04 August 2009

Duelling North Korea experts

From an NPR Online NewsHour article on Bill Clinton's trip to North Korea.
B.R. Myers, an expert on the North's state ideology at the South's Dongseo University told Reuters that Clinton's visit allows the North to show its residents, who face deepening poverty, that the nuclear weapons program is making the outside world take it more seriously and the visit will be certain to be portrayed as tribute by the United States.


Yun Duk-min of the Institute of Foreign Affairs and National Security in Seoul told Reuters the visit held out the possibility of a dramatic turnaround by North Korea that could lead to a new phase of negotiations.

Who to believe? You get no help from the NewsHour. Are either of the experts any more than far-left/right loons (universities and institutes are not immune, right?)? No help from Reuters, either. Trust Reuters to vet their quotees? Beats me.

GE cheated, but promises to be good in future

From the gummint, via an NYT/Reuters item.

The SEC alleges that GE used improper accounting methods to increase its reported earnings or revenues and avoid reporting negative financial results. GE has agreed to pay a $50 million penalty to settle the SEC's charges.
The four accounting violations were:
  • Beginning in January 2003, an improper application of the accounting standards to GE's commercial paper funding program to avoid unfavorable disclosures and an estimated approximately $200 million pre-tax charge to earnings.
  • A 2003 failure to correct a misapplication of financial accounting standards to certain GE interest-rate swaps.
  • In 2002 and 2003, reported end-of-year sales of locomotives that had not yet occurred in order to accelerate more than $370 million in revenue.
  • In 2002, an improper change to GE's accounting for sales of commercial aircraft engines' spare parts that increased GE's 2002 net earnings by $585 million.

That comes to $1,155 trillion in oopsies in 2002-2003, so the penalty is about 4.5%.

On the other hand, that was six or seven years ago, there ought to be corrections for inflation, the time value of money, the proceeds of the benefit to GE, whatever.

I'm betting GE made money on the deal, over all.

So, GE fulfilled its moral and legal fiduciary duty to maximize shareholder value (for some definition thereof), and all is right with the ("free" market economic) world.

Capitalism == PerverseIncentive, I guess.

GE [...] consented to the entry of an order permanently enjoining it from violating the antifraud, reporting, record-keeping and internal controls provisions of the federal securities laws.

We promise never to do anything bad, ever again.

So that's sorted, then. Let's make Exxon be nice next--if they'll consent, of course.