PAUL SEEKS THE PONY:

Funds and Games (PAUL KRUGMAN, November 18, 2003, NY Times)

[L]ast year it seemed, for a while, that corporate scandals — and the obvious efforts by the administration and some members of Congress to head off any close scrutiny of executive evildoers — would become a major political issue. But the threat was deftly parried: a few perp walks created the appearance of reform, a new S.E.C. chairman replaced the lamentable Harvey Pitt, and then we were in effect told to stop worrying about corporate malfeasance and focus on the imminent threat from Saddam's W.M.D.

Now history is repeating itself. The S.E.C. ignored warnings about mutual fund abuses, and had to be forced into action by Eliot Spitzer, the New York attorney general. Having finally brought a fraud suit against Putnam Investments, the S.E.C. was in a position to set a standard for future prosecutions; sure enough, it quickly settled on terms that amount to a gentle slap on the wrist. William Galvin, secretary of the commonwealth of Massachusetts — who is investigating Putnam, which is based in Boston — summed it up: "They're not interested in exposing wrongdoing; they're interested in giving comfort to the industry."

I wonder what they'll use to distract us this time? 

You can't blame the poor guy for trying to cover his tracks--after all, it was Mr. Krugman who notoriously predicted:

[I]t was a shocking event. With incredible speed, our perception of the world and of ourselves changed. It seemed that before we had lived in a kind of blind innocence, with no sense of the real dangers that lurked. Now we had experienced a rude awakening, which changed everything.

No, I'm not talking about Sept. 11; I'm talking about the Enron scandal.

One of the great cliches of the last few months was that Sept. 11 changed everything. I never believed that. An event changes everything only if it changes the way you see yourself. And the terrorist attack couldn't do that, because we were victims rather than perpetrators. Sept. 11 told us a lot about Wahhabism, but not much about Americanism.

The Enron scandal, on the other hand, clearly was about us. It told us things about ourselves that we probably should have known, but had managed not to see. I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.

If you were that spectacularly wrong about something you too might be forced to develop a conspiracy theory to explain it away.

Posted by Orrin Judd at November 18, 2003 8:49 AM