Intermarkets' Privacy Policy
Support


Donate to Ace of Spades HQ!





Recent Entries
« Thursday Morning Link Dump | Main | On the Platinum Coin Trick »
January 10, 2013

Enron and the Trillion Dollar Coin

"The Enron scandal grew out of a steady accumulation of habits and values and actions that began years before and finally spiraled out of control." ~ McLean & Elkind, The Smartest Guys In the Room

Once upon a time, Enron had a real business that made real profits. They differentiated themselves from their competitors and stood atop the world, briefly, as one of the most successful, highly regarded and innovative enterprises ever. Then the roof caved in.

Or at least that's how it appeared, anyway.

In reality, as books like The Smartest Guys In the Room and Conspiracy of Fools well document, their focus changed rather early on from engaging in transactions that were good for the business economically to doing transactions that would best window-dress the financial statements by gaming the rules, accumulating massive amounts of debt along the way.

Their use of mark-to-market accounting was blamed, yet it was officially blessed by the SEC. Their hidden debt, masked by layers of special-purpose entities, was (mostly) accounted for within the rules, too, although they were straining at the outer edges.

Those rules, though, were made by man. The rules of economics, whether applied to companies or governments, are forces of nature that don't care that the FASB said 3% outside ownership in an SPE was sufficient to take it off balance sheet or that congress, in its infinite wisdom, created a loophole for the treasury secretary to mint an enormously-labeled platinum coin so the government can keep on spending.

When the end comes, it comes quickly.

"We were so sure of what we were doing and where we were going," one executive who attended [Enron's] San Antonio meeting said. "We didn't know we were living on borrowed time."

I couldn't help but think of Enron as I read the Business Insider piece Gabe linked yesterday, where the Smartest Guys In The Room are saying that the government can do this trillion dollar coin trick and keep the checks going out the door forever with no negative or unforeseen consequences.

"It's a one time thing", they say, ignoring the fact that we'll run a trillion dollar deficit this year that eats up the newly-minted room under the debt ceiling. Then what?

Mint another coin, I guess.

Meanwhile we'll continue to slog along at ~7%-8% U3 unemployment and ~2% real GDP growth (or lower, when you factor the government's deficit spending out of that number) because the tricks and gimmicks aren't really fooling anyone.

Most of the commentary on the trillion dollar coin idea has focused on its legality. That's the wrong question. The right question is: "Is this a wise thing to do?" And the answer is a resounding, "NO!"

So look for the Obama administration to press forward with it.

See also: Megan McArdle, Washington Goes Platinum

Seemingly, the most important thing is for the president to defeat intransigent Republicans—even if that means that the president “for all Americans” who once spoke of winning the future and healing the planet will be reduced to presiding over the Franklin Mint.

digg this
posted by Andy at 10:00 AM

| Access Comments




Recent Comments
cthulhu: "645 Morning Sleepy Fappers.I went to bed early .. ..."

Vic[/i]: "647 Missed the ONT because I foolishly went to be ..."

ALH: "Missed the ONT because I foolishly went to bed at ..."

Vic[/i]: "Ready for another cold wet rainy day here. It has ..."

ScoggDog: "Morning Sleepy Fappers.I went to bed early ... no ..."

Grampa Jimbo: "I saw Rooftop Koreans close the show for the Regin ..."

RickZ: "Car drives through Minneapolis protests TWICE! ..."

CrotchetyOldJarhead: "640>> At least you're in civilization....imagine ..."

Mrs. Ida Lowry: ""The man's name is Reginald Denny. He still suffer ..."

cthulhu: "638 636>> DFW. Might take the 'opportunity' ..."

cthulhu: "634 Ok cthulhu, there's one up now. @conservativ ..."

CrotchetyOldJarhead: "636>> DFW. Might take the 'opportunity' to go to s ..."

Recent Entries
Search


MuNuvians
Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
News/Chat
Archives
Powered by
Movable Type 2.64