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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?


To: T L Comiskey who wrote (2753)7/20/2002 3:55:30 PM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
Slaughterhouse: Will the Stock Market Crash?

by David Podvin
A BuzzFlash Special Commentary
July 19, 2002

The recent weakness in the stock market has wrought havoc on investors. Mounting losses have been accompanied by increasing concern on the part of Americans who are watching their dreams of financial security waste away. Yet, as prices decline, Wall Street and the corporate media are trying to persuade investors to buy and hold even more shares of stock.

The public has been advised that this is just one more temporarily painful correction in a long term bull market. It isn't. It is a grueling prelude to annihilation. Four hundred years of market history indicate that investors who heed the advice of Wall Street to buy and hold for the long term are allowing themselves to be led to a stock market slaughterhouse.

On February 3, 2002, in an article titled, “Missing The Overall”, I alerted readers to the fact that the mainstream media was misrepresenting the Enron scandal as an aberration of corporate corruption. As I reported at the time, the Enron debacle was just a symptom of a corporate epidemic:

"Many corporate empires have been built on such accounting legerdemain, including General Electric (NBC), Viacom (CBS), Disney (ABC), AOL/Time Warner (CNN, Time Magazine), News Corporation (Fox), The Washington Post Company (Washington Post, Newsweek), the Tribune Corporation (Chicago Tribune, Los Angeles Times), and the New York Times Company (New York Times, Boston Globe).

Enron is the tip of an iceberg on which sits the entire mainstream media.

A national association of accounting firms has called on the Securities and Exchange Commission to require all publicly held corporations to report real GAAP earnings. The return to ethical accounting standards would mean that, in order to reflect the current valuation of the Dow Industrials, the average would fall to 5825. In order to reach the historical norm based on GAAP, the Dow would decline to 3300."

Since then, accounting scandals have rocked WorldCom, Tyco, Qwest, Xerox, Adelphia, and many others. More corporate dominoes are now on the verge of toppling.

In February, the factual news – as opposed to the fiction that was reported on television and in the Wall Street Journal – was very bad. The accounting scam was beginning to unravel, and the insanely overvalued market was vulnerable to a major decline. As trillions of dollars were about to evaporate, Corporate America was reassuring investors that the future was bright.

On July 17th, stocks temporarily rallied. After the close, brokerage analysts continued to tell the public that the market is ready to move much higher. I maintain that, as the economy has slowed, corporations have further exaggerated their earnings in order to support their stock prices. As a result, the gap between real corporate earnings and the phony kind is larger than ever. Despite the carnage that has already occurred, the long term future for investors is actually bleaker than it was in February.

My perception stands in stark contrast to the propaganda that is being generated by Wall Street and the corporate media. They continue to spoon-feed happy talk to investors who are desperate to hear that things will improve. The professionals on the New York Stock Exchange are still aggressively selling short while their employees exhort the public to aggressively buy. Each rally is accompanied by brokerage firm proclamations of a new bull market. The public is again being seduced with the promise of the nonexistent economic recovery that is always just around the corner. Investors are being told the pessimism is now so great that everyone who wanted to sell must have already sold - meaning that the next major move will be to the upside.

It is the same pitch that Wall Street and the corporate media broadcast in 2000 and 2001. Their rhetoric was deceitful then, and it still is. This is an ongoing swindle of the American people. Hard-earned retirement accounts and pension funds are being obliterated. The faith of average citizens in Big Business is being rewarded with poverty.

And it is going to get much, much worse.

The speculative mania began in 1994, shortly after Congress overrode President Clinton’s veto of legislation that protected corporate executives from being sued by shareholders for lying about earnings. Freed from civil liability, and faced with the prospect of making incredible fortunes on their stock options, the leaders of America’s public corporations invented fairy tales in order to con the public into buying equities. The result was “irrational exuberance” that ended in the first quarter of 2000 with stocks more overvalued than at any time in history.

Every speculative mania of the last four hundred years has made the round trip to its point of origin. Whether it was the Tulip mania, or the South Sea bubble, or the stock market of the Roaring Twenties, every mania has ended with a panic that dropped prices below where they were before the speculation started. In the case of the Crash of 1929, it took investors twenty-five years to get even. Unless this time is unique, the market will return to the scene of the crime. It will drop to – at least – the level where it was trading before the congressionally endorsed corporate lying for dollars began in 1994. That means the major averages will fall – at least – another fifty percent from here.

