No, not him!
A post by Maynard
The size of Bernie Madoff’s theft is astronomical. It makes you wonder how someone could get away with a deception of such monstrous proportions. It also makes you question the efficacy (or perhaps the integrity) of the watchdogs.
If it makes you feel any better, the phenomenon of the silver-tongued deceiver is not a new one. Ivar Kreuger, the “Match King”, set the bar in the first half of the twentieth century. Kreuger built an incredible empire worth more than a hundred billion of today’s dollars.
I recently happened to pick up one of the many books about Kreuger (this one, if you really want to know). It includes an introduction by John Kenneth Galbraith. He notes that the book dramatizes the three great weakness of the financial community. I think his warning bears repeating, in that it is timeless and applies to all walks of life. Reading these words, penned in 1960, I couldn’t help but think of Bernie Madoff and of course of Barack Obama.
Galbraith’s three points:
First of all, there is a tendency to confuse good manners, good tailoring, and, above all, an impressive bearing and speech with integrity and intelligence. Kreuger was an extraordinarily competent actor who had discovered that a quiet forceful manner plus the ability to remember and recite the latest banality about the international economic situation were sufficient to win him the respect of the very best men.
Thus they rope us in.
There is also a troublesome and at times disastrous interdependence. The honest man becomes committed to the crook before he knows there is anything wrong. Then he must protect him to protect himself or, in the more usual case, refuse to believe there is anything wrong. [Kreuger's financial] partners were almost certainly honest men. And while they were unduly impressionable, they were, perhaps, not totally gullible. But after a certain time they could no longer afford to believe that Kreuger was a fraud. Despite repeated indications that there was something rotten to the north of Denmark, they denied the evidence of their eyes and ears.
Once we’re in, we find ourselves psychologically trapped.
Thirdly, there is the dangerous cliché that in the financial world everything depends on confidence. One could better argue the importance of unremitting suspicion. Kreuger made his career by exploiting the men who had confidence; he was brought down by the men who were trained to take nothing for granted. They would have got him earlier and with less damage done if they had not been restrained by those who thought it a betrayal of the canons of financial confidence to ask questions.
At the end, we’ve become just another agent of darkness, working, knowingly or unknowingly, in opposition to the good.
Our wisdom must be our shield against starting down the bad pathway in the first place. Because once started, it’s very hard to go back.
{ 6 comments… read them below or add one }
Tammy-
I just finished listening to yesterdays podcast and I felt the need to comment that I don’t think Christie is going to get any bump from Palin. His campaign has publicly distanced itself from Sarah and publicly announced that it does not want her help campaigning. In fact, Mitt Romney is on his way there to help him campaign right now.
Palin’s facebook never actually endorsed Christie, but supported the Republican Governor’s Association in there support of Christie.
Those who follow Palin, have seen the treatment of her by his campaign and aren’t likely to give him the “bump” that Hoffman has seen.
That said, Christie is the more conservative option in that Governor’s race and it is nice to see Sarah let us know where she stands.
History does seem to repeat itself proving that the more things change, the more they stay the same but at least Ivar Kreuger killed himself. Unlike Bernie Madoff who will probably spend the rest of his life in some country club Federal pen at tax payer expense with free medical care.
This is why for 9,000 years, the world built its monetary system on gold and silver. When you “traded”, you traded something of real value for something else of real value. Not that gold was or is incorruptible. The Romans toward the last trimester of their empire would call in all the coins for a “new commemorative minting” of coins to honor this or that emporer. What they really did was dilute the gold further and further with copper. By the collapse, the coins had been made of bronze and then rather thin copper alone.
What America has done is to steal the worlds savings through “borrowing” at such a rate that soon all the taxes collected will be insufficient to pay the interest. Even now, foreign countries see the insatiable appetite for spending that our polititians have, and counter it by diversifying into other currencies or commodities. We have begun to squander our our status as having the most stable and universal exchange currency, by diluting the perception of real value through massive money printing aka: “quantitative easing”. This will eventually bring about massive inflation as those who use dollars suddenly have no need for them, and rush to the window to redeem them for what ever they can get for them. We are in a true “Catch-22″ situation here. We will soon be unable to borrow, so we will have to offer more interest, to borrow more of the worlds savings. As we raise interest rates to borrow, the revolving debt of the Federal government increases, and we rapidly diminish our ability to pay the interest, while we have to offer even higher interest in order to keep borrowing. If we continue to print the difference, inflation goes out of control, because the inflated dollars will compete with the repatriating dollars that flood in and compete to buy whatever tangible asset it will buy.
This speaks to Maynard’s premis. There are those who have had such a track record investing in America, and allowing us to hold their savings, that even though the signs of collapse are gathering like a storm, they can’t see it or they don’t want to see it, or they think somehow our people will be able to sort it out, or they are just in too deep. They continue to feed the scheme, or the fraud, hoping it is not really a fraud.
Tammy,
I just finished listening to the podcast from yesterday. It was great, as always, but I wanted to discuss your Republican party/block of cheese comparison.
Don’t get me wrong, I am no fan of the GOP right now. I was actually considering sitting the election out rather than vote for McCain, until he brought on Sarah (LOVE HER). But I would rather compare the Republican party to a child. A child who is being taken away from me (the parent) by people who want to indoctrinate her with beliefs and principles different from mine. They want to diminish or completely eliminate my influence on her. I am not just saying “No” to that, I am saying “Hell No.” I want to take back my child/party from the people who want to destroy her. So while I would vote for Sarah no matter what party she belonged to, I admire her more for helping us get our party back on track.
I would point out that the fascists did not create a third party, but rather took control of the Democrat party. The liberals are now taking the Republican party over for themselves. I want to change that.
On a totally different note, I would like to chime in on the “pot pie” vs. “cow pie” vote. I have a third option for you to consider. Since you are always talking about the kind of crack people in Washington are on–may I suggest a “crack-pot pie?”
Love you Tammy. Keep up your good work, and good for you for taking Saturdays off.
This is an interesting post, but not for the reasons Maynard points. Tammy pointed out yesterday that the Democrats in New York are showing an ad criticizing Hoffman’s success. Since Democrats believe that government should encroach itself in every aspect of a person’s life. That earning money and living off the fruits of ones labor, the Democrats find any kind of economic independence as a reproach. The”Match King” is a consequence of that type of mentality.
From what I’ve read about this man it appears that Kreuger got himself entangled with governments by issuing loans for monopoly status for his firm. Kreuger had to keep up the fraud because the governments he was in cahoots with defaulted on their debts. If anything this a cautionary tale of mixing business with politcs.
As far as I can see, Hoffman earned his money legally and without government “help”. Before Kreuger got himself in trouble, he had a legitimate business. The comparison between Madeoff and Obama is to me inaccurate. Madeoff’s “business” was never real in the first place. It was a fraud from day one. The president has never worked anywhere in the private sector. He went from academia to government. He doesn’t know how to earn money and doesn’t know what it takes to earn it.
Any business that goes to government for favors is courting disater. It’s a no win situation no matter what. Just look to my former employer Bank of America. The CEO, Kenneth Lewis is resigning. And the bank is up on federal charges regarding the Merrill Lynch deal. Even though the government insisted the bank buy the bankrupt firm with TARP funds. Go figure.
A movie called “The Match King” is on TCM tonight, at midnight Pacific Time. Sounds like the same story that Tammy is writing and reading about. For all the late nighters, it might be interesting to watch and very timely.
You must log in to post a comment.