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Non-Tech : The ENRON Scandal
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To: Doc Bones who wrote (2455)2/7/2002 1:31:53 AM
From: Mephisto   of 5185
 
"Enron's illusion of profitability rested largely on "mark to market" accounting. The company entered into contracts that would yield profits, if at all, only over a number of years. But Enron jumped the gun: it treated the capitalized value of those hypothetical future gains as a current profit, which could then be used to justify high stock prices, big bonuses for executives, and so on.

And that's more or less what happened in last year's budget. The Bush administration took a bullish 10-year surplus projection — a projection that had a built-in upward bias, and in any case should have been regarded as no more than a guess — and treated it as if it were hard fact. On the basis of those surplus fantasies the administration — aided by an audit committee, otherwise known as the U.S. Congress, that failed to exercise due diligence — gave itself a big bonus in the form of a huge tax cut." Paul Krugman

Bush's Aggressive Accounting [NYT Op-Ed]
February 5, 2002

Doc, I thought it was a good editorial! Thanks! Mephisto
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