Scams - dump (I wrote this more than 6 months back - Jan to Mar 2008)

Scams we faced/facing
- AGW: This is to start a world wide carbon trading model. Yet more money flowing to the financial sector. Where is the creation of real wealth? What happens to underdeveloped economies that sell their credits?

- Housing scam: Popular programs on TV to say how houses can be sen as investments. Buy to let, buy to turn a quick profit etc. This fed the bubble. The wealth and inflows of money came from illusion of house price increase. People feel richer, borrow to throw at stock market (because it is a stairway to heaven), or spend more. Ridiculous values placed on services. Costs more to higher a cleaner for 3 hours than to buy a DVD player (£20) from the store at the local service station.

- Agency theory: We need to do some more work here. It is classic agency theory where management in companies do what is in their interest rather than the shareholders. Managers pay themselves 30-40% of the profits without any risk capital at stake.

- Y2K: I heard somewhere that Italy was one of the few countries that chose not to implement Y2K action and....nothing happened. Who benefited? Large accounting firms.

- Dotcom: Why were the financial analysts never taken to task for their gross over valuations of companies. Complete distortion of reality. Barriers to entry low. Why is Google so highly valued. Compare this to large companies with tangible assets and try to make sense of this? Lastminute.com at its height was just a booking agency and valued at £800m.

- Enron and financial engineering fiasco: Again the analysts did little to no fundamental analysis. They just pedalled the same garbage - then it was SIVs that hid exposure off balance sheet. They also booked the entire future cash flow of acquisitions as income for a year to maximise bonuses. Where were the auditors?

- Credit crunch: Now its the rating agencies. But also the analysts who continued to talk up the financial community....ongoing....

- Commodities: The role of the hedge funds/investment banks in hyping up the oil frenzy of 2006 to 2008. Making fuel from food. When did we lose our sense so badly http://www.time.com/time/magazine/article/0,9171,1725975,00.html