Sesame Street explains the Madoff Scandal
Mar. 16th, 2009 02:19 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jducoeurThanks to Between the Lines for the pointer to this lovely little video about economics. Okay, it's probably not really from Sesame Street, and it's not in any way accurate.1 But regardless of correctness, it is rather viscerally satisfying...
1 I find most of the "Madoff is Evil Incarnate" hype to miss the point: the scary thing is that I suspect he simply fell into an easy trap of his own making, and that most people, after the first few steps, would have made just the same decisions he did. The thing about pyramid schemes is that they are easy to start, and *very* hard to stop. You get deeper and deeper so fast that all you can do is keep feeding the monster until it eats you. Indeed, it wouldn't surprise me if it started the same way as the Satyam mess: cooking the books just a little to smooth out a glitch, and then covering over each successive layer until all you have left is the fraud...
1 I find most of the "Madoff is Evil Incarnate" hype to miss the point: the scary thing is that I suspect he simply fell into an easy trap of his own making, and that most people, after the first few steps, would have made just the same decisions he did. The thing about pyramid schemes is that they are easy to start, and *very* hard to stop. You get deeper and deeper so fast that all you can do is keep feeding the monster until it eats you. Indeed, it wouldn't surprise me if it started the same way as the Satyam mess: cooking the books just a little to smooth out a glitch, and then covering over each successive layer until all you have left is the fraud...
(no subject)
Date: 2009-03-17 03:39 pm (UTC)Could be. It's entirely possible that he really is that much of a sociopath, but I don't think the story I've seen so far requires that. He managed to build up a structure that pretty much required him to just keep going, or it would all collapse pretty fast, and the crime grew ever larger as he went.
I honestly don't see any way he *could* right the ship after those first few years -- he built up the firm on an impossible premise (that he could deliver reliable earnings in an unreliable market), and if he admitted that fundamental untruth, even by having "a bad year", it likely would have led to a run on the fund, destroying it and revealing the crime. So he just kept building it instead.
We'll see -- I'll be very interested to read the full history once it gets properly worked out. But so far, I don't see anything that requires a really sociopathic lack of remorse, just a fair dollop of ordinary moral cowardice and greed...