Dotcom Bust — or Fraud?

Everyone knows that we’re in the worst economic slump in decades. The official explanation is that besides the normal fluctuations of the business cycle, we’re dealing with the after-effects of the dotcom bust. Too many people put too much money into risky high-tech and dotcom ventures, and they lost their shirts. As a result, even the ones who still have money are reluctant to invest.

Isn’t this being euphemistic? One of the big things we’re dealing with is the after-effects of massive fraud. Enron, Tyco, WorldCom, and too many others to name defrauded their investors. And most of them were not dotcoms or even high-tech; Enron was an energy company.

Back in the boom days, proponents of tighter business regulation were called “anti-business” or worse. Laws were relaxed, and as a result many of the fraudulent activities were entirely legal. Everyone was the loser, and the ones who lost the worst were the small investors and pensioners whom “business Democrats” were catering to. (Joe Lieberman was the number one business Democrat, and unsurprisingly, he was the Democrat with the biggest say in the Enron investigation.)

So now a lot of that money has disappeared from the face of the earth. Some of it is in the hands of the perps, who I am sure have invested it very conservatively –offshore. And even people who have money are gun-shy. Sure, over-optimistic investment in dotcoms had something to do with it, but a lot of it was just plain fraud.

10.6 billion dollars worth of creative accounting at WorldCom