Monday, December 22, 2008

Why 'Trust' Is Just A Four-Letter Word

The concept of trust is inherent in any interaction, from buying a bagel at a delicatessen to investing retirement money with a broker to electing people who will make sure that inspectors see that the bagel is baked in sanitary conditions and that regulators see that the broker is above board. Yet government seems to do a much better job of citing a deli if there are mouse droppings under its ovens than keeping an eye on people like Bernard Madoff.

The conclusion to be gleaned from this disconnect, as noted here the other day, is that the wealthy and the powerful -- which are pretty much one and the same -- have little to fear from law enforcement or regulators.

The arrogant Madoff certainly had no worries even though there were explicit warnings years ago that this Jewish financier was running an immense Ponzi scheme that has rippled through Palm Beach and other enclaves for the super rich and all the way down to charities such as a university where he was a trustee and a Holocaust remembrance foundation.

As I noted in that earlier post, please spare me the shit about human nature and if it seems too good to be true then it is.

The fault here extends well beyond a somnambalant Securities and Exchange Commission. As it is, it can be argued that the activities of some of the banks and other financial institutions that have gotten billions from the troubled Troubled Asset Relief Program (that's TTARP to you) are Ponzi schemes of a sort.

And how fricking unsurprising that many of them
refuse to say how they're spending my money and yours, while at least a few are using taxpayer lucre for obscene executive bonuses.

Meanwhile, the people running TARP are showing these institutions the very deference that got them -- and the economy -- into so much trouble in the first place.

The new year already is shaping up to resemble 1933 in some key respects. Some. One is that having killed off several million jobs over the past couple of years, government and the wealthy-powerful have pretty much put a stake through the heart of the concept of "trust."

Photograph by Bloomberg News

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