Tuesday, February 9, 2016

Bernie Maddof and irony

After coming down with a horrible bout of the flu, I was able to watch some stuff I had taped. Recently, ABC had a story of Bernie Maddof special on and it was really good. Undoubtedly, they took some poetic license to make Bernie look like an even bigger douchebag than he was, but they also accurately portrayed what a shit show the SEC is. There was a whistleblower who figured out there was no way he could be racking up the returns he was, and this guy was ignored for awhile and even after they went through the firms books, they stopped short of taking the last few steps to check out his information. Had the crash not happened next, I can't help but wonder if his scheme would still be going today. Two very interesting things came to mind watching this.

In the movie, a very young Bernie is a stock broker pitching his customers on penny stocks. He was making good money, but after a crash, a lot of his customers got wiped out. So, he took his own money to rebalance his customers accounts and then lied and told them he had gotten them out of their positions and they didn't lose anything. His thinking was that if he could make them whole, he could keep them as clients. Later in the movie, we see the federal government bail out all the big banks and do something quite similar. Now in my opinion, everything that followed was one massive bailout of those with wealth via the FED. Small people who got destroyed got nothing and people who already had little saw things get even worse. Free shit indeed.

The other thing that stood out to me was the absolute incompetency of the SEC in this case, but multiple agencies in the crash. The SEC is weak and worthless because Wall Street wants it that way. Many right of center love to dump endlessly on agencies when they fuck up and of course, they will never accept that maybe if we took regulation seriously, it wouldn't be this way. In the midst of the market meltdown, the movie has Maddof rambling in a speech that it was ridiculous he was being prosecuted for this when fraud was taking down the entirety of Wall Street. He shouts angrily, "I was running th biggest ponzi scheme ever created inside of an even bigger ponzi scheme." He had a point. The packaging of debt with mortgages that were never going to pay off were given stamps of AAA by ratings agencies, the same fuck wads who later downgraded US debt. These people were idiots and yet, they still retain their status as an "independent" group that is capable of assessing debt.

We've really done nothing to fix this problem, and again, that is by design. It is what Wall Street wants. Dodd-Frank is weak, the SEC remains a weak agency and people simply don't give a fuck.


  1. It is pretty interesting how trickle down works.

    Look at the housing bubble, many were at fault.
    1. Appraisers: Didn't get touched.
    2. Realtor's: Home free after the lie, home prices always go up. Always buy as much home as you can afford as your income will catch up in coming years.
    3. Mortgage brokers: Some went out if business and disappeared. I love the liar loans.
    4. Bankers: Verbally beat up, some went our of business but no one ended up in court.
    4. The insurer (AIG) bailed out. No jail time there.
    5. The Federal Reserve, Greenspan retired as all government employees do when in trouble.
    6. The DOJ, they continue suing and making money on the housing/banking failure. Few people got a dime of the fines collected.
    7. Congress past and present: Few were touched as they pointed fingers at everyone else.
    8. The President, past and present. Not even an honorable mention.
    9. The people who took out loans they could not afford: They lost their homes causing many others to be adversely affected. None paid capital gains on they foreclosures.

    Probably missed a few players but they were not harmed.

    All in all, no one was

    No one is held responsible.

    1. Not only did Greenspan retire, but I remember him going on a "victory lap" giving speeches before it all blew up wherein he was already spinning his part in it. Still, for me, a lot of this comes down to regulation. For the most part, I don't believe a lot of these regulators are truly smart enough to understand the instruments they are regulating, and Greenspan himself admitted he didn't understand a lot of the securities created. Wall Street created a lot of unregulated garbage that basically was exempt from oversight.

      People don't wan't to hear Bernie's schtick about Wall Street or Elizabeth Warren's spiel, but there is something very legitimate there. This WILL happen again. Bernie is hammering HIllary about her 600k speech and I think he ought to. Democrats are just as bad at taking Wall Street money, but it would be refreshing to see one Elizabeth Warren type from the Republican party