Bernie Madoff Was a Piker

You probably don't understand the great financial meltdown of 2007 if you haven't read Michael Lewis's book The Big Short. He constructs a persuasive case that that meltdown was the direct result of the most massive fraud in financial history. That fraud had more than one origin, but the engine of doom at its heart was conceived by our friends at Goldman Sachs, picked up by Deutsche Bank and then everybody else. Its elements, as outlined by Lewis, were these: vast packages of really rotten home loans were packaged, tied up with various bows, and sold as triple AAA and other highly rated bonds. In order to get these high ratings they engaged in systematic campaigns to confuse, misinform, bribe, and intimidate the ratings agencies that produced these ratings. Because there weren't enough of these truly rotten mortgages to package, they created synthetic products of side bets on the value of these bonds, and packaged and sold them with high ratings.

When the meltdown happened, legend has it that a prominent economist asked "where are the tumbrels..." referring to the carts used to deliver victims to the guillotine during the French Revolution. In a more justly vengeful world, or one in which the levers of information were less dominated by the slavish minions of Wall Street, the tumbrels would have rolled, and Wall Street executives and traders would have perished by the hundreds. In our world, their fortunes suffered a but temporary setback.