It will not be a straight-line drop. There were big bear market rallies beginning in April and September of 2001. In the current emotional environment, there can be a violent countertrend up move at any time. When rallies do occur, they will doubtlessly be accompanied by orgasmic screams of ecstasy from Wall Street. The shills for the financial establishment will once again lure naïve investors into the market so the big boys can sell equities short at higher, more profitable levels.

The reasons that are being given for buying stocks as long term investments are false. The extremely high prices that Corporate America has paid for buyouts and takeovers have created massive debt that will take years to reduce. An enduring economic recovery will not occur until the elimination of the tremendous corporate inventory overcapacity that was built up during the acquisition frenzy.

While the market may look undervalued by comparison to where it was a couple of years ago, the bargains are illusory. Stocks are still extremely overvalued on an historical basis. On July 10, Merrill Lynch recommended that investors buy Cisco Systems for the long term at $13.51. This is the same Merrill Lynch that in 2000 told the public Cisco was a winning investment for the long term at $82. Yet even now, gullible investors have again charged in to buy Cisco shares based on Merrill’s recommendation.

The stock of Cisco Systems currently is selling at more than five times above the historical norm for companies with a similar growth rate. The firm’s reported earnings do not include the cost of employee stock options. If Cisco had acknowledged the expense of the options, its reported earnings would have dropped by two thirds. The saving grace here is that Merrill Lynch does not recommend stocks that are below three dollars a share, so its days of conning the public into investing for the long term in Cisco Systems are numbered.

The myth that investors are overly pessimistic was debunked by Comstock Partners on July 12:

At the 1974 bottom cash at equity mutual funds was 11.7% of assets, the percentage of bearish investment advisors was 67%, only 4% of stocks were above their own 200-day average and stocks on average sold at 8 times earnings. We are nowhere near these numbers today. Currently, cash is 5.3% of equity mutual funds assets, the percentage of bearish advisors is 37%, stocks above their 200-day average are at 37% and the S&P 500 is at 40 times trailing reported earnings and 25 times consensus 2002 estimated earnings.

Translated into English, Comstock's analysis demonstrates that market sentiment is nowhere near the emotionally depressed level that accompanies the end of a major decline.

A recent New York Times poll revealed that the average expectation by investors is for double-digit returns on stock investments over the next five years. That is not pessimistic. It is optimistic.

Last week, AOL conducted a poll posing the following question: “What are you doing with your stocks?” Over sixty percent of the respondents chose, “I'm leaving them alone. The market will come back.” That is not pessimistic. It is masochistic.

The Dow Industrials have begun to fall hard because foreign investors – who generally prefer to buy the stocks of household names – have begun taking their money out of America. According to a report by the Federal Reserve, foreigners are now withdrawing their funds from this country at a greatly accelerating pace. The reason is simple – they do not share the parochial view that George W. Bush is doing a great job. Foreign money managers invested large amounts in America during the mid to late 1990s, when they had confidence in the intelligence and skill of a capable president. After almost two years of watching Bush in action, they are now voting with their cash. These are votes that Antonin Scalia is helpless to void. As a result, the blue chips and the American dollar are getting pummeled.

There is reason to believe that a fresh spate of corporate accounting scandals will soon arrive. The new “exaggerations” will be even larger than most of those that occurred during better economic times. Faced with the unpleasant task of reporting smaller profits, many corporations have compensated by telling bigger lies. Standard and Poors estimates that Raytheon may be reporting profits that are nearly 9,000 percent better than its "core" real numbers; Perkin-Elmer is overstating earnings by 7,274 percent; The Gap by 1,047 percent; Apple Computer by 1,003 percent; and Yahoo! by 956 percent.

According to the Associated Press, several Apple executives sold company stock worth almost $50 million in the weeks before an earnings warning caused Apple’s shares to plunge. Chief Financial Officer Fred Anderson was one of those who sold his stock just before the bad news was released to the public. He claims that there is “nothing wrong” with what he did.

This attitude toward cheating the shareholders has been noticed overseas. Guido Rossi, a former chairman of Telecom Italia, said, "What is lacking in the U.S. is a culture of shame. No business leader in the U.S. is considered a thief if he does something wrong. It is a kind of moral cancer."

Thus far, the favorite companies of American investors have been largely spared. They will not be able to hide their lies much longer. IBM is going to get nailed for accounting fraud, as will Intel and Cisco and General Electric. The GE Capital division, which is the big deal-making profit generator for the conglomerate, is a cesspool of accounting corruption. General Electric, which owns NBC and is the most widely respected company in America, is going to take a hard fall.

