Michelle Chihara–Uncanny All the Way Down: A Response to Frederik Tygstrup


This response was published as part of the b2o review‘s “Finance and Fiction” dossier.

In “Learning from Madoff: On Fiction and Finance in 21st Century,” Frederik Tygstrup describes Bernie Madoff and his famous financial scam as an allegory for the 2008 crisis and the rise in speculative capital at the turn of the 21st century. Madoff’s split-strike conversion strategy (as he called it) was pure fiction.[1] Tygstrup positions the story of Madoff’s fictional trades in an age of enormous growth in fictitious assets.

Madoff took money from investors and claimed to be trading it, but he was just parking the money in a bank account. When clients wanted to withdraw their funds, he pulled money out of the bank account and called it return on investment. Then he went looking for more clients whose new deposits would cover the gap. This is a classic Ponzi scheme. Madoff, the investor with two sons and a blonde wife and a home in the Hamptons, was arrested a couple of months after Lehman Brothers went bankrupt, just as the scale of the global crisis was coming into focus. The man’s entire financial career was a lie. Unlike the derivatives traders who built a house of cards on mortgage-backed securities, Madoff had no financial cover story. He was faking it one hundred percent. But the size and timing of his fraud raised a question: Is the entire economy a scam?

The Madoff case engendered a number of documentaries and book-length investigations into what the scheme did and did not mean. Tygstrup quotes Colleen Eren’s book, whose very title calls the case “the public trial of capitalism.” Tygstrup describes the affect swirling around Madoff as excessive, then offers an “allegorical reading” of this fascination. He finds that “the case becomes a kind of a slightly convex mirror in which we not only see his (devious) deviation from normal market behaviour, but also a replication of it, only in a slightly distorted fashion.” The judge who sentenced Madoff to 150 years in prison had a “striking” tone of indignation, and the conviction was “quite exuberant,” Tygstrup writes, for “what was, after all, a fairly trivial white-collar crime, the big numbers notwithstanding.” The level of affect, for Tygstrup, was extra, given the big but humdrum crime.

The amount of emotion that Madoff provoked was “remarkable,” for Tygstrup, given “the very normalcy of what he was doing.” Based on trades he was not in fact making, Madoff kept promising money managers that he could bring in high returns forever. But of course, at some point, the debt would have to be called in. For Tygstrup, only the size of the heist was “sublime,” and Madoff got away with it for so long in part because he was reflecting the market back to itself: “Madoff’s fictitious investment fund also tells us something about the nature of fictitious capital in an age of accumulation by financialization: precisely not as an anomaly, but as an allegory of unsustainable credit-based and highly leveraged capital accumulation.”

Tygstrup’s argument thus relies on setting Madoff’s normalcy off against a historically specific change in the overall level of financialization. It relies on a relatively common claim about a quantitative increase in the fictitiousness of capital at a particular moment in time. The idea is that Madoff might have been easier to clock, he would have stuck out more, if not for a quantitative growth in fictitious capital. Later, Tygstrup summarizes financial history by saying that after 1929, “certain limits were set for how much banks should be allowed to leverage.” After the run on the banks that triggered the Depression, in other words, the regulators put some limits on fictitious assets. Speculation was kept in check by reserve ratios, where those reserves served as a foundation or referent for financial activity. After the 1980s, according to Tygstrup, deregulation allowed the degree of leverage to rise, and it “skyrocketed.” He cites Martijn Konings’s Capital and Time for a description of “inflated positions” that “performatively built up supplementary market value.”

There’s no question that the fascination with Bernie Madoff, an ideal Jewish scapegoat and record-breaking Ponzi builder, emerged out of both a desire to punish the entire rentier class and a desire to excise a bad apple. His normal qualities made him a good stand-in for finance generally. And at the same time, if Madoff was an unusual criminal, then getting rid of him might allow finance to get back to the status quo. In this way, punishing Madoff served both a desire to see and not to see systemic problems. And Tygstrup is correct in pointing out that the financier who was called a monster exhibited a real lack of monstrosity. The scale of his crimes may have been monstrous, but he didn’t seem particularly devious and the money wasn’t spent on cocaine and hookers and yachts–just one mistress and a second home. The fear that Madoff provoked came from the subtlety of the distortion. If, generically, Madoff served as an allegory for the events of his era, perhaps affectively he entered the category of the uncanny. Madoff was so familiar that he was eerie, unheimlich.

