Why This Matters
This Affects All of Us
Like the empty revenues of Bernard L. Madoff Investment Securities LLC, the 2008 Financial Crisis proved to us that our financial system has long been in jeopardy. The post-Keynesian economics of the past forty years have gradually yet surely eroded the ethics of both our private sector and the government that continues to back it as tens to hundreds of millions of lives have lost the opportunity to live with dignity and pursue the American dream. This downward trajectory of America's working and middle classes highlights an unsettling truth: We the people, those whose labor and toils fuel the machine of progress and line the pockets of those who facetiously short our generated bounty on a whim, we are not in the driver's seat. More disturbingly those who are in the driver's seat buy, trade, spend, scheme, and exploit frivolously knowing well that whatever consequences to be had will be diverted onto the backs of those below them as government and private interests continue to bail them out carelessness while holding few accountable.
Bernie Madoff was an exception. Bernie Madoff by many angles was a sacrificial lamb; a bad egg in a nest of bad eggs pinned to take the fall for all of the rot, greed, shortsightedness, and negligence that cultured the petri dish for his Ponzi scheme to grow. As regulations are slashed and the ideology of a "free" market is increasingly force-fed into the hungry maws of the American people, we set the table for greater dereliction, more fraud, and a larger burden on the future of our country. The exchange of hollow capital across boundless firms generated a $3.25 billion loss through Ponzi schemes in 2019, the highest net loss due to fraud since 2008's Great Recession. Yet this begs the uncomfortable question: How many Ponzi schemes are still operating? How much liquidity actually exists in our markets and how much is bunk? By how much will the next major Ponzi scheme exceed Madoff’s record and how many people will lose their livelihoods because of it?
This Will Continue to Happen
Madoff's actions and the losses they generated are to any extent unforgiveable and while the victims of his crimes receive their settlements through the diligent efforts of trustees like Irving Picard, the unseen damage remains. When the wealthy are victimized through white-collar crimes, those beneath them often foot the bill. Those with exceedingly high losses are often treated quickly through recovery funds yet high losses do not equate to high chances of poverty. Small investors on the other hand often have far more to lose, yet these victims are more easily swept under the rug. The small guy pays the price while the system protects those few it was built to protect.
In 2016, Charles and David Koch of Koch Industries were allowed to keep the millions they had earned as early investors in Madoff's Ponzi scheme following a ruling by Bankruptcy Judge Stuart Bernstein. While there is little evidence to tie the billionaire Koch's into any co-conspiratorial status, the ruling in their favor to the detriment of thousands of BLMIS's smaller and newer investors illuminates the deplorable state of our markets. Justice and what is fair can always be undermined with enough capital. Ethics and moral judgment now take a backseat to wealth and prestigious influence. Stability and genuine freedom only ever truly come to those who can afford it. In the trickle-down economy, the dire consequences of incompetence, carelessness, and ill-intent have no surface tension. They rain down and pool into the lower classes as quickly and effortlessly as oil. If we wish to fight this trend, we must hold our financial institutions accountable on all fronts. We must be aware of these misdeeds always and never allow the distractions of our modern dilemma to lull us into a forgetful complacency.
