Hildegarde

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Follow the Money

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Years and years ago, one of my good friends from college gave me the single most important piece of investment advice, once you get past that thing about “don’t put all your eggs in one basket.”  

“Never,” she told me, “never ever ever ever ever invest in anything if  you don’t understand how the company makes its money.”

She had started from nothing and made herself very well off all on her own by work and investments, and she’d never been willing to touch a share of Enron stock, so she had credibility.

It’s too bad that half the people involved with Enron itself, and with  Bernie Madoff, and with a dozen other scams and debacles, hadn’t had that particular piece of advice.

I bring this up for two reasons.   One is a conversion I had with Robert, off the blog, about my love for true crime–and my feeling that most mystery readers also love true crime, and also are interestedin how murderers and other criminals think. 

I’ve got industry stats and lots of anecdotal evidence to back me up about the  affirinity of mystery readers for true crime.  As to the interest in murderers–well, for me, it depends on the murderer.  Serial killers bore me to tears in real life and true crime and fiction.  Mental illness does not fascinate me.   There are, however, other murderers who present more interesting problems, to me–for instance Sante and Kenny Kimes–although their decision to murder isn’t necessarily what strikes me the hardest.

The other reason this is on my mind today is that Tis the  Season, and as I said, people send me books.  Over the last few days there’s been a little snowfall of books abou Bernie Madoff, the first round in what I’m sure will be several rounds of published material on that particular case.

And if people know me well, they know that the true crime I really love isn’t about murder, it’s about money.

There are a number of reasons for this, the first of which is just the financial porn.  It’s inherently interesting to me to watch big whacking unks of cash go flying around the landscape. 

I find it interesting even when there isn’t any scam involved.  When I ws first living in New York, I dated a trader from Bear Stearns for a while.   We would go out and drink with his friends every once in a while, and I would sit quietly and listen to them talking about money and commodities and stocks and bonds and whatever.  Then I would sit even more quietly over my Scotch while the whole group of them stampeded to the men’s room to do…well, I can’t prove what I think they did. 

But the experience gave me a very nuanced idea of just how much I could trust the stability of Wall Street.

The second thing is that it is a fact that one of the best ways to learn to understand how any business operates–I mean really operates in the real world, not the way it’s described in textbook ought-to-bes–is to read about how somebody scammed it.

I know a lot more about how energy markets are made in this country, and how energy resources are bought and sold and traded, after fifteen books about the fall of Enron than I could have if I’d gone through every business school volume on the planet meant to “explain” the business.  The same goes for books on the fall of Bear  Stearns and how the mortgage meltdown happened.

But the most interesting thing about true crime books about financial crimes has to do with the “victims.”  The scare quotes are ambivalent there.  Sometimes, you really are dealing with victims, pure and simple.

But a lot of the time, the victims are in fact complicit in their own victimization–part of the success of any con is to get your mark to collaborate with you, and people do collaborate.

In every account of every financial true crime case I’ve ever read, there has been some second assistant bookkeepr somewhere going, “Hey!  Look at this!  This doesn’t make sense!”

And there have been dozens of people not listening, or actively blocking their ears while they yell “la la la.”

In the Madoff case, the signs were so obvious it’s hard to understand how the man managed to go on operating as long as he did.  And although their were real victims–old people, his family, some foundations who took the attitude that a fellow Jew would never rip off Holocaust survivors–there were three times as many people who must have known there was something wrong and did not investigate, or blocked it out of their minds, or…

Or. 

The psychology of marks is more interesting to me than the psychology of Bernie Madoff himself, who is, in spite of the mind-boggling sums involved, essentially a small man in every sense of the word.

But then, the psychology of those second assistant bookkeepers interests me, too, as well as the question of why they always seem not to be the people getting promoted into the positions where they could actually do something about the things they see.

Tis the Season.  Bernie has just managed to become a big deal trader on Wall Street without actually being registered as a trader or having any of his traders registered–and, you know, you’d think somebody would have noticed.

Written by janeh

December 21st, 2009 at 11:00 am

Posted in Uncategorized

5 Responses to 'Follow the Money'

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  1. “But then, the psychology of those second assistant bookkeepers interests me, too, as well as the question of why they always seem not to be the people getting promoted into the positions where they could actually do something about the things they see.”

    I may write a longer post later, but right now I’ll just sum it up as power does not like to hear the truth or the people who speak it.

