Oh My God, It's a System!

Via Andres Valloud, a list of the Madoff scheme's dupes sorted by magnitude of their losses.

What this highlights for me is that the worldwide financial system, generally, is both worldwide and a system. It's made of interconnected, independent agents, with varying motivations and levels of self-interest, all feeding back to each other filtered and transformed information, far from ideal, instantaneous knowledge.

A front page article in the Seattle Times this weekend speculated whether the regional home market would experience a rebound in 2009. The gist of the argument is that that market has been relatively untouched. I could be wrong, and whatever else, Seattle may continue to be less affected than other areas. However what I missed in the article was any recognition that Seattle is part of an overall system that continues to be sinking, and even worse: the home mortgage crisis may be not even halfway through its defaults.

Belying any glimmer of hope of a recovery, the Madoff list above provides a long list of banks and other financial institutions that clearly do not engage in sufficient diligence when investing billions of dollars. The Madoff case may be the most blatant but I imagine it is exemplary in exposing rampant negligence.