As per the fate of all mortals, Bernie Madoff logged out yesterday for the final time. So it is worthwhile to recall why that inexorable event happened in the Federal penitentiary, as Sven Henrich exquisitely reminded in his post this AM:
You know what got him caught? Not forensic accounting, not regulators, not investors, not the Fed or the SEC. But the world’s greatest cleansing process: The tide going out otherwise known as markets going down. His Ponzi scheme may have never been exposed were it not for markets collapsing and his new cash inflows stopping which exposed the facade of his fraud. But people had believed. They had believed that magical returns can come out of nothing. And as long as people believed they kept sending him money.
When the news came across the screen, of course, the wet-behind-the-ears punters who were lapping up Coinbase’s IPO yesterday at an insane market cap of $100 billion undoubtedly wondered, “Bernie who?”