Mad Mad Mad Madoff World (Update)

Wall Street Manna reports on a Barron's story back in 2001 that was onto Madoff's "don't ask, don't tell policy". The Barron's piece elucidates so nicely how Madoff plucked the social strings of the wealthy elite to lull them to sleep as he robbed Peter to rob Paul (See It's a Mad Mad Mad Madoff World). And after the story came out everyone looked the other way for another 7 years. Well, almost everyone.

This quote from one investor whose eyes began to itch says it all:

"What Madoff told us was, 'If you invest with me, you must never tell anyone that you're invested with me. It's no one's business what goes on here,'" says an investment manager who took over a pool of assets that included an investment in a Madoff fund. "When he couldn't explain \ how they were up or down in a particular month," he added, "I pulled the money out."


As for Ponzi schemes, I wondered aloud after this story broke if all of Wall Street is a Ponzi scheme. It may be a stretch but, in a way, doesn't the current situation prove this? If the money was there then there would be no problem. But the money isn't there. Lots of it isn't there.

But don't listen to me. I am not an economist or a hedge fund manager. I'm just a lucky dummy who got scared of the market last summer and put all my savings into cash.