Imagine a company trading on Wall Street, the darling of investors that is able to triple its stock in two years? Imagine that this company first started off trading in natural gas then moved to the sale of bandwidth and eventually traded weather futures, yes, and a company that betted on the weather and gambled on the temperatures? Imagine that this company can walk away from a billion dollar electricity infrastructure in India that failed because no-one thought to find out if the Indian government could afford to pay the tariffs and wrote-down this loss as a profit? Imagine that this company was listed on the Fortune 500 list as the most innovative company? Imagine that this same “darling of Wall Street” cost the state of California $30 billion and created havoc and untold misery to its citizens for more than a year. It became so unbearable for the then Governor of California, that an unlikely candidate won the governorship, Arnold Schwarzenegger, yes, the “Terminator.”
Now imagine that this company through a combination of a charismatic CEO, brilliant advertising and a bullet proof PR strategy won over all the Wall Street analysts, and the ones that disagreed with its CEO’s forecasts of the company’s fortunes was fired? Now, further imagine that I told you that one of the systemic issues that plays into the hands of the top 10 000 companies on the planet is a 300-year old piece of technology, in today’s lexicon, an application that has remained the same for almost half-a-millennia, yet we consider its practitioners and pundits, highly astute, prudent and educated people? It’s called, “Accounting?”
Now stop imagining, because the subsequent collapse of this company is considered by many pundits to be the “biggest fraud in history.” It precipitated the collapse of Arthur Anderson; one of America’s oldest accounting firms due to loss of reputation. They were caught shredding more than 1-ton of evidence and promptly convicted of “obstruction of justice.” One of the five largest accounting firms in the United States disappeared overnight. By the time the dust settled, almost 30 000 people lost their jobs and medical insurance with an average severance pay of only $4500. Meanwhile, executives were paid $55 million during the bankruptcy and cashed a further $755 million in the year before the collapse. It is calculated that Enron scammed investors of $60 billion in lost earnings and corporate larceny. For the so-called, “biggest fraud in history,” at the close of 2001, the chilling events of 2008/09 was just around the corner and it would make the Enron corporate scandal look like chump change. Not even the newly legislated Sarbanes-Oxley Act would save poor Americans again, because it seems that corporate bosses are too wily, too cunning, too educated in the ways of legalized theft and corporate larceny, and with the help of Congress, have constructed a labyrinth, complex set of banking, financial, legal and other related and supportive laws that creates corruption and fraud and keeps the poor in a state of perpetual poverty…..
Within eight years we would become familiar with new words introduced into our lexicon like, meltdown, bailouts, TARP, “troubled asset relief program” and “quantitative easing.” Clever economic euphemisms for buying junk (dead) stock and borrowing (taxpayers) money to banks at almost zero interest rates, without our consultation or consent.
And become familiar with banks names like Fannie Mae, Freddie Mac, Bear Stearns, Royal Bank of Scotland, Bradford & Bingley, HBOS, Merrill Lynch and Goldman Sachs, because they’re always on the evening news. We would also get to understand what AIG really does? And we would discover to our horror that the FCIS, the Federal Deposit Insurance Corporation would sacrifice 465 banks on the altar of neocapitalism for the sake of the ones that were “too big to fail.” Then when you finally open the morning papers one day and discover a hidden amount that describes household losses (in dollar terms 2011), of $19.2 Trillion, you bite down hard on your tongue and quietly vomit in your mouth because there were other bigger, even more nightmarish figures right next to that one and you finally understand the meaning of Groundhog Day as the light recedes into blackness……