After Madoff, America’s own Ponzi fraud unwinds
Uncle Sam has been running a gigantic Ponzi scheme, but unlike Madoff, America can print dollars
Call any Jewish friend these past few days and the degrees of separation from someone financially devastated by Bernie Madoff's $50bn heist are often only one or two. It's not just ruined heiresses in the Palm Beach Country Club now faced with the prospect of dividing the Jellymeat Whiskas can into two equal portions for mistress and cat, it's Jewish academics on Ivy League campuses, Jewish doctors in Santa Monica finding their retirement nest eggs or charitable trusts wiped out overnight.
I called up one rich Jewish pal in New York and asked whether I should Fedex him some dry rations. He volunteered cheerfully that because of some intricate family dispute his own money hadn't been parked at Bernard L. Madoff Investment Securities LLC. On the other hand his uncle had woken up the morning after Madoff's arrest to discover that the $40m he'd entrusted to Bernie was gone forever, along with the multi-million pension fund of his workforce, which he'd also entrusted to Madoff.
His fraud ranks as a major ethnic cleansing in 21st-century America
Of course Madoff had clients of every creed and nation, but he made a speciality of trolling for Jewish money. His fraud ranks as a major ethnic cleansing in 21st-century America.
How did Madoff, despite widespread suspicions across many years, continue to allure so many investors, smart fellows like Steven Spielberg, well equipped with expert number crunchers?
The most gullible dupes of all are those who preen themselves as being privileged accomplices in a profitable conspiracy, at scant risk to themselves. Many of Madoff's clients were not so naive as to believe he had a virtuous investment model that permitted him to report 10–12 per cent annual returns on capital invested, through boom and bust. They thought Bernie's 'model' took the distinctly unvirtuous form of insider information. Thus did Madoff's prosperous victims fatally miscalculate the dimension of the swindle.
On the larger canvas, what exactly separates Madoff's operation from those of the banks rewarded for their shady follies by a $700bn bailout? Just like Madoff, the banks finally had to admit that all their public financial statements were false, that the supposed assets were worthless. Unlike Madoff, who looted his clients of a mere $50bn, they were "too big to fail".
The operating assumption of the Ponzi scheme is that the tide will always rise, that old investors can be repaid by the infusions ponied up by the fresh recruits. For the past 20 years the entire American economy has become - to quote Bernie's succinct resume of his business to his sons - "a giant Ponzi scheme", bloating out like the metastasising planet described by Stanislaw Lem in his strange science fiction novel Solaris.
Uncle Sam is the biggest Ponzi operator of all. Bernie had to constantly replenish his fund with new deposits. So does 
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