Those who are breathing a sigh of relief that there's no sign that Bush directly intervened for Enron had better look at the larger picture. The republicans have certainly learned some things from their past handlings of scandals such as Watergate and Iran-Contra. Bush switching from "Kenny Boy" to "Mr. Lay", and Harvey Pitt all of a sudden changing from "let the accountants police themselves" to "maybe I was hired to actually do a job here" are two very recent examples. Set that public image, and set it fast, to minimize the potential damage of ill-favored public perception.
But the bigger picture for the politicians is, how will the voters react in 2002 and beyond. Right now, the voters are still wrapped up in the terrorist/Afghanistan aftermath, which has favored the "rally behind the chief" mood. Clearly, Bush has benefitted from this. Ironically, the law of unintended consequences has played its hand again : the Al-Queda, in their rabid hatred, was disturbed about the growing American presence and influence in the Middle East, as exemplified by icons such as our TV networks, McDonalds, and Coke. The spiritual pollution of American materialism, in their view. Who better exemplifies this than the large American corporations, which are the power propping up the bushies ? They've strengthened the hand of the figurehead of the main beneficiaries of their avowed enemy.
Meanwhile, while the damage control teams try to frame the Enron issue solely as a business problem, or as an isolated issue of Bush not coming to the aid of Enron when they bleated for a savior, it is actually much more than that. Bush's and the republicans' biggest problem from a political point of view going forward is the economy. Most mainstream economists are talking up recovery, pointing to all signs of hope to influence the mass psychology. Consumer spending does indeed rely in part on confidence and future expectations. And who knows, things may get better in the short run, though I'm not betting on it. Many people are still stuck on the idea that we're only in a short blip, and will soon return to a toned down version of the "normalcy" of the 90s economy.
But what will be the implications of Enron, and what I expect will be other similar if less intense episodes that will come to light in the subsequent months ? You can expect -
- Scrutiny of soft money, and journalists digging for other, easily understood anecdotes. The Enron problem was not about a last minute cry for help, but of a culture promoted by both parties that allowed them to get away with virtually no oversight, and great exposure and favoritism from their political friends for years. Good god, FERC was about to force the nation's utilities to cede regional control of the grids to the likes of Enron !
-A focus on corrupt cronyism, between corporations and politicians, and between entities such as the big 5 consulting branches and their accounting arms working for the same company. Likely to bring tighter rules.
-A deeper look at why government officials who were notified of the Enron problem did nothing to notify or warn the public, not of the specific Enron problem, but of the bigger problem in general. NOW they're finally starting to talk about crooked Wall St. analysts. Well, the small group that reads SI has known about this for years, but most of the general public has been clueless.
-And most importantly, tighter accounting rules, maybe leading back to GAAP reporting and slicing back pro forma. Just this thought is bound to make Wall St. nervous, and I'm guessing will be a precipitant for a market slide when the implications are more widely acknowledged.
All this would not bring down Bush a la Nixon, but it would certainly undermine the markets and economy. The American voter is funny. So many of them are swayed by the 30 second television image - strategic thinking is not their forte, save for a minority of political junkies. So when they have a job and times seem good for them personally, they fall for semi-charming politicians who make them feel good about themselves. Not much thought required there. But when times get hard, look out, they are in ruthless search of a scapegoat. They start reading stories about executives who cashed out of hundreds of millions of dollars (just why were they given ALL those shares anyway ?) while their own retirement accounts have dwindled, or they find themselves out of work. Then they get mad and vote.
Right now, bush gets the benefit of the doubt. But if Enron is a harbinger of things to come, and the economy does not pull out of its mire, a la its media touted schedule, the masses will get restless as they view more and more how the government has been purchased by the powerful, while they are left behind. Then watch out. And expect another front to open on the war on terrorism, to divert attention. |