So will the media conglomerates. They are still lying about their earnings, too.

When the bluest of the blue chips – along with the ostensible guardians of the truth - are caught cheating their shareholders, the current crisis of confidence will turn into panic. Investors will not trust business to be honest with them, nor will they trust the media to honestly report what is going on. The result will be a terrifying freefall in stock prices.

The Federal Reserve will do everything it can to stem the tide, and huge short-term rallies will result. Massive Fed intervention worked to end the crash in October 1987, but that frightening drop had occurred within the context of the greatest bull market ever. The Fed tried the same thing in September 2001, with only temporary success. The S&P 500 and the NASDAQ are now under the September low, because the most recent intervention occurred within the context of what will be the greatest bear market ever. The constant lowering of interest rates by Alan Greenspan has not worked to stop the continuing deflation of the biggest speculative bubble in human history. His intervention to stop a crash won’t work this time, either. Not for long.

What is going to happen to the market will devastate most people. During the crash in 1929, one out of eighty Americans owned stocks. Today, more than half do. The lives of trusting individuals who bought the dream are going to be permanently damaged. The irreplaceable money in the pension funds and 401(k) plans of millions of Americans will vanish. This will mean a long term decline in the standard of living for the majority of people in this country.

The aftermath of the stock market mania is going to be heartbreaking. Innocent people will be crushed.

Meanwhile, the guilty corporate aristocracy is crying all the way to the Swiss bank. Relatively few of them will ever be made to suffer for their banditry. The vast majority of corporate brigands will ride off into the sunset with their ill-gotten loot. Like Al Dunlap of Sunbeam and Gary Winnick of Global Crossing, their penalty for lying and cheating and stealing from their shareholders will be a life sentence of living in luxury.

What has been done cannot be dismissed as white collar crime. Given the countless lives of employees and investors that have been ruined by the corporate miscreants, they are guilty of crimes against humanity. Yet their atrocities are excused by the mindless chorus of conservative lemmings who continue to insist that there is absolutely nothing wrong with American Big Business - except for the slanders manufactured against it by wild-eyed communist critics.

Human nature never changes. There was mass euphoria at the top in 2000, with the boom in technology ensuring permanent prosperity and budget surpluses for as far as the eye could see. At the bottom, there will be overwhelming despair that this country has not experienced since the last stock mania bear market ended in 1932. There is nothing we can now do to prevent it from happening; this is the inevitable day of reckoning that follows the unraveling of the most audacious Ponzi scheme ever perpetrated.

Unfortunately, the impending disaster will be even worse than it has to be. The remedies that have been proposed by George W. Bush are transparently farcical, which guarantees a further worsening of what is already a horrible situation. Bush appears to be totally out of his depth - another Herbert Hoover - and the very real possibility exists that he could produce similar results.

As was the case in the spring, Corporate America and its mainstream media are saying that there is no reason to worry. The party line is still that investors should be buying and holding stocks for the long term. According to the current Wall Street marketing campaign, a falling market is actually a good thing, because lower stock prices create bargains. But there are no bargains during the collapse of a speculative mania. It is vital to remember that, during a financial panic, just preserving what you already have is a wonderful investment.

Thus far, believing the Wall Street hucksters has been a painful mistake. If history proves to be an accurate guide, then continuing to follow the self-serving advice of the financial establishment is going to result in a nightmarish catastrophe for the average American.



To: T L Comiskey who wrote (2753)7/20/2002 7:51:40 PM
From: stockman_scott  Respond to of 89467
 
Some interesting insights...

Message 17768364



To: T L Comiskey who wrote (2753)7/21/2002 6:35:35 AM
From: stockman_scott  Respond to of 89467
 
Predicting Presidential Scandals:
Looking at Bush's New Vulnerability

By John W. Dean [former Counsel to the President of The United States]

truthout.org

Friday, 19 July, 2002

President Bush recently lectured businessmen on corporate responsibility.
One wag said it was like President Clinton lecturing on chastity, except Clinton
would not be foolish enough to do so. Bush, or his advisers, should have known
better. Capital market investors found neither credibility nor solace in Bush's
Wall Street jawboning.

