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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (154015)	2/28/2002 9:55:34 PM
From: Perspective	Respond to of 436258

Excellent find; I especially liked the following: Among the 1920's corporate malfeasance was National City Bank Chairman Charles Mitchell, short selling his own bank's stock, J.P. Morgan partner Richard Whitney embezzling stock exchange funds, Match King Ivar Kreuger swindling investors multinationally (the 1920's Enron) and the Shenandoah Corporation and Goldman Sachs Investment Trust building pyramids of holding companies and collecting management fees from each. Equally unprecedented was the reaction of jurists after 1932, in jailing Whitney, Mitchell and other financiers, and of politicians in running for office for a decade and a half through demonizing Wall Street. Harvard's business historian Richard Tedlow, quoted in the Wall Street Journal Tuesday, believes the ethical cloud in 1929 was the worst in U.S. history. The political reaction to it was also unprecedented in its lack of inhibition, causing immense economic damage, both in the U.S. and internationally -- and bringing military as well as economic catastrophe in its wake. At least the first part of this saga appears to have repeated itself in the 1990s. Previous standards of executive remuneration were swept aside by the mania for stock options, and the refusal to book them properly in company income statements. Previous standards of stock valuation were swept aside in the dot-com mania, where companies that were far from even the prospect of showing a profit were able to raise billions. Previous standards of Wall Street analysis were swept aside by Mary Meeker, Henry Blodget and their cohorts, using their privileged positions as Wall Street analysts, not to provide investors with information, but to pump up the ever-escalating bubble. In political life, previous standards of veracity (even that of Richard Nixon) were swept aside by a president who refused to define the word "is." And of course, as Enron showed, previous standards of conflict of interest avoidance were ignored by the Enron executives who benefited from the special purpose companies, and previous standards of audit behavior were trashed along with Enron documentation by the Andersen accountants even as lawsuits loomed. The result was a gigantic stock market bubble, which swept aside not only recent standards of valuation but even those of the late 1920's, regarded by all observers until about 1995 as an aberrant peak never again to be approached. What we don't know of course is where we go from here. Strauss and Howe postulate a global crisis occurring about 2010-2020, which will provide the annealing fire from which the civic virtues of the currently infant "Millennial" generation will be formed (while making the lives of the rest of us very much more unpleasant.) In their view, however, the crisis will be extraneous -- the world will simply find itself in war or economic catastrophe, which will not be anyone's fault. The history of the 1990s, particularly of the late 1990s, and comparison with earlier crises, strongly suggests that a causal link is at work. If the malfeasance of the idealist generation produces a valuation bubble, the crash of which produces an economic depression (and make no mistake, we are here talking about the d-word, not the r-word) then the beginning of the crisis may already be upon us. Moreover, just as the valuation bubble of the 1990s appears to have been larger than in 1929, so the economic undertow from its bursting may be correspondingly more damaging. HERE'S WHERE WE CAN ACTUALLY LEARN SOMETHING IF WE COLLECTIVELY RECOGNIZE THE DISEASE: If this is the case, then the road ahead, to avoid an economic/military crisis which however character-building will certainly be enormously painful, is a difficult one. The reaction to economic hardship, if it occurs, must differ from that of the 1930s. In particular, we must not revert to protectionism (which impoverishes other countries) must not carry out a legal and political assault on business (which impoverishes at home and abroad) and must not allow the international financial flows to dry up. In foreign policy, we must be vigilant to block the rise of powerful enemies, while at the same time helping countries in difficulties and ensuring that the world trading system remains open and active. Above all, we must guard against the metastisizing of government, so popular among idealists grown impatient with age... BC

To: Les H who wrote (154015)	2/28/2002 10:51:26 PM
From: Les H	Read Replies (1) \| Respond to of 436258

the lost art of saying no... news.ft.com

To: Les H who wrote (154015)	3/1/2002 12:12:57 AM
From: ild	Respond to of 436258

That guy is on drugs: With a high savings rate and a permanent trade surplus, Japan is an ideal candidate to be the first country to restore the gold standard, which Japan left in 1933 after having returned to in 1930. This would preferably be done at a slightly inflated gold price of about 45,000 yen per ounce (today's price is about 40,500) and would of course include the full scale production of high denomination gold coins, which would become a store of value for Japanese savers. In recent weeks, the rise in the gold price briefly above $300, apparently on Japanese buying, suggests that Japanese savers themselves are beginning to think about this possibility. In Japan's situation where price deflation stalks the country, a return to the gold standard would be reflationary and stimulative. It also would give Japanese savers an alternative channel of saving to the banking system, thus restoring economic confidence. The likelihood of bank failures would remain, but not be increased as the banks' problem is one of solvency, not liquidity. By removing a portion of savers' deposits from the banking system, a restoration of gold would reduce the possibility of a bank "run" and exhaustion of the deposit insurance fund.