Tuesday, June 30, 2009

It's 3 AM. Do you know what your money is doing?

I have to admit, when I saw the headline, "Madoff Takes Responsibility," I snorted. Dude, it's too late. The only way that Madoff could potentially redeem his debt to society would be to donate his brain to science, in the hope that we can isolate the Sociopathy Factor, and eliminate his kind from future generations. Lame journalism reached a new nadir as the writers solemnly decribed the millions of dollars worth of assets that are being liquidated in order to repay billions of dollars in judgment. His wife only gets to keep her $2 mil in cash, poor thing.

Neither am I particularly a fan of the legions of articles and comments that blame Madoff's victims for being victims. These people, some of them, are having a hard enough time without being excoriated for projected character flaws by others who, at bottom, are just afraid it might happen to them.

But then, I have to wonder--what did these people think their money was up to?

Back when I was an eager, idealistic adolescent, I realized that as a member of a First World nation, the biggest effect my existence has on this planet, for good or ill, is what I do with my money. I can recycle, compost, agitate against plastic bags and for 'green' energy every waking moment of my life; I can work in a 'healing' profession, I can be kind to strangers, children and homeless people. But when global economic conditions are such that a $25 micro-loan can make the difference between starvation and prosperity for an entire Third World family, I have to accept that my point of maximum global leverage is financial, even if I'm at the extreme low end of the income curve in my social circle.

That means that when I get an IRA rollover when I leave my civil service job, or a windfall from a relative, I need to be careful what I do with it. Not only because I ought to be planning for 'retirement' (as if--I'll be painting, blogging and giving meddling health advice until I drop), but because all of my vaunted values are mocked if my money is off pillaging rain forests and propping up brutal regimes while I sleep.

Like many people, I am not consumingly fascinated with the ins and outs of finance, trading or big business. I'm perfectly happy to park my money with a dependable expert and check on it every now and then. But it seems only common sense to park it with some people who are going to do a rainforest and brutal-regime filtering process before they use it. That is why, for the last ten years, my miniscule IRA has been invested with Sentinel Investments, formerly Citizen's Funds, a sustainable investment firm that looks at the real-world consequences of its actions, not just the bottom line.

(N.B.: Sentinel Investments is not paying me a dime for writing this post; in fact, they don't even know I'm writing it.)

I haven't suffered financially more than anyone else for doing this. The paper value of my IRA dropped by about half when the stock market did, but during the years when the market was doing well, it did better. The fact is, not only is myopic greed a lousy principle on which to run a society, it's not even a good investment strategy. You might make a buttload of money smuggling guns to thugs, but you still run the risk that a rival thug might torpedo both your profit margin and your boat captain.

So in the end, I have to assign at least some responsibility to Madoff's bilkees. Not for not understanding investment banking; for trying to get a lot of money without ever thinking about what money is for. Money is not a moral force, in and of itself; it is merely a tool for doing things. And it behooves those of us who have it to take responsibility for what those things are.


Chris Rywalt said...

There was an excellent, detailed, and lengthy article a few months ago in Vanity Fair, I think it was, which laid out the entire Madoff affair from start to finish, including interviews with his investors. It was basically a massive schadenfreudefest for someone like me -- I don't enjoy the misfortunes of others in general, but like most people, I imagine, I love it when the victims deserve it.

Typical unrestrained ignorant blog punditry coming up. You might want to avert your eyes.

Two things kept coming to mind while I read the article. The first was that Madoff clearly backed into his bad behavior. It seems he started out sincere and honest, eventually made some small mistake, and in attempting to cover for it made some more, and the whole thing eventually snowballed, like a Jackie Gleason routine from The Honeymooners only more painful and slow, until he finally found he'd doomed himself. I don't know if he's really sorry for anyone but himself, but I suspect not.

The other thing that kept coming to mind -- the main thing -- was that Madoff's investors gave him their money for one reason and one reason only: GREED. They wanted MORE. More than they could get through regular channels like savings accounts and mutual funds. It's not that they didn't know what Madoff was doing with their money: It's that they didn't care as long as he returned MORE.

I understand that a wealthy lifestyle comes with responsibilities and costs we normal people can't imagine. You can't just have a big yard: You need people to mow the big yard's lawn, and that costs money every month. And I understand that these expenses can accumulate slowly in what seems to be a reasonable fashion: You want a pool, so you put one in. Then someone needs to take care of the pool. Hell, I've experienced that myself. (I got rid of the pool.)

But all of that is beside the main problem, which is the problem of MORE. All of Madoff's investors could've put their fortunes in a regular old bank, or invested across a range of things, or otherwise parked their money some place safer. But then they wouldn't have gotten MORE.

They wanted MORE and now they have LESS. And that, to me, is a good thing. An excellent thing. The less they have the better. I would like to see them learn to appreciate that someone has left out flattened cardboard for them to sleep on under the bridge before they're allowed back into polite company.

Now that's schadenfreude!

Oriane Stender said...

Very well put, PL.