dec 16th, 2008
moving away from india for a moment, the magnitude of the bernand madoff ponzi scheme is absolutely unbelievable.
$50 billion, that's with a 'b'.
that's more than microsoft's revenue.
the guy pulled it off for a few decades. utterly amazing. the chit funds of india must be eating their hearts out.
http://dealbook.blogs.nytimes.com/category/the-madoff-scandal/
2 comments:
Sorry to say, it is not unbelievable.
Despite the pretense of regulation and oversight in matters of finance and economy, US is practically not much better than India.
The regulators are clueless, short of resource, and appointed on the basis of their commitement to free market (i.e. free from regulation).
The whole Wall Street collapse of Lehman Bros, Baer Stearns, etc and the incestuaous connections between money handlers and rating agencies are folklore.
These things point to a much bigger rot then we are ready to admit. US has no basically compititive advantage in finance, and even in broader economy. The only thing that is keeping the charade of economic power alive is a currency which US can print and rest of the world trades in.
Article on the Madoff disaster by Paul Krugman in New York Times: The Madoff Economy
” it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole. . . . The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence. . . . financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion. . . . At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way.”
The last sentence in Krugman’s essay is: “What we’re looking at now are the consequences of a world gone Madoff.”
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