Water, wealth, Madoff, Citibank, Al Waleed, the butterfly effect, you and me

All the water on earth will be there as long as earth exists: it is very simple. As it evaporates from one location, it condenses and comes back as rain or dew in a different location. Fresh water can end up in the oceans, and ocean water can end up on land, via clouds and precipitations. Polluted water is water nonetheless and we only have to clean it to be able to use it again. We do have the technology and the wealth required to make it happen. When there is a drought in Argentina, there is flooding in Bangladesh. The amount of water on our planet has been the same since earth came to exist. We just need for it to circulate.

Wealth is the same thing: other than for a very finite quantity of rare metals and gems that can be mined, the amount of wealth in the world remains he same. It only shifts from some individuals or countries to others.

That is why a recession or even a depression, be it local, regional or global, can only be temporary, and can be fixed by governments and possibly some extremely wealthy individuals or corporations: when the Hunt brothers cornered the silver market a few decades ago, they demonstrated it could be done. John Maynard Keynes said it before me: when the system becomes off balance, the government has to temporarily get involved to make corrections.

If (part of) the US government's stimulus plan results in, say 300,000 fewer mortgage failures that may quasi automatically result in 300,000 homeowners investing $40,000 each in home improvements, or an amount of $12 billion. These $12 billion will make home improvements specialists flush, along with furniture makers, roofers, carpenters, plumbers and the like. They in turn will be able to hire a number of previously unemployed workers who will be purchasing consumer goods they could not afford before. Including automobiles, as long as credit is made available to them for the purchase. Right there, Detroit's economy gets a partial recovery (ideally, if we used a bit of protectionism on a temporary basis, in the form of tax incentives for buying American cars, we could maximize the effect). With cars being bought and rolling off the assembly line, the demand for gasoline returns, along with an improvement in the economy of OPEC countries. When OPEC countries, especially in the Middle East, are confident again that oil prices can slowly return to a level of profitability (although not as high as in 2008, or it would again kill recovery in the US and Europe) they will again invest in their own countries and abroad. The last thing a smart oil producing country wants to do is bet its future 100% on oil, as this would mean certain death. Even if it takes long for the world to wean itself off its need for oil, it is only a matter of decades before it becomes reality. By then, OPEC countries that have not diversified would be condemned to become deserts again. Hence their great motivation to invest their oil wealth in other areas, including tourism and hospitality.

Wealth does not evaporate, it only shifts places or goes into hiding: the $50 billion at question in the Madoff scandal are still somewhere. We all know that some have been redistributed to early investors. That is how a Ponzi scheme works: the crook never keeps all the money, or he will not go any higher than the first wrung of the Ponzi ladder. A $50 billion Ponzi scheme may mean redistributing as much as $40 to $45 billion on the way up the ladder. Compare it to an AMWAY distributorship: these are nothing more than legitimized Ponzi schemes (except that each wrung of the ladder gets paid some of the money - save for the idiot at the bottom, who ends up with a bunch of Simple Green). Let's assume Madoff was able to keep $5 billion, which would be a very high estimate. There are his houses and other real assets, possibly worth, combined, close to $150 million. There are real assets he put under the names of various relatives and/or friends. There may be a large number of these as he had 13 years to weave his web. Let's say they amount to another $300 million. He is also very likely to have bought some rare gems and large quantities of gold, more than likely kept outside the United States. Possibly $2 billion worth. And then there are the loans and investments he would have made to off-shore entities that could easily account for the balance of the loot. Is that wealth lost to the world? Not at all. It is only lost to those bilked by Madoff. On the other hand, the people who sold him houses and real estate acquired some of that wealth, and put it back in the market one way or another.

The only part of the loot that basically has been "temporarily retired" from the financial world would be the gems and gold bars he probably stashed away in Switzerland. Swiss banks are feeling the pressure to open up their vaults to international authorities, and the loot will eventually be recovered, and put back in circulation. In the meantime, it is crucial to grill Madoff (let's build a deluxe mini-Guantanamo on Park Avenue for that purpose) to get him to tell where he hid the gold and the gems, so that can be put back in circulation. Here we are, Madoff's $50 billion are all back in circulation for the benefit of the world economy. Too bad for Steven Spielberg and Jeffrey Katzenberg, but I am confident they will recover...

Unless Madoff invested everything in Citibank stock...

So, basically, it is all so simple, and just a matter of deciding where to start.

Now that, as taxpayers, we are all stockholders in Citibank (we "own" 36% of its capital - likely to increase very soon) we have he right to demand that lending resumes for hotel development. I recommend the formation of a shareholders committee representing taxpayers, and given representation at Citibank's next general assembly... It will work.

Oh, by the way, guess who is the largest single stockholder of Citibank? That would be Prince Al Waleed, who also happens (in partnership with none other than Bill Gates) to own Four Seasons and, on his own, a very, very big chunk of Fairmont.

Can we all get along? And try to make money off the whole thing?

Benoit Gateau-Cumin, Chief Recruiting Officer at The Boutique Search Firm gives you what appears to be miscellaneous and seemingly unrelated thoughts about our current economy (or lack thereof).

About The Boutique Search Firm | The Boutique Search Firm has been serving the recruiting needs of luxury hotels, resorts and restaurants worldwide for almost 20 years when it was formed by Chief Recruiting Officer, Benoit Gateau-Cumin. The company is a retained, client-paid search firm that can guarantee complete confidentiality. They are proud of their consistently updated database of over 25,000 candidates representing the "crème de la crème" of hospitality management worldwide. They are so confident in their candidates that they guarantee all placements for one full year, above and beyond what executive recruiters in their field offer. Since 2000, they have published a monthly newsletter, Heads Above the Rest® that has become one of the most avidly anticipated and read newsletters in the business. For more information visit