It’s a good thing we still have Social Security. There are some (formerly) rich people who are going to need it:
The epicenter of what may be the largest Ponzi scheme in history was the 17th floor of the Lipstick Building, an oval red-granite building rising 34 floors above Third Avenue in Midtown Manhattan.
A busy stock-trading operation occupied the 19th floor, and the computers and paperwork of Bernard L. Madoff Investment Securities filled the 18th floor.
But the 17th floor was Bernie Madoff’s sanctum, occupied by fewer than two dozen staff members and rarely visited by other employees. It was called the “hedge fund” floor, but federal prosecutors now say the work Mr. Madoff did there was actually a fraud scheme whose losses Mr. Madoff himself estimates at $50 billion.
The tally of reported losses climbed through the weekend to nearly $20 billion, with a giant Spanish bank, Banco Santander, reporting on Sunday that clients of one of its Swiss subsidiaries have lost $3 billion. Some of the biggest losers were members of the Palm Beach Country Club, where many of Mr. Madoff’s wealthy clients were recruited.
The list of prominent fraud victims grew as well. According to a person familiar with the business of the real estate and publishing magnate Mort Zuckerman, he is also on a list of victims that already included the owners of the New York Mets, a former owner of the Philadelphia Eagles and the chairman of GMAC.
Bummer. Didn’t anyone tell these suckers, er, wealthy individuals to diversify their assets?
It’s interesting that Madoff himself refers to what he did as a “Ponzi Scheme”. So, the people who got to the party late footed the bill for the ones who came early. But is that where all of the money went? Does that mean the early investors have at least a moral obligation to refund their ill gotten booty to the late investors?
On another note, it looks like the Republicans are still not done with their irrational hatred of everything labor. Paul Krugman makes reference to the Republicans’ efforts to stick a fork in the unions before the changing of the guard next month. The hard hearted meanies can’t find it in themselves to extend a measley $15 billion to the autoworkers so they can keep their jobs and their houses and prevent Michigan from turning into a landscape straight out of I Am Legend. But when Krugman turned his attention to Europe, where the Germans are holding out for equally selfish reasons this line had me giggling:
Last week Peer Steinbrück, Mrs. Merkel’s finance minister, went even further. Not content with refusing to develop a serious stimulus plan for his own country, he denounced the plans of other European nations. He accused Britain, in particular, of engaging in “crass Keynesianism.”
The Germans are being stubborn and dragging their feet, refusing to join the rest of the class and insisting that nothing needs to change. (I hate to stereotype but my own experience with my German colleagues is oddly similar. You must prove something a priori before they sign on to actually trying it and even then, they resist.) But Germany is hardly immune to sharing the wealth so the flinching from Keynesian economics is pretty funny, even if it is shortsighted and ruinous for everyone else in the EU.
But the US has it easy in the area of labor unions compared to Germany. Decades of assault on labor has resulted in very little protection for them. What do the billionaires want anyway?
It must be the sheer scale that is the problem. A billion here, a billion there, pretty soon you’re talking about real money. Money has no real meaning to the superrich. There are only so many necessities of life a person can buy with a billion dollars. After a certain threshhold value, it’s all play money. Is that why they seem to be so stingy towards the people who work for them?
Well, we can only hope that there will be some new riches to rags stories that will come out of the Great Financial Collapse of 2008 that will make it all worthwhile. Schadenfreude and all that.
Filed under: Financial Meltdown of 2008 | Tagged: Billionaires, germany, krugman, Labor, madoff, suckers | 93 Comments »