Bernard L. Madoff allegedly tricked defrauded investors in a Ponzi scheme, the investment company (Hedge Fund) still has Billions of Assets apparently, which will be divided up and some investors may see at least a very small portion of their money. If all the news reports are correct, this will indeed, be the biggest Ponzi scheme in the history of humankind, one that went on for about 35-years, although we do not know yet if it was fraudulent from the get-go, as at one time it may have been legit.
What we do know is that this scandal has rocked the financial world and affected many industry sectors from Entertainment to Commercial Real Estate and from Banking to the Non Profit Sector. One has to ask where on Earth were the regulators during the last three decades? There are all sorts of speculation and perhaps Madoff got a free ride due to his careful approach to whose money he took, his coziness with the SEC, and his spotless reputation on Wall Street.
Now then, let's back up for a second and discuss a little philosophy shall we. We are calling Bernard L. Madoff a fraudster and yet, his is not the only hedge fund that lost everyone's money. Many other hedge funds promised huge returns and did quite well trading garbage and playing with Credit Default Swaps, obviously they realized that such a game was built on a foundation of swamp gas. Many of these Hedge Funds lost everyone's money too.
Mr. Madoff, did not lose everyone's money investing because he wasn't investing any, except perhaps a little for show, or so we believe from media reports right now. So, in reality his Hedge Fun was much more efficient, he just took the money, while the others traded it into oblivion on complete nonsense. One method we call appalling and the other we call criminal, but mind you the net result is indeed the same for the investor who has lost all their money.
In essence Mr. Madoff skipped all the bull, and more efficiently took the money, while the other hedge funds wasted it on a scheme they knew or should have known was ridiculous, tossing around hot potatoes, and dancing around parked chairs with broken legs, with too many players until the music stopped. Well, now the music is completely stopped for everyone so from a philosophical standpoint and the ethics of Ponzi Schemes aside, what's the difference in the end. Everyone still loses.
Both Hedge Fund methods in this case are illusions, Mr. Madoff's illusion at least lasted longer (three decades), while the other Hedge Funds playing credit default swaps lasted for a brief flicker of time. Why did all this happen and why do people feel entitled to make billions of dollars they didn't earn, don't deserve, and we all have to pay for in the end. And before we answer that shouldn't we hold up a mirror to the whole of society and ask ourselves about this "entitlement" myth, as it seems to permeate humanity.
I guess my questions are;
- Who is next to fall?
- Why are we so surprised?
- What brilliant financial Ponzi Scheme is next?