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Thursday, Apr 3, 2008 7:19 PM UTC

Bear-Stearns recalls the glory days of Enron

How do you make a company disappear? Easy: Just sic the news media on 'em.

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Topics: Enron, Globalization, How the World Works,

When Enron CEO Ken Lay testified in his criminal fraud trail in 2006, he accused the Wall Street Journal of bringing down his company.

“We thought The Wall Street Journal was on a witch hunt of Andy Fastow,” Lay testified Tuesday, referring to a series of articles the newspaper published about the partnerships beginning in October 2001.

“It was absolutely destroying the confidence investors had in the company and driving down the stock price,” he added.

A time-honored ploy! Blame the media! Today, Bear-Stearns CEO Alan Schwarz attempted the same maneuver, according to Muckraked, which obtained a copy of his prepared testimony for a congressional hearing held Thursday.

While Bear Stearns was “adequately capitalized and had a substantial liquidity cushion,” the firm imploded due to the weak credit market and “the unprecedented speed at which rumors and speculation travel and echo through the modern financial media environment, the rumors and speculation became a self-fulfilling prophecy.”

Poor Bear-Stearns. Ken Lay thought Enron got the shaft from the media, but back in 2001, the blogosphere was a pale shade of its current hydra-headed monster. The investment bank never had a chance.

How the World Works will have more to say about Sen. Christopher Dodd’s hearing on “the response by Federal financial regulators to ongoing turmoil in U.S. credit and mortgage markets and the near collapse of Bear-Stearns,” later this afternoon.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.

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Gripping photos: The people of the Turkey protests (slideshow)

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  • The protests take on a festive element as police forces move out of the park and square. Wearing a gas mask, this young man dances to traditional Turkish music in front of Taksim Square’s Ataturk Monument.

  • In Gezi Park since March 31st, this protester, originally caught off-guard by the Government’s teargas and water cannons, went out and bought a Russian army mask from WWII, preparing for what was to come.

  • This rambunctious boy seems to be enjoying the chaos. After taking this picture he threw a stone at the already destroyed building in the background.

  • Forming a line, the police face off directly with protesters in Taksim Square. After a while, they retreated and there was a general cheer – a back-and-forth dance that has been common since the beginning of this protest.

  • An elderly woman in Gezi Park reads the news. The tent community occupying the park was violently destroyed on June 16th.

  • Many different groups had set up booths to promote their cause in Taksim Square and Gezi Park. Standing in front of one, this man waves his flag while posing with conviction.

  • Many home-remedies are used to minimize the effects of tear gas. This woman has put a milky solution on her face, removing her mask after the tear gas dissipated. Before sunrise, the police came again for another round of teargasing.

  • People capitalize on the uprising -- selling flags, beer, gas masks, sky lanterns and spray paint to name just a few of the popular items.

  • On Monday morning, June 11, the police execute a strong offensive. Many plain-clothed police officers, like the ones seen here, clash with protesters in the side streets away from the main stand-off in Taksim.

  • The authorities seem to be most aggressive in the night, pushing protesters away from the square and park. After being teargassed this young woman catches her breath with other protesters on Siraselviler Street.

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