How Real People Are Managing

The Bernard Madoff scandal will not just affect rich people. Already NPR did a story this evening on a pawn shop in West Palm Beach that just examined a $500,000 yacht for a customer in dire straits. There are many people in places like West Palm Beach, Hollywood, the Hamptons, and Manhattan who might have lost a lot, or perhaps even everything.

Those people should have known better, but greed got to them. One woman interviewed this morning said that the statements Madoff sent quarterly never quite made sense to her, only a casual investor, but since the dividends kept on coming, she never questioned him.

But what about the Royal Bank of Scotland, or HSBC, of Elie Wiesel's charity, or that of Steven Spielberg, to name a few? Wouldn't we think that banks and sophisticated institutions like Yeshiva University might know a ponzi scheme when they saw one?

More importantly, how many people will lose their jobs in another wave of layoffs? When the government had the opportunity and the information necessary to regulate the financial markets, it chose to rely instead of "self-regulation."

Self regulation doesn't work, and we know it, hence, inspectors, police officers, accountants, criminal defense attorneys, and prosecutors. We know it because of the size of the federal code and every state's legislative history.

Last night I attended a community meeting organized through the Obama website. I went to a modest home a few towns over, where mostly people in their fifties, sixties, and seventies met, many veterans of political campaigns dating back to Adlai Stevenson, others novices who had just gotten so ashamed and so fed up they felt they had to do something. The only under 40 was the host--an African American single mother raising her children and working as a paralegal in the "foreclosure" business.

Two of the people in the room are on the verge of losing their homes. One because her partner lost her job of 17 years and they don't know how they will pay the $10,000 tax bill. The other is a retired couple whose savings got eaten up by the collapse of the financial markets. Neither the husband or the wife looked like they are hearty enough to go back to work full time.

How many more of ordinary people will be thrown into insecurity because of the greed of the rich and the delusion of "self-regulation?"

Vanity Fair is previewing an article by Nobel economist Joseph Stieglitz, which is available on truthout.org. The piece is called "Capitalist Fools," and it's definitely worth a read.

Just as the Soviet Union fell quickly and precipitously, although in hindsight not without warning, not because of Ronald Reagan, but due to spending way beyond its means, so goes the United States of America, bringing the western world down with it.

Stieglitz gives five reasons why we are where we are, and remember, he wrote this article before the Bernard Madoff scandal broke.

We need to understand what happened in order to regulate wisely.