No Accountants Were Harmed in the Making of this Blog

          While I was traveling last week to visit, and ultimately to bury, my 90 year old mother who had suffered a devastating stroke, I got an e-mail telling me that someone had posted a reply to a comment I made at Going Concern. Going Concern is a blog that deals primarily with accountants and accounting issues. I started reading it early this year when it was full of news of the alleged accounting irregularities and possible audit failures surrounding the bankruptcy and collapse of Lehman Brothers in September of 2008.
          I like to post comments at Going Concern because I get a lot of readers for my blog from there—not enough to get me recognized anywhere and certainly not enough to add any cash to my coffers, but still a significant addition to my total traffic.
          This particular reader, the one who replied to my comment giving rise to the e-mail, took exception to some of my confessions of regrettable fiscal decisions that led to my filing bankruptcy. Here is the text of the e-mail, which includes the whole of the reply:


Jigaboo (unregistered) wrote, in response to jonahgibson:


I read your little blog ... you sound like an idiot. 20 years of credit card date [sic] at 23% +. Why, for the love of God, why would you not refinance???? This is an accounting website. You are hurting us here with your nonsense.


Link to comment: http://disq.us/fjz8d

          Notwithstanding that he is of course correct—I do sound like an idiot—I find it ironic that Jigaboo, who, hopefully at least, does not realize that his screen name is a racial slur and who apparently does not bother to check his text before he posts, thinks that my paltry bankruptcy and my few foolish decisions, all of which I have documented here, are actually injurious to accountants. I wonder whom, exactly, he thinks has been injured, and how.
          I would have hoped that Jigaboo understood that the point of my little blog—at least in the entry about my bankruptcy, which is the one to which he alludes—was precisely that I had made bad choices, that where I had managed other people's money as if it were my own, I had managed my own as if I were the federal government. I don't think that Jigaboo has read much of my blog. Otherwise he might not have called it 'little' and he might have had a better grasp on the often self-deprecating timbre of my posts. In fact, according to my reader stats, Jigaboo, who logs in from Brooklyn, has only read two or three pages of my blog and only spent a few minutes doing that. This is perhaps long enough to form a New York opinion, but one should consider that it was largely New York opinions that held Repo 105 transactions to be appropriate accounting.
          I think Jigaboo is wrong in his assessment of any damage I might have done to the accounting profession. I may have made some bad choices, and I may have undertaken to get myself out of the mess I'd got into in a manner entirely too late and unsatisfactory to him, but I have not committed 'nonsense' enough to do any injury to accountants in general or even to the concentration of Big 4 denizens and alumni who frequent Going Concern. They may have been hurt, but not by me.
          Accountants have been hurt by the kind of people who would never make the mistakes I've made. They've been hurt by the same arrogant, self-righteous bastards I've been talking about for nearly 100 entries now. They've been hurt by guys who are the opposite of me, the kind of guys who get their own finances right but play fast and loose with the money that belongs to the rest of us, the kind of guys who believe that it's their right to be 'too-big-to-fail' and who are more than happy to take taxpayer money to bail them out of the mess they created but don't want to accord the same benefits to anyone else.
          The damning evidence that they must have known they were doing wrong is that they used accounting legerdemain to hide their actions. Yet now they are content to take fat bonuses and to congratulate one another for getting away with it. These are the folks, their collective sense of entitlement pumped up on steroids and their collective conscience atrophied by lack of use, who remain unapologetic as they lobby for a regulatory status quo. Meanwhile the world is still trying climb out of the smoking wreckage that their mostly unregulated excesses brought us.
          Accountants have been hurt by these guys in the same ways that the rest of us have. They've seen their investment portfolios shrink to a fraction of their former worth. They've watched the value of their homes decline. They've seen their credit sources dry up. They've seen their livelihood put at risk by business declines everywhere.
          Accountants, though, have also suffered a blow to their credibility. Not very many people seem to trust accountants anymore—at least not to the extent they once did. Accounting has slid down in the rankings on the list of honored professions—and not just because it's so hard for accountants to get girls. Their integrity and their acumen have been splintered by broadside after broadside. It's not the investment bankers they have to thank for this either. It is the partners and managers at the top of the accounting profession, in the largest firms, with ostensibly the most to lose, who are to blame. These are the auditors who saw firsthand the accounting sleights and subterfuge being used to cover up the cancer in our financial institutions, and elected—elected mind you—to call it Kosher. They passed on fraud. They aided and abetted the crime. They took their fees and helped to hide the truth and now they want a pass themselves.
          My friend, Jigaboo, doesn't have much to say about these guys. My guess is that one day he'd like to be counted among their number. I think he aspires to be one of them. Why else would he be so adamant about protecting their precious reputations from nonsense such as mine? Why else would he be so keen to banish us idiots from discussing our failures in the same place where we profess to be accountants? Jigaboo wants to maintain the veneer of intelligence and acumen that will allow the next generation of accountants and auditors to abet the next generation of scalawags, and none of them will ever be jobless like me.
          So thank you very much, Jig. I appreciate your concern. I feel good that you are out there making the world safe for defenseless accountants who might otherwise be caught unawares by idiots and nonsense. I just think that you have missed the forest for concentrating on trees like me who have already been felled by the truly dangerous idiots among us.

