First there was the .com bubble...
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First there was the .com bubble, then real estate, then our credit markets. How do all of these things relate? Simply in people's desire for the easy way to be rich without the understanding of the sacrifice necessary. Thierry Magon de la Villehuchet, who recently took his own life, understood this concept including a few others such as honor, integrity, and courage. http://www.bloomberg.com/apps/news?pid=20601087&sid=aSZkOg5o2apk&refer=home
The SEC could not have protected anyone from this...
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Unfortunately, he paid the price of not doing enough due diligence and relying upon a government agency to do the job many thought it was assigned. The SEC could not have protected anyone from this anymore than the FDA is stopping the toxic insertion of products into our foods and medicine. Remember the dog food, baby formula and lately heparin? We as the public have made two critical errors that have allowed these things to flourish. The first is we have turned our responsibility to of due diligence over to our government and thus in turn over to other governments. The second is we are no longer holding individuals accountable for their actions.
Continuous advancing returns even in down markets...
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Mr. Magon de al Villehuchet placed his faith in a flawed system, and did not do his own due investigations into the investments that made many rich. Why should he? Continuous advancing returns even in down markets. What could be better? Why are we blaming the SEC for not protecting us from our own folly? The SEC is there to only govern the reporting of results, not to ensure that fraud isn’t taking place. They have never had either the resources or the talent pool to execute that mission. In order for departments like the SEC, FDA, and EPA to adequately police an industry, the number of qualified people to execute that mission will need to substantially grow, and consequently taxes will have to be raised to cover the costs. Or we can look to people to take care of themselves as they have always done in the past. Did anyone visit the offices of the Madoff companies? Did they ask to see the products or even did they use the services to see the quality of the investment? Did they investigate any further than the meeting in the Hamptons? Of course not. As many of us do, the investors get a tip that this stock or that stock is going to do something, and they buy, not for long term gain, but for the quick return. This is the dark side of greed where we want something for nothing and end up paying the price plus interest. There is not enough government oversight possible to prevent very resourceful individuals from taking advantage of others.
These advisors trusted when they should have been skeptical...
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The one thing that must be clear is new legislation will not solve this problem. Congress believes just because there is a law that the problem is solved. The one thing that must be taken away from all of the events is the use of reason and to reduce the emotional aspects of our choices. Let's look at social security. A bankrupt program that punishes the poor, but is protected by fear. Verify death rates, poor vs. wealthy, and see who lives long enough to see retirement. Madoff played on that fear. Not being able to show a large enough return, our choice for outsourcing our thinking as well as our manufacturing and the desire for the new car combine to produce a compelling picture for the investment advisors. A guaranteed return, continually advancing profits. A sure thing. These advisors trusted when they should have been skeptical. While things are going well they do not have to look too hard. We must look at our choices about where we purchase products, what we expect of our leaders (business, government, spiritual), and understand that we will have to pay the price for our decisions. How expensive that is will truly be up to us.
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