So Madoff’s performance was uncannily successful at a historically specific moment, granted. But Konings’s point, in Capital and Time, is precisely not that 2008 indicated that capitalism had breached some kind of objective boundary. Tygstrup almost seems to accept the reasoning that Konings is pushing against. Konings critiques argumentation that relies on a distinction between “real and fictitious forms of value and sees the tendency of finance to exceed its natural limits” (Konings 2018: 36) His point is precisely to critique the critiques that see limits and foundations, or that rest on the idea that something has objectively “skyrocketed,” leading to a quantitative imbalance.

For Konings the temporal dynamics of speculation and austerity are themselves fundamental to an inherently self-referential system:

If a kind of double movement is at work in capitalist life, this involves not a periodic oscillation between foundational values and speculative impulses but, instead, the constant need to respond productively to speculative provocations, to reconstruct reality around a new connection that cannot be undone and has irrevocably altered how things work. (Konings 2018: 12)

Meanwhile for Tygstrup, the emotional excess in the fascination with Madoff depends on something being “conspicuously bloated” within capitalism itself. That bloat implies something swollen beyond its normal size, where normal is defined in reference to a real or a more real type of value, and where the idea of real value usually involves some nostalgia for Fordist production. But Konings wants us to see a system defined by its self-referentiality, with no outside to the logic, and no ultimate ground. The historically specific detail that makes Madoff’s case fascinating is only the crisis itself, which of course differs from the last crisis, but not because the quantitative growth creates a qualitative difference. Any implication that reserve ratios or Glass-Steagall-style regulations might let the air out of finance’s bloated core is a fool’s errand, a path to further complicity. When there’s a run on the bank, everyone gets swept up looking for the monster. Before that, the monster always appears as an innovator. But it’s important to remember that the finance sector has no path to a healthy flat stomach.

Perhaps Madoff should be considered in conjunction with another allegorical figure, Jordan Belfort, the inspiration for the movies Boiler Room and The Wolf of Wall Street. Belfort ran penny stock scams for years. He spent 22 months in prison and then went on to sell his memoirs and become a kind of self-help guru who gives workshops on investing. He too was emblematic of the 2008 crisis. He was first indicted in 1999, the first movie came out in 2000, and the second, directed by Martin Scorcese, followed in 2013. Madoff was the subject of a number documentaries, but never got quite the auteur treatment that Belfort did. In a performative economy, Belfort was the better performer.

In 2014, a former enforcement attorney for the SEC wrote an article for The Wall Street Journal entitled, “How ‘the Wolf of Wall Street’ Really Did It: The stock scam wasn’t emblematic of greed in the Financial District. These guys were just shrewd crooks working out of Long Island.” In the body of the article, former prosecutor Ronald L. Rubin insisted that the offending firm depicted in the Wolf movie “was not a real Wall Street firm, either literally or figuratively. Its offices were in Long Island…” The fraudulent acts, the cocaine and the strippers and the toxic masculinity that became Hollywood’s inspiration? These were not emblematic of Wall Street. These guys weren’t even from Manhattan.

In 2014, Rubin was concerned with defending the legitimate men of finance from the figurative implications of The Wolf. Belfort’s scam depended on high-pressure sales and stock IPOs. Rubin wanted it to be clear that Belfort was “just a thief.” But Belfort’s methods were remarkably close to the standard practices of the industry. He told stories about investments in particular companies, built trust, and then suggested that if his marks balked, they were leaving money on the table. If this is highway robbery, the highway is still the stock market. Both in real life and in fiction, Belfort fit the archetype of the hard-charging, hard-partying, hypermasculine Wall Street trader. Belfort could have been a Master of the Universe straight out of the The Bonfire of the Vanities, or a Gordon Gekko-type from the movie Wall Street, or one of Liars Poker’s big swinging dicks.[2]

