Latter Day Robber Barons Comeuppance & Other Leveling
7/10/02 6:44:05 AM Pacific Daylight Time
Lay in them thar beans and other supplies... Here it comes! Three articles this week!
The Burning Season, Part
By William Rivers Pitt and S. Loescher
t r u t h o u t | Perspective
Tuesday, 9 July, 2002
A Pew Foundation poll found last week that some 62% of Americans think George W. Bush should be doing more to help the economy. They should be careful what they wish for. The folks currently ripping the economy to shreds with lies and shady accounting spring from the same school of corporatist business thinking that birthed Bush in the first place. One should think twice before sending a wolf to tend the sheep.
Between the largest trade deficit in American history, a dollar that has lost 10% of its value in the last few months, and an IMF Director who has warned central banks worldwide that they might have to prop up the American economy with some form of direct intervention before a global economic meltdown ensues, it is worrisome to behold a man like Bush at the helm of our economic future.
The problems Bush faces can be seen in twofold fashion by analyzing the manner in which he himself has done business, and by analyzing his priorities as displayed by his energy bill, which is currently moving through a Congressional conference committee.
It's funny how all this seems to circle back to Enron. The national news media seems to have lost Ken Lay and the Houston energy corporation somewhere along the way, but the sorry state of American capitalism owes a great deal to the back-room finagling of Kenny Boy - Bush's nickname for the disgraced CEO - and his pack of sharks.
After all, it was Lay and his people who dumped $5.95 million into Congressional campaign contributions over the last few years in order to bring about the broad-based deregulation of the energy business. That deregulation has spawned the whirlwind anyone unfortunate enough to have a 401K is reaping. 74% of that financial largesse went to Republicans, most prominently among them Senator Phil Gramm of Enron's home state of Texas.
Gramm, whose wife Wendy was an influential Enron board member, worked hammer and tong to make sure that regulatory control of the energy industry was kept at a minimum. The philosophy behind this was simple: let the market correct itself without any obtrusive strictures from some federal bureaucracy. Gramm was able to achieve this thanks to the Republican control of Congress during the latter half of the Clinton administration, and thanks to the massive distraction provided by a Congressional trial dedicated to the ways and means of lying about sex.
We are now in the midst of that correction - a pure example of economic Darwinism if there ever was one - and 62% of Americans don't like the way of it. The market is in the process of gutting itself, cutting out the cancer of lies and financial shell-gaming brought about by a total lack of outside control.
In the long run, this will be healthy. Like the "Rail Panic" of the mid-19th century, when the railroad Robber Barons were finally brought to heel by a series of oversight rules that prevented them from ripping regular people off as they pleased, the endgame of this current scenario should bring back a degree of legislated control to the careening madness that deregulation brought forth.
It should bring about that reform, but it very well may not. Reform, and the entire American economy, is in real danger of flying right off a cliff because of the man whom a majority of Americans expect will fix things. George W. Bush has no real interest in reform or repair. He is cut from the same bolt of cloth that has wrapped our economy in a smothering shroud, and he listens only to those who think as he does.
Because of this, the steps needed to repair things may never be taken; for Bush to take them would point a damning finger at his own shoddy way of doing business. It would also, along the way, destroy a piece of legislation vital to the greedy expectations of the industry captains who have funded Bush since he first entered politics.
It has been said that no one hides from history. Bush is learning this to his woe. The sorry tale of Harken Energy Corporation, one of the many businesses Bush helped run into the ground during his "youth" as a forty-some-odd year old businessman, speaks to Bush's questionable qualifications as a reformer. Back in 1990, Bush sold 212,140 shares of his Harken stock and reaped a tidy profit of $850,000. Two months later, Harken destroyed itself when it announced that it was carrying a larger debt than it had previously disclosed. Raise your hand if you've heard of this kind of thing happening recently.
The bright students who raised their hands and chirped, "Enron executives did the same thing!" get a gold star.
Bush and his professional apologist Ari Fleischer have twisted themselves in knots defending Bush's violation of federal laws. You see, Bush failed to file the proper paperwork for his stock sale until some eight months after the deadline. That is against the law. Had he filed on time, the SEC would have investigated him for insider trading, and asked what he knew when he sold his stock. As it happened, the SEC looked into the deal in 1991, but dropped it like a hot potato. Extra credit is coming for anyone who can name the man sitting as President over the SEC chairman in 1991. That's right: George Herbert Walker Bush.