The stock market continues its bumpy but steady bleeding of the retirement
funds of countless millions of Americans. The accounting scandals at Enron,
Tyco, Global Crossing, WorldCom and Adelphia have led to a lack of faith in the
accounting practices for all businesses, which in turn has caused the
downswing in the stock market.

The investing public is too sophisticated for President Bush's "do as I say -
not as I once did myself" sermon, which was about as effective as his boastful
pledge of getting Osama bin Laden "dead or alive." If the stock market is a
leading indicator of public confidence in the president, Bush is in much worse
shape than his post-September 11th pumped approval ratings indicate
(although they, too, are falling fast).

The President seems to have forgotten that it is not merely Americans who
control our stock market. Foreign investors are a huge factor as well, and
foreign money is going elsewhere. Bush's lack of credibility is even greater
abroad.

It strikes me that that this collapsing market has made the both President
Bush and Vice President Cheney vulnerable to serious scandal.

What Makes A Scandal? Twentieth-Century Political Scandals Provide
Guidance

Scandals don't happen in vacuums. Rather, they need a proper atmosphere.
Think of a tree falling in the forest. If no one is around to hear it, it goes
unnoticed. If the tree was felled by the rules, then those who learn of it do not
object. So it is with scandals: actions and activities must be noticed for a
scandal to occur, and there must be an atmosphere intolerant of the action or
activity for a scandal to occur.

By definition (according to The American Heritage Dictionary) a scandal is
"an act or circumstance that brings about disgrace or offends the morality of
the social community." Thus, there must be a community of disapproval for an
action to be scandalous.

Presidential scandals often happen when the public is suddenly not as
tolerant as it once was of a president's behavior - his conduct, or even a
mindset that existed before he assumed office and was fully known to voters at
that time. To appreciate this historical paradigm, one need look only at the
most significant presidential scandals during the 20th century: Teapot Dome,
Watergate, Iran-Contra, and L'affaire Lewinsky. These scandals all occurred
when pre-existing behavior patterns of the presidents encountered changed
circumstances that also changed public tolerance for the patterns.

The Teapot Dome Scandal (1922-23): A Widening Scandal Encompasses
Graft

Teapot Dome is the name of a naval oil reserve in Wyoming (so named
because of a rock shaped like a teapot sitting atop a geological oil dome below
the surface). This property was leased by Secretary of Interior Albert Fall in
1922 to a friend, oil tycoon Harry Sinclair. Fall made similar leasing
arrangements for the oil reserves in California with another friend and oil baron,
Edward Doheny. Fall's receipt of some $400,000 from these friends (half of
which went to the Republican party) was found to be a bribe, although Fall
claimed it was a gift and neither Doheny nor Sinclair was convicted of bribery.

Like Watergate fifty years later, however, Teapot Dome came to embrace
other graft discovered in the Harding administration. Namely, it came to
encompass kickbacks on hospital construction and sale of government surplus
by the head of the Department of Veterans Affairs, Charles Forbes, and
kickbacks on the disposition of alien property acquired by the government
during World War I. That property had been handled by former Congressman
Thomas Miller under the supervision of Attorney General Harry Daugherty (who
was indicted but not convicted).

While President Harding was not personally involved in any corrupt
activities, Teapot Dome ruined his reputation and that of his administration. It
appears the scandal happened because Harding was too trusting of long-time
political cronies, placing little men in big jobs. This was the way he had
operated throughout his public career - a behavior pattern that had not
previously brought him down, but within his Administration, became disastrous.

Teapot Dome became a scandal in 1923. While the Democrats did not
control the U.S. Congress, their success in the 1922 mid-term elections had
emboldened them. Then, unexpectedly, Harding died. Within months of his
death, the corruption surfaced. No one knows what might have happened had
Harding lived, and many believe the highly popular president would have
dismissed the culprits, and promptly prosecuted them, thus saving his own
reputation and legacy.

We do know what, in fact, occurred after his death. He was tarnished and
tagged with the scandals, for the circumstances had changed. His trusting
management style, and his genial manner, were no longer admired. Rather,
Harding was implicated in Teapot Dome by the very fact that he was President,
and largely as a result of the scandal, he was soon labeled the worst American
president.

Watergate (1972-74): A Break-In Leads to A Historic Resignation

Watergate started as a bungled break-in undertaken by Richard Nixon's
re-election committee. But within a short time, it came to symbolize abuses of
power that included wiretapping newsmen and White House staff looking for
leaks, ordering the break-in of a Washington think-tank to obtain government
papers, breaking into a psychiatrist's office to get his records about a man who
leaked classified government information to the media, using the facilities of
government to screw the President's political enemies, and using presidential
powers to run a massive cover-up to hide it all.

