Great column, and I hope Galbraith is right that this scandal will play out in a Veblenesque way. J. P. Morgan wasn't just being corny when he said, "Character [in investment dealings] matters before anything else. I wouldn't lend money on all the bonds in Christendom to someone I didn't trust." The fact that Enron is largely an accounting scandal exposes US capitalism at a particularly vulnerable point. I heard a couple of TV talking heads last night speculate that the accounting industry may yet wriggle off the hook here and defeat attempts at re-regulation. If so, it would be a self-defeating victory. In the absence of strict new government controls on accounting firms, the public now has no reason whatsoever to trust these firms, and trust is all these firms have to sell. This would have dire implications for Corporate America as a whole. If the public perceives GAAP as just a tissue of lies, it makes no sense to do anything with your savings except stick 'em under the mattress.
Carl
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