If it worked for Bernie, why not U.S.?
As a Senate committee looks into how regulators missed Bernard Madoff's investment scam, the Marketplace Players wonder if the senators are really interested in fixing what's broken.
Bernard L. Madoff leaves a U.S. Federal Court in New York (Timothy A. Clary/AFP/Getty Images)
More on Marketplace Players, America's Financial Crisis
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TEXT OF SKIT
KAI RYSSDAL: Not too long ago Bernie Madoff was a superstar money manager. Today he's under house arrest in New York, which explains why he wasn't sitting in front of the Senate Banking Committee today. Top federal regulators were summoned to explain why they missed the red flags as Madoff pulled off one of the biggest investor frauds in history -- $50 billion.
The Marketplace Players wonder if perhaps the Senate is interested in more than just fixing the holes in financial regulation.
SENATOR 1: Mr. Regulator, let me get this straight: Bernie Madoff allegedly set up what is called a "Ponzi scheme."
REGULATOR: That's correct.
SENATOR 1: In which he allegedly earned billions out of basically nothing.
REGULATOR: Yes, sir.
SENATOR 1: Hmm. Could you explain to this committee the concept of a Ponzi scheme? 'Cause it sounds kind of . . . awesome.
(SENATORS: Yeah! . . . I hear that!)
REGULATOR: Excuse me?
SENATOR 2: The government is also currently in possession of a whole lotta nothing, Mr. Regulator.
SENATOR 1: Yes, and it would be very helpful to know how to make a few billion off it.
REGULATOR: OK. Uh, it's like a pyramid scheme?
SENATOR 1: Oh, pyramids, they're pretty.
REGULATOR: No. It's a scheme where you pay off one investor with money you get from other investors.
SENATOR 2: But how do they get paid?
REGULATOR: With money you get from more investors.
SENATOR 1: So, sorta like what we've been doing with China!
REGULATOR: Kind of! . . . But, wait, the U.S. Government can't do a Ponzi scheme!
SENATOR 1: Why not? They say Madoff did it! They say he did it for years!
REGULATOR: Look, if he did, it's only because we weren't paying enough attention to stop him!
SENATOR 2: Well, why don't we just continue not paying attention?!
SENATOR 1: Oh, that's a good idea. And then we could just take a piece of his action! Just a teeny piece. I'm sure he wouldn't mind.
REGULATOR: It's against the law!
SENATORS: Ohhhhhh. . . .
SENATOR 1: Well, what if we blackmailed some cash outta Bill Gates? Is that illegal?
REGULATOR: Yes.
SENATOR 1: Aw, man! Session adjourned.
RYSSDAL: Rico Gagliano wrote that piece and performed it with Brendan Newnam and Michelle Phillippe.
Rico and Brendan have a podcast called "The Dinner Party Download." It's at DinnerPartyDownload.com.
Comments
Comment | Refresh
From Reno, NV, 02/06/2009
Suggested parody Musical Score:
new riders of the Purple Sage-"Glendale Train"
"some-body robbed the Glendale Train, left two men lyin' cold;
some-body robbed the Glendale Train, and they Madoff, with the gold"!!
From Los Angeles, CA, 01/28/2009
The difference between Social Security and a Ponzi scheme is simple: a Ponzi scheme never reaches an equilibrium between inflow and outflow and so inflow must constantly increase. Social Security, like any insurance system, reaches an equilibrium by pricing the product at a level such that inflow balances outflow.
From Seattle, WA, 01/27/2009
A Ponzi scheme by definition is unsustainable over the long run. It requires either an ever increasing number of people to pay into or for the same number to pay more each time. And we wonder why the Social Security system is not going to be able to continue its payouts?
From Vancouver, WA, 01/27/2009
Rico
I was disappointed in you "Ponzi" article for not supplying the whole storie!
Having battled city and state governments for the last ten years It is evident that you are a rookie!
It is a blessing and a curse to have "common Sense"
You missed a very important ending to your storie that happens 99% of the time whenever you deal with Gov.
Dean
Dean
From Goldstream, AK, 01/27/2009
Implying that the existence of Social Security is somehow fraudulent or illegitimate solely because it would be illegal for a private citizen or organization to run a similar operation is a tremendous fallacy.
The government does MANY things that would be illegal for a citizen or private company to do, such as issuing currency, levying taxes, possessing nuclear weapons, arresting, imprisoning and executing people, forced military conscription, search and seizure of private property, etc.
Really, a government, by definition, does things that no other entity is allowed to do. Go ahead and debate the morality of healthy young people paying to keep old people from starvation and poverty, or that the system is inherently destined for insolvency (probably not, as benefits, retirement age and payroll taxes are adjustable) but can we please stop calling it a scam? That kind of misses the point of what a government is in the first place.
From Atlanta, GA, 01/27/2009
Mirroring the comments of others, if you remove "fraudulent" and "scam" from Investopedia's description of ponzi scheme you have a perfect description of our current social security system. It reads: A (fraudulent) investing scam that promises high rates of return at little risk to investors. The scheme generates returns for older investors by acquiring new investors. This (scam)actually yields the promised returns to earlier investors, as long as there are more new investors. If we treat everyone the same, shouldn't our government be punished as Madoff surely will be punished?
From Milwaukee, WI, 01/27/2009
I see from the earlier comment by Dan that he had the same thought as me; Rico Gagliano's skit sounded as though it was describing Social Security. I wonder why people who are upset by Madoff's improprieties aren't by the administration of Social Security.
From Atlantic Beach, FL, 01/27/2009
Though funny, the Marketplace Players failed to mention the biggest Ponzi scheme of all time, Social Security. The money collected today is spent on prior "investors" leaving future suckers, oops, taxpayers to pay in for today's worker. The very definition of a Ponzi scheme.
From East Greenville, PA, 01/27/2009
One aspect of the Madoff scandal I hadn't thought of was that (adding injury to injury) as his fund had been producing solid "returns" over several decades, haven't his investors therefore been hit with the corresponding capital gains taxes? If they have, do they have any recourse for clawing back taxes paid in previous years?
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