Richard Nixon's Watergate scandal was, in essence, about abuses of
government power. Those who knew Nixon before he became president were
not surprised that this activity was his downfall. He had a history of misusing
government power to fight his political opponents and enemies.

Nixon gained prominence as a young California congressman by misusing
the investigative powers of Congress as a member of the infamously abusive
House Un-American Activities Committee. And he was equally well known for
his use of dirty tactics in political campaigning - from his first campaign to his
last.

When Nixon became president, he saw himself as a wartime leader. And he
felt that in fighting the war in Vietnam, he should have at his disposal not only
all the powers of a Cold War president who used illegal activities, but also the
extraordinary powers special to wartime that presidents like Abraham Lincoln
(Civil War), Woodrow Wilson (WWI), Franklin Roosevelt (WWII), Harry Truman
(Korea) and Lyndon Johnson (Vietnam) had exercised.

Watergate was the result of Nixon's belief, based on his own prior conduct
and experience as Vice President, that he was above the law as President. In
fact, he was not fighting World War III, nor was he dealing with a situation akin
to the current terrorist threat. Watergate was not a cover-up of the bungled
burglary of a political opponent; rather, it was a cover-up of
government-sponsored illegal activities, which Nixon considered "national
security" matters.

But times had changed, and others did not allow Nixon's conduct to be
justified by the mere invocation of national security. Thus, rather than a
third-rate burglary sliding into oblivion, it became the key to discovering Nixon's
intolerable conduct.

Again, as with Teapot Dome, the changed atmosphere combined with a
president's pre-existing disposition created the scandal. This pattern repeated
itself again during the Reagan presidency.

Iran-Contra (1986-92): A Cold Warrior Run Amok

Not unlike Nixon, Ronald Reagan saw himself as a cold warrior. Reagan
spent a lifetime chasing communists. As the head of the Screen Actors Guild,
he secretly informed on suspected communists in the film industry. As host of
a television series he frequently addressed the communist menace. As
Governor of California, he was sure communists were behind the anti-war
movement.

In 1981, when he became President, Reagan had no communists to fight in
the United States, so he became the champion of the anti-communist
Nicaraguan contra rebels in Central America. The contras were conducting a
guerrilla war against the Sandinista government of Nicaragua, a
Marxist-infiltrated regime. Notwithstanding the vigorous efforts of the Reagan
administration, Congress decided in 1982 to temporarily ban financial aid to the
contra rebels.

President Reagan simply ignored this law. Using his National Security
Council (NSC), which was not expressly covered by the law, NSC staffer Oliver
North covertly passed military aid to the contras. The funds for the contras
came from another North covert operation: secretly selling arms to Iran, despite
a U.S. trade and arms embargo. (Thus the moniker "Iran-contra"). Reagan
hoped the arms deal would free American hostages held by a pro-Iran group in
Lebanon.

The scandal broke in 1986 when Lebanese newspapers disclose the arms
deals. Reagan went on television and vehemently denied the story. A week
later, he was forced to retract his false statement, but he still insisted that the
sale of weapons had not been an arms-for-hostages deal. Years later, Reagan
acknowledged that the evidence did show it was an arms-for-hostages deal, but
Reagan said that in his heart, he did not want to believe that was the deal.

Reagan was forced to appoint a commission, headed by former Texas
Senator John Tower, to investigate the matter; it whitewashed it. Next,
Congress investigated, and found out at least part of the story. (Oliver North,
and others, had destroyed documents, making it impossible to fully reconstruct
events.)

Finally, an Independent Counsel was appointed, which resulted in 14
criminal indictments. But in the end, no one went to jail. Most all were
pardoned by President G.H.W. Bush, or avoided conviction on legal
technicalities.

Many historians believe that Reagan's actions in Iran-Contra were the result
of the growth of the presidency during the cold war, and of Reagan's own cold
warrior mentality. Reagan, like his Vice President G.H.W. Bush, claimed that
he was unaware of the illegal action of his subordinates - although the
subordinates said this was not true, he, like his Vice President, got away with
it.

Reagan was only slightly tarnished by the scandal. Yet Iran-Contra, like
Teapot Dome and Watergate, became a scandal because Reagan's earlier
acceptable conduct (aggressive anti-communism) encountered changed
circumstances (a temporary Congressional prohibition of aid to the Contras).

