A few large accounting firms audit major corporations. If audited too closely, corporations can employ a more compliant firm. The Arthur Andersen firm was found to be too accommodating and was sacrificed. Were Andersen’s practices different from those of its competitors? Apparently the Ernst & Young firm will be the next to fall. During the real estate bubble, bond issuers shopped bond-rating agencies for favorable ratings. This practice continues with investments formerly rated AAA being reclassified as junk! An industry group, the Financial Accounting Standards Board establishes standards for valuing corporate assets. What is the value of a non-performing mortgage-backed security in a declining real estate market?

With such unresolved problems, how does one explain the strong stock market? One possibility is that insurance companies, mutual funds and wealthy investors demand for investment opportunities exceeds supply causing a stock market bubble. Another possible explanation is that propertied interests believe that their influence in Washington will allow them to rig the game. Will they be able to sell their inflated assets to the Social Security Administration or to self-directed retirement account they hope to substitute for Social Security?

“A society becomes totalitarian when its structure becomes flagrantly artificial: That is, when its ruling class has lost its function but succeeds in clinging to power by force or fraud.” — George Orwell

Our government abets corporate fraud with token regulations and subsidies. Reliance on a professional military supplemented with corporate paramilitaries makes the use of force within the USA more feasible. Beware!

John Gibson

Blooming Prairie