December 18, 2008

Why the Madoff affair is a blessing

Bernard Madoff, an avuncular pillar of the New York financial industry, a.k.a Wall Street, turned out to be a crook. Now this is hardly news in itself. The place has more crooks than human beings. But Madoff was a different kind of crook. He didn't just pull the bread out of the mouth of orphans and widows from across the globe, which would be unremarkable. He also pulled the sushi out of the mouth of Nobu patrons. He swindled friends.

For years, Maddof ran a ponzi scheme, taking money from investors and promising fantastic returns that were too good to be true, about 11% a year with near zero volatility. But the returns never existed. Madoff sucked the reports out of his thumb and paid old investors from the new money pouring in, attracted by the imaginary performance of his funds. It worked, like every ponzi scheme, as long as the circle of fools was growing. As the finanicial crisis unfolded and many investors demanded to redeem their share, Madoff had to admit that he could not pay. 50 Billion dollars vanished.

Madoff is Jewish, which wouldn't matter a lot except that rich U.S. Jews have a "Jewish Old Boys Network" that rivals and even exceeds the original in its shamelss favoritism. They like doing business inside the tribe, partly on the (patently mistaken) assumption that Jews don't screw other Jews.

And Madoff screwed a whole lot of other Jews. Among his victims are Steven Spielberg, Mort Zukerman, the American Jewish Congress, Elie Wiesel Foundation for Humanity (sic!), the Lappin foundation, J. Ezra Merkin, the Technion, and many, many others. See the Jewish Journal for more details.

And that is why it is such a blessing. Philanthropy is generally a reactionary enterprise. The rich gives us back (a fraction of) the money they extracted from our labor, but with strings attached, including the demand of our gratitude, not to mention our general subservience and a recognition of their right to steal even more of the wealth of the world. Because of the special place of Israel in the petrodollar system and the special relation between the Jewish establishment in the U.S. and the state of Israel, Jewish philantropy has some particular reactionary tendencies, funding everything from bigoted propaganda, through the creeping ethnic cleansing of Palestinians, to settler pogroms.

The Madoff scandal is big. I'd venture that its aftershocks would reverberate for many years. Both wars of manoevers and wars of positions are won and lost on financial resilience. The global collapse had decimated some important fortunes already, among them Lev Leviev's and Sheldon Adelson's (and one could perhaps add to this list Conrad Black and Thomas Friedman). Madoff's rip-off adds stress to an already stressed lot, and that would mean less money for a bunch of very bad causes. Here's the outlook from the source:
In a frank interview, Avraham Infeld, president of the suddenly penniless California-based Chais Family Foundation, said the Madoff affair, which has cost Jewish charities hundreds of millions of dollars, if not more, will require the Jewish philanthropic world to rethink its priorities.

Infeld, who served as Birthright’s first president, said humanitarian needs at home and in Israel must take precedence over other good causes.

“In addition to the foundations that will no longer be able to provide aid, there are a lot of private individuals who have lost their nest eggs, and they need our help. More and more of the Jewish community’s money will have to go toward feeding the poor and aged. Unfortunately, less money will be available for education, culture and so on. I find this is a watershed,” Infeld said. (The Jewish Week)

I think these are very good news. Who says JSF only focuses on the negative?

Here's an example. The first victim felled by the revelation that Madoff was a fraud was the Lappin Foundation. The foundation had all its money invested with Madoff and was forced to close.

The Lappin foundation never minced words about its mission:

We believe that the most serious threat to Jewish continuity is assimilation and intermarriage. We are succeeding in reversing the trend of intermarriage and asimilation in our community by enhancing Jewish pride through the innovative programs of our Youth to Israel, Jewish Continuity and Interfaith Outreach Committees.

The Lappin Foundation promoted Jewish racism. There is nothing wrong with "enhancing Jewish pride" in order to defend "jewish continuity" per se. But for the folks at Lappin, "Jewish continuity" is the continuity of biology. And their flagship program is sending Jewish American youth to discover themselves in the racist apartheid state of Israel. Instead of working to promote a cultural heritage that would be attractive enough for spouses joining in, the Lappin foundation assumed that Jewish culture is bankrupt, and thus the way to preserve it was to hunker in the ghetto, worship tanks and enjoy travel on Jewish only roads. In a way, they proved their own point. And thanks to Madoff they've now added financial bankrupcy to their long going moral one.

Good Riddance!

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