Comments on: Lessons Bernie Madoff Taught Us

By: HM

HM — Fri, 06 Feb 2009 02:27:51 +0000

If you watched the SEC testifying on how they investigated Bernie Madoff in 2006 and found nothing wrong, I don’t think you’ll ever feel safe investing in Wall Street again.

By: Revi

Revi — Tue, 03 Feb 2009 21:37:51 +0000

Well, we should remember what they say: If it seems too good to be true, it probably is.

By: ZP

ZP — Mon, 02 Feb 2009 18:04:42 +0000

Well, there it is, folks. Any way you slice it, it comes out pure greed. A man’s reach again exceeding his grasp. Or what’s an investment for?

By: Janet Davis

Janet Davis — Fri, 09 Jan 2009 15:34:08 +0000

Nancy Miller has really hit the nail on the head. Great article. Great insights.

Janet Davis

By: Ron H

Ron H — Thu, 08 Jan 2009 19:41:37 +0000

Am I the only one feeling somewhat gleeful over the Madoff rip-off. I mean, it was only a monthor so ago that America’s elite and intellectuals were chastising us rural folks about being dumb knuckle-draggers not even nqualified to vote. Well, just how truly smart were all these “elite” to fall for the oldest scam in the book? You can bet that it was not blue-collar Americans that got fleeced by this guy. First and foremost, they (rural folks) are simply so much smarter than the upper crust. Eat cake you snobs in Palm Beach and Manhatten!

By: JulieW

JulieW — Tue, 06 Jan 2009 17:19:14 +0000

Greed Greed Greed is what caused this mess.How a guy like Madoff can get away with this for so long is incredible. Is this the tip of another iceberg?

By: Jonathan R

Jonathan R — Tue, 06 Jan 2009 15:13:54 +0000

Regulation will not be a panacea. But more — or more importantly — better regulation can be a big help.

Yes, Ponzi schemes will always be with us, but we can hope to catch them before they have so many victims. As Ms. Miller points out, oversight was lacking.

A major goal should be to keep large institutions (AIG, Lehman, etc.) from threatening the system as a whole. A clearinghouse would be a big step in that direction. Futures blow-ups have occurred (e.g. Amarinth, Soc. Gen., Barings, Refco, and others) without creating systemic risk. They did not create paralysis or create systemic risk. The investment banks fought the idea of centralized clearing for CDS and other swaps tooth and nail because the over-the-counter system provided larger margins by creating opacity and barriers to entry. Users of these instruments strongly prefer a clearing system but lack the market (or political) power to force it. This kind of infrastructure is a public good and will only occur if imposed on industry by government.

Regulation will be far from perfect. Markets are imperfect too. And they operate better with adult supervision.

By: Alan W.

Alan W. — Tue, 06 Jan 2009 03:37:14 +0000

Ms. Miller makes a very subtle point. I.e. everyone loves capitalism when the market is going up. You would have thought we would have learned from the tech bubble, which wasn’t so long ago, that “irrational exuberance” is just that; irrational. The real estate bubble, following on the heels of the tech bubble, has, once again, made us face the ugly reality that if something seems to good to be true it isn’t. That applies to tulips, Florida real estate, a dot com that produces nothing but an IPO, 2 bedroom Capes on 1/5 of an acre selling for $500,000, and consistent 15% returns even in a bear market.

Clearly, Barney Frank, Chris Dodd, et. al have a lot to answer for, but will they ever be questioned? However, the larger point is you can’t regulate the human capacity for greed and stupidity.

By: Horace Wells

Horace Wells — Sat, 03 Jan 2009 07:00:14 +0000

The whole system we have is great. The one wrench in the works is that it attempts to harness the sins of greed and avarice to create wealth and plenty for all. Like all compromises it cuts both ways. So lets be honest cynics for once and stop all this fake piety of trying to merge some redneck cracker version of religion into capitalism and politics. Nobody with any integrity is buying any of the GOP holy roller crap anymore. Ditto with Obama and his clergy pals.

By: lydia

lydia — Fri, 02 Jan 2009 18:28:42 +0000

We also learn it doesn’t work out real well when we think our financial guru is making us all these great returns by insider trading instead of running a Ponzi scheme.