Washington Accounting Scandals Worse Than Wall Street? - 500 Beiträge pro Seite

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Washington Accounting Scandals Worse Than Wall Street?
By Mark Hulbert
CBS.MarketWatch.com
8-11-2

http://www.rense.com/general28/wash.htm

ANNANDALE, Va. (CBS.MW) -- Have our politicians in Washington no shame? Given the shenanigans they employ to manipulate the federal budget, they should be among the last to criticize corporate America`s accounting methods.

Perhaps our elected representatives are hoping that if they divert our attention to how corporations are cooking their books, we might not notice what a mess they`ve made of the federal government`s books.

According to Bill Frenzel, who himself served in Congress between 1971 and 1991 and who now is a guest scholar at the Brookings Institution, one of the only differences between the accounting methods used by some corporations and the Federal government is that criminal sanctions do not apply in the latter case.

This situation has led a number of investment newsletter editors to throw up their hands in disgust.

This past Friday, after the stock market was driven down even further by yet more evidence of malfeasance on the part of both corporations and the federal government, Sy Harding of Sy Harding`s Street Smart Report pleaded: "Will someone please give investors a break?"

Imagine, if you will, how the Feds would react to a publicly traded company that:

* Does not employ accrual accounting.

* Frequently changes the definitions used to classify revenue and expense.

* Regularly places expenses "off budget," while nevertheless declaring as current income any associated revenues.

* Rarely, if ever, accounts for any of the insurance that it underwrites or guarantees.

Our politicians would fall over themselves in righteous indignation. Yet these are just a few of the methods that for years they themselves have been employing to make the federal budget look better than it really is.

The government`s budget mess is not the only federal government offense that upsets Harding. He also is shocked by the poor quality of economic data released by the government. The latest example is the Labor Department`s monthly reporting of the unemployment data, which he concludes is "almost unbelievable."

Here is Harding`s opening statement for the prosecution:

"In early March the Labor Department reported that 66,000 new jobs were created in February, a surprising reversal of the long stretch of monthly declines in jobs creation. It was taken as a sure sign the economy was growing again, and the stock market rallied strongly.

"A month later came more good news, that 58,000 new jobs were created in March. But whoops -- the numbers reported the previous month for February were wrong. Instead of 66,000 new jobs being created as previously reported, there had actually been a loss of 2,000 jobs. So apparently the turnaround in the employment picture did not begin in February as investors had been told -- but at least it had begun in March.

"The following month came the good news that 43,000 new jobs were created in April, - but whoops -- the numbers reported the previous month for March were wrong. Instead of 58,000 new jobs created in March as previously reported, there were actually 21,000 more jobs lost."

Tongue firmly in cheek, Harding muses: "I`d hate to think it`s the same kind of self-serving on the part of Washington that Wall Street firms and corporations have been guilty of, trying to make investors (and voters) think that everything is better than it actually is."

Harding concludes: "Rather than dragging more CEOs off to jail right now for previous problems, Washington might do investors a bigger favor by investigating why the government itself is misleading investors with incorrect information."

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va.

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