Juicy” financial and/or political news creates increased volatility in the financial markets and political arena which always stirs the news and tabloid media which, in turn, generates much desired emotional public, political and financial community reactions. This means “money in the bank” for the news media but this does NOT mean it is a conspiracy to create the news. Right or wrong it all just feeds on each other creating the much desired frenzy that is profitable from the media perspective.
Regardless, the only focus should be on the probable effects of all this behavior on the future since once corrupt behavior is exposed, in all likelihood, the damage has already been done. However, popular perception can be far different than reality. To help understand ethically corrupt behavior you need to understand some of what is going on, meaning the tangents and core issues.
“Tangents” are bits and pieces of information that are the truths, partial truths and no truths. Any lobbyist, public relations firm, politician and anyone else with self-serving interests is well aware that the “tangents” can be used to attract or divert attention and obscure what is really important which are the “core” issues.
The public, made up of voters, Wall Street investors and everyone else, is deluged with information and faced with the task of differentiating the meaningful from the meaningless. Without a factual comparative base the task is nearly impossible. Not only is the quality of information difficult to decipher but without an objective base of information to base decisions the more vulnerable to emotionalism the public becomes.
Here is where you enter the world of statistics, albeit an imperfect and potentially inherently corrupt world by its very nature, as well as corrupted by those who use statistics, but it is typically all we have for guidance in future decision making procedures. Statistics are measurements derived by actual precedent. There is a story behind each measurement and the data derived from statistics cuts through “tangents” to expose the “core” issues.
Once the “core” issues are identified there is oftentimes nothing really new. However, especially noticeable among the deceiving and deceitful, or “bad” players in the process, there is ongoing thought to the development and implementation of “tangents” for self-serving interests. However, no matter how complex and convoluted the deceptions and nefarious schemes are constructed when “tangents” are removed the “core” issues are straightforward, but no one ever said it would be easy to wade through the mud to find clarity.
For example, on Wall Street a simple “pump and dump” scheme is when the value of an investment is artificially inflated (pumped up) and a misrepresentation to investors is applied to justify the inflated price and then the investment is sold (dumped) to those misinformed.
Another example is the Ponzi scheme investment which involves investment transactions that never even actually occurred! However, if Wall Street U.S. government regulators, known as the SEC, Securities And Exchange Commission, had ever really bothered to check out these type schemes they could possibly have been quickly exposed!
Then you also have business accounting gimmickry claiming earnings or profits, which pass SEC examination, and get signed off on as correct by accountants and lawyers, but profits and earnings that, in reality, are simply nonexistent! Then you also have the simpler fraud which consists of company management simply fraudulently inflating the valuations of existing company assets to the public and investors.
The list goes on but the point here is that schemes coming from ethically corrupt behavior making headlines, as these schemes are exposed, they are not new and all share a central core which is the manipulation of information or set of data.
Ethical corruption is nauseating and once exposed potentially always increases accompanying periods of socioeconomic disruption, meaning when the public realizes they have been victimized they are rightfully miffed and more active in seeking causes and remedies for their discomfort through temporary but potentially long lasting public mistrust, more vigorous voter turnout and more cautious investor behavior, but overall temporary because the fact is the public always tends to forget!
SUPPLEMENTAL SOURCE: DRACH MARKET RESEARCH BY ROBERT DRACH APRIL 16TH, 2010