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Corporate Crime for Morons
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We cant all be astronomically wealthy. But we can all enjoy when the rich and powerful are facing financial ruin, public humiliation and, best of all, jail time. So its no surprise that the CEOgate story has gotten so big, temporarily eclipsing our neverending battle against terror and our self-righteous indignation over the Pledge of Allegiance.
It probably doesnt help that both the President and Vice President are closely linked to big business and believe in their entitlement to secrecy so adamantly they refuse to turn over any documents anyone asks to see (like Bushs SEC investigation files). Even Martha Stewart is being sautéed in insider-trading allegations, and if you cant trust Martha Stewart, who can you trust? (Does this soufflé recipe really call for four eggs, or is Stewart just trying to help her friends in the poultry industry?)
Now what began with Enron last fall as simply the biggest corporate bankruptcy in U.S. history has spiraled into a steady stream of scandals, scaring the crap out of investors, spooking the already shaky economy and forcing the government to leap into regulatory mode. With elections a mere four months away, you can bet even the timid Democrats will keep the story alive, since it casts such a poor light on our MBA President and his big business-beholden party.
But as sexy as the corporate corruption scandal has become, why should you care about the shady (or straight-up illegal) accounting practices of a bunch of fat cats? Because even if youre not a shareholder in Enron, WorldCom, Xerox or Martha Stewart Omnimediaor even if youre not a shareholder in any corporationwe all have an interest in the health of the economy. A bad American economy, it stands to reason, is bad for Americans.
Maybe even more important, if these CEOs are criminals, they deserve to be treated like criminals. Dont let all the big business jargon or lawyerly explanations confuse you: Stealing billions from Wall Street investors is no different than stealing 50 bucks from a Main Street convenience storein fact, its probably worse. If thieving corporate officers dont do serious jail time, thatll be an even bigger crime.
So, before your eyes begin to glaze over, lets get right to the most important questions.
What the hell is going on around here?
It turns out corporate America is just as bad as your disgruntled bleeding-heart hippie uncle always said it was. Insider trading, questionable connections between independent auditing and high-priced advising, overstated revenues and creative bookkeeping are costing some shareholders their shirts while lining the pockets of the guys in charge of these companies. This has prompted investors to pull out of the stock market and hurt the economy. After all, who wants to hand over their savings to a bunch of suspected criminals? Investment is always accompanied by a certain amount of risk, but you shouldnt have to take the additional risk that maybe the company youre investing in is lying to you.
OK, but corporations have always been sketchy, havent they? I mean, if you wear Gap khakis and Nike sneakers, drink Starbucks coffee and eat McDonalds hamburgers, its like kicking a small business owner and third-world child in the face while pissing on the environment and making a financial contribution to the Devil himself. Big corporations have always been unspeakably evilwhy is their bookkeeping such a big deal?
Whoa there, my rabidly consumer-conscious friend. While there may be some truth in what you say, were not talking about business practices that are merely morally or ethically questionable. In many cases were talking about businessmen purposely misstating their numbers to make their companiesand thus shares in themappear more valuable than they actually are.
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