Link to this page: http://www.socialistparty.org.uk/issue/561/6737
Madoff with the money!
WORSHIPPED BY financiers as the 'guru' of hedge funds, it turns out that wealthy New York socialite Bernard Madoff is nothing more than a fraudster.
And what a fraud! Madoff, the former head of the Nasdaq stock market, swindled banks and other investors out of $50 billion (£33 billion). It is probably the biggest fraud in the history of financial markets.
At the same time as the scale of the fraud was being revealed, Tory leader David Cameron was giving a speech praising the financial regulatory system in the USA!
Ironically, Madoff had served on the advisory committee assembled by the Securities and Exchange Commission (SEC), America's main market watchdog.
It turns out that Madoff had been operating a Ponzi* scheme ie nothing more than a pyramid scam - where investors are lured by high returns, unaware that the returns are actually being paid by new investors.
Madoff's philosophy appears to have been: 'There's a sucker born every minute', as the rich and financial capitalists lined up to be ripped-off. Part-nationalised UK bank RBS is one casualty of this fraud. Another is London-based Bramdean, headed by City "superwoman" Nicola Horlick. Bramdean described Madoff's hedge fund as "low risk, high liquidity"!
Yet another victim is Santander, which owns the Abbey, Alliance and Leicester banks. It revealed that one of its funds had $3.1 billion invested in the firm run by Madoff.
Santander, it should be recalled, was given at least £18 billion by the Labour government to take over the savings and branches of the failed Bradford & Bingley bank. In effect, the public purse has been robbed by a high-class fraudster.
Madoff's scam only came to light as a result of the financial crash on the world's stock markets which hit hedge funds particularly hard. As investors attempted to withdraw their money Madoff's fund was revealed as an empty husk. But this massive fraud begs the question, how many more scams are out there waiting to be revealed?
(*Named after Charles Ponzi - a US fraudster in 1920.)
In The Socialist 7 January 2009:
Socialist Party Marxist analysis
Socialist Party youth and students
Socialist Party campaigns
Celebrity Big Brother
International socialist news and analysis
Socialist Party workplace news
Environment and socialism