Apparently so. That’s “billion,” with a “b.”
John Kenneth Galbraith once argued that in normal and boom times there is always a certain amount of hanky-panky going on both inside firms and in trading markets, concealed amid generally positive results. He proposed to call the total amount of money involved in that hanky-panky “the bezzle.” And he argued that the conventions of economic discourse discourage discussion of how big a role frank dishonesty plays in the business word. (My understanding is that virtually every S&L failure revealed massive fraud, and that most were in fact the products of that fraud, but virtually all of the published analysis of that event treats it as a moral-hazard problem rather than a moral problem.)
Well, now it looks as if the bezzle is bigger than ever. And it looks as if we’re about to find out.
Update It’s not clear to me whether this was a true Ponzi scheme, where the operator pays big “dividends” to existing investors out of the money forked over by new investors while skimming as much as he can off the top, or whether Madoff actually lost all that money making bad trades and simply covered it up by faking results in order to keep the apparent returns high. It’s fraud, and self-interested fraud, either way, but he may have engaged in cheating rather than outright stealing.