Earl Mardle's Journal - January 1st 2003

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Earl Mardle's Journal
Wednesday, January 1st, 2003

Date:	2003-01-01 11:55
Subject:	Network drivers in Bankruptcies and Deflation Talk
Security:	Public

Check this one First

The BBC rounds up the stories as 2002 produces US Bankruptcies with 186 public companies going bust with £230bn in assets, dwarfing last year's record $259bn. As the Redherring story in the earlier blog points out, many of these companies are in Chapter 11 and heading for a second round which will pull down even healthy companies.

Even more interesting is the point that

Whereas 2001's corporate failures were predominantly the result of debt problems, accounting scandals were the most notorious feature of 2002's list. Of the five biggest failures, four featured accounting trouble.

These are the results of learning that spreads through the network of the most highly connected companies, each of them infecting their colleagues and, because the process operates at the highest levels ofbusiness, when the dam breaks oit takes with it the biggest companies who had the most to gain, and lose.

The excellent Paul Krugman in his NY Day NY Time comment (Free Reg required and only up for a few days) charts the spread of talk about Deflation in the US media.

In the first 30 days of December 2000, according to Nexis, only six articles in major news sources contained both the word "deflation" and the phrase "United States"; none of those articles suggested that deflation in this country was a real possibility. In the same period last year there were 292 hits; this past month there were 566.

I wonder how much of that spread is because writers have woken up to the nasty realities underlying the US and Global economy and how much of it is the usual, lazy, journalism that helped so much in getting us here in the first place and continues to ignore the Real Estate Bubble.

BTW, Happy New Year or, as a friend of mine from India wrote

Holiday Greetings (as cleared by our Lawyer)

Please accept with no obligation, implied or implicit, our best wishes for an environmentally conscious, socially responsible, low stress, non-addictive, gender neutral celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practice religious or secular traditions at all...and a fiscally successful, personally fulfilling, and medically uncomplicated recognition of the onset of the generally accepted calendar year 2003, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make the Republic of India great (not to imply that India is necessarily greater than any other country), and without regard to the race, creed, color, age, physical ability, religious faith, or sexual orientation of the wishee.

This wish is limited to the customary and usual good tidings for a period of one year, or until the issuance of a subsequent holiday greeting, whichever is later, and is not intended to, nor shall it be considered, limited to the usual Judeo-Christian-Islamic-Hindu-Buddhist-Sikh-Bah'ai celebrations or observances, or to such activities of any organized or ad hoc religious community, group, individual or belief (or lack thereof).

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