There are FAR too many out-of-work bankers and MBA’s!
In a normal year a $50 billion Ponzi scheme would be the biggest story on Wall Street…well unfortunately this isn’t a normal year. The con job pulled off by Bernard L. Madoff, former chairman of NASDAQ, is unprecedented in scope and will have undoubted reprecussions for the SEC and regulatory bodies across the world. My hope is that any legislation passed will not be too rash in it’s thought process. Madoff pulled (right now allegedly) the wool over the eyes of some of the smartest investors in the world. I’m sure the next several months will shed much light on what really happened (right now there are simply too many scraps of info, some contradictory, to paint a clear picture). What’s truly incredible is that this will simply be a byline in the financial story of 2008. What a year it’s been!
As background, a Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business (I’ll refrain from making any comparisons to Social Security systems). It’s a form of a pyramid scheme. It’s named after the Italian Charles Ponzi who orchestrated his now notorious scam back in 1920.
Here’s a video of the man of the nefarious moment. Around the 5:20 mark the irony starts to drip: