Ponzi dwarfed: Bernie Madoff fed the wrong wolf
Two F.B.I Agents appeared at the door of Bernard L. Madoff’s Park Avenue penthouse apartment very early in the morning of December 11th, 2008 after his two middle-aged sons reported through a lawyer to the F.B.I that their father had confessed to them that his gigantic international investment business was “a giant Ponzi scheme” and “a big lie”:
F.B.I. agent: “Mr. Madoff, we’re here to discover if there is any innocent explanation for what has happened”.
Mr. Madoff: “There is no innocent explanation.”
His premier innovation: globalization of fraud
The much-touted globalization of the world economy has a new shadow: the Ponzi scheme writ worldwide. In an unprecedented reframing of the popular and effective but hackneyed local Ponzi scheme doomed by mathematics and geography to relatively short life, Bernie Madofff has given it worldwide scope, depth and longevity. Investors in the United States, Europe, the Persian Gulf, Southeast Asia, and perhaps China all embraced the allure. From Ponzi, the local Boston confabulator a century ago to Bernard L. Madoff, the worldwide imitator; from eight months longevity to twenty years or more; from mere millions to real money: about sixty-five billion. A new entrepreneurial model is born for global swindlers. Localism begone: the world is your oyster!
An imagined conversation of Bernie Madoff with himself in his cell while awaiting sentence at the Federal Detention Center in Manhattan:
For twenty years, I carried this off. Everyone got at least eight
to ten percent and some got more — and a hell of a lot more.
Many investors got real rich, bought houses, boats, sent
children to college. And my agents who funneled investors to
me got mega-rich. Everyone was happy! I have to laugh: some
of these long-time “aiders and abettors” now claim they were
victimized by me! Yes — and the tooth fairy made me do it.
Of course, I knew it would end some day but I could have kept
it going for many more years, maybe even until I passed on —
I’m 71 already. That’s what keep me going. That hope.
Gee, I was awfully good at it, daily dancing on the tightrope of
always getting enough new money in to pay out the steady
return, getting agents in many countries, and greedy so-called
Investment Advisors, elite Swiss banks and more to shill for me
with new investors while enriching themselves with all those
commissions.
And what a life for me, a kid from Rockaway. The palatial
homes in the Hamptons, Palm Beach, the French Riviera, and
the Palm Beach Country Club where you had to pay three
hundred thousand just to join and you could still be rejected by
the Membership Committee … and then the yachts, but even
better, all the respect, the adoration: Jewish philanthropies
fawned over me, politicians clamored for my money, and the
Wall Street crowd elected me, Bernie Madoff, chairman of
NASDAQ. What a rush! What a life!
I loved it when people would seek me out, join country clubs in
an effort to meet me or my friends and try to manipulate them
just to meet me, push their money at me to invest — and Ha! I
still rejected many of them. Me, Bernie Madoff from
Rockaway. What a mystique I created — and for more than
twenty years!
Hell, it isn’t my fault that the economy and market cratered
in the fall of 2008. I had nothing at all to do with that. But it
changed everything: the downturn created impossible payout
demands from the investors and, for the first time, I couldn’t get
enough new money to pay them. God knows, I — and all my
agents — tried real hard around the world, even in China. But it
just couldn’t be done in this market.
I know I hurt some people and groups and I hate that. But I also
made many people so rich. I did a lot of good too with charities
though no one wants to acknowledge that now. They just
demonize and shun me now. My friends have abandoned me.
My children are terrified of being charged. And I don’t see my
grandchildren.
Hell, what I did doesn’t compare with that gang of crooks: the
mortgage brokers, the bankers, the Wall Street investment
securitizers, all of whom knowingly concocted or peddled toxic mortgages
securities … and then the bizarre triple ‘A’ ratings by the
officially sanctioned rating agencies of make-believe securities
based on ersatz math models from Wall Street ‘quants’
embraced by their Companies without any understanding … and
amazingly the rating agencies paid by the Companies whose
securities they rated and then were relied on by so many are
again thriving. What about the “booming economy” whose
major profit center was a bubble, a financial industry saturated with
deceit — and all those bandits and fools — not me — brought
the economy to its knees, causing millions of people to lose
their homes and their jobs. I’m a piker next to these crooks in
Wall Street suits. Who hurt this country more, them or me? I
hurt hundreds … all right, at most maybe some thousands — but they hurt
millions!
And then the politicians! “Maestro” Greenspan, the preening orchestrator
of the casino-type boom — and then of the collapse, with his Orwellian
double talk … the life-long devotee of pontificator Ann
Rand, the guru of “selfishness is good.” And Phil Graham,
Larry Summers and Bob Rubin (the latter two both Clinton Treasury
Secretaries), the “deregulation-is-always good” crowd with
Summers rising again from the ashes as an Obama economic
Adviser … who while President of Harvard secretly made
millions in his part-time job as an adviser to a hedge fund. And
then the farce of regulation by the Office of Thrift Supervision,
the Securities Exchange Commission and the others "regulators" who
pretended to regulate … and all of it presided over by a
mostly befuddled Congress and that good old boy, the “out-of-
it” Bush on the exercise machines in the White House gym.
Wow! What a crew … just what you need for a spree of
corruption, greed, stupidity by the “best and brightest,” and the
distracted public that mostly prefers to read about which movie
stars are screwing which other stars. We get what we deserve:
crooks, brilliant fools, and a rotten system. Imagine what Verdi,
Johathan Swift or Lenny Bruce could make of this....
And here I am, Bernie Madoff in this miserable cell in the
Federal Detention Center, eight by twelve. But I’m alone: I
shouldn’t be here alone!
God, I had bigger walk-in closets, and I only get out to go up on the
rooftop recreation with a fence over it every other day. The kids here
play basketball but my basketball days are over. Gee, I miss my
penthouse uptown ... my wife, my grandchildren — and my life.
A postscript
In March, 2009, a federal judge sentenced Madoff to a 150 prison term.
His cell is now almost certainly bigger and he gets out of it more often.
Comment
A Cherokee father told his five-year-old son: Each of us has two wolfs inside us, a good wolf and a bad wolf. And they fight. The good wolf is modest, peaceful, selfless and cooperative. The bad wolf is selfish, greedy, egotistical and predatory. The son asks: Which one wins? The father replies: The one we feed. |
