Harsh bud, Dude

Joe Nocera to Madoff victims: get over it.

Let’s dispense first with the idea that the S.E.C. should be reimbursing Madoff victims. Why? Government agencies make mistakes, treat people unfairly, and do all sorts of things we all wish they wouldn’t. But by law, the federal government cannot be sued when it carries out an unjust prosecution or, for that matter, when it fails to uncover a giant fraud. Government negligence led pretty directly to the recent financial crisis. Does that mean the feds should be reimbursing us for our stock market losses? Of course not. Because it’s not really the S.E.C. that would be paying out the money — it would be the taxpayers. Why should my tax dollars go to helping Madoff victims? This is not 9/11.

Besides, as I’ve argued before, the S.E.C.’s negligence notwithstanding, shouldn’t the Madoff victims have to bear at least some responsibility for their own gullibility? Mr. Madoff’s supposed results — those steady, positive returns quarter after blessed quarter — is a classic example of the old saw, “when something looks too good to be true, it probably is.” What’s more, most of the people investing with Mr. Madoff thought they had gotten in on something really special; there was a certain smugness that came with thinking they had a special, secret deal not available to everyone else. Of course, it turned they were right — they did have a special deal. It just wasn’t what they expected.

Outside the courthouse today, television reporters interviewed victims, all eager to tell their tales of woe. And their stories, in many cases, truly are heart-wrenching. Hopes and dreams have evaporated. Homes have been lost. Retirees are having to take minimum-wage jobs. Their anger at Mr. Madoff is understandable, to say the least. But to see them lash out at Irving Picard, the bankruptcy trustee, made me realize that too many of them still seem to think that someone should have to make them whole. The whole point about Ponzi schemes is that there is not enough money to make anybody whole — they were robbed, pure and simple, and the government is not in the business of reimbursing for robberies. Not even when the cops stumble across the robbers and then mistakenly let them go.

4 Comments

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4 responses to “Harsh bud, Dude

  1. anonymous

    Indeed, scammers need many similarly greedy, moronic “customers”, not victims, to build a “franchise”

    Common sense suggests stuff “too good to be true” is a scam; and one doesn’t put all (or most of) one’s money in any one investment, no matter how seemingly legit

    Amused by the “ethnic” victimization by fellow members of one’s persuasion….overly ethnic/provincial folks, whether WASPs or Jews or Indians or Chinese, tend to be among the most dim-witted, suspicious members of their heterogenous groups (no matter how much money their family allegedly amassed)

    Consider the most respected (and/or feared) guys in hedge fund or tech industry (or VCs or PE or IBers): a motley crew of guys who are random white dudes from Midwest and other nonglamorous parts of US, Indians (both India-born and US-born) and Jews, some from big money families, most from middle-income families….a real-world meritocracy that’s ever-shifting and dynamic, as many of these industries require stronger quant/analytic skill sets than others which are more social skills and relationship based

  2. Walt

    Dude –
    Now you are pissing me off. Cancel lunch tomorrow.
    Of course the Fed’s should bail us out. This country is way beyond accountability and responsibility. Did the Citi guys just get a 100% pay increase. Today. YES!!! Did the AIG guys get billions of dollars and multi-million dollar bonuses? YES!!!
    So Bernie victims – like me – get screwed? Explain to me, Weasel Boy, why that is fair? If the government decides to bail folks out, which they shouldn’t, they need to bail us ALL out. And we can all be wards of the state. Forget hard work, merit, pay for performance. Get on the dole. I am there, BABY!! Yet you deny me. You piss me off.
    Anyway. Have a nice day.
    Your Pal,
    Walt

  3. one who knows

    Here is a post to my Nocera, that the Times, as of yet, has been to cowardly to put up. The simply summary is that Nocera is performing classic polulist whore schtick, and that his article is petty, mean-spirited, poorly reasoned, and choc full of weak arguments and lousy comparisons:

    How DARE you, Mr. Nocera. It’s no surprise that the Times would publish such gutter trash. This is, of course, the same failed rag that ran the disgraceful “Loneliest Woman in Town” tripe, which was so obviously planted by a Madoff PR flack. That article was so light on logic, so full of *real* self-pity, and so rife with laughable comparisons, that it was a contest between the shamefulness of jumping into bed with Ruth’s publicist and the disgrace of publishing such a lousy attempt at journalism to see what would reach the bottom fastest.

    And now we have this latest indignity from Mr. Nocera, that breezes over the reality of much of the situation and indulges in the kind of populist gar-bage that was previously restricted to racist and shadenfreudesque droolings among the comment sections of Madoff articles. Have you really added anything to this conversation, Mr. Nocera? Yes, we have all heard the populist glee over this one: “the investors ALL should have known better” line of argument. Besides being a conservationist of brain cells by recycling an opinion that has been floated by every underinformed online hatemonger already, you have now leant this ridiculously oversimplified and hateful take on the situation a certain legitimacy.

    Let’s go through a few things, ok? Your start to this “piece” dealing with suing the SEC is a classic straw man maneuver. Everyone with a semester of law school under their belt knows that you can’t sue the SEC. That’s right. They can fail as woefully and pathetically as they please, and they can still claim immunity. And the lawyers who are taking people’s money to file lawsuits of this nature are courting two things: publicity and easy cash. The only way you can sue a government agency like the SEC is if they consent to be sued. They haven’t, they won’t, it’s a non-starter. Thanks for shining a light on NOTHING, Nocera.

