Modern-Day Pyramids

I don't really understand why we're paying so much attention to Bernard Madoff.

Oh sure sure, if the charges are accurate, the collapse of his Ponzi scheme might just put him in the Fraud Hall of Fame.

But he'll have plenty of company. In the world of finance, however, it's probably more accurate to say he will achieve new heights in the realm of illegal fraud.

As we're discovering, almost the entire economy is the moral equivalent of a Ponzi scheme.

Hyperbole? Well, let's see:

While the operating details may be different... somewhat anyway...it's undeniable that much of our financial and industrial structure is a Pyramid based on a phantom foundation.

It has been constructed by opportunists who were such con artists they didn't care whether it ultimately imploded, as long as they got theirs.

Or so inept they had no business around the building.

Or worst, the people who adopted the "Get along-go along" approach to success...never going against the grain, no matter what.

Those may be the most corrupt of all, since their expedient "make no waves" mentality was at the very least amoral, which is another way of saying immoral.

By the way, that would include the politicians who looked the other way so they could either get the crumbs in the form of campaign contributions, or because raising a stink was simply too much of a hassle.

Now that the chickens have come home to roost the home has caved in.

There are important differences between Madoff and the others:

First of all, he has not had the chutzpah to ask for a multi billion dollar loan to bail him out. At least so far.

Secondly, a sizable chunk of those who have been harmed by his enterprise are the prosperous, or soon-to-be former prosperous.

The rest of the financial schemes have damaged or destroyed the well-being of nearly everyone..rich, poor and somewhere in between, including those who believe that Ponzi was a character on "Happy Days"

During these UNhappy days, as we clean up this mess, we need to go beyond oversight regulation. It is essential that we write into the law prohibitions that drag a lot of these shady dealings and their dealers across that narrow line that separates barely legal and illegal.

In other words we need to call all this larcenous conduct what it is: A crime.

Comments

[ModerateMel]

But Bob, the judge let Madoff out of jail by posting stolen goods as collateral. If he stole $50 billion, surely his houses and penthouse are paid for by stolen money.

It's like a bank thief who posts bail from the bag of loot he stole.

Time for heat on a Judge too?

[chaffcutter]

What amazes me that all fraudsters from Ian Boskey and Michael Milliken of 80s to Madoff who have skimmed billions from Americans in last few decades have been Jews.

I am a Jew and play the market, the basic rule of the market is that money simply does not vanish in thin air, whenever someone loses some other person gains. In case of these frauds they are transferred to their own fake companies.

There are no babies out in the market, who do not know what is happening. I believe that the Regulators in Treasury, SEC and Federal Reserve are all partners in crime.

The beauty of all these heist is that these fraudsters deposit the loot mostly in European and Israeli Banks. The bankruptcies are declared and the babies in Regulatory Depts express their innocence.

Can we investigate this through a Grand Jury ?.

[Peter007]

I've read many posts here and nobody is connecting tyhe Ponzi scheme of Bernard Madoff with the United States Government Ponzi scheme.

Its not big corporations and big banks that are to blame. Its not the wiz kids on wall street. They are only players. They didn't set the rules.

A Ponzi scheme is illegal because its a lie. It's fraud. Another regulation won't end it. Regulators would look at the same books that investors looked at. Fake books.

The topic we need to discuss is the role of the Federal Reserve. They are given the ability to create money. Its a private banking system. Your Congress, uses the Fed because you the people keep demanding stuff from our government. New wars, auto bailouts. National health care, more police and teachers. There is not enough money around to supply you with all of your demands so the Congress has the Fed. print money. It gives you that large return for your investment. Its not tax money you are getting. Its newly printed money. You are being taken.

Learn something..

http://en.wikipedia.org/wiki/Federal_Reserve_System#Criticisms

[budderbean]

Now that the economic issues have come home to roost on the door steps of people that have media clout.. what will happen? Will the average American have a voice? Will the movie makers stand up and help give WE THE PEOPLE a voice to say ENOUGH.

