Chilling at the CC lounge

Theres quite a buzz in the CC Lounge today. Citi trading at under 4 (I shorted C. at 26 at the beginning of May 08 I wonder if they ever closed that trade?), BofA sucking up more taxpayer dollars after finding something rather nasty in the Merrill woodshed, Bernie Madoff redefining the meaning of alternative investment strategies: it certainly gets the blood flowing.Up here, away from the action, there are about ten of us who had some connection with the market. You have your typical mortgage broking scammers, loan sharks, a few boiler room refugees, even a corporate treasurer who got a little too personally involved in the company cashflow we all sit around and talk tactics, swap war stories and generally blow smoke up each others fundaments. Of course, Im the most famous of the lot, and they all tend to look up to me. I made it to the front page of the Journal (twice) and Im told there was quite an interesting piece about me somewhere in the FT. Plus, I fully expect to beat the rap.What was more impressive was, when the Madoff story broke, some young cub from the Journal called me. After a bit of chitchat about how I was getting on at the farm, he asked me about Ponzi schemes and similar scams. Move over Leeson - clearly, I am now the worlds leading expert on financial fraud. Problem is, we both got caught. The real experts are still doing it every day, rather than talking to journalists from the comfort of the communal lounge at one of the Massachusetts Governors guest homes.The CC correctional center is surprisingly acceptable. Im classed as a Level 3 inmate, which means they reckon Im unlikely to stab anyone to death, or even give them a paper cut. Originally, they thought of sending me to a secure hospital unit, on account of my apparently irrational behavior after my arrest, but Ive clearly become more rational, although theyre not keen on letting me out of the facility. They call me an RTB restricted to base although I gather it also stands for real trying bastard. Charming.Technically, Ive done nothing wrong yet. I am here under preventive detention, which basically means that there is a serious risk of me running away if they let me out before the trial starts. Apparently, when they found an overnight case packed with my clothes and a hundred grand cash, they thought I might be planning a long vacation. The truth is, most hedge fund managers take the same precautions, just in case it all goes FUBAR.The guys were pretty excited by the Journal call. To be honest, so was I. It means The Street hasnt forgotten about me just yet. Itll happen soon enough, the next time some wannabe big-time trader tries to corner the market in pork bellies or goji berries. Ever since the Hunt brothers and Silver Thursday, guys who try to do that get burned. I just wish Id read the manual.I havent always got on with the press. When we were right in the middle of the so-called butter money affair, I was getting swamped with calls from every journalist with even a passing interest in financial markets. They can ask the dumbest questions and then expect an intelligent answer that fills in all the gaps in their knowledge for free.I wanted to reach for my revolver every time I was asked the question: So what differentiates an alternative fund manager from a more traditional institutional investor?Heres the real answer:Were paid more.We wear better clothes.Our offices are near to the best restaurants and we can always get a table.We can charge for country club membership as a necessary business expense.Our first instinct is to charter a jet.We make up the rules as we go along.The word transparency has no place in our business model.We can call our firm something really stupid (e.g. Maverick, Cerberus) and get away with it.Regulators have absolutely no understanding of what we actually do.Objective valuation is a contradiction in terms.Black AmEx cards do not impress us.Every prop trader on Wall Street dreams of running their own hedge fund.And, last but certainly not least, all the above means that we are more likely to end up in correctional facilities.I dont blame you if you are thinking, Who is that Larry Podolsky? What did he do? The name is vaguely familiar, but So much has happened since I was escorted from the office on September 16, 2008 (just as the Fed was pumping USD85bn into AIG, which I think puts my minor transgressions into perspective), that it would be easy to have forgotten my fifteen minutes of fame.I always wanted to hit it big, but this was not exactly what I had planned. Butter money a description I detest, but the media thought it highly amusing was a great idea, but something got lost in the translation from concept to reality. I still think it could work. But probably not with my involvementAll that will come out at the trial. We shall have a good debate about the scheme, and what I did and didnt do, and then I shall probably come back here, maybe even to the same room (it has en suite, which is a nice touch). Because, as you and I, the Journal, the FT, Bloomberg and, just possibly, the SEC, all know, I am as guilty as all get out. The only thing Im going to be arguing about is how much it matters. OK, a lot of money went missing, but these guys could afford to take the hit. I wasnt milking little old ladies or skimming the US taxpayer. And, as I shall testify, I was only borrowing the money. I fully intended to pay it all back.

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