Bernie Does Europe

The following is entirely fictional.

The man stood out clearly among the other visitors at the Butner, NC medium security facility. He was trim, and scanned the room with dark eyes. His precisely cut blue suit, narrowed at the waist, the scaloppine soles of his pointed loafers, and his muted silk shirt offset by a mauve tie, would have photographed well east of the English Channel. His face was locked into a faint, bemused smile. It was a well-practiced expression, one perhaps used to mask his thoughts and emotions.

He had no trouble spotting the inmate he came to meet. The latter, an older man who was short and lumpy, would have been obvious even if he hadn't been so often photographed by the press. The visitor waved.

"Mr. Madoff."

"Yes. It's nice to meet you, Mr., uh . . ."

"John Talent," said the visitor, with the accent of someone who'd grown up with light breakfasts, not large ones.

"Yes, Mr. Talent." Bernie suspected that the visitor's registry, where Mr. Talent would have signed in, would not be terribly revealing to the press should they get their hands on it.

"I have the package you requested. Five pounds of shrimp cocktail and a quart of cocktail sauce."

"Wonderful, wonderful. You have no idea how hard it is to get a decent appetizer around here."

"I can imagine, sir," said the visitor, with well-exaggerated sympathy.

"Well, Mr. Talent. What was it you wanted to talk about?"

"I seek insight about your . . . former method of business. That is to say, your financial success."

"My . . . well, I suppose I was successful for a while."

"Yes, yes. How did you succeed in persuading people to give you money, and then keep it there?"

Bernie paused for a moment, seemingly in thought. "It comes down to telling them what they want to hear. Investing consists of putting your money down on a promise. The key is to make the best promise."

"That is interesting in abstract," said Talent quickly. "Let us consider, however, the possibility that the interests raising money are, shall we say, in some difficulty and their difficulties are not entirely unknown."

"Well, let me think. Uhmmm . . . can you tell me what interests you're talking about?"

"Perhaps we can say they are European. More I cannot reveal," replied Talent, his smile tighter than ever.

"Well," said Bernie, through a mouthful of shrimp. "They would have to improve the promises. That is, increase the promised earnings or profits on the investment, and make it appear that they have a very good chance of paying the returns. Look for ways to enhance your revenue, while cutting costs. At least, promise to do those things. By the way, this is excellent shrimp."

"I am pleased that you are enjoying it. Now, let us hypothesize that a . . . bailout, I think the English word is . . . will probably be necessary. That would require a third party--someone to provide the bailout for the interests I represent, so that we appear stronger. How should we deal with the third party?"

"What kind of bailout do you mean: funds, a guarantee of debt, or something else?"

"Any and all of them. Everything is under discussion. The important thing is to inspire confidence among the creditors."

"The creditors," muttered Bernie. "So you are trying to raise money to pay off old debts falling due?"

"Ahhh . . . perhaps I have said too much. But this is true. We must raise money to pay old debts. And there is not so much time."

"And you need a bailout to give the creditors confidence about your ability to repay new debt?"

"Precisely. We have been searching for a bailout, a new source of funds or at least a guarantee."

"How is that search going?" asked Bernie, plunking three pieces of shrimp at once into the cocktail sauce.

"Not very well. The European parties we approached speak in generalities. They don't want to say yes, but they don't want to say no."

"Why won't they say yes?"

"Because they believe we will use the money for consumption, not for investment. So it will not generate new revenues. It is, how you say, like the Ponzi arrangement."

Bernie chewed in silence for a moment. "I see. Then, why won't they say no?"

"Because they have invested in us already. If they say no and we fail, they will be harmed."

"So it is against their interests to say yes, and against their interests to say no."

"Precisely."

Bernie took a deep breath, and then another mouthful of shrimp. "Then you need to find another sugar daddy."

"Pardon?"

"Another benefactor. A new player to give you a bailout. Perhaps someone some distance away, who is not as involved in the situation. You have been talking to Europeans?"

"Yes. Interested parties in Europe."

"Maybe you should hop over the pond."

"Are you speaking of America?"

"That might be the next place to try."

"How could we persuade America to help European interests?"

"Think of something you could offer America."

The visitor stroked his chin, and then spoke. "We have been the victims of speculation in the derivatives market. It is very aggressive and damaging. Perhaps we could offer ourselves as an example of why your government should increase the regulation of derivatives. Your president might be interested, because he wants to add more regulation of derivatives but is having political problems with those people, the lobbyists. The international situation would give him . . . how you say it, political leverage . . . to change the laws. The lack of regulation is increasing international instability. This way, the profit making devices used by your big bankers . . . you call them Wall Street, I believe . . . will now be used against them."

Bernie smiled wryly. "I guess it's fair to say that sometimes, American financiers do go too far, and then the law catches up with them."

"So, if we give your government an international incident they can use to their advantage, perhaps they would have some sympathy for our situation."

"Maybe. Everything would have to be done very subtly. Nothing can be explicit, because the American government has many problems within the country to deal with, and the American people expect their government to take care of problems at home first."

"I understand perfectly. We will be very discreet."

"Good luck, then. And don't hesitate to come back for more advice."

"You have been very helpful, Mr. Madoff. Next time, I will bring ten pounds of shrimp."