Here Comes the 2nd Half…There Goes Madoff - June 29, 2009

This week ushers in the start of the much-awaited 2nd half of the year in the economy and investment markets…when many people believe we will see the first patch of blue in the economic recovery. Data on housing, manufacturing and the labor markets will dominate this week as to whether these expectations will be met.

Today ushers in another much-anticipated event – which will also affect these expectations from Main Street to Wall Street: the sentencing of Bernard Madoff, the mastermind behind the largest and most sweeping Ponzi scheme ever.

While Ponzi schemes are certainly not new, there is something at the core of this one that is particularly disturbing:

· The fact that Madoff was so indiscriminate – wiping out the savings of grandparents to grandchildren.

The extent of the damage he caused is unprecedented. And the ethics of his scheme have become symbolic of the Wall Street mindset of recent years – a mindset that created such products as credit default swaps and sub-prime mortgages.

Capitalism is the best and most productive framework for business activity ever devised. But it’s a game. And like all games – including those played in Fenway Park to Dodger Stadium – it needs rules and umpires. If games aren’t fair, people don’t play. They stay home.

What Madoff committed was not just a foul; it was a flagrant foul…and it needs to be punished as such. Like few other sentencings, this one will have far reaching implications as to fairness and the restoration of trust in our overall economic system.