We see his face plastered on every news channel and his name constantly mentioned in everyday conversation. Madoff this, Madoff that, Madoff, Madoff, Madoff. He organized one of the largest investment scandals of all time. He has been compared to Ponzi, a notorious scam artist from the early 1900s. Madoff, a former chairman of NASDAQ (a highly prestigious position), took roughly 65 billion dollars from investors and now faces 150 years in jail (even though he is already 70).
So, this a failure of the checks and balances system and lack of regulation in companies by the government. Not to mention the product of greed. After all, he is human, just like us all (including investors). However, this is not a failure of economic models.
But really, what I wonder is why the most experienced investors in the nation didn't realize what was going on. For example, if you give me $10 and I tell you that it will become over $50 in just a few months, would you buy into it? Wouldn't you think it was all a scam (especially with the weak economy)? Why didn't the top investors (few who also were said to be experienced economists) take the initiative to question the rationale behind the whole thing?
Now you may be wondering how all this relates to you. Well, Madoff was extremely involved in philanthropy for charities and universities, which have greatly suffered as a result of the scandal. If the average cost for an education for one year at a private college is...let's say about $40,000 and we divide how much money was involved in his scheme by the tuition cost, 1,625,000 students would have had full scholarships for one year at a private college. 1,625,000 people. Wow.
Question of the Post: What do you think of the Madoff scandal?