A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006. Now a Popeyes fast food restaurant on Google Maps.

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Entry from March 02, 2009
“Recessions catch what auditors miss”

“Recessions catch what the auditors miss” is a saying often attributed to economist John Kenneth Galbraith (1908-2006), and he did say that in a July 2002 interview. However, “recessions uncover what auditors fail to spot” is cited in August 2001. Cited in September 2001 and listed as an “old saying” then is: “recessions uncover what auditors do not.” The origin of the saying must be listed as unknown, based on the current evidence.
“Recessions catch what auditors miss” means that, in good economic times, financial frauds can flourish, but they’re found out in bad economic times when the money runs out. The saying became popular in 2008-2009, when the recession uncovered the Ponzi scheme of Bernard Madoff.
Wikipedia: John Kenneth Galbraith
John Kenneth “Ken” Galbraith, OC (October 15, 1908 – April 29, 2006) was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and progressivism. His books on economic topics were bestsellers from the 1950s through the 1970s and he filled the role of public intellectual in this period on matters of economics.
Galbraith was a prolific author who produced four dozen books and over a thousand articles on various subjects. Among his most famous works was a popular trilogy on economics, American Capitalism (1952), The Affluent Society (1958), and The New Industrial State (1967). He taught at Harvard University for many years. Galbraith was active in politics, serving in the administrations of Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy and Lyndon B. Johnson; and among other roles served as United States Ambassador to India under Kennedy.
He was one of the few honorees who received the Presidential Medal of Freedom twice. He received one in 1946 from President Truman and another in 2000 from President Bill Clinton. He was also awarded the Order of Canada in 1997 and, in 2001, the Padma Vibhushan, India’s second highest civilian award, for his contributions to strengthening ties between India and the United States.
27 August 2001, Financial News, “Banks change rules to deflect a criticism of tainted research”:
“There’s a recession going on and recessions uncover what auditors fail to spot.”
8-9 September 2001, Financial Times, pg. 6, col. 5:
The global slowdown is also allowing investors to rediscover the truth of the old saying that “recessions uncover what auditors do not.” Acquisitions made at the height of the late-1990s expansion are now being revealed as worthless. Write-offs are more common than in a demolition derby.
Google Books
500 of the Most Witty, Acerbic and Erudite Things Ever Said About Money
By Stephen Eckett
Published by Harriman House Limited
Pg. 11:
“A full fledged economic downturn will cause nastier things to come out of the woodwork. THe old market saying is: “Recessions uncover what auditors do not.”
Philip Coggan, Financial TImes columnist
The Daily Reckoning
By Bill Bonner
“Recessions uncover what auditors miss,” goes the Wall Street expression. When the kettle cools, a skin of slime appears on the surface. Then, people begin to wonder…what’s in the soup? That is the nice thing about gold. It is the same inside as out…and from one day to the next.
Global Economic News
Interview: Professor JK Galbraith
By Rupert Cornwell in Cambridge, Massachusetts
From The Independent,  01 July 2002
Galbraith still produces aphorisms to die for, including what may become the epitaph of this age of feckless book-keeping: “Recessions catch what the auditors miss.” But behind the quip lie genuine shock and anger. “I’ve been tracking this matter for a lifetime, and my greatest surprise was the sheer scale of the inadequacy of the accounting profession and some of its most prominent members. I’ve been looking at auditors’ signatures all my life, but I will never again do so without some doubts as to their validity. There must be the strongest public and legal pressure to get honest competent accounting.” However belatedly, Galbraith believes that may happen. Indeed, the whole philosophy with which he is identified, of corporate regulation and greater public control of the private sector, may be edging back in favour, two decades after it went out of fashion under Ronald Reagan.
July 10, 2002
Capx Spending Gets Pushed Out
by Chad Hudson
The Dallas Morning News reran a story first published in The Independent, Noted economist saw this coming , featuring economist John Kenneth Galbraith. According to Galbraith the current problem in corporate governance boils down to two problems. The large, modern corporations are manipulated by the “financial craftsmen” and have grown too complex and difficult to monitor. Also, companies “have grown out of effective control by the owners, the stockholders, into nearly absolute control by the management and the individuals recruited by management.” Then management has “set its own compensation, either in the form of salaries which can get to fantastic levels or of stock options.” Galbraith quipped that “Recessions catch what auditors miss.”
Mayday as Nortel three are forced overboard
Sunday Herald, The ,  May 2, 2004   by Ken Symon
The old byword for scandal watchers is that recessions reveal what auditors don’t.
The Marginal Revolution
How to run a Ponzi scheme
Posted by Tyler Cowen on December 13, 2008 at 07:51 AM
As J.K. Galbraith said, recessions uncover what auditors miss.
Posted by: Steve Sailer at Dec 13, 2008 6:42:48 PM
Clutch BBS - 50 billion dollar Ponzi Scheme
F.D. Khan 12-15-2008 11:48 AM
Recessions find what auditors don’t.
The Tablet (February 28, 2009)
From pinstripes to prison stripes
Simon Nixon
There is an old saying in the stock market that “recessions find what auditors miss”.

Posted by Barry Popik
New York CityBanking/Finance/Insurance • Monday, March 02, 2009 • Permalink

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