Madoff wasn't doing ANY trading??

This news comes as a surprise to me, because I thought I had the Madoff situation more-or-less figured out.

I suppose the Socratic virtue, knowledge of my own ignorance, is a product of advancing age.

I thought I had Madoff figured out because I was thinking of him as a ponzi scammer in the line of other recent ponzi scammers, such as the perpetrators of the Bayou funds fraud.

The Bayou funds started out as legitimate investment vehicles. They even started out with a legitimate auditor. But the trading didn't go well, and the managers succumbed to the temptation to pretend they were in fact making money in defiance of the facts. So they started cooking he books, fired their real-world auditor, hired a "new" auditor whom they invented, and the operation evolved by stages into a ponzi scam. But even at the end there was some actual investment going on.

I've covered that and similar episodes in my work as a reporter, and I mentally categorized the Madoff news when it broke in December under the same heading. Bad trader, unwilling to face reality, turned to book-cooker.

That isn't what happened. Or, to be strict about it, if that transition DID take place at some point n Madoff's career, it took place a looong time ago.

Bankruptcy trustee Irving Picard hosted a meeting of the creditors yesterday and gave them the bad, stunning, news. Not only was Madoff making it all up, he had been making it all up since 1994 or thereabouts. He was not only a fraud on a really large scale, which we knew already, he was a fraud through-and-through.