WHO WOULDN'T be mad at corporate America? I assume even Ken Lay's dog is a little hacked off at how things are going.
Last August, Enron boss Lay said there were "no previously unknown problem issues" at the energy company. Five months later, Enron was in bankruptcy proceedings, and Lay had presided over the breathtaking destruction of $70 billion in wealth.
If three examples of anything make a trend, as journalists joke, the corporate dishonesty exposed in the last eight months is a megatrend, an era-defining avalanche of bad news.
The Enron outrage has been joined by dozens of large accounting problems at some of America's biggest and most respected companies. Even Microsoft was forced this month to admit it misrepresented results.
The Securities and Exchange Commission has opened 128 potential financial fraud investigations this year, a record pace.
Every time someone like me says things will get better, they get worse.
Arthur Andersen is guilty of obstructing justice. Tyco's L. Dennis Kozlowski is accused of evading taxes. ImClone's Samuel D. Waksal is arrested on an insider-trading rap, and his friend Martha Stewart, the doily and crushed-lavender tycoon, is under scrutiny for her ImClone trades.
Last week came maybe the biggest bomb of all: WorldCom's disclosure that it overstated cash flow by more than $3.8 billion since 2000. Holy Toledo.
Corporate leaders finally seem to be joining Goldman Sachs boss Henry Paulson in recognizing the crisis for what it is: a scary threat to the public confidence that supports the system. Legerdemain on the ledgers by the jerks at Enron, WorldCom and the others has wiped out life savings, put tens of thousands out of work and driven down the stocks of good, honest companies in the general market downdraft.
So, at the risk of summoning another bolt from the financial angels, let me try it again: This will fade.
Although it doesn't feel like it, the current frenzy of revelation, accusation and fear is healthy and far preferable to the alternative - hiding accounting problems and letting them ooze.
No matter how good our laws, clever scoundrels will always find ways to cheat, chisel, embezzle and lie, although one must admit they exceeded expectations this time. What's key, however, is the action of corporate boards and regulators once they discover the skulduggery.
In Japan, authorities and investors have known for years that most banks are insolvent and hold what some Western analysts estimate is $1 trillion in uncollectible debt, most of which is listed as good. This is a disaster 10 times the size of the U.S. savings and loan crisis. Numerous nonfinancial companies are also hiding bad debts and inflating asset values.
What has Japan done about it? To avoid a blowup like the one rattling the United States, nearly nothing. The Japanese books have been cooking so long they're starting to melt, and the direct result is that people literally keep cash in mattresses, the Nikkei stock average is where it was in 1984, and the country has basically been in recession for a decade. How's that for trust?
In an amazing deed of denial, Japan's Ministry of Economy, Trade and Industry unveiled a plan last week to study whether the country's molasses-speed accounting reforms, including a rule requiring the correct valuation of assets on balance sheets by 2005, are too radical.
Instead I'll take Treasury Secretary Paul H. O'Neill, who urges corporate leaders to "get on the tabletop and scream out against the abuses." I'll take the Securities and Exchange Commission, which said last week that "accounting improprieties of unprecedented magnitude have been committed in the public markets."
I'll take surprise, screaming headlines, lurid trials and a $3.8 billion WorldCom restatement. How American it is. We're facing ugly truths, naming names, flushing out excesses, cleaning the mess - and getting ready to go back to work.
Most U.S. companies do not have accounting warts. And despite what you might think, this country has the best corporate financial disclosure requirements in the world. Now they will get better.
It is reasonable to think that the flood of shocking corporate disclosures is a trailing economic indicator, a recoil from past indulgence, not a portent of future pain. In the 1990s, we binged. Now it's time to purge.