    Then you turn to classic populist baiting by referring to the smugness of the Madoff investor. How do YOU know who was smug and who was not? Some of them were smug, others were humble, hardworking, polite people who are rarely smug about anything. Some of them didn’t KNOW they were with Madoff, which made it awful hard for them to be smug about things, no?

    Then you cherry pick the easy target, the investor who wants to be made whole. Let’s call this a strawman-lite. Pushing aside the absurd argument that the risk people took with Madoff was the same risk anyone takes who invests in the market – they are not the same – in one case, you risk the dimunition of your asset, in the other case the risk was apparently that your money was being STOLEN – no one with any sanity expects to be made whole from this. An even more fanciful wish is the idea that people will be reimbursed for imaginary gains – NO ONE is entitled to money that was never actually earned/created/not fabricated. The upper limit to what you’re entitled to is what was stolen from you, which is what you put in – and that’s obviously not coming back, although favorable tax treatment is the least the government can do after failing so miserably.

    Your article is unsurprisingly rife with horrible comparisons. This is not a case of a sidewalk robbery, in terms of reimbursement. When you point me to a victim’s reimbursement fund for that sort of crime, you’ll have a comparison. In this case, SIPC was designed PRECISELY for such an occasion. And it was designed that way because a policy decision was made that it helps our overall economy that people at least have the degree of confidence in investing that comes from knowing they can only be stabbed in the gut by, but not robbed blind by their investment advisors. No similar policy decision has been made for mugging victims.

    You also make the sloppy comparison between missing the Madoff treachery and the recent financial crisis. Yes, if the government wanted to hang all financial columnists and the CNBC lackeys by their toes for their crimes, I’d cheer with the rest of the crowd. But otherwise, to compare a situation as complex and messy as the overall financial meltdown and a situation where Markopolos HANDED Madoff on a silver platter to the Government agency that was SPECIFICALLY SET UP TO INVESTIGATE THIS SORT OF THING and chose to do nothing is a shameful piece of sophistry.

    The financial meltdown was caused by a lack of regulation, by the wrong people being in bed with each other, by an excess of greed, by an overemphasis on “to the cent” earnings releases, and by a system that had no choice but to get bigger, and ultimately, tragically reckless. However, the difference between the two situations is the difference between blaming your government for someone breaking into your home because the government did not install enough streetlights, or did not invest in a large enough police force, or created a socio-economic climate that would lead to desperate criminals and break-ins and blaming a police officer for chatting on his cellphone while someone beats you within an inch of your life on the hood of his cop car. Weak comparison.

    And what is further offensive is the idea that investors could only rely on the SEC’s clean bills of health to validate Madoff. As a financial columnist, surely the sheer absurdity of the CHAIRMAN OF THE NASDAQ running the biggest ponzi scheme in the nation’s history WHILE HE WAS CHAIRMAN OF THE NASDAQ cannot be lost on you. One of our two largest stock exchanges was helmed by a man perpetrating the most vile and outsized financial crimes imaginable. It still boggles the mind.

    Lastly, you persist in supporting this image of the “standard Madoff investor” which you know to a gross oversimplification. Should the financially sophisticated, super investors who were with Madoff have known better? Probably. Is it likely that they thought Madoff was up to something not entirely legal that worked to their benefit? It is certainly possible.

    But there are scores of Madoff investors who thought they were making a conservative investment. These people were never part of the Madoff circus of outsized returns year after year. They saw him as steady, conservative, and diversified, according to the statements that they were shown. This was the same man who had significantly underperformed the rest of the market in the glory years, but who could be counted on to keep your money safe and moving in a positive direction.

    For the investors who got in at the very end, a common symptom was total fear that the market was crashing all around them and a desire to move what they had left to an investment that was perceived as safe and that had the imprimatur of being run by a man who had led one of our major exchanges. These people couldn’t even begin to explain to you how they thought Madoff made his money. Now is it irresponsible to invest in something you don’t understand? Of course it is, BUT IF YOU REMOVE ALL INVESTMENTS OF THESE KIND, GOODBYE STOCK MARKET. If you removed all the money that did not understand how exactly their investments work, our exchanges would trade at about 1/50th of what they trade at today. To acknowledge anything less is to be both hypocritical and delusional.

    You know that many Madoff investors are innocent victims. You know that many of the investors did not even know their money was with Madoff. You know that many Madoff investors are not the filthy rich and terminally socially unconscious stereotypes that some would like them to be. You know that Bernie swallowed more small fish than ever at the end of his predations as he got more and more desperate. But acknowledging this won’t garner you the adulation of the angry populist masses that want to kick dirt on the few poor SOBs they can find who are more miserable than they are. So instead you write this piece of trash.

    You should be ashamed of yourself and your editors should do better than to publish such a self-serving, simplistic, pandering hatchet job.

  4. pulled up in OG

    “Why should my tax dollars go to helping Madoff victims? This is not 9/11.”

    Wrong, Joe. That payout was unwarranted too.