Is Henry Paulson The Next Bernie Madoff?

Palm Beach pawnshop

It seemed like everybody in Palm Beach over the age of sixty was on the evening news this week. If you’re like most Americans, I’m sure you felt a little smug as you watched these shell shocked people stand in front of their million dollar homes and tell the world that they had invested their life savings with Bernie Madoff. This resentment of the rich lingers deep inside our collective psyche, a mean-spirited reaction to the misfortunes of the affluent that is out of step with our nation’s official “grow rich and prosper” credo.

Its times like these when a lot of Americans revel in their ordinariness, in their stripped down lifestyles, in their modest homes and apartments. Many watch these elderly, formerly well-to-do people confess total ignorance of Madoff’s deception and feel a certain sense of superiority because they don’t need to have three tuxedos, or eat $300 dinners, or drive an expensive luxury car. In times like these, there is a renewed sense of devotion to frugal living, as if decency, honesty and humble circumstances are an indivisible trio.

Ordinary Americans shouldn’t start patting themselves on the back just yet, though.

Right now, the only difference I’m seeing between your faithful Treasury Secretary Henry Paulson and confessed swindler Bernie Madoff is the size of their playground. And in the wake of the Madoff scandal, where he has simply stolen the largest amount of cash ever from the investors who put money into his investment fund, we the American people continue to rely on the assurances of Henry Paulson that we need to simply quit worrying about how much of our money he has handed away, or who he has handed it to, because he knows what he’s doing.

Right.

The offices where Madoff cooked his books so well he could be a contestant on Iron Chef were locked tighter than…well, almost as tight as the books at the U.S. Treasury. At least Madoff gave the SEC complete reports with all the blanks filled in, even if the the numbers themselves were made up. Your humble Treasury Secretary Mr. Paulson, on the other hand, has a penchant for submitting documents to the bailout oversight committee with the names of the banks and the amounts they got blacked out. Even Madoff knew that you had to show the people something if you wanted them to believe you.

Which is why, if you’ve done a bit of private gloating about the misfortunes that have befallen the ostentatiously wealthy, you might want to think about the situation we are all in a little more carefully. In a normal economy, we’ve pretty much established that there are the “have’s” and the “have nots”. A bad economy changes those labels to the “have less” and the “have nothing’s”.

The gray-haired people in those news reports can sell their real property, even at fire sale prices, and move from a million dollar home to a modest older home or an inexpensive condo. They are likely to draw the maximum in Social Security benefits, and you would be surprised at the number of them who receive pension checks or have small annuities they purchased back when they were all the rage in the eighties. There will be food in their refrigerators. They will be able to put gas in their cars.

But if you are an ordinary American, who is already struggling to make ends meet, who is already living in a modest home, or an apartment, where will you go if Henry Paulson turns out to be doing as bad a job as Bernie Madoff? What will be in your refrigerator? Will you be able to put gas in your car?