I’ve spent a decent amount of time thinking about this topic. I’ve spent a lot of time thinking, “I can’t write it;” or “I shouldn’t write it.” Or something like that.
I know – a fair number of you would have bet I’d invested no more than six minutes thinking about anything I’ve ever written. You’d be wrong but that’s your prerogative. The truth is, sometimes I agonize over words or phrases, trying to create exactly the right feelings through a single sentence that I hope conveys the message I want to deliver. Warning: This isn’t one of those pieces. In fact, I’d recommend that if you’re looking for facts and journalistic integrity, you stop reading now.
Of course I’m talking about what else - the economy. I have absolutely no credentials nor do I have any specific expertise that qualifies me to talk about the financial crisis that surrounds us but that hasn’t stopped anyone in Washington from talking about it, or creating programs about it. And speaking of programs, who named “TARP?” Is the best word to describe these assets really “troubled?” Troubled? I’m troubled when I can’t remember where I parked my car at the mall. Or when I forget to record a check and then can’t remember why I wrote it. “T” should stand for Tragic. Or it should have been called HARP for Horrific Asset Relief. How about CARP, for Criminal Asset Relief? The activity that led to these assets being “troubled” is criminal.
Leaving aside the mortgage debacle, I think my own personal financial point of no return came a few weeks ago when The Wall Street Journal published a PDF of the document independent investigator Harry Markopolos submitted to the Securities and Exchange Commission on November 7, 2005, in which he expressed his concerns about Madoff Investment Securities, LLC. Yes, THAT Madoff Securities. Yes, 2005. That would be just over five years after he submitted his very first suspicions about Bernie Madoff but four years before Madoff became infamous for a Ponzi scheme that resulted in $50 billion dollars of fraud.
I read the Markopolos memo – or, more accurately, I started to read it. While I don’t know finance, I’m fairly fluent in English and yet I was lost. I could define almost every word; I just couldn’t figure out what any of them meant, strung together in that document. On the very first page, Markopolos describes his credentials: “I have experience managing split-strike conversion products both using index options and using individual stock options, both with and without index puts.” Well…good. That’s sounds…complicated.
In one of the more straightforward passages, he states his intentions: “As a result of this case, several careers on Wall Street and in Europe will be ruined. Therefore, I have not signed nor put my name on this report. I request that my name not be released to anyone other than the Branch Chief or Team Leader in the New York Region….” Four years later, as the walls come tumbling down, he’s in front of Congress testifying about the contents of his memo that was summarily ignored by his supervisors at the SEC.
I feel confused and angry. I don’t understand why Bernie Madoff isn’t wearing in an orange jumpsuit behind bars. I don’t understand a court system that justifies sending a Martha Stewart to jail for insider trading that led to her own financial gains but didn’t ruin countless others, and allows a Bernie Madoff, who stole $50 BILLION dollars from scores of people, to remain in his penthouse. Wearing an ankle bracelet.
I feel gullible and abused. Turns out, if you did the “responsible” things, you lose. If you have savings accounts for college expenses, you watch them shrink every day. If you have a reasonable mortgage and make all your payments on time, you won’t qualify for the very favorable mortgage being offered to those who are overextended. If you own a business and run it well, you won’t get any help, either.
I used to think: Well, you’re still better off than many! Really? The way the bailouts keep piling up, that’s hard to believe. And the way the markets are moving these days, we all lose – no matter how many times we chose to do the “responsible” thing.