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9:00 AM EST, Monday, February 23, 2009. "Trust. We had it. He stole it. ..." So reads the cover of the latest Portfolio.

The magazine has it half right. The loss of trust is pervasive. Start with plummeting bank shares. Then there are the banks who no longer trust their customers (and won't lend to them). Move on to institutions who are hoarding their monies, afraid to invest. Move on to you and I who no longer trust anyone on Wall Street and certainly not our government regulators, whose salaries we pay.

All of us investors are deer in the headlights, frozen -- awaiting the next meltdown, the next "Madoff." Frozen is not good for the economy.

Madoff is not the biggest fraud. Auction rate preferreds securities (ARPS) are. About $360 billion of them "froze" a year ago. Some have been redeemed. But $176 billion of them (more than three times Madoff) are still frozen. These things were sold to investors as "cash equivalents." Investors can't get to their money. Mostly, they're being paid less than 1% a year.

There is widespread belief that the big Wall Street firms who peddled them and participated in the ARPS auctions knew the securities were toxic. Several of the states' attorneys-general have already uncovered internal emails showing the auctions were likely to fail. We've seen Wall Street execs bailing out of the ARPS, while simultaneously peddling the toxic ARPS securities to an unsuspecting public. Wall Street has been hit with fines and orders to redeem ARPS. But things are likely to get far more messy -- further destroying investor confidence and trust in Wall Street.

I was stuck in ARPS also. But Deutsche Bank, who sold them to me, bailed me out of them at par. Thank you. Meantime, I've been writing a web site called AuctionRatePreferreds.org. I'm the central place on the Internet for news and views on ARPS. I also receive emails from investors still stuck in ARPS. Sample:

Hi Harry,
I just wanted to let you know that I appreciate your efforts. I look at your website often to check for news. I've got $900,000.00 stolen from me by Charles Schwab.

I've given my information to a long list of government officials, some are very helpful, some seem lost. I've spoken to the NY Atty generals office several times and while they seem to be working on it they haven't made much progress.

I'm now filing for mediation with FINRA, I'm not sure how many people have found this helpful -- but it looks like I'm about to find out first hand.

Schwab managed to stonewall me for quite some time after I learned that they had put me into an ARS -- I only found out after a tried to liquidate a small portion of my holdings in mid 2008 that my money was frozen. -- Raymond S. Wach.

Many ARPS investors are -- amazingly -- just waking up to their predicament. They are moving into heavy legal and political action, seeking each and every way to get their money out. Many say they're unearthing serious naughtinesses. Here's an email from a reader of my ARPS site, who doesn't want his name published (I know who he is). Until we see his evidence, we have to treat his allegations against Oppenheimer with a grain of salt.

Harry,
What's happening with Oppenheimer is unacceptable. I have good reason to believe from speaking to regulators and my personal experience that Openheimer brokers and execs are lying vociferously. I also believe they may be submitting fabricated emails and documents purportedly showing they warned clients. Numerous Oppenheimer clients have told me of receiving calls from regulators in different states saying, "Oppenheimer told us they warned you about auction rates" when no such warning was ever issued. One problem is that auction rate investors are generally nice people, who would never embellish anything, and the lawyers for the downstreams, at least Opco, are fighting like crazy lying bastards.

Oppenheimer clients going to arbitration may be receiving surprises in the form of falsified documents and emails and recollections of phone calls that are utter fiction.

Two more things we've learned most recently about Madoff:

1. He got to Hollywood money through Hollywood business managers. They gave him the money. Not the actors, directors, producers -- many of whom hadn't heard of the word Madoff. For more , read the Portfolio article, Madoff's Hollywood Connection.

2. Madoff did not buy any of the blue-chip stocks and Treasury bills listed on their account statements over the last 13 years. For more, read the New York Times' Madoff never made supposed investments.

Weekend reading in pictures:

Happy Birthday to Ted and Claire: Friday was my daughter's and her husband Ted's birthday. Ted is a buy-side analyst and a damn good one. I wished him Happy Birthday. His reply: "It certainly was. People will talk about the (stockmarket) bottom being on our birthday!"

