The mass hysteria surrounding Bernard Madoff's alleged $50 billion Ponzi scheme just leaves me with one question. When are we going to stop talking about Madoff's "victims" or "foolish investors" and instead ask investors to take responsibility for their own actions?
Madoff's scheme was alluring. The guy was low-key and likeable; he was hard to get to. To gain access to his fund you had to go through one of his so-called "gate-keepers': Walter Noel, Carlos Grasso and Charles Fix. Once in you got steady returns even in the most volatile markets.
If you asked how he managed to pull this off, sources tell me, you got told simply: "Bernie knows..."
It appears none of his investors ventured further and asked the obvious sequitur: "Bernie knows what precisely? And how?"
"In a bull market no one bothers to ask how the returns are met, they just like the returns," Jake Walthour Jr of Aksia LLC, an investment advisory firm told me Friday. In other words we are greedy. Or we were.
Aksia sent out a letter to potential Bernie investors many months ago warning them of the blatant red flags they'd found in Madoff's operation.
But, just like so many people got suckered into purchasing mortgages they could not afford, or who allowed themselves to follow Wall Street banker's so-called advice when making risky investments, people invested with Madoff regardless. If the returns were good - then who were they to worry, if the math or logic didn't quite make sense to them?
For the past few years a friend made less than $50,000 per year, but nonetheless had a mortgage that put him in a house worth over $1 million. He thought this a bit strange - but heck, he had a great house.
Now, he's got to move out, cannot afford the debt...who should he blame, the mortgage broker? Wall St.? The Government? Well, maybe - but what about himself?
If any good is to come out of the economic crisis, it has to be surely this: that as all the filth and corruption of Madoff and his ilk is unveiled, we too need to take a long hard look at ourselves and actually start to take accountability for our actions.
We can't max out our credit cards every month or overspend without consequences. We can rant and rave about other people's failings - and sure, they deserve it - but the first person who made a bad decision - and deep down if we thought about, we knew it - was us.