What's The Difference Between Madoff And The Rest Of The 'Investment Industry'?

AllThePonzisThatFit
HedgeBundsGoneWildVille


The difference?

Well.

Essentially, nothing, according to our man at The Times, the Nobel-laureate Paul Krugman:

So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.....

{snippety doo-dah}

At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.

Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.....


All of which is just reinforces the fact that Joseph Stiglitz, another Nobel-laureate, was right when he pointed out that blame must be apportioned appropriately for this cult-of-the-codswallop (ie. the de-regulation of everything) that has laid capitalism so very, very low.

Otherwise, we will wake up 18 months from now, with none of the root causes having really been addressed because we've been bamboozled by the screamers into believing that it really was the fault of those greedy autoworkers or, even moreso, those poor people who bought their first houses when they never should have.

Which, of course, is laughable in the extreme.

In fact, here's what Mr. Stiglitz had to say about the latter issue:

"You'll hear some on the right point to certain actions by the government itself - such as the Community Reinvestment Act, which requires banks to make mortgage money available in low-income neighborhoods......Defaults on (this) C.R.A. lending were actually much lower than on other lending...."


Did you get that?

Even now, with the bottom falling out of everything because of the concerted actions of Mr. Madoff et al., the folks at the bottom catching the worst of the crap (ie. the ones who really have to scrape and hustle and flow to keep things together) are holding up their end of the bargain.

Instead, the people that are really killing the housing market are the finest of the fine folks who gambled big money they didn't have on the hopes that they'd be able to flip out and make their creditors (ie. banks) happy and themselves stinkin' rich for no good reason at all.

Which, of course, is precisely what the Madoff's of the world and the Reality TeeVee Home Spec-u-vestment shows, not to mention Alan Greenspan and all his damnable puts, were telling them to do.

OK?

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Update: There is, of course, a caveat, as Alison points out in the comments.....which is that the demonstrable difference between Madoff and the rest of the Investment Industry is that the former has not yet applied for and/or been granted a Bernanke Bailout yet.....(at least as far as we know, ha!)

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