"Look at the list of those who lost money. Swiss private banks. Jewish family foundations. Retirees in Palm Beach. Not exactly the Fast Eddies of finance. But therein lay the brilliance of Madoff’s scheme. He didn’t promise the usual Ponzi manna from heaven–double or triple your money with Bernie Madoff’s surefire, get-rich quick scheme! No, he promised and delivered 10% returns. So consistent were his returns in good times or bad, an investment in Madoff came to be called the "Jewish Bond." His investment strategy was a "black-box" model, one to which no one but him had access. And yet when the returns were good, no one bothered to ask how he was making them.
Madoff also moved easily in the familiar power networks of New York. He was chairman of the co-op board at his fancy Upper East Side building. He was chairman of the board of Yeshiva University’s Business School. A member of exclusive country clubs in the Hamptons and Palm Beach. Strange as it may seem to people beyond this claustrophobic social world, these are not positions assigned lightly.
Madoff had earned the trust of individuals forged in the fires of New York finance, law and government, supposedly some of the toughest, smartest, savviest people in the world. He fooled them all over many years, and his reputation among them probably protected him from scrutiny." Forbes
I love New York, sort of…
The delis are grand. The pastrami is as nowhere else. Ben Benson’s Steak House is perhaps my favorite watering hole anywhere. People walk fast. They talk fast. "Whaddaya got? What’s next? Whaddaya got?" would be a typical conversational gambit by a proprietor in a small Manhattan shop. The brittle, hard edged attitude is hard to match except in Paris. Antagonistic cleverness is a point of pride. It is clear that New Yorkers are among the smartest, most worldly people in the country, if not the world. Their transplanted descendants in California are much the same. We country bumpkins are awestruck at their sophistication.
So, how did this "Ponzi scheme" happen? How did it succeed so well for so long? This is not a New York thing? Ah. You see. I did not realize that.
Nevertheless, it does seem that the "Big Apple" has suffered a good many setbacks this year. The disasters in the financial and commodities markets, the collapse of investment banks like Lehman Brothers and insurance giants like AIG, the ravages wrought by hedge fund managers spinning out fantasies of non-existent leveraged positions, Secretary Paulson, Chairman Bernancke, etc. Are these not all phenomena of NewYork City and its outlying barrios in Palm Beach, the Caribbean, etc.?
I will be there for the next days. I’ll take a corned beef on Rye with mustard, to go. While I’m waiting I’ll have a Manhattan straight up. pl