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Are You Ready for Collapse?

Are You Ready for Collapse?

MIT analyzed it and KPMG updated it: economic collapse is nigh.

Economy, global economy, economic crash, economic collapse, economy crash, economics, MIT, KPMG, Peter Isackson, world economy

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A year before COVID-19 changed humanity’s view of the world and of its future, Charbonnier attempted to assess the merits of collapsology theory, focusing on the motivation of its promoters. He accurately identifies the marketplace for an increasingly popular genre of literary production, pointing out that “fear is an eminently political emotion, and the production of doomsday scenarios activates our belief systems, our attitudes toward the future, and our sense of good and evil on a very deep level.” These are clearly recipes for producing best-sellers.

In other words, it makes good business sense to predict catastrophic global collapse. Charbonnier accuses collapsologists of hoping to “reinstate” the “fervor and submission” associated with “millinarianist warnings” from the historical past. He calls the contributors a “community of believers,” but nevertheless distinguishes these fanatics from serious anthropologists such as Jared Diamond or philosophers such as Walter Benjamin, reasonable and reasoning thinkers who describe in scientific terms the process through which civilizations decline.Clearly, Charbonnier doesn’t believe a collapse is imminent, which doesn’t necessarily mean that he adheres to Steven Pinker’s style of optimism. Charbonnier wrote his article in 2019, offering it as his contribution to a debate that had come to life in French intellectual circles at that time. Following a never-ending pandemic, would he make the same judgment today?

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“It’s Not only Carillion that’s Built on Sand, it’s our Whole System of Corporate Accountability”

“It’s Not only Carillion that’s Built on Sand, it’s our Whole System of Corporate Accountability”

The construction & services giant collapsed even as KPMG signed off on its financial statements; now they deny any responsibility.

The Big Four accountancy firms — PricewaterhouseCoopers, Ernst & Young, KPMG, and Deloitte — reported combined annual revenues of $134 billion in 2017. In the global audit arena, they are virtually unassailable. In the US, the Big Four audit 497 of the S&P 500 companies. In the UK, they audit 99 of the FTSE 100 companies. In Spain there’s not a single firm listed on the IBEX 35 whose accounts are not audited by one of the Big Four.

But what are the Big Four firms actually good for?

Given the oligopolistic structure of the global audit industry as well as the potential conflicts of interest that can arise between the auditors’ myriad roles, this is a vital question — and one that is finally being asked by British lawmakers following the epic crash-and-burn of the services and construction giant Carillion.

In recent years, the external and internal auditors of Carillion, KPMG and Deloitte, pocketed a combined £40 million for their services. Yet they abjectly failed to discover, and warn investors of, the company’s precarious condition that caused it to collapse in spectacular fashion in January. Many other market players, including major investors, pension covenant assessors, and hedge funds shorting Carillion stocks on the markets — some with access to the accounts, others without — saw warning signs long before its demise. So, why didn’t the auditors make sure that the company discloses those problem to investors?

Carillion’s external auditor, Dutch-seated KPMG, signed off on its accounts without fail to the very bitter end, even though it was clear that Carillion had wafer-thin profit margins and was dangerously overloaded with debt, including some £2.6 billion worth of pension liabilities, and that between 2012 and 2016 it ran up debts and sold assets just to continue paying out dividends to shareholders.

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Olduvai IV: Courage
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Olduvai II: Exodus
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