Just so we're clear: Bush was an executive of an energy company that fell apart after it was forced to disclose the fact that it had grossly inflated its profit reports. Bush was not financially harmed by this, because he sold his stocks just before the hammer came down. He broke federal laws by failing to report his sale of the stock, and was not damaged by the SEC investigation that followed because it was halted soon after it began. The SEC chairman at the time was an appointee of the first President Bush.
If this has not grabbed the attention of the 62% of Americans who want this fellow to fix the economy, the rest hopefully will.
The House of Representatives recently passed their version of Bush's energy policy bill, which was written almost completely by the same people who have run companies like Enron into the ground. Vice President Dick Cheney, who captained the bill-writing process, refused to disclose the specifics of that process, claiming that the sovereignty of the Executive Branch was at stake. What information did dribble out after massive pressure, however, confirmed the worst suspicions of activists and investigators. Bush's energy bill, as it currently stands, is not meant to serve the people. It is meant to serve large energy corporations and those who contributed to his Presidential campaign. Often, the two are indistinguishable.
The Energy bill as constituted by Cheney, Bush and their friends in the energy industry is yet another massive tax giveaway. The guts of the bill provide massive tax exemptions for these corporations. As ever, the excuse for this is that these companies will benefit without onerous financial burdens placed upon them by the tax structure of the federal government. The fact is that, in these days of ballooning federal deficits, the American people will bear the burden for the breaks these corporations will get from this energy bill.
Just how much does the Cheney plan - adopted by the House with only minor changes - give to industry, and how does that compare to what industry invested in campaign gifts? The numbers show that the coal industry was the biggest winner in terms of rate of return on their campaign contributions investments. They gave $3.8 million, and receive more than $5.8 billion - a whopping 153,700% rate of return on the investment. Other winners include the oil and gas industry, which contributed $33 million and receive nearly $19.5 billion in benefits - a 58,400% rate of return.. The electric utility industry donated $18.6 million and received more than $5.8 billion in benefits - a return of investment rate of 31,400%.
We have before us a President who stands guilty of the same corporate crimes he decries from his radio pulpit. This President, despite all that has happened, still pushes for the ruinous House version of the energy bill. The tax giveaways to his corporate energy friends will further undermine the American economy, and open the entire nation up to the same rolling blackouts that afflicted California, back when Enron was in charge of their electricity. The Senate watered this bill down a bit, but it sits now in committee waiting for the crafting of a compromise bill.
Come November 5, 2002, Americans will have the opportunity via the midterm Congressional elections to thwart some of the more egregious abuses of the Bush administration by electing Democrats to an unassailable majority within the legislative branch. In 2004, we will be afforded the chance to toss these robber barons out on the street, bag and baggage.
In the meantime, anyone who thinks these corporate thieves should not be crafting energy policy for each and every American should reach out to their representatives and tell them the score. The Senate's version of this bill was only slightly less damaging to the public, and the compromise being hammered out in committee will bear all the fingerprints of Cheney's secret meetings with the very individuals who have so damaged our economy and the stock market.
Bush and these people cannot be trusted to shepherd this economy without stern guidance. Left to his own devices, Bush will lead us further into this economic black hole. That is his nature. If he is allowed to foist his bastardized energy bill upon us, our perilous economic balancing act will tumble from the wire and be smashed in the street. It is time to make some phone calls.
(Part Two - a detailed analysis of the development of the energy bill and those wjho influenced it - is coming soon)
âEvery trend in the commercial marketplace continues to point towards a slowing economy. At the present time of these workings, while some may also expect that the markets will go up and down in regular cyclic fashion, there are others who believe that an economic collapse will ensue, and redefine a bottom line point for financial markets. Understand that such a bottom line point is produced as a byproduct or consequence of the shifting energies as now involved. Expect that it will be there by midsummer 2002 at the latest, based on current prognostications.â
If I were to look into the crystal ball for the week, I'd see a pretty good pullback from the euphoria of Friday, Monday and Tuesday with the possibility of moving higher by the end of the week? But does it have legs? I'll just follow the trading system's recommendations. Looks like this morning, the talking heads on television are completely bewildered.
I'm not bewildered so much as just interested. Like a spectator in a good sports event, the thrill of crowd-watching nearly equals the sport itself. And, so it is with investing lately. On the one hand, I really believe we are replaying the events of the 1930's, but with several twists that make this crowd unlike any other. Some of the differences: