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Madoff Madness

Boy, Time Magazine has really fallen on hard times, haven’t they?  They did a series on the 100 Most Influential People in the world and, for some reason, picked Bernie Madoff.  So who did they get to write an article about him?  Why, it’s our man from Flint Davison.  He basically says, in a beautiful “blame the victim” piece, that we deserved Bernie Madoff (assuming I have correctly read his rambling piece).

Yes, he stole $65 billion from some already quite wealthy people. I know that’s upsetting to them because rich guys like Bernie are not supposed to be stealing from their own kind. Crime, thievery, looting — that’s what happens on the other side of town. The rules of the money game on Park Avenue and Wall Street are comprised of things like charging the public 29% credit card interest, tricking people into taking out a second mortgage they can’t afford, and concocting a student loan system that has graduates in hock for the next 20 years. Now that’s smart business! And it’s legal. That’s where Bernie went wrong — his scheming, his trickery was an outrage both because it was illegal and because he preyed on his side of the tracks.

This would be the credit card industry whose chief representative is now Vice President to the Chosen One? A housing bubble inflated to a large extent by government pressure on lenders and loose money policies at the fed? A federal loan company—two companies in fact—that went completely belly up while paying out tens of millions of dollars to political hacks?  The student loan system that, despite being a government-controlled mess, still leaves the average student with a debt of about $20,000 in exchange for a first-rate college education.

I mean, I just wanted to be sure.

Apparently, Moore would prefer that the middle class have no access to credit at all.  It would be much better for them to return to the days before credit cards, when they borrowed money from loan sharks or pawnshops and only rich people like Michael Moore could afford to buy a house and an education.

Had Mr. Madoff just followed the example of his fellow top one-percenters, there were many ways he could have legally multiplied his wealth many times over. Here’s how it’s done. First, threaten your workers that you’ll move their jobs offshore if they don’t agree to reduce their pay and benefits. Then move those jobs offshore. Then place that income on the shores of the Cayman Islands and pay no taxes. Don’t put the money back into your company. Put it into your pocket and the pockets of your shareholders. There! Done! Legal!

Well, except that the overseas tax dodge is a complete myth.  And companies outsourcing frees resources and capital for greater insourcing while providing cheaper goods to the lower and middle class.  And shareholder earnings are taxed.  And companies that don’t plow profits into improving their company tend to go bankrupt—like, you know, GM and Chrysler.

Other than everything about it being wrong, however, I stand in we of Mike’s keen analysis of our economic system.

It would be too easy — and the wrong lesson learned — to put Bernie on TIME’s list all by himself. If Ponzi schemes are such a bad thing, then why have we allowed all of our top banks to deal in credit default swaps and other make-believe rackets? Why did we allow those same banks to create the scam of a sub-prime mortgage?

Moore conveniently ignores the largest Ponzi scheme in human history—the Social Security and Medicare systems that are now projected to go bankrupt within the next decade or so.

And instead of putting the people responsible in the cell block in Lower Manhattan, where Bernie now resides, why did we give them huge sums of our hard-earned tax dollars to bail them out of their self-inflicted troubles? Bernard Madoff is nothing more than the scab on the wound. He’s also a most-needed and convenient distraction. Where’s the photo on this list of the ex-chairmen of AIG, Merrill Lynch and Citigroup?

Well, the difference is that most of what those banks did was legal, whereas what Madoff did was illegal.  We don’t jail people in this country for being irresponsible assholes (although I think plenty of bank and AIG executives do belong in prison for fraud).

Where’s the mug shot of Phil Gramm, the senator who wrote the bill to strip the system of its regulations, or of the President who signed that bill?

Just to clear, Mikey. That was President Clinton.  I mean, just in case you forgot who was President back in 1999.  And the big probem wasn’t the repeal of Glass-Steagel but the complete lack of regulation of CDS markets and derivatives.

And how ‘bout those who ran the fake numbers at the ratings agencies, the lobbyists who succeeded in making sleazy accounting a lawful practice, or the stock market itself — an institution that’s treated like the Holy Sepulchre instead of the casino that it is (and, like all other casinos, the house eventually wins).

The Feds still require banks to use those ratings agencies, that’s what’s happening to them.  In a capitalist system, those rating agencies would have been ruined by their mistakes.

As for the stock market, it has had a solid return for most of the last century, including the Great Depressions and the Great Whatever We’re In Now.  The reason it’s treated like a “Holy Sepulchre”, Mikey, is that hundreds of millions of Americans and thousands of pension funds are invested in it—for the long term.  I do agree that there’s a little too much attention paid to the stock market.  But it’s not a casino—it’s a tremendous force for elevating the middle class and helping people retire in comfort.

Here’s where it gets fun.  I’ll quote it in full.

And what of Madoff’s clients themselves? What did they think was going on to guarantee them incredible returns on their investments every single year — when no one else on planet Earth was getting anything like that? Some have admitted they did have an inkling “something was up,” but no one really wanted to ask what it was that was making their money grow on trees. They were afraid they might find out it had nothing to do with gardening. Many of Madoff’s victims have told investigators that, over the years, they have made much more than the original investment they gave Bernie. If I buy a stolen car from the guy down the street, the police will take that car from me regardless of whether I knew it was stolen. If I knew it was stolen, then I go to jail for receiving stolen property. Will these “victims” give back their gains that were fraudulently obtained?  Will the head of Goldman Sachs reveal what he was doing at the meetings with the Fed chairman and the Treasury secretary before the bailout? Will Bank of America please tell us what they’ve spent $45 billion of our TARP money on?

Actually, they spent a lot of that money buying Merrill Lynch at federal gunpoint.

The thing about this article is that sometimes Moore actually makes sense.  There are some ... well, not pearls ... but maybe nice pieces of quartz in that river of shit.  A lot of the problems we’re having are a result of influence-peddling in Washington.  A lot of the problems can be blamed on a Congress and a White House that were more interested in lobbyist junkets than sound banking practices.  This isn’t a matter of party either—both were culpable.

But Moore has embraced, repeatedly, a model that would make these things even worse—that would put more of our economy in the hands of politicians, that would make influence-peddling even more critical to business success.  Here he is praising the President for firing the CEO of GM.  Here he is saying the bailout of GM should have come with all kinds of requirement for mass transit and green cars.  His movie on healthcare was practically a love letter to socialism.

What does he think is going to happen when the federal government controls the banks, the car makers, the loan companies, the hospitals, the drug companies, credit cards and healthcare?  Does he really think that all those powerful lobbyists and monied interests are going to go home?  Or will they simply redouble their efforts to claim their piece of the federal pie?  Will we not be right back here with another mysterious baillout and billions more dollars being heaved around at special interests?

Moore has an idea of what the problem is.  And I share his outrage over the bailouts.  But he wants to put out the fire by pouring more gasoline onto it.

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