Armstrong Economics Blog/Banking Crisis Re-Posted Jan 18, 2023 by Martin Armstrong
For those who just read the news and believe whatever they report, in the industry, everyone talks all the time. If Madoff was losing billions trading, everyone would have known. It is one thing to have a portfolio of assets that itself collapses in value which would NOT involve trading, then that presents a more private issue but everyone would suspect something for the news would be circulating around as to what he bought. There is just no way money vanishes. The likely prospect is that Bernie was aware of the dark side of Wall Street and perhaps facilitated that for a price.
Bernie’s case began on December 10th, 2008. Lehman Brothers and Bear Stearns both collapsed and the Fed took over Fannie & Freddie. The collapse of Lehman shocked the world and that unleashed real panic. That above all took down Madoff, but then came the bailout of AIG which was really to save Goldman Sachs. No doubt, Bernie was hit with withdrawals and on whatever investment he did have in place, he would have lost a fortune without a Ponzi scheme. With the practice of laundering money going on in NYC, no doubt the counterparty risks collapsed. That most likely pushed Bernie over the edge.
Understand one thing. Madoff did not collapse in isolation. His losses were curiously suddenly attributed to a Ponzi scheme. That was very convenient. Calling something a Ponzi scheme as a matter of law meant that EVERY transaction was a fraud. Therefore, that cuts off all investigations to understand what really happened. It is no longer needed because everything and every transaction need not be investigated because it was all Bernie as a fraud.
As long as they called it a “Ponzi Scheme” there was no investigation into money laundering.