Madoff and the price of lost trust....

I think most of us were amazed by the reach and depth of the Bernard Madoff ponzi scheme -- $50 billion (!) -- as well as the duration of the con.

The Knowledge@Wharton newsletter recently discussed the Madoff case with two Wharton professors. The podcast and transcript can be accessed here. The brief analysis includes a discussion of the influence principles at play, the failure of regulation, the need for diversification and transparency, and the loss of trust. Loss of trust has a price:

"....Trust is like lubrication. It makes transactions easier, faster, cheaper. It fuels the economy, so we can trade. And we've lost some of that trust. So now the costs are going to go up. There's more friction, as we have to do more due diligence. I think that's necessary. And clearly, it was necessary before this. So perhaps the silver lining is that we're going to get back to these basic principles of oversight and diversification."

The email newsletter, Knowledge@Wharton is a useful resource for staying current with trends in business research.