Wednesday, June 26, 2002

Gloom for the world economy The world’s financial markets are in turmoil after the revelation of a massive accounting fraud at WorldCom. Is the collapse in share prices and the dollar a short-term reaction: or might policymakers now find themselves struggling to keep the economic recovery on track? 1:29:38 PM  Google It!  comment  []

Euro nearly reaches parity with dollar "The euro flirted Wednesday with parity to the U.S. dollar, which was dragged down by falling stocks on Wall Street and another scandal over corporate accounting." "The euro reached 99.43 U.S. cents early Wednesday, before slipping back to 98.5 cents, its latest climb in a rally that began in early April and has sent the currency up 14 percent." "Many economists predict the euro will reach parity - one euro to the dollar - in the next weeks or months. That would be a public-relations boost for the 3-year old currency, which has so far played a distinct second fiddle to the dollar as the preferred vehicle for investors and central banks around the world." "At the same time, experts say it's mostly the dollar's weakness - not a sudden improvement in the euro-zone economies - that is driving the rally. In the 12 countries that use the euro, second quarter growth was only 0.2 percent." 1:25:14 PM  Google It!  comment  []

Dan Gillmor: Corporate sleaze carves into our trust "Dan Gillmor blasts the corporate crooks whose  transgressions fill today's newscasts, greedy bastards who milked billions from their companies, betraying their shareholders. Dan thinks they're aberrant, and that their worst sin is making investors believe that there's no way for the little guy to win. I wonder how aberrant they are -- these aren't fly-by-night operators; the perps in these billion-dollar, economy-destroying felonies are seasoned CEOs and CFOs, people who come from the ranks of Big Five consulting firms and out of world-renowned B-schools. These crooks are the kinds of talking hairpieces that VCs like to parachute into startups to get them ready for IPO; they're the kinds of back-slapping cap-toothed glad-handers who know how to talk to the investment bankers. Some days, I believe that the only way to get to the top of a venture-funded or public company is to check your morals at the door. " "Rational people are starting to assume something that isn't necessarily true. They're becoming convinced that the system is hopelessly, irrevocably rigged against everyday investors by a corrupt cadre of insiders in boardrooms and on Wall Street, willfully assisted by regulators and elected officials who are either corrupt themselves or simply blind." [via BoingBoing] Dan Gillmor asks, after learning of the WorldCom debacle, "How much more trust can we lose?" He continues, in a sentiment shared by more than a few: "I fear we're nearing a classic tipping point. The primary reason we didn't have a worse recession in the wake of the market downturn was that consumers kept spending. Now their confidence is dropping." [via Corante Premiumblend] 12:49:28 PM  Google It!  comment  []

Europe sees WorldCom scandal as "American disease" "European stock market traders and investors voiced shock and disgust on Wednesday at a $4 billion accounting scandal at U.S. telecoms group WorldCom Inc, but they doubted the same could happen in their home markets." "'If you can't trust the accountants or the companies then the whole thing falls down like a pack of cards,' said Henk Potts, an investment analyst with Britain's Barclays Private Clients, which manages money for wealthy clients." 12:41:08 PM  Google It!  comment  []

WorldCom Says It Hid Expenses, Inflating Cash Flow $3.8 Billion "WorldCom, the nation's second-largest long-distance carrier, said last  night that it had overstated its cash flow by more than $3.8 billion during the last five quarters in what appears to be one of the largest cases of false corporate bookkeeping yet." 12:39:50 PM  Google It!  comment  []

Bush condemns US telecoms fraud (WorldCom: 17,000 jobs lost) "A multi-billion dollar accounting fraud has taken place at WorldCom, the number two US long- distance phone company. " "In an immediate attempt to salvage some of its business, the firm has announced 17,000 redundancies and sacked its chief financial officer, Scott Sullivan." "The fraud is far bigger in money terms than Enron's misdeeds, and will further undermine the trust of investors in corporate America." "The US dollar lost strength and share prices around the world plummeted on news of the fresh scandal, with telecoms firms particularly hard hit. " 12:14:11 PM  Google It!  comment  []