Friday, June 28, 2002

Paul Krugman has a simplified description of the financial shenanigans at Enron, Dynegy, Adelphia, and Worldcom. There are a couple of ominous things about this menu of mischief. First is that each of the major business scandals to emerge so far involved a different scam. So there's no comfort in saying that few other companies could have employed the same tricks used by Enron or WorldCom [~] surely other companies found other tricks. Second, the scams shouldn't have been all that hard to spot. For example, WorldCom now says that 40 percent of its investment last year was bogus, that it was really operating expenses. How could the people who should have been alert to the possibility of corporate fraud [~] auditors, banks and government regulators [~] miss something that big? The answer, of course, is that they either didn't want to see it or were prevented from doing something about it. 3:39:02 PM

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