Madoff makes things worse

The court-appointed trustee for the liquidation of the Bernard Madoff firm recently stated that he will not issue IRS 1099 forms for the 2008 fiscal year, because “there are questions about the accuracy of the BLMIS [Bernard L. Madoff Investment Securities LLC] financial records and the Trustee’s experts and staff has been unable to assure the Trustee of the complete accuracy of those records.”
Apparently the forensic accountants assigned to Madoff’s client assets department don’t know which set of books is the right one.
The spectacular demise of Madoff, in an alleged massive Ponzi scheme, has fascinated the public, including those who read the Jewish press. A recent edition of the Chicago Jewish News featured a classic tabloid front page, Ã la the New York Post, with a photo of Madoff in his baseball cap, and the headline: THE WORST JEW EVER.

Pauline Dubkin Yearwood, the paper’s managing editor, wrote a story that spread over two pages inside, which focused on some of the losses suffered by Jewish Chicagoans in the Madoff scam. Pati Gerber, a Chicago Jew who told the Tribune that she lost more than $15 million to Madoff, responded to a question about what should happen to Madoff: “I’m not an angry person. I believe in forgiveness. But I’d like to see him burn in hell.”
In addition to reports culled mainly from the Chicago Tribune, the editor also included comments on the scandal from rabbis, an academic and community leaders. The article also mentions that the ADL reports that there’s an upsurge in anti-Semitism around the globe, as people decide that villainous Jews must be behind the economic downturn; 74 percent of Spaniards in a recent poll think that “Jews” have too much control over financial markets.
There has been some pushback on the American Jewish World’s reportage of the Madoff scam. We have heard concerns expressed that a Jewish newspaper should be sensitive to those in our community who are already suffering financial losses and don’t need to be doubly shamed by having their names splashed across these pages.
The fact is that there is an element of politics that attends to the publication of a Jewish newspaper. We tend to shy away from internecine disputes in the synagogues and organizations, and try to focus on issues of general interest to the Jewish community. However, this is a newspaper, and the Madoff scam has disproportionately harmed the local Jewish community. The Feb. 6 story that ran on Page 1 drew praise from professional journalists in the larger community. The story appeared on MinnPost.com (whose editor, Joel Kramer, is a partner in Minnesota Jewish Media, LLC, the American Jewish World’s parent company) and in the Politics in Minnesota e-mail newsletter. Traffic to our Web site spiked, so to speak, as nearly 300 visitors read the sad story at ajwnews.com.
Beyond the specifics of the Madoff scam, we are concerned about the prospects for the economy this year and on into the future. There are some dire commentaries available about where things are headed. In his New York Times column last Friday, “Decade at Bernie’s,” Nobel laureate Paul Krugman used the Madoff scam as a jumping-off point for the general economic malaise that has set in.
“By now everyone knows the sad tale of Bernard Madoff’s duped investors,” Krugman writes. “They looked at their statements and thought they were rich. But then, one day, they discovered to their horror that their supposed wealth was a figment of someone else’s imagination. Unfortunately, that’s a pretty good metaphor for what happened to America as a whole in the first decade of the 21st century.”
The economist and author noted the recent Survey of Consumer Finances from the Federal Reserve, which found that “there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001.”
Krugman warns that the faltering economy “is a broad-based mess. Everyone talks about the problems of the banks, which are indeed in even worse shape than the rest of the system. But the banks aren’t the only players with too much debt and too few assets; the same description applies to the private sector as a whole.”
The AJW has pointed this out in the past; or provided space in our Aug. 1, 2008, edition for Robert Reich, who wrote about the Bush administration’s stimulus plan. He noted then, more than six months ago, that this “isn’t a normal downturn. The problem lies deeper. Most Americans can no longer maintain their standard of living. The only lasting remedy is to improve their standard of living by widening the circle of prosperity. The heart of the matter isn’t the collapse in housing prices or even the frenetic rise in oil and food prices. These are contributing to the mess but they are not creating it directly. The basic reality is this: For most Americans, earnings have not kept up with the cost of living. This is not a new phenomenon but it has finally caught up with the pocketbooks of average people.”
In other words, folks are strapped for cash. And they are skeptical about the chances for the Obama stimulus plan to alleviate the budget woes; and more deeply in doubt about the wisdom of spending trillions of dollars to shore up a banking system that seems to have been instrumental in wrecking the economy. These are the outfits that lost a fortune after opening the spigot for billions of dollars in subprime mortgages that could be packaged into collateralized debt obligations, credit default swaps, etc.
In the weeks and months ahead, we will be reporting and writing about the epochal decline in the global economy. We will continue to look at the malefactors — Madoff and the other gonifs on Wall Street — who have brought us to this perilous state. We hope that the Obama administration succeeds in its efforts to rebuild the financial system and deliver help to those who have lost their homes or their jobs; and we welcome the ideas of our readers about what practical steps we all can take to rebuild the economy and mend the frayed fabric of our society.

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