Friday, March 20, 2009

Bait and Crumbs

Elie Wiesel, born in Romania, author, professor, and Nobel Prize winner, survived Auschwitz and Buchenwald, before he met Bernie Madofff, native New Yorker and a former chairman of the NASDAQ stock exchange. Wiesel invested the Norwegian Krones he received from his 1986 Nobel Peace Prize and established a humanitarian foundation whose mission was “to combat indifference, intolerance, and injustice around the world.” The money was entrusted with Bernard Madoff Investment Securities. Madoff madeoff with $15.2 million, “substantially all of the Foundation's assets.” Wiesel and his wife also lost their lifetime personal savings to Madoff’s Ponzi scheme. What is a Ponzi scheme? Something like the miracle of the loaves and fishes, only Ponzi keeps the feast to himself, and all you get is the bait and crumbs.

Madoff has turned himself in and pled guilty in Federal Court to 11 felonies, including securities fraud, wire fraud, mail fraud, money laundering, perjury and false filings with the Securities and Exchange Commission. His clients number in the tens of thousands. Other people’s money was never invested. Instead Madoff pocketed it, spent it to support his lifestyle of the rich and famous, including penthouse on Park Avenue and country club membership in Palm Beach. He is currently in custody in the maximum security wing of the New York Metropolitan Correctional Center, historic home of terrorists, gangsters, and drug dealers. He occupies a 8 x 8 foot cell with white cinderblock walls, double-decker bunk, sink for two, and stainless steel toilet. There are 750 inmates at the facility. It remains to be seen if Madoff will do his time at one of the federal facilities such as Ft. Walton Beach, Fl., often called “Club Fed,” or a hard-time hell hole like the U. S. Penitentiary in Leavenworth, Ks. Wherever, Madoff, age 70, will likely spend the rest of his life behind bars.

Prosecutors are investigating Madoff’s family, as well as his accountants and other business associates. Bernie who? The sums of money involved are in the hundreds of billions, enough to bail out a failing segment of the U.S. economy. Prosecutors also want restitution from Madoff of approximately $170 billion. New York Mayor Michael Bloomberg said, "incarcerating him for life" sends a message to other white-collar criminals. "Vengeance is one thing, but it's making sure that other people understand that they can't go out and ruin people's lives and take away their savings," the Mayor said.

If you work the assembly line at Ford, Chrysler, or General Motors, and your company executives need government bailout to stay in business, you get to take pay cuts and other givebacks. Over the past six months, non-union working stiffs have seen their 401k’s, their stock-market based retirement savings systems, shrink by almost half as Wall Street has crashed. If you are a whale of a bank, having swallowed other banks, and lend money for people to buy houses they cannot afford, you have become too big to fail. If you invent a new kind of stock that has nothing to do with ownership of any company but rather is some gambler's hypothesis about the value of a bundle of loans for houses people can not afford and then issue insurance policies on the derived speculation into the infinite possibilities of a financial universe light years away, you get a retention bonus when the bubble bursts, to bring you to your senses and help you resist the temptation to rush into the nearest unemployment line.

Bernie Madoff needs a cell-mate. There are candidates aplenty.

Copyright 2009 by William C. Cotter


pascal said...

Let's see....I believe my economic package is behind the times...I have to do something half way right to even get a can of beans and all this time I should have been working for AIG on the bonus committee! Only requirement: firm conviction in your "class" superiority and a scheme to get a "bonus" every three months. Unbelievable! Let's see this most recent bonus was to compensate for what? Convincing the suckers in Washington to fork over billions in loot to preserve the credit system? Nice, niffty lie!

Carl said...

Bernie Madoff was not your run of the mill con man. He specialized in trading on the good faith of his friends. Add to that, he concentrated on bilking Jewish non profits taking many of them to bankruptcy.

Now, many of these should have limited their investment. In the Washington, DC area our Jewish federation did. Nevertheless, Madoff and Abramoff raise significant communal question for the American Jewish community. Something more than the criminal process is needed. Jews actually have a tradition, more or less, of excommunication. I can't think of two better candidates

CP said...

The big question now is this: When we get things normalized, are we just going to start over and do the same thing again? I think the Main Street folks have learned (or are learning) their lesson about buying houses they cant afford, but people who get million dollar bonuses for abject failure don't learn anything. Maybe we should have middle class boot camps in which they have to live like the rest of us -- and live in communities small enough for everybody to know if you caused other people grievous losses.

Tina said...

We now have many excellent examples with which to confront those who think that thepoor and unemployed are by nature "sorry."


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