For Rubin’s way of thinking, Madoff was monstrous because he seemed so normal, and the toxic masculine archive was exaggerated in order to sell spicy stories about bad apples. The real Bear Stearns just wasn’t like that. As a prosecutor, he wrote that he had learned: “[E]very business, especially those involving large sums of money, attracts criminals. For example, after the real-estate market collapsed in 2008, scammers began peddling worthless loan-modification products to impoverished homeowners facing foreclosure. Such predators were no more characteristic of the mortgage industry than Jordan Belfort was of Wall Street.”[3]

Rubin directed attention to the figure of the criminal precisely in order to exonerate the industry. So for Rubin, the mortgage originators peddling NINJA loans (No Income No Job or Assets to back them) on the way up, then packaging those NINJA loans into tranched securities in special purpose investment vehicles, passing them off their books, and privatizing enormous profits on commissions and sales? Those were real, regular, businessmen.

When those businessmen socialized the losses after the crash, people like Rubin relied on the idea that the crisis was a kind of organic natural disaster, an objective reality that made victims of regular people, including mortgage originators and securities brokers.

Rubin understood that the market, writ large, needed public trust, and so he was concerned with appearances, with the problem of representation. In order to make Belfort seem abnormal, Rubin aligned him with criminal others. “Scammers” preyed on homeowners who needed help modifying their loans. In search of fakes to stand in contrast with the real, Rubin bemoaned fraudsters who were taking advantage of vulnerable people. Madoff had pretended to be a normal trader before the crisis. Scammers pretended to be helpful bankers after the bailout. But all of these symbolic negotiations, of masculinity and emblems and fakes, were part of the creation of value within the system.

Arguably, homeowners were vulnerable to fake bankers because the state wasn’t forcing the bailed-out banks to provide help, for real. In courts across the nation, creditors who had profited from the securities on the way up were trying to claim assets they no longer owned. When it wasn’t convenient to own the assets, they had passed on the responsibility, but now they wanted money from foreclosures. The creditors were abusing the bankruptcy process to such a degree that a US Senator had to pass a law to try to get them to stop.[4] Everyone, in other words, had to work hard to distinguish the mortgage industry from the criminals. Rubin needed fictional representations of criminals to do so.

Rubin’s interpretive work distinguishing the real from the fake, the allegory, and the morality tale, was part of the work of reconstructing capitalist realities. Distinguishing the monsters from the scammers from the innovators is part of the performance that creates value forms. Money refers only to itself. Thus in a capitalist context, the relationship between referent and representation, between productive labor and fictitious asset, creates a gap. In that gap, we find both the creation of value forms and constant analysis, in a dance that often imagines that the next round of speculation will find a way to keep us safe from its ravages, that the next round will respect some objective limit or fundamental economic reality (Konings 13-19). Rubin wanted to distinguish “real” trades from “fake” money, and real creditors from fake bankers. He wanted to retroactively validate past investments in mortgages, precisely as a means of getting financiers back to the business of creating new and better speculative positions—this time, they promise!

Tygstrup seems correct to the extent that the fascination with Madoff revealed a productive ambivalence. Madoff was both a bad apple and a stand-in for the whole rotten mess. But that ambivalence isn’t peculiar to Madoff, and it doesn’t herald a quantitative level, in relation to the ever-receding bottom line, at which finance will finally topple over.

The promise that if we validate this round, or rein something in, the solution to the mystery of real value will be just around the bend—that is a seduction inherent to neoliberal reason. In a discussion of The Sopranos as something of an allegory, Matt Seybold put it this way:

Neoliberalism is a regime that governs by fiscal arbitrage, and laws exist only to establish a baseline against which we can measure financial risk. The question then becomes, what can you get away with: “Can you make more money breaking the law than is required to mount a successful legal defense…? Is the grift worth more than the graft it takes to pull it off?” (Seybold)

This makes it seem that, yes, the entire economy is a bit of a scam, and Madoff and Belfort were both looking for an answer to the same question. Madoff moved more money than Belfort, he just managed to pull off less and fell harder. It then struck everyone as truly weird, almost uncanny, that Madoff never had a plan.

