"Recently, Floyd Norris at The New York Times penned a wonderful article titled “Pension Folly: How Losses Become Profit,” which catalogs some of the shenanigans available to corporate America via the miracle of pension accounting. Here is my favorite quote, which will give you some idea of the magnitude of the problem: "A study by Milliman USA, a benefits consulting firm, found that in 2001, the reported results of 50 large companies included $54.4 billion of profits from pension fund investment.
In fact, the pensions lost $35.8 billion from investments last year." So, on top of pro forma earnings,
in which companies pretend to make money when they actually lose a ton, "
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Sounds like a Enron, WorldCom tricks and the tricks used by George W. Bush when he was on the audit
committee and Board of Directors of Harkens Energy!
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"Sometime before this year is out, I think all of technology is going to be taken to the woodshed,
and at some point it will probably happen en masse, instead of just a couple of
stocks at a time. To quantify the damage, I believe that before this bear market is through,
we'll probably have a whole lot of stocks trading under $3, because what a stock is
worth is a function of the underlying fundamentals -- not what its price has been at some crazy
moment in time."
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And hopefully, the crooked analysts, investment bankers and CEO's will have lost their jobs! |
