The Confidence Garden

December 18, 2008, 3:28 PM UTC

madoffWord comes today that the SEC was informed about Bernie Madoff’s miscreancies several years ago, but engineered a neat solution to let him off the hook. I hate to say I told you so. But I told you so.

Look at our economy as a gigantic brain, and the regulatory part that governs all the others has mouldered since, like, 1980, hanging like a withered appendix off the powerful other portions of the organ instead of doing its job. And so people like Bernie Madoff were allegedly allowed to grow and fester.

If the charges against Mr. Madoff are true – and we hasten to add that in our system everybody is innocent until proven guilty! (or gets off using a variety of other strategies) – he was one of the greatest confidence men in history. Confidence men bilk money from other folks by establishing just that: confidence. Mr. Madoff was the head of NASDAQ. He was a man above reproach. He looked peerless in a suit. There was every reason to have confidence in him.

But confidence can’t be established if its seeds fall on infertile ground. The garden in which it grows, located deep within each of its victims, must be tender and soft, turned gently over by the need to believe. It must be watered by greed and warmed by the sun of jealousy and competitiveness. And as we now see, the entire garden itself must be left to sprout whatever it will, untended.

Bernie Madoff told people that he would guarantee their money. Now we look at the poor losers on which he feasted – the charities, the elderly shuffleboarders in Miami, the guys with McMansions in Greenwich whose future now perches on the head of a pin, and we marvel. How could they have been so credulous? Didn’t they know that if it looks too good to be true, it probably is?

Look in the mirror. None of us are any better. Some of us are just luckier. Each of us believed in whatever portion of the system in which we had confidence, and are now being punished to one extent or another.

The only ones who are making out all right are the shorts who never trusted in anything in the first place. It’s a pretty grim world where those are the guys who turned out to be the winners.