I noticed that the NY Times today had two articles next to each other, and it occurred to me that maybe they were more related than meets the eye.
First – the Dow Jones went up 379 points. Good news!
Then, the next headline – Madoff Guilty Plea Expected: Could Face Life in Prison.
Sure, the first article gave some convincing arguments as to why the Dow “soared” today.
A memorandum from Citigroup saying that the bank had been profitable in the first two months of the year; calls for regulatory reforms from the Federal Reserve chairman, and the possibility that the government would reinstate rules governing short sales of stocks.
But what of the likely Madoff outcome? I think we can all agree that, however irrational, hesitant investors want to see results, and fast. Whether those results come from the bailout or from the criminal courts, investors are looking for answers.
The bailout requires prudent and cautious execution. I’m not saying a criminal trial does not, but results may come faster from criminal trials (or at least charges) if investors are anxious to place blame. Should the government enforcement mechanisms and the media be focusing more on the Madoffs and Stanfords of the world to boost investor confidence?
I would love to hear your thoughts on this – please comment below!