Gretchen Morgenson in today's
Times points to some questions that should have been asked of the telecom cartel long ago. The suggestion is that telecom giants were Enronically inflating themselves:
Unlike Enron's saga, this drama is not about a single, rogue company operating to enrich its executives. This tale is about an entire industry — telecommunications — that rose to a value of $2 trillion based on dubious promises...
More people stand to be hurt by the fallout from the telecom follies than from Enron. Remember when AT&T (aka Lucent, Avaya et al) used to be the "widows and orphans" stock? There are a lot of screwed widows and orphans, since no one believed telecom - a regulated industry - could create such economic hallucinations. But they did:
Ms. Kalla estimates that telecom companies made swaps worth $2.5 billion in 2001. It is not yet clear how many of those swaps lacked a real business purpose. But some analysts wonder if these interlocking relationships were intended to overstate the true economic value of the businesses. Given that the companies were not generating nearly enough revenue to keep investors happy last year, there was certainly incentive to inflate results.
Brava Ms. Morgenson. Let's see if the Times has what it takes to dig deeper. The lively and hugely deserved detestation of Enron should not cause us to lose sight of screaming capitalist jokes perpetrated without the direct assistance of Messers Cheney or Bush.
''Big Government is bad and Big Business is good. But these days how can you tell the difference?'' Captain Blowtorch.
