When Bernie Madoff first established his now infamous investment fund, he intended it to be a reputable program, utilizing investments paid in by trusting clients to produce above-average returns. Bernie, of course, would take his well-earned cut. But the investors would watch their portfolios flourish under Bernie’s wise and skillful governance.
Somewhere down the road, Bernie went off the rails. His taste for high-living increased well beyond his ability to finance those tastes through productive investments. Oh! those fancy yachts, fancy houses, fancy cars, expensively tailored suits; those fancy women, and those exotic vacations! How these little luxuries sucked the monies out of his fund.
So Bernie became a big-time crook, syphoning everything out of the fund, to keep him living high on the hog. Bernie was a real charmer, especially in those tailored suits and with that carefully coiffured hair-style; and he paid freely to frequent the most expensive country clubs and inhabit the world’s classiest hotels. Bernie proved to be especially attractive to rich Jews – especially lonely Jewish widows. Bernie learned how to fleece the gullible of everything that they had. As long as the money kept rolling in, Bernie could milk his Ponzi Scheme while pretending to grow the portfolios that were entrusted to his untrustworthy care.
In September 2008, Bernie’s world collapsed. As the stock market collapsed, investors began to withdraw funds from their accounts in significantly larger amounts than the volume of new investments. That is the moment of reckoning for any Ponzi operator. Bernie considered flight, but where could he possibly go in a shrunken world. Niger had little attraction for this man of culture.
So Bernie confessed, attempted to commit suicide, failed, and is now living rent-free in public housing. All the yachts, houses, expensive suits, fancy women and exotic vacations are now merely figments of Bernie’s dreams.
In the 1930s, an American president, FDR, set out in a similarly modest manner to initiate an investment fund for all Americans. He called it ‘social security’. Like Bernie, FDR meant well in the beginning.
Like Bernie, FDR was a charmer, as long as those hidden leg-braces held up, and the cameras did not come too close. The fund would be self-financing, paid for out of payroll taxes, and would provide a modest but positive return for all invested in it. FDR’s return would be re-election after re-election and the confirmation, he believed, of a permanent Democratic Party majority.
FDR died before he could corrupt the scheme; but it did not take long for American politicians – right as well as left – to identify a spending pot that could be exploited. And such spending pots are always exploited by the venal creatures who inhabit the nation’s capital.
2010 was the Bernie Madoff moment of reckoning for the looters of the Social Security Ponzi Scheme. For most of its 75-year history, the program has paid its own way through a stream of supposedly dedicated payroll taxes that appeared to generate large surpluses over the past two decades. Nevertheless, in 2010, social security went cash negative. The cost of benefit payments outstripped the revenue raised from payroll taxes. In 2011, the negative cash flow will amount to $246 billion.
So what? The gullible respond. The Social Security Trust Fund is in excellent shape, with $2.6 trillion of accumulated surpluses in its groaning coffers. That, of course, is what Bernie Madoff’s clients believed in September 2008. Likewise, those who rely on social security are about to discover that their cupboard is also bare.
Washington politicians have stolen every last red cent from the Fund. Like Bernie Madoff, Washington politicians have left a pile of valueless IOU’s – in the form of Treasury Notes – in place of the hard-earned taxpayer dollars that they have stolen to live high on the political hog and to secure re-election after re-election.
Bernie Madoff – in the end - confessed and tried to take his own life. He was convicted and is now paying for his crimes through incarceration. Can we expect George W. Bush, Barack Obama, Harry Reid, Nancy Pelosi, Barney Frank and Chris Dodd to attempt to overdose on ambien pills and, should they fail, to rot in jail on 150-year terms?
Hey! These guys are politicians. By comparison, Bernie Madoff was a real gentleman. As Social Security tanks, the politicians have access to resources beyond Bernie’s reach – tax increases and coercive benefit reductions – and they will not hesitate to head for comfortable foreign shores should the domestic scene heat up. Unless, that is, like Colonel Gadaffi, they are slow to quit, and end up dragged out of the Washington sewer system, with a rebel bullet in the back of each of their respective heads.
Caught in the cross-fire, so to speak!
