Madoff Knew End Was Near When His Caddy Was Flipping Houses

Sitel Patel visits Ponzi schemer extraordinaire Bernie Madoff at Butner Federal CC and among the many revelations: Madoff knew the bubble was coming when his caddie told him he was flipping houses.

From the WSJ story:

Mr. Madoff recalled one of the first moments he sensed that economic conditions in 2008 could be fragile. He was at the Palm Beach Country Club in Florida, he said, and he had "a young black kid" for a caddy, and the caddy was buying and selling homes.

"He said he didn't need credit. He would buy homes and flip them for a profit," Mr. Madoff recalled. "I told my wife, 'This is the end.' "

Comments

[3PuttAficionado]

So basically, Madoff suggested that flipping houses had replaced flipping burgers as the new inner city McJob

[Outrage]

He knew the market was in trouble when "a young black kid" was doing what we middle-aged white guys have been doing all along. There's a problem with a country where young black kids are even permitted to buy houses.

So the crash is the black peoples' fault. I'm so relieved. Great article, Mr. Santelli.

[PABoy]

Outrage, did you read the artical it was about knowing credit was too easy and soon his investors would seek liquidity, maybe you are the racist for assuming the worst.

[Outrage]

Oh yes, I'm the racist. The article throws out something that has nothing to do with credit (race), and the warning flag for the impending collapse was "black people" being able to afford houses. "Something's wrong!!"

Yeah, I'm racist. You got me. By the way, your tea bag is dangling.

[Viz]

@PABoy

He says a young black kid is flipping houses is pretty racist my Madoff himself. One I guess could interpret it 2 different ways but I for one interpreted it as Madoff being racist.

[digsouth]

PA--you are killing the messenger.

Sarcasm was very evident in the outrage post.

Viz got it right.

[KLG]

It's hard to imagine an apparent sociopath like Bernie caring what color his caddy was. The point is a caddy was flipping houses without any visible financial means. Anyway, it was pretty clear the end was near in 2002-2003 when graduate students were buying houses and condos based on the income from their stipends. No down payment, no help from dad. Yeah, that'll work.

[Pasaplayer]

I wonder if Bernie tried to sign him up.

[Vwgolfer]

There is so much wrong with this comment by Madoff, however the " young black kid" should be commended for his smarts to game the system which constantly craps on his demographic, Flipping houses with no money down ain't his fault, he saw an opportunity and took it. Better than hanging out all day with your friends playing Xbox. Lol.

[hacker]

So, let me get this straight. It's either a great business model, or a bubble about to burst - depending on the race/socio-economic background of the person making the deal? If the kid had been a young Wall Street guy's son caddying for kicks, would it have been a bubble about to burst then? Or only when it was a "young black kid?" How do you read this article at all without weeping for humanity?

[Golden Bell]

The key here is not the color of the caddie's skin, but the fact he was young and working the real estate market, which someone from Madoff's background would have considered a market for people his own age.

It reminds me of why Joe Kennedy, the Boston financier and father of Jack, Bobby and Teddy, got out of the stock market just before the Great Depression. He knew it was time to get out when the kid shining his shoes began giving him stock tips. The kid was Italian, and still shining shoes when a newspaper caught up with him in 1985.

[tlavin]

There are many iterations of this story. For me, I started sensing the tech bubble when the octogenarians in the men's bar extolled the virtues of owning Cisco stock. Without knowing what a router was. I also had my regular shoeshine guy at city hall giving me stock tips. Too much funny money induced giggling certainty.

[No Longer Used to be Former Stack & Tilt Convert]

From what I understand the people who really saw that the bubble was about to burst acted on that knowledge making tons and tons of money.

[BrianS]

The "black kid" angle was just added to get people riled up. He means anyone who was caddying for a living at a FL golf course, - although Denunzio from Caddyshack fame did claim that he was a millionaire investor, and he just caddied for the exercise.

For me, some of stories on "Flip this House", a ridiculous show on US CATV were what convinced me that the end was near. It made it seem like you could add 5k granite counters and redo some cabinets and somehow add 80,000 in value to a home. The funny thing is that the people really believed that it was their hard work that was adding the value to the home, not the inflating balloon. Unfortunately, short of selling your residence and moving to an apartment, it didn't seem like there was much that could be done to avoid taking the pummeling that the bust delivered.

[reader818]

Why would any sensible person give credence to a single word -- racist or otherwise -- attributed to Madoff? Part of the reason he's incarcerated is to prevent him from further harming people. Giving him a forum compromises that isolation and gives him the opportunity to mislead and further injure people.

[Jds]

Golden, that story is also attributed to J.P. Morgan, who then sold all his stocks,etc.,etc. Is the article you saw from 1985 enough to take it out of the realm of urban legend?

[Chuck from Charlottesville]

I'm just amazed that a guy with any intelligence would launch that swindle in the first place.

And Golden Bell got it right; Outrage needs to see somebody to help him take the "rage" out of "Outrage".