The cause of the current financial crisis - numbers or culture?

[Dauphin]

Originally posted by Vanguard
Before that point however, manipulating the accounting rules is so much more profitable than any other business activity that it is impossible to compete with someone who is doing it unless you start doing the same thing yourself.

Could you demonstrate how companies go out of business because of not adopting the manipulative accounting practices of others?

[Kidlicious]

Originally posted by Vanguard


Being "profitable" is the not the same thing as "creating wealth."

Manipulation of accounting rules does not create wealth. Instead it (basically) allows companies to print their own money. Which, obviously, is a very profitable business and which companies continue to do until eventually nobody can tell which money is good and which money is bad.

The financial crisis is basically the result of this process. Markets have been destroyed by huge influxes of money created by securitizing false value and borrowing against it. This new money is not backed by interest paid by the government. Nor is it backed by any hard, readily convertible asset. It is instead backed by profits on real estate. Profits which only exist if real estate keeps going up and up in value.

That's true that stock value isn't real wealth, but then anything that increases the value of stock is in the same category.

Also, I don't think efforts to keep your stock price up create money because it's just money that would be used to purchase other stock or something else.

[Heraclitus]

Originally posted by Barnabas

Muslims are hated because they are poor people with very different values. They are more similar to gypsies in that way.

Good point.