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Sometimes accounting is science fiction
I can't help it. I'm fascinated by the Enron debacle. I'm not proud of it - in fact, I feel a sort of shame every time I surf the Internet to read the latest story about the company's decade-long magic act of minting money out of nothing. Part of me feels like I'm taking advantage of the misery of the thousands of people who were left bereft by the company, their futures shattered. They are the ultimate victims of this corporate implosion, and no one should forget that.
The story is everywhere, and that is a good thing - even though innocent Enron workers are constantly reminded of their unjust fate. I can only hope that it stays at the forefront of the nation's attention span longer than last summer's tabloid-esque pursuit of creepy Gary Condit.
The Enron scandal deserves our attention because it demonstrates how easy it is for a small number of people to pervert the system. These shell partnerships, with names inspired by animals and "Star Wars" - "Raptor," "Jedi" and "Chewco" - were created without so much as someone batting an eye, until it was too late, that is.
Some of the blame for allowing Enron to conceal a whopping $1.2 billion (that's billion with a "b") in debt has been leveled at the business media, and rightly so. As a former business editor, I know that reporters covering these companies should have acted more as a watchdog than lap dog, able to ask such seemingly simple questions as, "Why can't you provide me a balance sheet?"
I also know that trying to understand the financing behind a company like Enron is like trying to read cuneiform writing. Stare and squint at it as you might, it's not going to make any sense. And since most journalists do not possess an MBA, they rely on the opinions of analysts, which, as we have witnessed, are not always erected on solid ground.
But is corporate America alone in its fudging the books to suit its financial whims? Absolutely not. While Enron execs are publicly pelted for their greediness, governments often practice a system of accounting that is just as dubious, and possibly as risky.
Take Washington, for example. In doing some reporting for a recent story, I learned that in order to make up for an expected $1.2 billion shortfall (Gee, that number sounds familiar, doesn't it?) the state had conveniently tweaked the mathematical formula used to determine how much money it should receive from the federal government to be used for Medicaid patients.
As a result, the budget office for the Department of Social and Health Services claimed Washington should garner an additional $200 million from the feds, thereby filling a large chunk of the budget black hole. Now understand, the money's not in the bank yet. There's no guarantee the state will get it.
In other words, the state is assuming it will get the money. And you know what happens when you "assume," don't you?
What's worse, there's talk that through the algebraic finagling, Washington could argue it's owed $1 billion. Again, there's no assurance it will get the money. But this is old news, isn't it? States have been guilty of using voodoo economics before, in some cases staging raids on pension funds to pay for programs.
What fuzzy math the state will use to counter additional bad economic tidings is unknown. Unlike Enron, we have access to the books. Hopefully they won't contain anything named after a Wookie.
Drastically shifting gears here, I would like to make a plea for more letters to the editor. Lately, they've been practically nonexistent at our office, either by e-mail or snail mail, although they began to pick up this past week.
While the guest columns we've run have been interesting (this one included, I hope), I would much rather see an editorial page filled with lively debate generated by you, the reader. Write about anything you want; it doesn't matter if it has appeared in the Valley Record or it's a topic that just sprang to mind.
In other words: We want you ideas (just try to make them less than 450 words, if you please). You can e-mail letters to barry.rochford
@valleyrecord.com, or send them to P.O. Box 300, Snoqualmie, WA 98065.