When the creation of value forms shifts, and alters how things work, it’s a worthwhile exercise to understand who is being served up as a bad apple, and why. It’s worthwhile keeping an eye on where neoliberal reason is directing our attention—perhaps especially in moments of crisis. But if these crooks are representative of anything, it was of their provincial specificity, of the last gasp of Wall Street, before the apotheosis of global dark money. And of course, the film of The Wolf of Wall Street, which narrated the rise and fall of a powerful American trader, couldn’t get funded until its backers found a kleptocratic Malaysian financier.[5] The Wolf of Wall Street, in that sense, is both meta-allegory and big, fat, bloated symptom. But the ground, the material referent to keep in mind, is not some elusive final limit but the suffering of the Malaysian people, when the theft of their sovereign fund was made real by the markets. The system isn’t getting more objectively fictional, it’s getting more unequal.

Michelle Chihara is currently on book leave as Associate Professor of English at Whittier College, where she teaches contemporary American literature, media studies, and creative writing. She has also served as Associate Dean and Director of the Whittier Scholars Program for individualized curricular design. Recent publications include an entry on “Men” in Finance Aesthetics: A Critical Glossary (forthcoming 2024 from Goldsmiths Press); a chapter in New Directions in Print Culture Studies from Bloomsbury Press (eds. Daniel Worden and Jesse Schwarz); articles in Distinktion: A Journal of Social Theory, American Literary History and Postmodern Culture. She co-edited The Routledge Companion to Literature and Economics (2018). From 2016-2022 she was Economics & Finance editor at Los Angeles Review of Books, before serving as Editor-in-Chief through 2023. Before academia, she worked as a reporter and has published reportage and essays in a variety of publications, including Mother Jones, n+1, Post45: Contemporaries, Bloomberg and Avidly.org.


Bernard, Carole, and Phelim P. Boyle. 2009. “Mr. Madoff’s amazing returns: An analysis of the split-strike conversion strategy.” The Journal of Derivatives 17, no. 1: 62-76.

Chihara, Michelle. 2020. “The Rise of Behavioral Economic Masculinity.” American Literary History 32, no. 1: 77-110.

Konings, Martijn. 2018. Capital and Time: For a New Critique of Neoliberal Reason. Stanford, California: Stanford University Press.

La Berge, Leigh Claire. 2015. Scandals and Abstraction: Financial Fiction of the Long 1980s. Oxford: Oxford University Press.

Morath, Eric. 2011. “Bill Strengthens Trustee’s Power to Protect Homeowners.” Wall Street Journal, May 27.

Rugin, Ronald L. 2014. “How the ‘Wolf of Wall Street’ Really Did It.” Wall Street Journal, January 3.

Seybold, Matthew. 2022. Podcast episode: “The Sopranos Revival (Remember the End of the End of History?)” with Peter Coviello and Xine Yao. The American Vandal, September 29. The Center for Mark Twain Studies.

Hope, Bradley; John R. Emshwiller and Ben Fritz. 2016. “The Secret Money Behind ‘The Wolf of Wall Street.’” Wall Street Journal, April 1.

[1] See: Bernard 2009, which makes clear that it was relatively obvious that Madoff’s returns could not come from the strategy he claimed to be using.

[2] See: La Berge 2015 for a discussion of hypermasculinity, scandals, and abstraction. I also discuss masculinity and epistemic authority in economics in Chihara 2020.

[3] See: Rubin 2014. Rubin had initially helped Elizabeth Warren set up the Consumer Financial Protection Bureau. Later, according to his own website, as an attorney in private practice he “defended clients against CFPB enforcement attorneys he had trained,” and still later he wrote an article for the conservative magazine The National Review about the CFPB’s “Tragic Downfall.” Rubin felt the CFPB had become too politicized. (The CFPB still exists, so this is a metaphoric downfall.)

[4] See: Morath 2011. Sen. Patrick Leahy (D-VT) was one of three senators who recognized that the actions of creditors in the bankruptcy process rose to the level of abuse and fraud, and so the politicians introduced legislation to curb the behavior.

[5] See: Hope 2016 for one example of the many articles and books written about the 1MDB scheme.


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