Here's the big secret about Bernie Madoff - his major investors knew the returns he was getting were implausible, they just thought this was due to his use of insider trading information. It's the classic M.O. for con artists everywhere, your mark has to think they're in on the scam as well. I don't have much sympathy for the big fish Madoff screwed over, they had it coming. The charities and old ladies he ruined are a different matter.
What happened with Madoff shows how critical regulation is in the financial sector. It's a lot easier to cook the books and keep some of the cash than to actually grow money by investing. With credit rating agencies being paid by the corporations they're evaluating and a government bought and paid for by Wall Street lobbyists the buyer has to beware.
I consider the American real estate boom of the last decade to essentially be a big Ponzi scheme. The availability of cheap, easy credit meant more money was available for houses, so the prices skyrocketed. Buyers were urged to borrow beyond their means and to repeatedly refinance and borrow against equity since home values could "only go up". For a few years this worked, it was possible to buy a house you couldn't afford on credit and then make a profit selling it to a "greater fool" a year later. Like any Ponzi scheme this eventually collapsed.
What happened with Madoff shows how critical regulation is in the financial sector. It's a lot easier to cook the books and keep some of the cash than to actually grow money by investing. With credit rating agencies being paid by the corporations they're evaluating and a government bought and paid for by Wall Street lobbyists the buyer has to beware.
I consider the American real estate boom of the last decade to essentially be a big Ponzi scheme. The availability of cheap, easy credit meant more money was available for houses, so the prices skyrocketed. Buyers were urged to borrow beyond their means and to repeatedly refinance and borrow against equity since home values could "only go up". For a few years this worked, it was possible to buy a house you couldn't afford on credit and then make a profit selling it to a "greater fool" a year later. Like any Ponzi scheme this eventually collapsed.
