Mike John, Content Explorer, MCA, Los Angeles, California, USA
Answered Jun 18, 2018
Not just Bernard Madoff. The stock market crash of 2008 occurred as result of banks over-financing debt. It was too easy for people to borrow money, mostly for housing, and too many banks lending on this, and then on the debts. Initially, this was very profitable but when the crash came many large organisations suffered massive loss. Madoff promised a 10-12 pc annual return with immediate access to the investment when required. The scame worked by 7 feeder funds channeling into the main fund.
New Investment money was used to pay off earlier investors, a recycling of cash. Success in such a scam depends upon a constant flow of new investors and when the global financial crisis reduced this, returns were poor and investors left. In the second half of 2008 they did so en masse, Madoff was screwed, and many lost hugely.
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