be held entirely responsible for the misdeeds of a handful of its students. Sending the lads to face the wrath of a greying sociology lecturer hardly seems fair though – shouldn’t the crime fit the punishment?

Only two out of nine of the Barclay brothers’ preferred candidates were elected into the Chief Pleas, which will be the cause of such annoyance to the Barclays, as they worked so hard to get the democratic election in the first place. In reaction to the elections not going how they wanted the Barclays are pulling out all investment in Sark, closing down all businesses immediately and stopping all building work. This leaves those jobless in a tight spot, as there is no welfare state in Sark.

But it’s their estates manager, Kevin Delaney, who’s been mouthing off in public after the Barclays’ failure. To the BBC he said Sark “have effectively written the longest commercial suicide note in human history“. And the Guernsey press reported him slamming the poll as “a cartel”. “Deals were done behind closed doors that were executed with military precision. It was block voting on a breathtaking scale of which I have never seen in my life”, he said, over-egging it just a touch. If it was an organised coup, then it certainly wasn’t on a breathtaking scale, there’s only 600 people who live on the whole island, including children. 

And it’s hardly a difficult operation, when half of those people or more were heavily anti-Barclay and their helicopters in the first place. The vote was however, a bloody complicated one, where each person had to cast 28 votes, not to make up for the lack of voters, but to individually choose someone for each one of the 28 seats in the Chief Pleas.

To help their supporters, the Barclays published a newsletter with a useful list of Barclay approved candidates and anti-Barclay “feudal talibanists” and those with”‘socialist streak”, who were not to be trusted.

The Barclays leave Sark on a sharp economic downturn, and the Barclay backlash seems to have added weight to their detractors’ suspicions, that they were trying to control Sark in one way or another. The severity of the reaction seems to be over the loss of something more than the freedom to “preserve unique beauty and tranquility” on Sark.

So was it wise for Sark to go Barclayless? Members of the new government, say, in dramatic expect-a-sequel style, “The show will go on. We’ve lost one of our benefactors but we’ve got to pick ourselves up, dust ourselves down and move forward to a shiny new democracy.” But not helicopter or cars shiny, just licensed bicycles and tractors shiny.

Sony Home is a vast virtual universe that you can walk around and chat to other folks with PS3s, using an avatar, ie a ludicrously unrealistic projection of yourself. The universe has been plagued with delays (it was meant to be done for September last year), but Sony have come good on their promise to deliver an open beta version by the end of the year, and are being very bullish about its prospects. Director of Home Jack Buser diplomatically refused to name its rivals (Microsoft’s Live and Nintendo’s Mii), before effectively slagging them off, saying Playstation performs better, and that “anybody that wants to try to play catch up is going to have a real hard time”.

The platform is free to download and use, but is nevertheless ripe for milking cash from. A virtual world is going to need virtual advertising, or it just won’t feel right, right? At first, the advertising will be uploaded via Sony’s servers, but soon enough companies will be allowed to control their own targeted, personalised ad campaigns. That bit in Minority Report where Tom Cruise gets personally advertised Guinness edges closer to reality.

The game begins with your “home”, an apartment or house, which is free. But, if you’re a colossal sucker, you can buy a nicer pad for your pixels to chillax in, with real original-life money. That cash goes straight to Sony. You can also buy Diesel jeans for your avatar, again for real money, and Sony get a cut of that too. It’s conspicuous consumption taken to its logical conclusion – all transaction and no tangible product.

But what if you’re one of Sony’s 8000 employees who’s getting the sack? Don’t worry, you can use your previous overlords’ hardware for your financial gain! Users will be able to sell, for real cash, games and other user-created content they’ve made to other users in Home. If the scales fall from your eyes and you realise you’ve spent actual pounds on a virtual penthouse, you can sell it on to some other chump, potentially for a profit.

I’m envisaging a virtual house-price crash if the service fails to become popular. Or maybe a virtual sub-prime crisis, after nerds desperate for a flash Home pad take out mortgages worth 110% of the value of their virtual property, and then default on their loans after the allowance from their parents gets spent on Doritos and porn.

Female Home users beware though. As gaming mag CVG points out, the universe is predictably full of menfolk who haven’t learned many social skills after all those years in the basement:

“Home is heaving with hopeless sex pests. If a girl – real or not – wanders past, 20 guys will run towards her, forming a circle and body-popping…I created a girl avatar, strolled around for a bit was literally chased by gangs of gawping, dancing idiots. “how old r u?” “where u from?” Some guy even started whispering stuff through his headset at me”.

Predictable enough. But imagine the hilarity of what happens next! “It’s even funnier if the girl is a bloke in disguise and they revert back to their original male avatar. If the game had a ‘jaw drop’ emote, these guys would be using it.” Nurse, my sides!

Sony Life – like real life, only without the joy of seeing a laughing, clapping child, or anything else nice, funny or good. Stay away, fellow recessed citizens! Get your chums over for some Guitar Hero instead!

“Paying for music is progressively becoming a niche activity as the value of recorded music is in steep, possibly, terminal decline,” reports SD. You don’t say. Still, the effects of this trend are finally coming to pass. CD distributors Entertainment UK – supplier of Zavvi, WHSmith, Asda, Sainsbury’s and Morrisons – recently went into administration, with independent distributor Pinnacle Entertainment laying off 94 staff just a week later.

