Looking Up - What can you say?
The Yankelovich Economic Edge POV
J. Walker Smith
You’ve heard the joke, right? That Bernie Madoff has the perfect last name for somebody running the biggest Ponzi scheme in history—“made-off,” as in Bernie made off with everybody’s money. It’s a sick pun about his terrible crime, but at least we know how to name what he did. For the problems in the economy at large, though, we haven’t yet figured out what to name it.
Of course, it feels a lot like a Ponzi scheme. In this past Sunday’s New York Times Magazine, financial journalist and professional investor Roger Lowenstein drew an explicit analogy between the recent stock market bubble and Madoff’s fraud. Investing to trade over the short term rather than investing to hold for the long term, wrote Lowenstein, meant that “[n]obody was thinking about what those companies were worth, only about the next quotation on the screen.” The banks that did so, he concluded, were “legally” banks, but “conceptually, [they were] investing with Bernie Madoff.”