Laura Flanders, Janeane Garofalo, and me on GRITtv
On Monday, I was a guest on the Laura Flanders Show on GRITtv along with comedian and activist Janeane Garafalo, and journalist Danny Schecter.
Our discussion was about what separates out-and-out frauds like Bernie Madoff from the architects of the subprime crisis and other Wall Street miscreants who managed to get rich by recklessly gambling away other people's money.
Morally, I'd say there's not much difference between Madoff and the folks who hyped liar loans so they could sell the debt out the back door, knowing they'd have made their quick buck before anyone realized that the people who bought the houses and the people who bought that debt were totally fucked when the former inevitably failed to pay the latter. Legally, some of these hucksters may have been on firmer ground than Madoff, but that in itself doesn't make them more ethical.
Nor is there much difference between Madoff and the credit raters who misrepresented bad securities as sound investments because they wanted the rating commission from the crooks who created the securities. Both were motivated by greed, but the corrupt credit raters ultimately ruined far more innocent people.
The irony that I was getting at in the segment was that Bernie Madoff managed to get away with the financial equivalent of a chain letter by falsely claiming to be part of the ostensibly legitimate but virtually unregulated world of hedge funds.
In reality, Madoff wasn't managing a hedge fund or investing in anything, he was running a classic Ponzi scheme. But when Madoff intimated he was making astonishing returns by trading billions of dollars worth of over-the-counter derivatives, few could contradict him because the trades he was alluding to would have been private and unregulated anyway.
We now know that Madoff's apparent financial wizardry was just a front. His methods were old fashioned Ponzi tactics: recruit new marks and divide up their money amongst your existing investors. As long as you can keep up the recruiting rate and your existing investors don't cash out en masse, you can appear to generate amazing rates of return without actually investing in anything.
I was pretty nervous being on TV with Janeane, but I guess I didn't screw up too badly because I got invited back to the Laura Flanders show.