Day 164 - Conspiracy Theories

          The job boards are bleak for the Treasure Coast area. I should have thought to check before we moved, not that it would have made a difference under the circumstances. We still would have come here because we’re needed. Still it would have been good to know how bad things are here. This is a depressed area. St. Lucie and Martin Counties have unemployment rates that are 40 to 50 percent higher than the rest of the state. There don’t seem to be any jobs listed around here at my level and damn few even at entry level. My thought had been to only look for work in this area so we can stay here as long as we’re needed. I might have to rethink that.

          We switched out the cable service when we got here so that my wife and I could have high speed internet service for our computers. Nelson had a satellite system, and we changed to a cable provider that also offers fiber optic internet service. They finally got the last of it hooked up today. It’s been a struggle with a series of contractors to get the cable run, buried, hooked up, and programmed. Apparently all those things have to be done by different people. Lean they are not.

Nelson’s been grousing through the whole process. He hates change. The new remote is giving him fits. None of the buttons are in the same location they were on his old remote. He doesn’t remember that he has a new device in his hand until he’s already pressed a button according to its placement on the old one. Then, when he gets an unexpected result, he gets peevish. I spend a lot of time listening to him cuss at Mother Angelica because he accidently got to EWTN and can’t figure out how to get back to the Western Channel.

          He was adamant about the Western Channel. He’s been talking about it all week. He likes his western movies, and he needs to see one every night or his day is incomplete.

* * * * *

          As I work through my career history in accounting it becomes increasingly obvious to me that I have spent a great deal of time working for fools, charlatans, thieves, and scalawags who seemed bent on bringing me low. Even so I have always been able to exert a certain amount of influence over my circumstances, and there as always been a certain amount of leverage involved in knowing, because of my familiarity with the books and records, where all the bodies were buried.

          You could argue (as I’m sure the guys who fired me would) that I had a hand in my own undoing at my last company. I wasn’t what they hoped I would be, although, to be fair to myself, what they hoped I would be changed over time as evidenced by two years of positive performance reviews leading up to getting fired. But even had I been what they were hoping for at the end, I don’t think the outcome for me would have been very different. My real problem, I think, was expressing aloud my opinion that our CFO was too prone to knee-jerk hysterics, and that our corporate accounting manager was an anal-retentive myopic who couldn’t see the forest for the trees.

          Of course all that is water over the dam at this point. My current problem is not that I lost a job, but that I can’t get a new one because 1) there aren’t any jobs to speak of in the area where I have chosen to reside, and 2) there aren’t very many jobs anyplace else.

When I first lost my job, I thought I would get another in fairly short order. I had a pretty good résumé, a stable work history, and a boatload of experience. When I lost my last job, the result of a wholesale reduction in force to reduce overhead pursuant to a pre-packaged bankruptcy plan, I found a better job in just a few months. I had the sincere hope that things would not be materially different this time. As the global economy crumbles around me however, I am being forced to give up the notion that I will get a job quickly and easily. My hope for another job depends on an economic recovery more than it depends on my acumen, credentials, and persistence. To make matters worse, the hope of an economic recovery seems to grow more remote every day.

I honestly don’t know how we got into this fix. I’m not sure anyone else does either. There are lots of opinions being floated in the financial media, but not very much of it makes sense to me. As an accountant I want to be able to make the numbers work. I want to be able to follow and quantify the logic. I can’t.