Apparently, mobile downloads will double by 2010 – although this prediction looks less impressive when you consider that half of these downloads are predicted to be for ringtones rather than actual tracks. At the other end of the spectrum will sit a gang of packaging-obsessed record nerds who will fling their cash at luxurious things like the new Franz Ferdinand in 2xCD, 6×7″, DVD, book format, plus commemorative record-centre, i.e. ultra-silly box set format that aren’t going to make very much money but are great for merely existing.

So how is the poor music industry going to make the rest of its money? If you’re a retailer, ride the long tail, and sell lots and lots and lots of things for very little money, so you make at least some money back – something that e-commerce giant Amazon.com invented and has now expanded with its MP3 arm. Their online music store is taking on iTunes (who currently monopolise the market) by offering promotional pricing. Meaning that singles are available for 59p each, compared to to 79p charged by iTunes. New KOL album for three quid as well! And DRM free!

But even this puts the industry in a weak position, because “iTunes’ near break-even pricing has set consumer expectations for buying individual tracks”. So if you’re a publisher, you’ll just have to get used to much smaller margins. Sorry.

Who else? Purists will get annoyed at kids on the bus playing bassline from their phones. Record companies aren’t going to keep giving out massive advances; instead they’ll have to search harder and then nurture it into something that people definitely want to buy, rather than chucking the Saturdays at a wall and hoping they stick. And the bands, except the absolute top of the pops, will have to work hard for smaller advances, won’t be able to buy a yacht built from impacted cocaine any more, but will have to go on the road and play gigs and have a really great time for a few years. The music industry isn’t in crisis; industry expectations about themselves are being cut down to size.

So first we had banks bailed out. Then guys like Adolf Merckle wanted the personal bailout treatment (not that he got it of course). And now the third wave of bailouts is happening, with companies getting cash from the government to keep them going and not send job cuts spiralling out of control.

So we’ll see today if the car industry in America is getting $15bn, more specifically GM and Chrysler. GM alone was hoping for $12bn, but it’ll just have to make do. You might remember that GM and Chrysler’s bosses got told after their first plea to come back when they had some more viable plans for sustainable product. So come back they did, with some whizzo new green cars, to show that they weren’t just going to keep churning out the old gas-guzzling models but provide something that was efficient and clean.

Holman W. Jenkins Jr, writing in today’s Wall Street Journal, says that these new cars are doomed from the start though, thanks to American drivers wanting to carry on driving big unless gas prices get really crazy. He’s got a point, and small cars seemingly have to be pretty luxurious and/or statement-y before Americans start to buy them. But America needs a shift towards smaller vehicles, and perhaps this government enforcement will be the catalyst it needs. The real challenge is not getting GM to come up with some green car designs, but finding a way to make them efficiently, paying wages the unions are happy with while managing to keep prices down for smaller cars. In some ways, the stranglehold of the United Auto Workers union is keeping the Big Three from expanding its portfolio of models; it doesn’t have room to work out how to make the cheap, small cars America needs.

Anyway, enough of them for now, as there’s a much more delicious bailout happening this week, namely the Italian government chucking money at the parmesan industry. They’re buying up 100,000 wheels of parmigiano and 100,000 of Gran Padano in a bailout worth 50m euros, drawn from a fund to help feed needy people; they’re couching it as sending the cheese to charity. So if you’re homeless in Italy, expect some serious flavour atop your soup ration!

So it seems if your product is a totem or icon for the country you’re in, you can expect sentimentality to breed you a pot of bailout cash. If you’re trading in something totally unsexy like iron ore across countless different countries, then you announce 14,000 job cuts. Not that I’m advocating unnecessarily ruthless capitalism, but hopefully we’ll get some kind of continuous auditing in place for everyone receiving bailout cash, to prove they’re actually a viable business rather than something nice to keep around the place. Because at the moment, given their portfolio of cars, that’s all that GM really is.

Back in September Becht sold off the first bunch of his Reckitt shares at a price of £28.60, which made him£1.4m, then saw them rise only a wee bit more before they fell big time in October, reaching a low of £23.14. Now they’ve bounced back up again, and Becht clearly feels the time is right to sell more off, raising £2.85m from the sale of 100,000 shares. He’s still got 1.2m left, which a quick calculation at yesterday’s price says are worth £33,360,000. And he gets £22m a year as salary. Sigh.

Maybe this is all to free up shares as part of his effort announced last week to allow employees to buy shares in the company, “to focus the efforts of staff in 42 countries behind the company’s overall performance, rather then their own local business units”. Shares will be offered at 20% below their listed price for a short period, like an M&S pre-Christmas sale.

He’s especially targeting India’s emerging aspirational class, with MD CM Sethi saying: “We expect a very high take up rate of the share plan from employees in India”. Constant fear at fluctuating share prices may seem like an evil way to stimulate hard work, but surely it’s a more of a sound investment than pouring your money into the failing print media company you work for.

Reckitt has been enjoying 7% growth per year for seven years, against an industry growth of 3-4%. They spent £65m on advertising last year, helping us print media types out no end. What they actually do is make all sorts of things that end up at the back of cupboards, like Dettol, Lemsip, Finish and Cillit Bang, which gives us an excuse to tell you to go check this out, an oldie but a goodie…