Lehman Bros. and Consensus « Climate Audit

My interest in climate change derived in part from experience in the stock market where "consensus" is not infrequently established in favor of opinions that are completely incorrect. And, in many cases, the people promoting the views are competent and serious people. How are such things possible? I read about the Bre-X and Enron failures, trying to distinguish between the "shame on you" and the "shame on me" components - i.e. yes, the original misconduct and deceit was deplorable; but at what point should proper independent due diligence have been able to detect misconduct? At what point were regulatory agencies negligent? Obviously we're going to see a new spate of such inquiries in the wake of the recent collapses.

I was particularly intrigued in the cases of Bre-X and Enron failures by the tremendous acolades meted out to the promoters right up to the eve of their collapses.

As evidence of this ongoing interest, a reflection on Bre-X was one of the very first Climate Audit posts (Feb 6, 2005). I observed that Felderhof and de Guzman were lionized at the 1997 PDA convention (March 10-16, 1997) and walked around like royalty only a few days before the fraud was revealed. de Guzman literally disappeared a few days later, supposedly either jumping or being pushed from a plane over the Indonesian jungle. Others speculate that he may have assumed a new identity in a Third World barrio somewhere. The "consensus" disappeared quickly. Take a look at the post.

In another early post, I observed the "consensus" that Enron was not only a well-managed company, but the most outstandingly managed company in the U.S., citing a couple of quotes from Kurt Eichenwald's Conspiracy of Fools...