The sheer scale of Bernie Madoff's chicanery is impressive -- the "all around nice guy" and Wall Street money manager appears to have made as much as $50 billion dollars of his clients' cash vanish. But How the World Works has had a hard time getting too excited about it. When the U.S. auto industry in on the edge of collapse and the entire global economy is sliding into a deep recession, why get all hot and bothered about a Ponzi scheme, no matter how big? Boys will be boys, after all.

I will admit to being tempted to draw some kind of parallel between Madoff's outright theft and the larger story of Wall Street's implosion this past year, but BusinessWeek's Michael Mandel beat me to it, in "Madoff and the Global Economy."

Painfully, the allegations of fraud surrounding the Madoff affair are also exposing the fundamental fallacy of the global economy. Like Madoff's trusting investors, the rest of the world was willing to assume that the U.S. economy as a whole was a low-risk, good-return investment. This belief drove the entire structure of global trade and finance for the past 10 years. And when the subprime crisis showed this assumption of low risk to be false, the financial crisis resulted.

Combine Mandel's piece with the Wall Street Journal's report on how the Securities Exchange Commission missed numerous red flags warning something might be awry with Madoff, and you end up with a nice little morality tale. As went Madoff, so went Wall Street. The free market has never looked better, has it?

(NOTE: How the World Works will be light today while I work on a roundup -- "The year in the economy.")