I watched a four-part excellent documentary on Bernie Madoff’s “scam of the century”. (The series is not exactly a documentary because most scenes are re-enacted, but this is done in a very good, and rather discrete, way, combining the actual footage with the enacting, so that we can still call it a documentary). The film has several professors of finance and Wall Street specialists explaining very clearly the mechanism of the fraud (I liked in particular Diana Henriques who is the author of a book on Madoff).
Madoff ran an "Affinity Fraud". That is, he created an illusion that he was letting his fellow Jews in on an inside deal. This has transpired among other trust groups, but nothing on this scale. Recall that Mr. Ponzi worked inside a very parochial Italian ghetto in Boston.
I’d say he didn’t start the scheme with the intention of really running it, and it became a monster with a life of its own. He probably started it because he was terribly arrogant and desperately needed to “seem” like a success (maybe impress his father in law, differentiate himself from that father he’d looked down upon… who knows)…. He posed like the incredible trader he was not. He was full of himself and a bit of a megalomaniac. At some point he probably even began believing his own bs and thinking he was someone … What is mind blowing is the SEC officials and the supposedly financially literate institutional investors that have him money. Sad sad sad story overall, although quite frankly I felt little sympathy for most of the victims interviewed. Surprising that the SEC, JP Morgan, Walter Noel, Sonia Kohn and all those others were never held responsible.
Thanks, very interesting take. I suppose we should also ask why no one in the media (and the documentary producer) hasn't explored these issues. Are all of us in this capitalist system also somehow complicit? We don't dare to ask whether the capitalist system is ultimately driven by greed, or at least by people who are indifferent to its social effects on society.
“ His legitimate business generated huge income; surely more than enough to buy the three properties. So he did not need the Ponzi scheme to be rich.” Didn’t the show say that the “ investment counseling “ unit on the 17th floor transferred hundreds of millions to the dealer operation on the 19th? Edit. See Episode 3 @ 24 min. The 19th floor received transfers from the 17th floor of $800,000,000 during the 2000s.
Perhaps it was money laundering and not a Ponzi scheme. Legally, if you call something a Ponzi scheme it means that every transaction was a fraud. So there's no real investigation into transactions.
I don't believe in too much greed or too much need for love or any of that because I don't believe Madoff (or anyone else) would be able to become what he were without an ability to keep stuff like that under control.
A man wants to impress the world around him how smart he is? Doesn't feel outrageously strange ...
Question to those who understand more than I: Madoff didn't put many of the billions and billions invested into his own pocket. He used some of the money later invested to pay earlier investors. How then do we get to a loss of 65 bn? Or are we mostly counting those people that invested 10m and expected, seven years or so later to have 20m, as losers to the tune of 10m? (plus the original money not given back to them as well as some normal return on those first 10m)
Madoff ran an "Affinity Fraud". That is, he created an illusion that he was letting his fellow Jews in on an inside deal. This has transpired among other trust groups, but nothing on this scale. Recall that Mr. Ponzi worked inside a very parochial Italian ghetto in Boston.
I’d say he didn’t start the scheme with the intention of really running it, and it became a monster with a life of its own. He probably started it because he was terribly arrogant and desperately needed to “seem” like a success (maybe impress his father in law, differentiate himself from that father he’d looked down upon… who knows)…. He posed like the incredible trader he was not. He was full of himself and a bit of a megalomaniac. At some point he probably even began believing his own bs and thinking he was someone … What is mind blowing is the SEC officials and the supposedly financially literate institutional investors that have him money. Sad sad sad story overall, although quite frankly I felt little sympathy for most of the victims interviewed. Surprising that the SEC, JP Morgan, Walter Noel, Sonia Kohn and all those others were never held responsible.
I guess greed has a very short memory.
Thanks, very interesting take. I suppose we should also ask why no one in the media (and the documentary producer) hasn't explored these issues. Are all of us in this capitalist system also somehow complicit? We don't dare to ask whether the capitalist system is ultimately driven by greed, or at least by people who are indifferent to its social effects on society.
“ His legitimate business generated huge income; surely more than enough to buy the three properties. So he did not need the Ponzi scheme to be rich.” Didn’t the show say that the “ investment counseling “ unit on the 17th floor transferred hundreds of millions to the dealer operation on the 19th? Edit. See Episode 3 @ 24 min. The 19th floor received transfers from the 17th floor of $800,000,000 during the 2000s.
Perhaps it was money laundering and not a Ponzi scheme. Legally, if you call something a Ponzi scheme it means that every transaction was a fraud. So there's no real investigation into transactions.
I don't believe in too much greed or too much need for love or any of that because I don't believe Madoff (or anyone else) would be able to become what he were without an ability to keep stuff like that under control.
A man wants to impress the world around him how smart he is? Doesn't feel outrageously strange ...
Question to those who understand more than I: Madoff didn't put many of the billions and billions invested into his own pocket. He used some of the money later invested to pay earlier investors. How then do we get to a loss of 65 bn? Or are we mostly counting those people that invested 10m and expected, seven years or so later to have 20m, as losers to the tune of 10m? (plus the original money not given back to them as well as some normal return on those first 10m)
Terrific. Why is the obvious so ignored? I suspect the producers did not want to note the hands that feed them,