Pyramids There are lots of those around in my opinion. Walmart is a pyramid, Home Dept, Lowes.. All pyramids. Destroying the middle class of America.. If companies like these didn't exist the economic picture would never look like this...

Lack of oversight lack of oversight lack of oversight... Have you ever attempted to talk with anybody that sits in one of these glass towers?? Good luck. We the people.. Or them the robber barons.. History repeats itself. Oh And Blah Blah Blah... I'm in a bad mood and (My head hurts)

[gopons]

It is exactly that Get-Along-Go-Along attitude that was promoted as a result of 911. Additionally, this current administration went out of it's way to say, "Either you are with me, or against me." It is no surprise that there was an attitude in the conservative circles that if you were in the 'In Group', you were immune to scrutiny. So yes, the current economy is a Ponzi scheme, and the ones that got in at the top, are forcing us at the bottom to finance their exit strategy.

[BeSpoke]

HOW IS IT that Made-off can be out on bail that is so-o low? He's got nothing to look forward to but life behind bars and that DOESN'T make him a flight risk? 50 BILLION dollars is a lot of gelt to go thru without having any squirreled away for himself SOMEWHERE......Franken is correct--our financial system is the moral equivalent of a ponzi scheme. Bush changes the bail out bill for Wall street with one sentence so that the guys at the top get to retain their shameful salaries and bonuses and the guys at the bottom and the ones that invested their lives working for these schmucks get....bupkes. The SEC and the Feds take care of their own, who's to take care of us?

[chayefsky]

The only power left us is our tax dollars which are now passing through the hands of these felons faster than diarrhea. We can choose to pay or not pay. Perhaps it's time for some civil disobedience enacted by millions of average Americans who will now refuse to fund the bailouts and bumblings of our "esteemed" elected officials. There is always strength in numbers.

[ReasonIsMyReligion]

Hear hear.

[jsarets]

The entire realm of Western macroeconomics is a Ponzi scheme that promises hyperbolic growth in consumption but is in fact a criminal empire causing global economic and ecological collapse and usurping private property.

Why? Because money itself is a Ponzi scheme.

Money is a Ponzi scheme because money is created out of nothing as interest-bearing debt to the central banking system, which is the operator of the scheme. Every dollar is a promise to repay one dollar plus interest. Since the interest isn't loaned into the economy with the corresponding dollar, it cannot be repaid unless more interest-bearing money is borrowed. The scheme can only operate as long as the underlying economy sustains exponential growth in both consumption and debt. When it collapses, the perpetrators of the fraud come away with all the properties and assets in the economy.

[Pdubya]

Yes! And if you could go further and expound upon the fact that it is a non-partisan event, but ratther a socioeconomic event, I would be glad to hear it.

Rubin is named in the lawsuit as well. Any guesses why we're not seeing that in print? We are facing a purposeful debasement of our currency to help reign in the New World Order that so many of our centrist globalists on the Hill are chomping at the bit to secure their place in the new era.

For instance, Goldman Sachs bundled contributions 3:1, Obama/McCain. House wins.

We need to look to our currency, not mechanistic elaborations of what will work or not work. It begins at the top: The Federal Reserve and world government.

[ThePeacemakers]

The economy does resemble an upside down pyramid. The funnel gets thinner at the bottom - the essence of "trickle-down".

But Mr. Franken, this is exactly why the Madoff situation needs to be in the limelight 24/7:
To expose these economic theories for what they are.

On another note, the Swiss banks involved must realize karma is b - - - -.
Some of that easy come money came from WWII.

[MountainBiker]

Why the outrage?
 
He contributed to democrats.
 
Search opensecrets.org for the truth the liberal media doesn't want you to know.
 
This guy makes Ken Lay look like a saint, but since he's a democrat and his ill gotten dollars went into the pockets of democrats the the media will look the other way. Watch and ask yourself why he isn't mentioned as much as Ken Lay, and why the liberal media doesn't mention his contributions to democrats.
 
What a great country where democrats and their contributors/friends don't have to face the same scrutiny as republicans.

