In one of his more melancholy moods, Isaac Newton mused that he could measure the movement of distant celestial bodies but could not gauge the magnitude of human folly.
It's a reflection with a certain compelling relevance given the stunning news that one of the country's most respected securities traders, Bernard L. Madoff, allegedly has swindled investors out of at least $50 billion. It's a staggering sum, one that approaches the ghastly totals rolled up by such epochal corporate frauds as Enron and Worldcom. More staggering yet is the roster of victims, which includes not only banks but high-flying hedge funds, professional investors such as Mortimer Zuckerman, cultural luminaries such as Elie Wiesel and Steven Spielberg, an Orthodox Jewish school and a variety of other charitable foundations.
Madoff, moreover, was not some brash outsider. For nearly half a century, he and the firm he founded have been pillars of Wall Street. He and his brother helped create NASDAQ and helped lead the securities trading industry's transformative conversion to electronic trading.
Robert Graves dismissively quipped that while there is no money in poetry, neither is there poetry in money. As we've all recently learned, there sometimes is the stuff of other literary genres: farce and tragedy. There's a little of each in the proud declaration that was featured on the website Madoff's firm maintained:
"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing and high ethical standards that has always been the firm's hallmark."
In retrospect, it's a sentiment that brings to mind not Graves but Groucho -- "The secret to life is honesty and fair dealing. If you can fake that, you've got it made." The breathtaking hypocrisy of publishing such a declaration suggests a lesson to be learned, and a mystery to be pondered.
The lesson is one that becomes clearer with each excruciating turn of the Wall Street screw. The long, bipartisan experiment with financial deregulation has failed utterly. The argument that a return to rigorous oversight will somehow stifle Wall Street's "creativity" is no longer convincing. Whatever its theoretical costs, regulation is dramatically cheaper than intervention. And absolutist insistence on the superiority of "individual choice" and "free markets" now is exposed as so much vacant rhetoric.
