From Enron To Sino-Forest - Same Old Song

Tyler Durden's picture

Via Peter Tchir of TF Market Advisors,

Enron --> Worldcom --> Adelphia --> Lehman --> MF Global --> Greece --> Sino Forest --> ????

I would rank these as some of the more notorious bankruptcies. These weren't normal course of business bankruptcies. These were dark and deviant. They have many similarities.

Opaque and convoluted accounting and finances are common to them all.  Whether it was Jedi for Enron, repo 105 for Lehman, or off-market swaps with Goldman for Greece, they all used every trick in the book to keep debt off balance sheet and to obfuscate the risk.

In many cases, one individual pointed out the problem. They were often ignored by their peers and ridiculed or even threatened by management. Every single one of these companies attacked the individuals who were pointing out their problems, or just broadly lambasted the "evil speculators". Yet in the end, their complex chain of interconnected and dubious transactions collapsed on them - the end often bein swift and brutal.

I didn't include LTCM, or Healthsouth, or Madoff, or AIG, or Fannie & Freddie or some others could have fit here as well.

Companies go bust all the time, but in most cases it was too much debt in a business that changed. These are different. They were full of deceit and denial, and never really had a chance of recovering once the web of lies, hidden debt, and accounting tricks came to light.

I can't think of many companies tainted with that brush that ever survived? Tyco? Maybe there are more, but as financial complexity increase, efforts to hide debt grow, and the easy route is avoided, it is a clear warning side.

It is hard to watch what is going on in Europe and not believe that Greece is just the first of many. Countries and their banks. Countries and their regions. Countries and EU programs. Banks and their national central banks. Banks and the ECB. It is hard to pin down the fatal flaw, but for me it is harder to believe that there is nothing to see there and we should happily move along. Especially since Greece did happen in spite of all the denials.
Yes, the money printing of central banks is powerful, and maybe make it different this time, but just think about some countries and banks that could easily replace ????

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BobPaulson's picture

I was wondering when the Sino story would be posted here. Good riddance.

The best ponzi schemes going are the ones that are the simplest. Anyone ever heard of the "Send me a dollar and I'll send you two" scam?

oogs66's picture

Where should I send the $? This sounds good :)

DorseyCecil68669's picture

my friend's aunt makes $72/hr on the internet. She has been without work for six months but last month her payment was $19183 just working on the internet for a few hours. Here's the site to read more .....

StychoKiller's picture

Speaking of scams...lookee here /|\  LOL!

Kayman's picture


Geez.. Dorky Weasel , why don't you set up a webcam at your house.  You are on the wrong site.

Gully Foyle's picture

Hey Now!

Canada to stop issuing pennies, businesses told to round off to nearest 5 cents, or "work it out for themselves"

The Canadian Tory government has announced that it's discontinuing the minting of new pennies, as the coins are expensive and considered a "nuisance" by businesses and their customers. As Steven Chase writes in the Globe and Mail:

“It costs taxpayers a penny-and-a-half every time we make one,” Finance Minister Jim Flaherty told the Commons, adding the move will save taxpayers $11-million annually.

...The increasing scarcity of pennies means Canadians will have to get used to cash transactions being rounded off if they’ve got no pennies on hand.

Ottawa is suggesting businesses round off cash transactions to the nearest five-cent increment but says it’s leaving this to businesses to work out for themselves.

When I was (briefly) at the University of Waterloo, the Engineering faculty's cafeteria had an option to dispense with change altogether: when your bill was added up, you could opt to gamble on rounding, with the direction -- up or down -- dependent on your change. In other words, if you had $3.83 owing to you, you'd have an 83% chance of getting $4 back, and a 17% chance of getting $3 back.

Spitzer's picture

What a fucking joke. This makes me puke.

It saves 11 million anually ? Thats it ?

11 million measily fucking dollars ?

palmereldritch's picture

I say we start politically and electorally rounding out MPs based on what their inviolable pensions cost versus what they deliver as valuated by the protection of the rights and freedoms of the average citizen.

Like pocket change, you would be left with so few you could total them up on one hand.

Buck Johnson's picture

Yep, also if people think that Greece is the only one and that MF Global was the only one doing what they did I have a bridge to sell you.  Everything is on a precipice about to go over and every time the central banks print like  a drug it's effect doesn't last as long and takes twice as much to feel or to work. 

Dingleberry's picture


All we did was deregulte the criminals!

Joebloinvestor's picture

Usually a "good" company doesn't have to hide debt.

Everytime I see "off balance sheet" or "sterilization" I cringe.

blu's picture

When there is no longer an honest way to make money, the rich turn to dishonest ways. Six of one, half dozen of another.

And it is those already wealthy doing this. Don't kid yourself. They've been playing this game for 800 years.

Strider52's picture

I'm taking 90% of my money out of my bank. The mattress (just a metaphor) is starting to sound better and better.

Screw the banks.

StychoKiller's picture

I'd like to place yer avatar ON a mattress! LOL

bobola's picture

"...Batter-coated french fries are a fresh vegetable, according to the Agriculture Department, which has a federal judge's ruling to back it up..."

Say the lie over and over and eventually it becomes fact............


WAMO556's picture

And I will eat them fresh veggies with fresh KETCHUP from Heinz - <sarc>

WAMO556's picture

And I will eat them fresh veggies with fresh KETCHUP from Heinz - <sarc>

non_anon's picture

yeat,it will be different all right

citta vritti's picture

"It is hard to pin down the fatal flaw, but for me it is harder to believe that there is nothing to see there and we should happily move along."

As usual, the Marx Bros. have it: "Who you gonna believe, me or your own eyes?" Chico Marx (dressed as Groucho). Duck Soup.

(at 44:00:

WAMO556's picture

So who launches the first tactical nuke? A. Isreal; B. Iran; C. North Korea; D. Japan (they don't have nukes, like Dolly Parton don't have big boobs - just a small state secret); E. Russia; F. China; G - for any rogues out there that just wanna drop some shit and get it started. Becuase if you are going to steal alot of loot - ask a con man when he is stealing something he will tell you during one of two ways - 1. Distract your attention; and 2. Create a Diversion. THAT IS WHEN YOU STEAL SOMETHING.

Absalon's picture

Given that the global debt market totals less than 90 trillion and there are over 600 trillion in interest rate swaps and credit default swaps you know something is fundamentally wrong in the derivatives markets.   There is no way that you can legitimately get to 600 trillion in derivatives on a base of 90 billion when you consider that it takes two dollars of debt to create one notional dollar of interest rate swaps and not every debt will be subject to any kind of swap.

Winston Churchill's picture

Don't worry,they all net out.sarc.

palmereldritch's picture


Sorry but there wasn't a post on Blackberry's less than stellar (OK, Deathwatch) quarter

What was the name of this company again...Soylent Trees?