[jeanrenoir]

I voted for Obama enthusiastically, but I'm also for equal-opportunity crucifixions of malefactors on the scale of Lay and Madoff, whether Republican or Democrat. Madoff will be responsible for at least as much human misery as Enron, I totally agree. So he should be punished in the media and in the courts at least as severely as the crooks at Enron ever were. There can be no excuse for Madoff whatsoever. None.

[blueskybigstar]

Bad democrats should go to jail too. You won't find anybody trying to defend him. Lay is another kind of despicable. Apples and oranges. No mention of Bush here. Interesting.

Wrong. Premise wrong. Conclusion wrong. Deliberate attempt to misinform. Just B.S.

[RedneckDem]

uh... his story was in the papers and all of the morning shows, just as Blagojevich, this am. Open your eyes, just because Rush and Fox tell you it is being covered up, doesn't mean its true...

It's all over this site and every liberal blog. The Dems, since Clinton, have had zero qualms about tossing the ineffective and corrupt fellow Dems out. Some cases before court, some after. Depends on the degree of the crime or accusation.

[Social Construct]

Agreed. What sizzles my grits is how the debate over this economic shell game is becoming one of finger pointing at the hard working, average American. Arguably, these folks, with increasingly stagnating wages,caved into the pressure of the banking industry's scheme of hard-selling shaky credit as a way out of their declining buying power. Thanks for pointing your learned finger at some of the real culprits, Mr. Franken; the ones that controlled the shell game.

[tbirdalum]

Bernie is just the tip of the iceberg. He's the one who was caught. There are plenty more doing business as usual, including the self-serving CEO's and their yes-men.

[tomas0808]

Our country has had a major lack of leadership. I know the whole thing is confusing, but our elected officials were supposed to protect us from this. The level of corruption is amazing, people like Spitzer who challenge the scheme are eliminated.

Banks, Corporations, Advertisers and the politicians who side with them are Enemies of The People

[FogBelter]

Agreed, Mr. Franken.

How about this idea? A Pyramid scheme based on taking debt and turning it into securities that are then sliced into derivatives, inflated in value, and pumped into the perpetual motion machines of the World Float Market?

But how to sustain such a money making mechanism? Well first of all ... duh ... you have to get rid of all the regulations you can and compromise the regulatory agencies that remain, not a problem.

Then there is the issue of fresh money coming into the Pyramid at the bottom ... how to do that? Ah hah! Easy credit! Credit Cards for EVERYONE! That'll do it! Who cares if the card holders amass access to credit they could never pay in six lifetimes were they to use it all? it's the CDOs from their debt we want as octane for the Pyramid ... besides, draconian bankruptcy laws will keep them in line, as long as they don't all default at once, but that would require a Crash. No way!

cont ...

[FogBelter]

But we are thinking small here ... what about Mortgages for everyone with an ID card and the ability to make an "X" on a document? There is a lot of money for the Pyramid there! And if we encourage flipping of real estate and irrational appraisals to insanely inflate the property values, the sky's them limit for CMOs we can generate from that! Brilliant! Factor in home owners tapping into the equity of their over valued homes with loans and there is another CDO opportunity!

It is an AMAZING plan, Mr Franken ,,, and as long as the credit markets don't freeze causing the inflated securities' values to collapse (silly thought) we will be living high on the hog!

Are we good or what? Let's give it a shot!

[blueskybigstar]

Too funny. Too true.

[ReasonIsMyReligion]

::clap clap::

[RedneckDem]

Yep, it's all the average Americans fault. No blame on the stagnant wages, offshoring and the price of commodities. There was a time when we wage earners received raises, cost of living or merit, and could balance the credit/savings ration thing, all while living our version of the American dream. Silly of us to actually assume that our income would grow or that American Companies would receive tax incentives to offshore American jobs.

Yes, there was and is a decent % of serial abusers, but we're only now finding out about the true serial abusers on Wall Street now, aren't we? I bet you think the average joe is at fault for de-regulation and the birth of the derivative market.... sad...
You are a sorry excuse for an American, if you are one. Tarred and feathered is where your ilk should end up...