TANSTAAFL came to my mind when I read the Washington Post's article listing the victims of Bernie Madoff's Ponzi scheme. All of these people bought into Bernie Madoff's story because they thought they could get something for nothing. They thought they could get a free lunch - endless returns, higher than the market normally gave, with no risk. Madoff's fund never had a down year, even when the market did.
The list, which was made public in a court filing, is 162 pages long, with about 80 names per page! (There's a lot of duplication for people with multiple accounts.) For the many charitable foundations, I just shake my head; their investment advisors exercised poor judgment. I'm involved with 2 non-profits, and funding is always an issue, and the one that has an invested endowment has lost serious dollars this year. (But not to Madoff!) The same applies to the individuals (I was really sorry to see Sandy Koufax's name); they were very badly advised. But the names that really pissed me off were in this paragraph:
Several investment advisory firms, including Argent Wealth Management, Bank of America Private Bank, Citi Smith Barney, Citigroup Private Banking, Fairfield Greenwich, Fleet Bank and Ivy Asset Management, made the list, ...It gives me cold chills. I used to work for Bank of America, and at one point I actually investigated whether I should move all my investments to the Private Bank. The answer was no (I think we weren't rich enough). These people are supposed to be investment experts. And they swallowed Madoff's scam hook, line, and sinker.
Did nobody at any of those firms have the brains God gave bastard geese in Ireland? Did nobody have a "too good to be true" alarm that went off in his head? It wasn't impossible; Harry Markopolis spent 9 years trying to convince the SEC that, on the basis of his published returns, Madoff had to be cooking the books. NPR's Planet Money blog has put up several stories about Markopolis' quest; and he was before Congress this week saying that he's got a "mini-Madoff" (only about $1 billion) to give the SEC again. I've seen the document they ignored; Planet Money linked it a couple of months ago. If the SEC ignored that, they were either giving Madoff a pass or they can't add.
We may get out of this economic mess, I don't know. But I know this: until we as a country learn that There Ain't No Such Thing As A Free Lunch, we'll be in constant danger of getting back into another one. Unless we can cure ourselves of the conviction that we can make it big, quick and easy, with no risk - that we can get something for nothing - we'll be wide open to the next Bernie Madoff.
The late great Leslie Charteris wrote a number of his Saint short stories about various forms of bunco games; the Saint made a hobby of beating the bunco artists at their own games. This was in the 1920's, but all the games Charteris wrote about are all still out there; and they all still work, because everybody believes that he can get something for nothing; and none of the bunco schemes ever work on people who understand that there ain't no such thing as a free lunch.