Many analysts are blaming the sub-prime mortgage debacle—too many bad loans made to borrowers who did not adequately demonstrate their ability to repay. The sup-prime problem has been with us for over a year now, and everyone is talking as if we’ve only seen the tip of the iceberg. If we’ve known about the problem for over a year, how is it that the smartest kids on the block—the MBAs and analytical wizards on Wall Street, graduates of the finest institutions of higher learning in the country who are knocking down salaries and bonuses that the rest of us can only dream of—weren’t able to foresee the collapse and mitigate its effect?

How is it that, of the total of all mortgages outstanding, the percentage that is actually at risk of default is sufficient to tank the entire global economy. How is it that a relative handful of bad loans—bundled and securitized with good loans, rated investment grade by respected rating agencies, discounted to accommodate a historically reasonable rate of default, collateralized by real estate, guaranteed with sophisticated derivative contracts, and purchased and held by the very investment banking institutions that had a hand in their creation and so should have clearly understood the inherent risks—how is it that those loans were sufficient to cause the complete collapse of some of the largest banks in the world?

None of it makes any sense to me. I don’t think we’re being told the truth about any of it. We’re being spoon fed bits and pieces that seem to make sense in and of themselves, but they don’t add up to a coherent and believable whole. We’re not getting the whole picture. We’re getting a cubist Picaso. It may be art and it may be genius and it may be distracting, but no way in hell does it look like what it purports to represent.

The guys responsible for this ‘art’ have taken the rest of us to the cleaners. They took huge profits in their firms and huge bonuses personally while they built a house of cards that collapsed on the rest of us. After the collapse they took bailout money to make themselves whole again while the rest of us are left wondering how we (and our children) will pay the bill.

I’m not looking for a grand conspiracy behind all this. My personal feeling is that the captains of Wall Street are just another enclave of venal, self-serving, socially inbred fools, charlatans, thieves, and scalawags. The only real difference between them and the bottom-feeders it has been my misfortune to work for is that the Wall Street bozos play with much bigger numbers.

Others of my acquaintance do see a grand conspiracy here, whether real or imagined. I’ll grant them that their theories are at least as logical as mine. My theory depends on a confluence of coincidence, a perfect storm as it were of events and circumstances that worked together to undermine the foundations of our economic systems. The conspiracy theories depend only on the collusion of a small band of bad actors who already know each other, who work in the same industry, came from the same schools, and reside in the same geographical area. A grand conspiracy is much easier to orchestrate in this instance than an unfortunate confluence of coincidence.

I’ve already mentioned my brother-in-law who believes that there is an effort afoot by the extremely privileged to eliminate the middle classes. I find it hard to believe that this is a coordinated enterprise with and agenda and regular meetings, but, whether or not there exists an actual conspiracy, it grows increasingly difficult to argue that the middle classes are not at risk of disappearing.

Another conspiracy theory has been advanced by author, Sara McIntosh, in her novel, Shell Games. McIntosh is a former accounting consultant and forensic auditor in Chicago who sold her successful business to indulge her love of writing. Shell Games is a laudable first effort. She calls it a financial thriller, and, unlikely as it may seem to those whose eyes glaze over at the mention of accounting issues, she makes good on her promise by delivering a sexy page-turner.

The premise of Shell Games is that the current financial collapse is the result of a large-scale and exactingly orchestrated fraud that has been effectively covered up by the sudden availability of TARP funds. Of course there is more to it than that, and I won’t spoil the plot by revealing it here. Suffice to say that McIntosh has worked out a cogent explanation for the gaps in logic that I have found in the explanations being offered up by our government and by the financial media. Who is to say that McIntosh hasn’t hit on the real deal?

What sets her novel apart from other novels featuring large-scale financial fraud is the author’s intimate knowledge of the details of searching for accounting anomalies in huge volumes of transaction data. It takes an unusual and focused mentality to get a thrill from the discovery of emerging patterns in financial records, but there is perhaps greater skill involved in being able to convey that thrill to the uninitiated. The excitement of accounting is not something easily conveyed to an audience that has largely been persuaded that accountants are a uniformly boring bunch of socially inept slugs. McIntosh is anything but, and her book may do much to dispel the myth. If my TV producer friend, Wendy, had found Sara McIntosh all those years ago when she was looking for ‘interesting’ accountants, she may have been able to come up with a show.