Let The Good Times Roll

It's human nature not to raise questions when things are going good. You know...let the good times roll! And, those who scheme to take your money always use this fact to their advantage. This fact is at the core of every Ponzi scheme.

The recent Bernard Madoff scandal (pronounced "made-off" and resulting in many an easy joke), just reinforces this fault of human nature (See Full Story). As long as he was able to show his investors (or should I say: his "marks") that he was able to provide phenomenal returns, no one would question his accounting. But one man did and he was ignored. That man, Harry Markopoulos, a financial analyst, complained to the Securities and Exchange Commission (SEC) in "1999" on the basis that it was impossible for Madoff to legally have the returns that he and his phony investment firm were showing (See Full Story). Harry Markopoulus' nose and that old saying of "If it sounds too good to be true...it is" got his suspicions up about Madoff. Sadly, if he had been listened to, Madoff and his Ponzi scheme would have been stopped 8 or 9 years ago.

People seem shocked that smart people like Steven Spielberg lost money and, all those combined, lost over $50 billion in Madoff's scheme. But, how easily they forget. Even a well scrutinized, public company can screw the public. It wasn't that long ago that Enron put the bite on the entire investment community through its phony accounting. Fortune magazine was so enthralled with Enron, at an earlier time, that it called it: "America's Most Innovative Company." Unfortunately, the innovations were in bad, falsified accounting.

When Mr. Obama announced his pick for the SEC Chief, Mary Schapiro, he blamed lax oversight for the Madoff scandal. I guess that was another one of his cheap shots at Bush. However, Mr. Madoff's firm was the kind of operation that was never federally regulated. Federal law, going back to the 1970's and during both Democratic and Republican-controlled Congresses alike, never mandated regulation of the Madoff-type of operation. That was Madoff's advantage. Like a lot of typical political B.S., Mr. Obama is just expressing the hindsight and the lack of foresight that all politicians always seem to have. Let's not forget that Enron was a regulated security with constant public and financial scrutiny and it got away with what it did during the Clinton Presidency and a primarily Democratic-controlled Congress. Mr. Obama may talk big; but, regulation or not, there will always be another Madoff or Enron scandal in the future of America; and, just maybe during Mr. Obama's term or terms in office. Just mark my words.

One last comment about Madoff. He's out of jail on $10 million bail (See Full Story). Only in America can a person use the money that he stole to post the bond he needed to get out of jail. How stupid is that!