Check them out.
- To Catch A Thief details how regulation upon regulation missed Madoff (and the confidence in regulation let many investors assume they were safe), while the only ones who were wary were investors who did their own digging. We see over and over that it is not regulation which stops frauds but investors who don't rely on regulations to catch it.
- Madoff exploited the Jews discusses how he took advantage of trust within the community to avoid hard scrutiny. Sad but important to recognize.
- The Madoff Inheritance utilizes the play The Voysey Inheritance to note that the past year, from the housing mess to Madoff, teaches us a lesson:
A big lesson of the past year is that we all should be talking more about money. One reason we don't talk about money is we are afraid of what we might learn. Mr. Madoff's contented investors are hardly different from the apparently uncountable number of people who put down 5% for a large mortgage without wondering, How does this work?I love this last line:"It's strange the number of people who believe you can do right by means which they know to be wrong."
Thursday, December 18, 2008
Madoff, Regulations, & Jews
The Wall Street Journal today seems to be dedicated to discussing Bernie Madoff's $50 billion scheme, and a few pieces are particularly interesting and worth reading by readers here:
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Madoff stories have run above the fold in the Wall Street Journal every day this week.
ReplyDeleteAnon - Obviously; I meant in the Opinion Journal online, which I get a digest of each morning. The first three pieces were all Madoff-centric.
ReplyDeleteTo Catch A Thief details how regulation upon regulation missed Madoff (and the confidence in regulation let many investors assume they were safe), while the only ones who were wary were investors who did their own digging. We see over and over that it is not regulation which stops frauds but investors who don't rely on regulations to catch it.
ReplyDeleteRegulation would have stopped the fraud if the SEC did its job, right? The problem was that they didn't do anything when people brought it up over and over again.
Harry Markopolous wrote to the SEC about Madoff in 2000 and again in 2005, in a 19 page letter listing 29 red flags. (Via Sailer.) I don't know too much about the SEC, but I know without looking that Bush appointed a "pro-business" guy with a religious belief in "free enterprise" and a strong distaste for rI'm right.
The whole point of regulations is that not everybody has the time or expertise to do their own digging. I shouldn't have to conduct double-blind scientific experiments to figure out which medicines are safe to take and I shouldn't have to comb through numbers to figure out if Madoff's fund was an egregious fraud.
Bad government is not evidence that government doesn't work. It's just evidence that government by that particular group of people doesn't work. It's like Mencken's quote: Republicans tell you government doesn't work and then get in power and try to prove it.
You totally missed the point. People are now going to push for *more* regulation, just like they're doing with housing and everything else. Except the problem isn't lack of regulation, but horrible reliance on it and execution of enforcement.
ReplyDeleteThe problem with Madoff was insufficient enforcement. The problem with the financial meltdown is insufficient regulations on financial instruments and ratings companies.
ReplyDeleteLOL - Insufficient regulations on ratings companies?? Think if that even makes sense.
ReplyDeleteWhat regulations on financial instruments would have stopped this from happening? Seriously.
And I'll guarantee that someone proposes more regulations due to what happened with Madoff.
What regulations on financial instruments would have stopped this from happening? Seriously.
ReplyDeleteSome sort of oversight? Like you can't just put a pile of junk together and rate the conglomerate AAA?
LOL - It's different people putting the junk together than those rating it. The ratings agencies blew it - but that has nothing to do with regulations!
ReplyDelete