Imagine a juggler tossing a bunch of balls up in the air. You give him more and more balls to juggle until finally there are too many and the balls crash to the floor. That is akin to what is happening in the United States. An environment has been created where corporate managements are rewarded through stock options. The name of the game is keeping the bottom line performing and eventually you will have not only a yacht, but also your own aircraft. Greed, to quote Wall Street's Gordon Gecko, was good. Unfortunately, in the wake of the Enron Corp debacle it seems to be less good. US earnings growth in the go-go 1990s was typically 15 per cent to 20 per cent a year. But business, whatever the new economy people told us, always runs in cycles. Coming out of the low base of a recession, profits rise, get reinvested in expansion and rise again. Eventually, however, profits are invested in projects which cannot produce a meaningful return, sowing the seeds for the next recession. That is finally what caught up with the US just as it did in 1997 with Asia, where there were similar beliefs that the business cycle had been repealed. Captains of industry hate to admit the party is over and so resort to dubious tactics to delay the inevitable. The truth has to be slowly extracted from a kicking and screaming patient. Enron, so far, has been the big daddy of the duckers and divers. But everywhere you care to look there is an accounting nip and tuck going on to preserve a little of the faded beauty and keep overvalued share prices up. Networking equipment titan Cisco Systems has long been known for what is euphemistically called 'aggressive accounting'. But it went one step further in November last year when it included in its bottom line the sale of US$290 million in excess inventory which had been written off as worthless just seven months before. The tricks are not confined to high-flying upstarts. One of bluest chips, IBM Corp, has been selling off anything it can, including an art gallery, to boost the bottom line, according to respected commentator Fred Hickey. In addition, it has been booking revenues from computer services contracts even though clients are told they can 'buy now, pay later'. 'And it just so happens that those accrual rate increases were enough to beat estimates by a penny every quarter,' Mr Hickey said. Even insurance giant American International Group is coming under scrutiny on how its earnings have been there or thereabouts against analyst expectations for the past 15 years. In what has been typical in recent days for fund managers, Newton Investment Management says it is particularly scrutinising US companies which just meet earnings expectations each quarter. Firms audited by Enron's accountants Arthur Andersen were also going under Newton's microscope, said its global strategist Tim Wilson. 'We are going through our portfolios so we can avoid the banana skins,' he said. Some in the market are even talking about spotting trouble by measuring accounting fees against cash flows. A number higher than the norm might indicate extra money is being paid to tweak the books. It is all guesswork. Just as it was in Asia during the crisis, fund managers sitting on what they thought were solid names have suddenly found the stock slumping as a story of malpractice swept through the market. By the time they had picked up the telephone to sell it was too late. Asia paid a heavy price for its past misdeeds with an exodus by foreign investors. The recessions that followed have cleared out much of the excesses and left Asian markets looking far more healthy. Wall Street, by contrast, is still staggering along at excessively high levels, courtesy of a stubborn belief in the US story and the Federal Reserve slashing interest rates to 40-year lows. For now, foreign investors such as Mr Wilson, say they have to be in the US market because of the rate cuts, the boost from higher government spending and because it is simply too big to ignore. For now, the fear of underperforming other fund managers by cutting US holdings rules over potential losses.