Monday, December 15, 2008

Nutshells ...

Mr. Philadelphia sums up the entire financial crisis in 2 paragraphs:

Josh is right that there's less difference between the Madoff case and the financial sector generally over the past few years than will generally be acknowledged. There are differences, especially in that it was a kind of decentralized Ponzi scheme within and between organizations, and no one person could have stopped it or given up the game. But for years the housing, mortgage, mortgage backed securities, and everyone's favorite, the synthetic MBS, markets all depended on getting new suckers to throw cash into the system. And it wasn't as if nobody noticed.

The question we've been asking for some time is who gets left holding the bag. Unsurprisingly, it'll largely be taxpayers. Apparently we're the ultimate suckers!

One day, I'd just like to fuck up everything I touch and then get someone else to pay to straighten it out. Unfortunately, if you and I ran our finances like these guys with MBAs, we'd be living in a refrigerator box under a bridge somewhere. Or, like the Madoff case, we'd have been in jail long ago:

U.S. regulators never inspected Bernard Madoff’s investment advisory business, alleged to be a Ponzi scheme that cost investors $50 billion, after he subjected it to oversight two years ago, people familiar with the case said.

The Securities and Exchange Commission hadn’t examined Madoff’s books since he registered the unit with the agency in September 2006, two people said, declining to be identified because the reviews aren’t public. The SEC tries to inspect advisers at least every five years and to scrutinize newly registered firms in their first year, former agency officials and securities lawyers said.


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