Are Bernard Madoff's Victims Total Scumbags?

My post on "Madoff Victim Bailouts" attracted a surprising amount of hatemail. (Go look at the comments!) I can't believe that any of my regular readers would aggressively say "The State should reimburse Madoff's victims, and anyone who suggests otherwise is an ***hole."

One thing I've learned from blogging is "amount of hatemail received" is directly proportional to "importance of subject", especially when the comments are obvious pro-State trolling.

I figured out what happened. According to Google Analytics, that post was being circulated on a "Bernard Madoff victims' support group" E-Mail list! Some people read that post, and then had the nerve to leave a comment here. They said I was a jerk to suggest that they didn't deserve a bailout.

The two pro-State troll comments on "Madoff Victim Bailouts" were probably published by someone who actually got robbed by Bernard Madoff! I'm sort of honored that someone who was robbed by Bernard Madoff felt motivated to leave a stupid comment on my blog!

I bought shares of Citigroup at $49.60 (currently $2.62). I bought shares of Bank of America at $54.02 (currently $6.19). Was I the victim of fraud? Probably. I thought "Bank stocks are a safe investment. I'll buy a couple of banking stocks to diversify." At that time, I didn't realize that the stock market is one big scam, and that gold is a better investment than stocks. I didn't consider asking the State to reimburse me for my loss.

I'm not an idiot. I didn't invest all of my savings in Citigroup and Bank of America. However, I did have most of my savings invested in the stock market, which has substantially declined recently. The S&P 500 is still lower than it was in 1999, when I first started investing. I was a "long term buy-and-hold stock market investor". The real value of my investments has substantially declined, especially when you adjust for inflation correctly. Now, I'm a "long term buy-and-hold gold and silver investor", although I haven't made my first purchase yet.

Do I have the right to demand the State reimburse me for my loss? Why are Bernard Madoff's victims entitled to a State-paid bailout, but I am not?

Madoff's victims thought they were members of a privileged group, who were lucky enough to invest with a genius like Bernard Madoff. He turned out to be a fraud, and now the victims are using their connections to get the government to reimburse them (partially) for their loss. They're using their connections to get regulations retroactively changed, increasing the amount of bailout money they receive.

There are two specific regulations that were changed. There was a change in tax laws/regulations regarding taxes paid on an investment that later turned out to be a fraud. Instead of getting a deduction on future taxes, Madoff's victims get a rebate for the taxes they paid on phony profits. If I sell my Citigroup or Bank of America shares, I merely get a long-term capital loss, rather than getting reimbursed for taxes I already paid on dividends I earned. How is my example different from the loophole that Madoff's victims lobbied for themselves?

There was a retroactive change in SIPC regulations, changing the definition of who qualifies and maybe increasing the coverage level. I am not entitled to a reimbursement for my loss in Citigroup and Bank of America, even though I thought they were "safe/conservative" investments when I bought them.

Someone who invested less than $500k directly with Bernard Madoff received full SIPC insurance and recovered his full investment. Those people outperformed my investment in Citigroup and Bank of America. Why are they entitled to protection but not me? I pay the cost of SIPC insurance in the form of higher commissions and fees on my brokerage account.

"The government pays to reimburse Bernard Madoff's victims!" is logically equivalent to "Higher taxes for everyone who didn't get ripped off by Bernard Madoff!" If you don't understand that, you have zero knowledge of economics. Why should I pay the cost (via higher taxes), because someone else was an idiot who invested in a scam?

What's my attitude towards getting ripped off by the financial industry? My attitude is "HAHAHAHA!! You got me! That's a clever scam!" I lost some money. I also learned that most of my future investments are going towards physical gold or silver or GLD or SLV. (In my IRAs, I must buy GLD or SLV instead of physical metal. Keeping an IRA seems stupid, because it seems likely that the US government won't exist 20 years from now.) I'm not cashing in my current stock investments, partially because it seems like a bad time to sell. I'm (unrealistically?) hoping to profit eventually, and maybe I'm wrong about the US government collapsing before I retire. All my future investments are going to physical metal or GLD or SLV. (I probably should just cash in all my State-sanctioned investments, pay the IRA withdrawal penalty, pay the capital gains taxes, and convert to physical gold or silver. I haven't done that, partially because I have no safe place to store my metal. It's simpler for me to say "All future investments are going to physical gold or silver or GLD or SLV." and keep my current State-sanctioned paper investments.)

The lesson is probably worth more than the actual amount of money I lost. I also experimented with an options trading system. It didn't turn out well. My attitude is "Shame on me! I won't try that again. It was a nice try, but it didn't work." If I didn't risk my money to back my ideas, I'd be a hypocrite. I lost 100% of my investment in options, but it was a valuable lesson. I wasn't an idiot who risked all my savings on it. I'm not entitled to be reimbursed for my loss. When I opened my options trading account, the disclosure said "Options traders are risking a 100% loss of their investment." I knew the risk. I thought it was worth it. I turned out to be wrong.

I'll repeat my point again. If you invest most/all of your savings in one place, and it turned out to be a scam, YOU DESERVE TO LOSE YOUR SAVINGS! Each investor has an obligation to perform their own due diligence. If insiders can lobby the State for favors whenever they make a bad decision, then why would anyone ever bother to make wise decisions? Why bother performing useful work, when you can get a bailout?

WHEN THE STATE BAILS OUT MADOFF'S VICTIMS, EVERYONE WHO DIDN'T GET RIPPED OFF BY MADOFF PAYS HIGHER TAXES!! WHEN THE STATE BAILS OUT THE BANKS AND GM AND AIG AND FRE, THEN EVERYONE WHO DOES ACTUAL USEFUL WORK PAYS HIGHER TAXES!!

I'm deeply offended that some of Bernard Madoff's victims had the nerve to post a comment here. They believe that they are entitled to a State bailout, reimbursing them for their loss. They said I'm wrong for suggesting they are not entitled to a bailout. In case any of Madoff's victims are actually reading this, I have a message for you.

YOU ARE SCUMBAGS!! JERKS LIKE YOU ARE THE REASON THE STATE IS EVIL!!

IF YOU THINK THAT THE MADOFF SCAM WAS A ROUGH DEAL, WAIT UNTIL THE US GOVERNMENT COMPLETELY COLLAPSES!! PARASITES LIKE YOU ARE GOING TO HAVE TO WORK FOR A LIVING INSTEAD OF LEECHING OFF THE PRODUCTIVE WORKERS!!

YOU DESERVE WHAT IS GOING TO HAPPEN!!

If anybody on the Madoff victims' mailing list is reading this, then you should realize what a scumbag and idiot you actually are. Read the rest of my blog carefully, and see the warning for what is going to happen. Your gravy train is coming to an end soon!