As if we needed the world to be more ticked off at the effects of American greed and corruption on the world economy, we now have Bernard Madoff bringing down European investment banks single-handedly. Thanks, Bernie.
Apparently a lot of people invested in Madoff's scheme through their financial advisors. The NY Times reports that "investors are now questioning whether these paid advisers were diligent enough in investigating Mr. Madoff to ensure that their money was safe."
Right. I'm gonna go with "no" on that one. I think maybe the "diligent enough" part is automatically negated by the "$50 billion Ponzi scheme" part. Call me picky.
(And by that I mean: For Christ's sake, people, is that actually a question? May I suggest that you think of your lost money as a tax on being dumb.)
Let's be honest here. Madoff isn't that much of an outlier. You don't have to run a Ponzi scheme (or try to sell a U.S. Senate seat) to be corrupt. A bunch of people are skimming millions (billions?) from Wall Street, it's just that they've managed to get it codified as salaries and bonuses and convince the public that anyone deserves to earn that amount of money. And it's not enough that they get paid while Rome burns, they actually want to get paid for setting it on fire. All this while they sell out their companies, cut jobs, and pay no mind to their laid-off employees who have to survive now on unemployment... except oops! we've run out of that money too.
Madoff cooked his books and sold people fairy dust in order to bilk them of billions of dollars, sure, but I really don't see that much of a difference between that and what the rest of the Wall Street big men have done. Except that he'll go to jail, while they just have to settle for a few million less in their bonus check this year. *Sniff*
If the government were to get serious about cleaning up this mess, which I'm not optimistic about, I think they should cap CEO salaries, make most bonuses illegal, and require that all that newfound money go to shore up unemployment benefits, food pantries and homeless shelters. Merry Christmas.
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And did you mention, "Ban derivatives"?
Funny, one of the first things my father taught me about investing was, "Never buy secondary issues"--which is what derivatives are, except if they're an elaborate Ponzi scheme. If you want to buy something, buy it, but don't put all your eggs in one basket. I believe the word is, "diversify." If you want to have a financial adviser, by all means have one. But don't forget to use your own brains. If you didn't have some you wouldn't have that money anyway because you would have spent it. And don't be afraid to ask somebody for another opinion because, in the end it's your money. Or it isn't.
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