Answer: they weren’t. Joe Nocera has a fascinating piece in the New York Times about the Madoff hearing — and the reactions of the people who entrusted their fortunes to his Ponzi scheme.

Judge Denny Chin had made clear that he was not going to allow the Madoff guilty plea to turn into a Wailing Wall for the victims, so most of them stayed away. Though Judge Chin allowed them to speak, he insisted they stick to the issue before the court: whether he should accept Mr. Madoff’s guilty plea. One woman argued that the judge should not and force a trial instead, for the “opportunity to find out where the money is.” But of course there is no money — certainly nothing close to the supposed $60 billion plus he was “investing.” That is the whole point of a Ponzi scheme: the fraudster uses money coming in from new investors to pay old investors, pretending that that is their gain.

Afterward, the TV cameras surrounded a woman named Sharon Lissauer. She had not been wealthy, she said, but she’s lost everything. She didn’t know what she was going to do. She was weeping. It was hard not to feel sad for her — indeed, for all the victims of Mr. Madoff’s evil-doing. But one also has to wonder: what were they thinking?

At a panel a month ago, put together by Portfolio magazine, Mr. Wiesel expressed, better than I’ve ever heard it, why people gave Mr. Madoff their money. “I remember that it was a myth that he created around him,” Mr. Wiesel said, “that everything was so special, so unique, that it had to be secret. It was like a mystical mythology that nobody could understand.” Mr. Wiesel added: “He gave the impression that maybe 100 people belonged to the club. Now we know thousands of them were cheated by him.”

Nocera’s central question — what were these people thinking when they put all their eggs in the Madoff basket? — is just the latest reminder of the extent to which we are not rational creatures. I’ve never owned shares personally, but even I know that one should spread one’s risk. As Nocera puts it, “Diversification has many virtues; one of them is that you won’t lose everything if one of your money managers turns out to be a crook.” Many of Madoff’s eager victims had plenty of money, but most seem to have sought no professional advice before handing over the dosh. This kind of behaviour was, said one fund manager who interviewed Madoff years ago and concluded he was fishy, “like trying to do your own dentistry. It is a real lesson that people cannot abdicate personal responsibility when it comes to their personal finances.” Nocera goes on to say:

And that’s the point. People did abdicate responsibility — and now, rather than face that fact, many of them are blaming the government for not, in effect, saving them from themselves. Indeed, what you discover when you talk to victims is that they harbor an anger toward the S.E.C. that is as deep or deeper than the anger they feel toward Mr. Madoff. There is a powerful sense that because the agency was asleep at the switch, they have been doubly victimized. And they want the government to do something about it.

Watching Alasdair Darling and Gordon Brown fumbling around with the banks is a profoundly depressing experience. it’s clear that they haven’t the faintest idea what they’re doing — they’re completely out of their depth. (And the Irish government, btw, is off the planet). But I console myself by thinking that Obama & Co probably know what they’re doing. Not so, says Paul Krugman.

Obama and Geithner say things like,

“If you underestimate the problem; if you do too little, too late; if you don’t move aggressively enough; if you are not open and honest in trying to assess the true cost of this; then you will face a deeper, long lasting crisis.”

But what they’re actually doing is underestimating the problem, doing too little too late, and not being open and honest in trying to assess the true cost. The actual plan seems to be to keep the banks semi-alive by implicitly guaranteeing their liabilities and dribbling in money as necessary, all the while proclaiming that they’re adequately capitalized — and hope that things turn up. It’s Japan all over again.

And the result will probably be a deeper, long-lasting crisis.

Brisk NYT column by Maureen Dowd.

How could Citigroup be so dumb as to go ahead with plans to get a new $50 million corporate jet, the exclusive Dassault Falcon 7X seating 12, after losing $28.5 billion in the past 15 months and receiving $345 billion in government investments and guarantees?

(Now I get why a $400 payment I recently sent to pay off my Citibank Visa was mistakenly applied to my sister-in-law’s Citibank Mastercard account.)

The “Citiboobs” — as The New York Post, which broke the news, calls them — watched as the car chieftains got in trouble for flying their private jets to Washington to ask for bailouts, and the A.I.G. moguls got dragged before Congress for spending their bailout on California spa treatments. But the boobs still didn’t get the message.

The former masters of the universe don’t seem to fully comprehend that their universe has crumbled and, thanks to them, so has ours. Real people are losing real jobs at Caterpillar, Home Depot and Sprint Nextel; these and other companies announced on Monday that they would cut more than 75,000 jobs in the U.S. and around the world, as consumer confidence and home prices swan-dived.

Prodded by an appalled Senator Carl Levin, Tim Geithner — even as he was being confirmed as Treasury secretary — directed Treasury officials to call the Citiboobs and tell them the new jet would not fly.

“They woke up pretty quickly,” says a Treasury official, adding that they protested for a bit. “Six months ago, they would have kept the plane and flown it to Washington.”

… is of Abraham Lincoln rotating in his grave. This from Good Morning Silicon Valley.

Congress may have steaming heaps of crises spilling off the edge of its plate, but that doesn’t mean no one is paying attention to the issues somewhat farther down the priority list. One of those is the way ubiquitous and unobtrusive camera phones help perverts pursue their peeping in dressing rooms and public places with less chance of detection. Rep. Pete King, R-N.Y., has found time not only to think about this one, but to come up with an answer: follow Japan’s lead and require camera phones to make a retro shutter-click or comparable noise. His Camera Phone Predator Alert Act would mandate that “any mobile phone containing a digital camera that is manufactured for sale in the United States shall sound a tone or other sound audible within a reasonable radius of the phone whenever a photograph is taken with the camera in such phone. A mobile phone manufactured after such date shall not be equipped with a means of disabling or silencing such tone or sound.”

Nice to find a legislator with a proper sense of priorities.

Here’s a conference that deserves to bomb.

User-generated content is a rapidly developing revolution in media. ‘Average Joe’ internet users now wield power over online content, and new business models are emerging in response to this shift. UGCX is the first conference and expo organized to bring together content-trendsetters and business leaders in various fields to examine how these worlds collide and what the future holds. This new mediabistro.com event will unlock the knowledge businesses and non-profits need to respond to this shift.

UGCX is part trade show, and part educational conference program. Conference program sessions will be loaded with successful case studies and business models in four tracks: social content, photography, video & gaming, and music. Our trade show floor will feature all the relevant vendors you need to connect with to gain new resources and tools to stay ahead of the social media curve.

Because face-to-face interaction will never be beat as a means of relationship building, we are stocking our 2-day event full of networking opportunities, so you can be sure to leave with lasting connections to help you create, use, and profit from user-generated content.

Needless to say — as Dave Winer pointed out — there’s not a single ‘user’ visible anywhere in the scores of companies the organisers claim are planning to attend.

How about a competition to think of the best slogan for this nauseating event? ‘Milk The Suckers’ is my entry. But ‘One Born Every Minute’ is also a possibility.