    Michael.Fisher

    21 Dec 09 at 1:38 pm

  2. I fit the criteria since I like reading mysteries and I like reading true crime – although I’m running out of good reliable true crime stories. I’m not particularly interested in money, though, and although I did read about the Kimes, I think it was because they killed. Bizarre mother-child, especially mother-son relationships are morbidly fascinating sometimes, though.

    I don’t mean I’m literally not interested in money; I’m extremely interested in my own money, and earning it, and stretching it as far as I can. Other people’s money doesn’t interest me, particularly if it’s in large amounts. It doesn’t seem quite real to me, but it’s not unreal in the same way that some unreal things can make an interesting fantasy story, or even a story set in a real time but in a situation I’ll never experience myself. Perhaps that’s why gambling has always bored me to tears. I just don’t get why the possibility of this vast sum of money is so exciting. Not that I’d turn down my 1/15 th or whatever it is of the office pool if we ever won a big prize. I just don’t get worked up about it.

    I’m as much interested in the greedy or careless people who get hooked into a con man’s scheme as I am in the con man himself, and his twisting of normal moral rules and even logic until the most innocent of victims (especially the lonely and slightly confused elderly) are said to have deserved what they get. I suppose they tend to be sociopaths, but they must be sociopaths with an unusual degree of charm and insight into other’s motivations. I think that’s what gets some of the in-between people – not the total innocents and not the co-complicit – so hooked; a lethal level of charm targeted right at their weak points.

    Cheryl

    21 Dec 09 at 6:10 pm

  3. True crime is an occasional read for me but both my daughters read it almost exclusively. My younger daughter who is 26 now was educated in a Catholic school from grades 5-8. I’ve never believed in children’s reading levels or censoring (mostly, anyway) what my children read. When she was about 10, Sally was reading HELTER SKELTER by Bugliosi (I consider this an excellent crime novel, almost up there with IN COLD BLOOD) and innocently asked her teacher if she could do a book report on it. The teacher (who, thank God, was not a nun) was not amused. Last Christmas in our after dinner conversation, my older daughter, her boyfriend, my younger daughter, my roommate and I selected our favorite serial killers and gave our reasons why. I know next to nothing about Bernie Madoff and financial crime makes me sad rather than interested.

    jem

    21 Dec 09 at 7:40 pm

  4. The Mark may have a worse case than most, but everyone seems to have a tendency to believe what they wish to be true. I suspect it go right down to DNA level. It’s why more con men play on hopes rather than fears.

    As for the second assistant bookkeeper, being right when your boss is wrong tends to be dangerous rather than rewarding, and not just in accounting. Military history is chock full of officers who won with the “wrong” side in wargames, and intelligence types who gave unheeded warnings, or were otherwise brighter than their superiors. Few seem to have prospered.

    True crime, for me, suffers by comparison with fictional crime. The criminals are mostly duller and more obvious–I’ll make an exception ofr HH Holmes–and the detection routine and improving technology rather than a flash of Wolfean insight. Well, if reality didn’t need improving, there’d be no place for fiction.

    robert_piepenbrink

    21 Dec 09 at 8:33 pm

  5. If you were a crook, would you promote someone who had not only spotted your crime, but refused to go along with it? It’s one thing when the company slides by degrees into criminality, as some of them do–they start out cutting corners, & end up making financial statements up or something (often feeling fully justified–they’re just weathering a temporary downturn, and protecting their investors until things pick back up.) In that case, I think they’d wind up like Robert’s examples, a voice crying in the wilderness, refusing to go along with the groupthink, and finding themselves isolated & ignored.

    But if the business was a deliberate con from the beginning, I think anyone who spotted the con & insisted on pointing it out would be lucky to escape the fate of all the bookkeepers Jane bumped off in Glass Houses. Con men are reputed not to be violent, but when you’re talking about the kind of money that, say, Madoff dealt with, they might make an exception.

    I trade in the stock market, and I think the hardest thing I had to learn–and one I keep relearning–is not to let what I hope to happen influence the trades I make. From what I can see, that’s a pretty universal characteristic. If your money is at stake, you generally keep hoping that things will work out right, no matter what the market is actually doing (or how fishy your money manager might appear if you didn’t have a vested interest in his honesty.)

    I don’t read any true crime. I enjoy fictional murders and mayhem a lot. But when I read true crime, I can’t get over being horrified that someone really *did* this! To another human being! It makes me feel sick, a sensation I don’t enjoy. I don’t think financial shenanigans would affect me as much, but I don’t really find them interesting.

    Lee B

    21 Dec 09 at 10:17 pm

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