It began with the names of corporate victims who had lived high on debt, such as Viacom CEO Sumner Redstone, casino king Sheldon Adelson and Lehman president Joe Gregory. They lost houses, planes or boats worth millions. Who knew they financed their mansions with debt?
Now it's our turn. Friday's unveiling of Bernie Madoff's alleged $50 billion pyramid scheme is only the tip of the iceberg of lost fortunes emerging from the depths. Madoff's fall has shaken this town to its core. The 70-year-old financier was lionized here. He gave millions to charity and made himself so hard to get to if you wanted to invest with him that his allure proved too tempting for many. The names of prominent locals whose fortunes have in all likelihood disappeared is long. "How could so many rich, smart people have been taken in?" people are frantically emailing each other. But they were.
So now we're confronted with a new reality. With it comes a new kind of unpleasant gossip. Can they really afford their lifestyle? Is the question being asked about you, about your friends and about your friends' friends?
Everyone is looking for the smallest sign that you might be both a broker and a victim of the credit crunch. In other words, did you fall for a Madoff, did you over-extend? Were you too stupid to see what was clearly a conflict of interest in banks on Wall Street, too stupid to see the whole system was over-leveraged? People look to see if you are wearing the same dress over and over again. Do you entertain less? Has your jewelry changed? Are you drinking more?
As you eat and drink among so-called friends, bare acquaintances ask you baldly if you've heard that so-and-so has lost their house and by the way, how have you financed your own home? The subtext is clear: you might lose yours too.
This schadenfreude is dressed up as a more serious intellectual discussion about the anticipated social leveling or the day of reckoning for the nouveau riche in the wake of the recession. But really, all anyone wants to know is who made sage financial decisions and who didn't. In other words, null points if you were a mini Sheldon Adelson or invested with Madoff; a full 10 if you stayed away from the Vegas of the boom years.
This article was originally published by the London Evening Standard