Exactly two years ago today, I received a phone call from hell. My financial adviser and close friend, with whom I had invested all of my family's life savings, called to tell me that overnight we had lost 95 percent of our net worth. It turned out that our life savings had been invested in a fund that had been handled by Bernard Madoff. Because we weren't direct investors (I didn't even know who Madoff was prior to his arrest), there was no hope of our ever recovering a penny.
Tragically, what happened to my family overnight is happening to many, many people today, only more slowly. It is one of the darkest nightmares of our times that so many people are losing their homes, their pensions, their jobs, their savings, and any semblance of financial security. The official unemployment rate is 9.8 percent, but if you include the underemployed (those who have part-time work but can't find a full-time job, though they need one), and add in also the huge numbers of unemployed people who have given up looking for work because they feel the search is hopeless, the figure rises to above 22 percent. There are already 19 million vacant homes in the country, with another 10 million foreclosures in the pipeline. The average household credit card debt is nearly $16,000. And the U.S. dollar, which has been the world's reserve currency for almost 100 years, is losing value and appears increasingly unstable.
How did we ever get into such a mess?
Last year, a Newsweek poll found Bernard Madoff to be the most despised person in history. Having been a victim of his fraud, I understand. But some people think that when it comes to wreaking financial havoc, Madoff was a piker compared to the man who was dubbed history's greatest Federal Reserve chairman upon his retirement in 2006 -- Alan Greenspan.
Why? Because Greenspan may be more responsible than any other single human being for the disastrous developments in our nation's economy. Author Matt Taibbi doesn't mince words on the subject. In his new book about how bubbles and bailouts have decimated the U.S. economy, he none-too-subtly calls Greenspan "the biggest asshole in the universe."
Madoff lived high and mighty as a billionaire as long as he kept his Ponzi scheme afloat. Greenspan was revered as long as he kept the party going for the ultra-rich, as long as he kept one bubble after another inflated. But with every party, there's always the morning after. The collapse of Madoff's Ponzi scheme bankrupted not just tens of thousands of families, but many charitable foundations, nonprofit organizations, and hospital and school endowments. The bursting of Greenspan's bubbles, on the other hand, decimated the entire U.S. economy, bankrupting tens of millions of families.
In his biography of Greenspan, appropriately titled Greenspan's Bubbles, MSN Money columnist William Fleckenstein recounts the devastating series of bubbles and crashes that directly ensued from Greenspan's policies. The Savings and Loan scandal was the first tip-off. As a paid consultant for Lincoln Savings and Loan, Greenspan was an ardent advocate of Savings and Loan deregulation. When Lincoln's parent corporation went bankrupt in 1989, more than 21,000 mostly elderly investors lost their life savings......Read More
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