Aperiomics is a system I thought of in 1989, I’ve been working on it mainly privately since then but am now starting to publish it. More detailed of it are found at Aperiomics.org, it is based on 12 mathematical principles of chaos and randomness that combine to explain events in war, economics, crime, sociology, evolution, etc.
People are welcome to read, they can correspond with me at firstname.lastname@example.org.
Wednesday, February 27, 2013
The Accounting Trick Behind Thirty Years of Scandal
has been afflicted with one financial scandal after another over the
past generation – culminating in the 2008 financial panic, the effects
of which we are still suffering under. It has widely been assumed that
each of these scandals have had disparate causes, but in their new paper
Bratton and Levitin argue that three of the most notorious scandals of
the past generation — Michael Milken’s junk-bond-related securities
fraud in the 1980s, the Enron scandal of the early 2000s, and the
subprime mortgage meltdown of 2007-08 — are all linked by their use of
an esoteric accounting mechanism called a “special purpose entity,” or
SPE. When used dishonestly, SPEs are nothing more than financial sleight
of hand, the clever shifting around of assets to trick regulators and
investors into seeing something that isn’t there.
With weakened I-O regulation the Iv-B economy becomes more deceptive, here it grows exponentially with secret cracks into special purpose vehicles. Because of compeititon those that don't do this fall behind and can be taken over, so honest accounting is driven out of the system.
what exactly are SPEs? Broadly speaking, they are legal entities that
are separate from the firms that have created them. They can hold assets
and owe debt, but as Bratton and Levitin write, “they never fully
coalesce as independent organizations that take actions in pursuit of
business goals.” They are companies running on autopilot that serve one
purpose: removing assets and liabilities from the parent company’s
can use SPEs for legitimate purposes. For example, an oil company might
want to finance an expensive and risky exploration project without
putting the whole firm at risk of its failure. So they’ll set up an SPE
with limited resources, put only those resources at risk in pursuance of
the new project, and fully disclose the arrangement to potential
investors. But as Bratton and Levitin’s paper shows, special purpose
entities can be — and frequently are — a recipes for disaster.