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12.15.08

Did We All Go Mad?

An explanation (of sorts) for the rush to go broke that engulfed us.

Remember the great Y2K crisis, when all the computers were supposed to go haywire because all four digits of the date turned over at once? Well, maybe it happened after all, only it wasn’t our computers that went nuts. It was us.

Something went wrong on or about the dawn of the millennium, that’s for sure—and it keeps on going wrong. Did the 2000 election and 9/11 and Iraq and now maybe Great Depression II—in short, the Bush years—unhinge us into some strange collective suicide spree of self-indulgence, self-delusion, and blind pursuit of money money money till we drowned in it? Or did the planet just spin on its axis when all those nines became zeroes and tip us upside down and shake out all our values?

The alleged $50 billion fraudster Bernard Madoff systematically betrayed all the people and philanthropic causes he advised, socialized with, and built his life around at the Palm Beach Country Club in Florida and the Glen Oaks Country Club on Long Island. I’m told he even ripped off his own masseuse, who had entrusted him with the $400,000 or so of her life’s savings.

Madoff looked strangely content in the back of the car as he was driven away to a future of unremitting execration.

One crucial psychosociological question still unanswered is this: When did Madoff decide to become a crook? Or had he always been one? Was this low-key, softly smiling gonif who inhabited the private comfort zone of the super-rich a lifelong charlatan who escaped detection until late in his career? Or (my theory) did the accelerating madness of the last decade or two entice him slowly but surely into an entirely new playing field where every moral boundary fell when it was pushed?

And what about Marc S. Dreier, the elegant, trusted lawyer for Solow Realty who sold promissory notes to the tune of $380 million that were, as yesterday’s Times put it, “flat-out fictions”? When did he fall off the moral cliff? Dreier was a Yale and Harvard law graduate and a staple of top-drawer charity galas. Both these guys had so much money in the first place that they had what Stuart Chase, in an essay on business ethics in Harper’s magazine in the fateful year 1930, called “The Luxury of Integrity”—meaning they had no financial need to steal at all. Yet they did, because they could.

You could almost sense the relief in Madoff’s stunning summation of his own career in the five simple words he spoke to his senior executives: “all just one big lie.” Not a complex matter of unfortunate, unraveling circumstances. Not something that could all be explained when he had had a chance to talk to his lawyer. No, just a big fat lie, so let’s be done with it. The perpetrator of one of the biggest financial scams in history looked small and strangely content in the back of the car as he was driven away to a future of unremitting execration.

With so much institutional collapse as well as personal delinquency around us it’s unsettling to ponder whether ethical torpor is only a matter of time and degree for everybody. When the numbers rise past a certain point, when the wealth you swim in is so great it loses all its meaning, when the illusion really takes hold that what goes up will go up forever, not only integrity but ordinary common sense flies out the window. The Times tells us that Dreier’s legal offices, for God’s sake, had $30 to 40 million worth of art hanging on the wall.

Last night on CBS’s 60 Minutes a Florida acupuncturist named Rula Giosmas told how she had bought six properties in this last five-year period as investments without reading any of the paperwork and now finds they are all financed with a new exotic horror—option ARM loans—a loan that apparently lures borrowers in with low-interest rate sales and then after two or three years, the rates “reset”—i.e. much higher. Unless she can renegotiate, she’s about to be broke.

“In the old days,” Giosmas told Scott Pelley, “I would shop around. But because of the frenzy and I was so busy looking to buy other properties, I didn’t really focus on shopping around for mortgage brokers.”

I dropped a fork full of spaghetti bolognese when I heard these words from the TV screen. This deluded woman was so dazed by the orgy of spending going on all around her that she grabbed up condominiums costing hundreds of thousands of dollars without having a clue how she got the deals financed. When Pelley waxed mildly surprised that Giosmas didn’t ask any questions about how she was financing all this, the lady offered an almost shrugging explanation. “I was busy,” she said. “I was really busy looking at property all the time…My full-time job is I’m an acupuncturist. So this was just a side thing.” Busy busy busy. And now the side thing is about to ruin her life.

Is the loss of any time to think a possible explanation for the current crisis of moral perspective? In our increasingly wired world, most of us live in a state of shattered concentration, so distracted that we don’t even notice how much we don’t understand. How many of us read what’s in those fat envelopes that arrive every few months, full of dense print describing some mutual fund that’s supposedly going to feed and shelter us in our old age? Hell, how many of us have read our mortgages? Busy busy busy. So busy we didn't notice that the crest of that lovely hill we were climbing was actually a cliff.

Tina Brown is the founder and editor-in-chief of The Daily Beast. She is the author of the 2007 New York Times best seller The Diana Chronicles. Brown is the former editor of Tatler, Vanity Fair, The New Yorker, and Talk magazines and host of CNBC's Topic A with Tina Brown . She has written for numerous publications, including The Times of London, The Spectator, and The Washington Post.