Madoff “lost” or “stole” $65 billion. That’s the headline of the day.

How is that possible when Madoff hasn’t even been trading for at least 15 years?

More likely Madoff “redistributed” $65 billion in the form of dividends and cash distibutions to investors.

Or, the bulk of the $65 billion is bogus paper profits. But you can’t really lose money that never really existed, right? (If I wrote you a check for $5 million and it bounced, would we say you’d “lost” $5 million?)

Ads make TV more pleasant: First:

In one experiment, Nelson, along with Tom Meyvis and Jeff Galak of New York University, had 87 undergraduates watch an episode of the sitcom “Taxi.” Half watched it as it was originally broadcast, with commercials for the Jewelry Factory Store and the law office of Michael Brownstein, among other ads. The other half watched the show straight through, without commercials.

After the show was over, the students rated how much they enjoyed it, using an 11-point scale and comparing it with the sitcom “Happy Days,” which they were all familiar with. Those who saw “Taxi” without commercials preferred “Happy Days”, but those who saw the original show, Jewelry Factory Store and all, preferred “Taxi” by a significant margin.

In similar experiments, using other video clips and a variety of interruptions, the results were the same: People rated their experiences as more enjoyable with commercials, no matter their content, or other disruptions. The effect wasn’t limited to watching TV; interrupting a massage also heightened people’s enjoyment, one experiment found.

The opposite was true for irritating experiences, like listening to vacuum cleaner noise: A break only made it seem worse, they found.

Second

In the week ending March 7, the advance figure for seasonally adjusted initial claims was 654,000, an increase of 9,000 from the previous week’s revised figure of 645,000. The 4-week moving average was 650,000, an increase of 6,750 from the previous week’s revised average of 643,250.

Kate Zernike offers a good look at what today’s kids will learn from the “Great Recession.” Writing in 1951 about children of the Great Depression, Time magazine opined

“Youth’s ambitions have shrunk,” the magazine declared. “Few youngsters today want to mine diamonds in South Africa, ranch in Paraguay, climb Mount Everest, find a cure for cancer, sail around the world or build an industrial empire. Some would like to own a small, independent business, but most want a good job with a big firm, and with it, a kind of suburban idyll.” The young soldier “lacks flame,” students were “docile notetakers.” And the young writer’s flair “sometimes turns out to be nothing more than a byproduct of his neuroses.” (This even before Philip Roth, born 1933, had published a novel.)

“The best thing that can be said for American youth, in or out of uniform, is that it has learned that it must try to make the best of a bad and difficult job, whether that job is life, war, or both,” Time concluded. “The generation which has been called the oldest young generation in the world has achieved a certain maturity.”

Japan is worse? Bloomberg:

The world’s second-biggest economy shrank an annualized 12.7 percent last quarter, the government said Feb. 16, the biggest contraction since the 1974 oil crisis. Capital spending excluding software dropped 18.1 percent in the three months ended Dec. 31, the seventh quarter of declines, a separate government report showed on March 5.

A Cabinet Office report on March 11 may show machinery orders slumped 40.2 percent in January from a year earlier, according to a Bloomberg News survey.

Signs of a deepening recession dragged the Nikkei 225 Stock Average down 5.2 percent this week. Ten-year yields had a correlation of 0.7 with the Nikkei in February, Bloomberg data show. A value of 1 would mean the two moved in lockstep.

“While falling stocks normally push yields down, we need to be alert to the risk that Japanese financial institutions, which suffered heavy equity losses, will sell bonds to generate profits before the fiscal year ends this month,” said Chotaro Morita, chief strategist at Barclays Capital Japan Ltd. in Tokyo. “Such selling of bonds may emerge as the Nikkei 225 comes closer to or falls below 7,000.”

Of course, Japanese banks own plenty of US bonds too. How high do US long term yields go when UST cancels auctions of TIPS, the inflation adjusted security, and tries to sell 100 billion worth of 30 year bonds — 15%? Unless of course, the Fed prints more money and buys the bonds itself.

More assurances that there’s nothing to worry about in Hungary.

Hungary PM says bank deposits are safe, guaranteed

BUDAPEST, March 6 (Reuters) – Hungarian bank deposits are safe and the government provides a comprehensive guarantee for client deposits, the prime minister said on Friday.

‘We have made very important steps (during this crisis). It is a very big thing that depositors in Hungary need not worry,’ Prime Minister Ferenc Gyurcsany told a meeting of business leaders.

‘They can be safe during a global financial crisis,’ he said.

Gyurcsany also said the government was ready to consider deeper and more comprehensive reforms than the measures laid out last month.

It’s a truism among money market mavens that any bank that has to proclaim its health is almost dead.

So it is with great sadness that I read this story tonight, datelined 03.05.09, 05:56 PM EST.

Hungary cbank, regulator say bank system stable

BUDAPEST, March 5 (Reuters) – Hungary’s central bank (NBH) and financial market regulator PSZAF said on Thursday that the financial situation of banks in Hungary was stable and bank clients’ money was safe.

‘The Hungarian central bank and PSZAF are closely monitoring the situation of banks,’ the bank’s spokeswoman Nora Hevesi and PSZAF spokesman Istvan Binder told Reuters.

‘The financial situation of the Hungarian banking system is stable, the money of depositors is in safety,’ they added.

The forint, having traded at 300 to the Euro just a week ago and having closed today in Budapest at 309 to the Euro is at 315 tonight.

Make that 316.

I got to know Andras Simor, the guy who today runs Hungary’s central bank, in the 1990s when I was living in Budapest and writing about business in the former Soviet bloc. Simor ran the securities arm of Creditanstalt Securities and was always generous with his insights.

Simor is in a tough spot now, because every currency speculator in the world is trying to bludgeon the IMF’s $15.7 billion loan out of his vaults and into their own wallets.

A devaluing forint hurts Hungarians who’ve borrowed avidly in Euros and Swiss Francs. And it puts great pressure on the banks in Europe (Creditanstalt being high on the list) who have loaned this money. The dominoes are tumbling.

(For Blogads’ business partners, it’s worth noting that this craziness is benign: Hungary’s tailspin means Budapest staff get paid more in local terms and we can hire more great programmers.)

I’d missed this passage in Warren Buffett’s annual report:

This debilitating spiral has spurred our government to take massive action. In poker terms, the Treasury and the Fed have gone “all in.” Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation. Moreover, major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won’t leave willingly.

“In the week ending Feb. 28, the advance figure for seasonally adjusted initial claims was 639,000, a decrease of 31,000 from the previous week’s revised figure of 670,000. The 4-week moving average was 641,750, an increase of 2,000 from the previous week’s revised average of 639,750.”

Good news, though probably a statistical blip.