Madoff, waste and losing the news
Nevil Gibson reviews 'The Believers' and more
Friday, March 26 2010 || Book reviews || BY Nevil Gibson
Adam LeBor
Weidenfeld & Nicolson paperback $35
Why did so many people willingly hand their money to a con man? That is the most compelling question arising from the slew of books on Bernard Madoff, who has taken the title of the world’s greatest swindler.
Ponzi schemes, named after an earlier con man, are common enough but not usually executed with such daring — or as little fanfare — as Madoff, whose main victims were members of New York’s influential Jewish community.
So it’s worth noting the views of Rabbi David Gelfand when trying to explain why many of his congregation handed over their money to a fellow member.
“There is an almost religious aura that has grown up around … a belief in American culture you can trust successful financial advisors,” the rabbi told author Adam LeBor, a British journalist based in Budapest and author of The Believers.
“It is a culture that has nurtured both narcissism and the desire for acquisition ... Many people have allowed themselves to be absorbed in this and not ask the right question: is this right?”
LeBor’s book reveals that far from being a ‘genius’ of Wall Street, Madoff was a fantasist who found the easier it was to beat the system the more daring he became.
That ‘system’ wasn’t Wall Street — Madoff’s trading activities and ‘hedge fund’ were all falsified, including the claim he embezzled US$65 billion.
He certainly ran an impressive Ponzi scheme — taking in money to pay out others — but the sums he took off investors were more likely to be less than US$15 billion. Half of this was claimed by just one man, Jeffrey Picower, who in June filed claims against Madoff’s trustee.
But Picower, and a number of others such as Stanley Chais, ran ‘feeder funds’ — collecting funds from investors and in return received falsified records from Madoff. They also received over-the-top returns and may have been the scheme’s biggest beneficiaries.
Until his death in a swimming pool last October from apparent suicide, Picower was largely unknown but was a philanthropist. Both Picover and Chais receive only passing mentions in this book, which is based on a mix of interviews and the voluminous public records.
Forbes put Picower in this year’s Rich List at US$1 billion at 371st, but based on his claims against Madoff he should have been 32nd.
Since his confession and imprisonment, Madoff has revealed little hard information on the involvement of others in his scheme. But investigators have said he was amazed he was never caught until he admitted the fraud to his sons. Clearly, much more has yet to come to light. This will undoubtedly be less about Madoff and more about what the rabbi described as “narcissism and the desire for acquisition”.
Waste
Tristram Stuart
Penguin paperback $30
In a world where there are more challenges than solutions, it is encouraging to see a practical problem given such a systematic and sober treatment. Up to half of the food that is produced is not consumed, and most of that waste is avoidable. In poor countries, where hunger is often an issue, food production and distribution systems are inefficient. In rich societies, consumers and retailers hardly think twice before discarding perfectly healthy produce. Some of this is due to irrational fears and health scares. But most of it is sheer thoughtlessness. Though long and detailed, everyone can learn from the voluminous research and how a change in priorities can make a big positive difference.
Eating Animals
Jonathan Safran Foer
Penguin paperback $37
The assault on humans’ carnivorous instincts is gathering strength, aided by continuing reports of a rise in the world’s hungry despite colossal strides by science and technology that has produced more food than many societies can consume. The arguments for vegetarianism are well known and are pointedly ignored by the majority. Earnest appeals to our morality are unlikely to succeed, which is why the issues have to be raised as stridently as possible. “Cruel and destructive food products should be illegal,” the author concludes.
Losing the News
Alex S Jones
Oxford hardback $45
Like the Hollywood movie State of Play, this is a nostalgic account of the news business at its best — exposing abuses of power. At a time when the mainstream print media are still finding it difficult to adapt to shrinking advertising budgets and readers who can get their news free from the internet, traditional newspaper journalism is in danger of extinction. The analysis is not new but it is comforting to know from a veteran journalist-turned-academic that all is not lost. He sees the newspaper surviving as a business model but believes publishers are being short-sighted in mixing them with web versions. It’s not an easy analysis for traditionalists but then the industry’s tumult is only just beginning.
