Who helps the usurers to play the share market
Creation of the financial market infrastructure supplying manipulation in these markets for the benefit of the world usurers. Particularly, the question is about a series of institutions on information service of the world usurers. They are:
a) institutions developing appraisal methods and methods of the financial reporting preparation for companies;
b) auditing firms;
c) rating agencies;
d) State statistical services;
e) mass media;
f) universities, research centers and other entities providing the usurers with “independent” expert appraisal and “studies”.
Controlled by the usurers institutions and departments developing company financial appraisal methods quite often give “presents” to companies and allow them to falsify knowingly the data on their assets and liabilities, financial results etc. so that to look “healthy and strong” or, at least, not “dead”. In fact, the liberalization of accounting and financial reporting systems of companies has been taking place that gives the business extra opportunities for “market manipulation”, and, put simply, for different frauds.
The profit used to be considered a very concrete indicator giving an idea about the results of the company operation in the conditions of market economy. Generally speaking, this is the difference between incomes and costs of the company. However, today the profit has turned into a very relative concept from an accurate measure. For example, there are profit calculation methods called FIF and LIFO. So, the profit values calculated under these methods differ significantly. Even in the frameworks of the same method it is possible to calculate the profit differently – depending on what the company needs. For example, to avoid taxes it shows zero profit or even losses. To prepare the company for sale or entering the share market, its owners, on the contrary, tend to show the maximum profit. The special expression has appeared: “profit is opinion”. The opinion which depends on the company`s strategy and tactics, more correct on its owners and top - managers.
Interesting article The False Mirrors of the World Economy says on this connection the following:
“If the companies needs to understate the profit, it practically always may from additional expenditure in a legal way which will exist only on paper. If, on the contrary, the company needs to look very profitable, it may use income overpricing methods. For example, some American companies, having concluded a contract, including a fictitious one, immediately take account of only potential incomes of its implementation under calculation of its financial results, though no contractual operations have been executed. Certainly, the skilled auditors can reveal such fraud, but, according to the recent practice, not everyone can resist against temptation to receive good reward for being invisible.”
“Liberalization” of the business financial control has also shown that banks and companies begin manipulation with their assets and liabilities indices, as well as profit using the balances of the “partners”, subsidiaries, second-tier subsidiaries etc. A bright example is corporation Enron which gave their credit and tax liabilities to such “external”, formally “independent” firms which number made up a few thousand. Partly, such situation could be explained by general weakening of financial reporting requirements on the part of controlling unite, and partly by that the officials controlling different companies took direct or indirect bribes and refused to notice apparent breaches. For example, there were numerous contacts of Ken Lay, the Enron former top-manager, with Paul Walker, the chairman of the Committee on balancing international standards, the former chairman of the U.S. Federal Reserve Board who interceded to special “preferences” for Enron corporation.
In 1990s, especially in the second half of the decade, there was a great wave of falsifying of the balance sheets of companies. The Frankfurter Allgemeine Zeitung wrote in this connection on 15.8.2002: “Balance sheet fraud: Taiko, Enron, March, World Com, Global Crossing, Xerox. The list of companies which have recently been suspected or already exposed for balance falsifying is very long. Loss of trust immediately mirrors in exchange rates. Many investors recognize that the unmasked frauds are only the top of the iceberg which true sizes threaten not only American but also the whole world economy. Never a week goes by that a new case does not come up.”
Here is an example of “liberalization” of the financial reporting standards connected with the current crisis. Under dictation of the U.S. Ministry of finance, American banks and corporations, the U.S. Committee on balancing international standards in autumn 2008 amended their documents. In particular, the guidelines were given how to appraise according to the “fair value”: Even if any assets of companies are “absolutely illiquid” (in other words, they have zero price, i.e. they are ordinary “waste”), the companies can resort to special methods of appraisal, and they can calculate a certain “virtual” price of assets on their ground. To look more important, the methods offer using a complicated mathematical apparatus.
In spring 2009, these “innovations” of the asset accounting and appraising got used by the American banks to show that the “business is not so bad”. In other words, the “illusionists” from the financial world have already learned perfectly how to turn “waste” into “gold” by a wave of a magic wand. Medieval alchemists never ever dreamed of that!
Shortly about the “objectivity” of “independent” auditor opinions. At the beginning of the current decade, as many remember, there was a large scandal with the American power giant Enron. Over many years this company was falsifying their financial reporting using both legal loopholes and shameless fraud of their investors and business partners. We are going to describe all those methods which were used by the company (particularly – some top- managers), and we will note that their auditor was permanently the world famous Arthur Anderson. Actually, the auditing company was in collusion with Enron, and “took part” in its milliard profits. The Enron scandal appeared fatal for the auditing company: it fell off the edge of the earth.