How Europe's governments have enronized their debts

AFTER FAILING TO abide by its own internal guidelines, sidestepping industry best practice, and ignoring internationally agreed standards, a one-time star borrower is brought low. Underlying this is a combination of highly structured financing – often suggested and effected by competing investment banks – and inconsistent accounting. This has disguised the true, excessive extent of the borrower's debt. All of the deals involved might have been legal, but their revelation has left investors shocked and out of pocket.

It sounds like the depressingly familiar tale of corporate accounting in the Enron era: but the sort of borrower we are talking about is a government not a corporate. And the governments involved are the very ones that have explicitly set themselves the task of borrowing responsibly – western Europe's EU members.

Governments have always been two-faced in these matters. They like to borrow and spend money liberally...