SWIMMING AU NATURALE

Running on empty...

As the UK Serious Fraud Office                                 

continues to uncover more cases of
serious financial wrong-doing, those
in the US are interestingly resonant

of of a passage from J K Galbraith's
The Great rash 1929.
"To the economist, embezzlement is
the most interesting of crimes. Alone
among the various forms of larceny,
it has a time parameter. Weeks,
months, or even years may elapse
between the commission of the crime
and its discovery. (This is a period when
the embezzler has his gain and the man
who has been embezzled feels no loss).

"At any given time there exists an
inventory of undiscovered
embezzlement and it amounts at
any moment to many millions of
dollars. It also varies in size with
the business cycle. In good times
people are relaxed, trusting and
money is plentiful.

"In these circumstances
embezzlement grows, the rate of
discovery falls off and the bezzle
increases rapidly. In depression all
this is reversed. Money is watched

with with a narrow suspicious eye.

Audits are penetrating and meticulous

and the bezzle shrinks."

Warren Buffett once famously
remarked that it is only when the tide
goes out that you discover who's
been swimming without clothes.