Wednesday, February 9, 2011
Lawyers' Dreams and Ponzi Schemes
Holman Jenkins on Madoff, the Mets and Ponzi Schemes:
To a certain kind of dyspeptic teenager, the Madoff-Mets saga will make perfect sense. Fred Wilpon, Saul Katz and siblings got their business empire, including the New York Mets, not through cleverness but luck. The cleverness was Bernie Madoff's. Their luck was to have been his patsies.
We say patsies. Irving Picard, the lawyer assigned to recover assets for Madoff's victims, calls them "willful" participants. The Wilpon-Katzes are accused of taking out $300 million in "fictitious profits," but the family is also worth much more than that, which makes them irresistible targets for the fatal "or"—they knew or should have known that Madoff was a fraud. Hence the Picard lawsuit's demand of an additional $700 million in principal the family had withdrawn over the years.
Read it all but the best part is the finish:
Ironically, Old Joe's (Kennedys) words echo more broadly today in light of a Ponzi scheme more disturbing than Madoff's. A perfect example are recent comments of Warren Buffett, Bill Gates and a group called Patriotic Millionaires for Fiscal Strength agitating for higher taxes to sustain the federal government, even though the federal fisc is saddled with commitments doomed to outrun any plausible scenario for future revenues.
Not that these agitators propose to make up the shortfall out of their own pockets even if it were possible (which it's not). They know the real money lies with the middle class—the comfortable and very comfortable, the almost rich and nearly rich. The patriotic plutocrats seem to think the rest of us should be inspired by their example to dig deep and keep the game going a while longer. They are the Wilpons of the welfare state.