Which country's stockmarket did worst? If you had put $100 into the stocks in the leading market indexes of major countries at the end of 2007, where would you be? In the United States, you would now have about $53. That fact — coupled with the reality that more Americans than ever are depending on the stock market to pay for their retirement — has severely depressed sentiment and spending. But it merits one of the top grades in this world. Among major markets, only Japan, at $59, has done better. In Britain, France, Spain and Germany, the figure would be around $45. In Italy, it would be $37. About a quarter of the money would still be there in countries like Ireland, Greece and Poland. Remember the BRIC countries, where growth possibilities seemed limitless not long ago? The stars there are Brazil and China, where about $46 or $47 remains. In India, the figure is $35, and in Russia it is $23. At least they have all done a lot better than Iceland, where you would have just $3 left of your hypothetical $100. -- New York Times, 2/19/2009

Gloom and Doom's big benefit: University of Florida shark researcher George Burgess says the number of reported shark attacks worldwide dipped to a five year low last year. In 2008, 59 attacks by sharks were reported compared to 71 a year earlier. Burgess said the sagging economy may have played a role. "... contributing to that reduction may have been the reticence of some people to take holidays and go to the beach for economic reasons," Burgess said. "We noticed similar declines during the recession that followed the events of 2001."

Housing Prices to Fall further. Double Trouble By ALAN ABELSON, Barrons, excerpted: The two charts provide eloquent and graphic descriptions of why housing still isn't able to get out of its own way and why there's still plenty of room on the downside for prices. The charts came from ISI Group. At a glance, they both relate the same message: House prices are still too high, and not by a modest amount, either. Nor, ISI reckons, will reducing the number of foreclosures, desirable as that may be, halt the erosion in prices. While fewer foreclosures are likely to slow the rate of decline, they won't reverse the downtrend or determine "where homes prices end up." And while the sharp contraction in residential construction of new houses is obviously a plus, the homebuilders, at last report, were still building appreciably more houses than they were selling, and inventories of unsold houses are huge. But given the remorseless rise in unemployment, which, if anything, is destined to accelerate in the months ahead, the simple fact that so many people are too strapped to afford to buy a home is the most formidable barrier to even a tepid housing recovery. House prices have another 20% or so to fall before hitting bottom and, at the earliest, we're talking sometime next year. And, possibly more important, a meaningful brightening of the current, profoundly bleak jobs picture, isn't in the cards for certainly as long, if not longer. What we see, then, for housing to achieve a decent recovery, is a long road ahead with more than a few bumps -- not the least of the reasons why we're not exactly ecstatic about the outlook for either the economy or the stock market.

Your next house? A Los Angeles developer is asking $85 million, one of the highest prices in the U.S., for a 48,000-square-foot mansion in the city's Bel-Air neighborhood. The seller is Mohamed Hadid, who says he paid roughly $7.5 million for the land about six years ago and spent another $59 million to build the house for his own use. I've never seen a house this big. I do like the trees. I'm guessing they're pencil pines. My wife says they're "Italian funeral trees." She doesn't like them. We're not getting any.

There's a music room, a library, a ballroom seating over 200 people, a Turkish hammam and a gym. e 2.2-acre property also features a pool, a tennis court, a 20-car motor court and seven fountains. I'm guessing this is the media room. How do you concentrate on the movie? Notice there are no plastic protector coverings on the couches. Susan, my wife. would approve.

Words of wisdom to begin the week.
+ In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress. -- John Adams

+ I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. -- Winston Churchill

+ A government which robs Peter to pay Paul can always depend on the support of Paul. -- George Bernard Shaw

+ Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And, if it stops moving, subsidize it. -- Ronald Reagan (1986)

+ The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin. -- Mark Twain

+ A government big enough to give you everything you want, is strong enough to take everything you have. -- Thomas Jefferson

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.