L'affaire Lewinsky (1999-2000): Not Every Dog Has His Day

William Jefferson Clinton was known as a philanderer long before he
became President. When Gennifer Flowers surfaced during his campaign, he
as much as admitted his extra-marital affairs, conceding on television that he
had caused pain to his family. Voters knew what he must be referring to, but
did not believe his extra-curricular sex life disqualified him to be president.

Before Monica Lewinsky became a household name, Washington gossip
claimed that President Clinton was having affairs - as President - with some half
dozen different women. No one was surprised. Nor did this cause any problem
in his reelection bid in 1996.

When Monica's one-time friend and confidant, Linda Tripp, reported the affair
of the White House intern to Independent Counsel Kenneth Starr, the rules
changed. Starr had been searching for wrongdoing by Clinton since January
1994 and had found none. But he did find that Clinton had been less than
truthful in testifying about his relationship with Lewinsky in the civil litigation
filed by Paula Jones, who had alleged that Clinton had improperly propositioned
her when he was the governor of Arkansas.

Using all the prosecutorial tools of the United States Government against
the President, Starr proceeded to build a perjury and obstruction of justice case
against Clinton, based on his false testimony in the Jones civil case. Rather
than test whether a sitting President can constitutionally be criminally
prosecuted while in office, Starr instead referred the entire matter to the House
of Representatives.

The House promptly proceeded, acting in a purely partisan manner, to
impeach the president, and send the matter to trial in the Senate. And the
Senate voted to acquit the President, for he had not engaged in an impeachable
offense.

L'affaire Lewinsky was more than a presidential scandal. The House
scandalized itself in acting in a purely partisan fashion. Independent Counsel
Ken Starr scandalized himself by probing the private sexual life of a president.
President Clinton scandalized himself, in the words of Newsweek columnist Jon
Alter, by his "squalid behavior" that "strip[ped] his office of much of its
grandeur."

But this presidential scandal, nevertheless, follows the pattern of Teapot
Dome, Watergate and Iran-Contra. Again a president's pre-presidential behavior
(of which voters are aware) became scandalous because of a change in
circumstances. Here, the change was the once inconceivable circumstance of
a federal prosecutor investigating a president's sex life as it might have probed
into that of a serial rapist.

President Bush's Changed Circumstances: Haunted By His Questionable
Business Past?

If past is prologue, and I believe it is, President Bush is now highly
vulnerable to scandal. It has long been known that Bush played in the minor
leagues of the Texas oil business, that he parlayed his name into a seat on a
small public company from which he earned almost a million dollars for doing
nothing, and that he was given a piece of the Texas Rangers baseball club for a
nominal investment that would ultimately reap him a $20 million nest egg.

Bush boasted of his business background during his presidential campaign,
claiming that his business background was one of his assets. He would run the
government like a good Chairman of the Board, with Cheney his trusted Chief
Operating Officer. The fact they had both become wealthy quickly, he
suggested, was only proof of their ability.

After Enron, Tyco, Global Crossing, World Com and Adelphia, the world
looks different. Just as our domestic and foreign policy changed with
September 11th, the accounting frauds of America's largest corporation, with
others doing what George Bush and Dick Cheney did on a smaller scale, has
changed the economic and business perspective of the nation. Integrity, and
not merely results, has begun to matter - because without integrity,
corporations will never attract the investment to get results.

Both Bush's and Cheney's weak efforts to deal with the problems facing
American business suggest they don't get it. Again, they are following the
pattern: Warren Harding didn't get it about relying on his cronies. Richard Nixon
didn't understand that his abuses would not be tolerated. Ronald Reagan failed
to appreciate that his anti-communism zeal had to follow the law. Bill Clinton
was unable to keep his zipper up even when he was the subject of civil and
criminal investigation. So, too neither Bush nor Cheney appear to appreciate
their present jeopardy.

Those who make it to the White House - both by election and selection -
often have more hubris than common sense, and are easily blinded by the
spotlight in whose glare they live. The White House, notwithstanding efforts to
keep the blinds drawn, is a fish bowl. It magnifies everything for those looking
in, and distorts the world for those looking out.

History suggests either Bush or Cheney are a presidential scandal ready to
happen. Hopefully, it won't happen. However, I'd give two-to-one odds it will.
___________________________________________
John Dean, a FindLaw columnist, is a former Counsel to the President of
the United States.



To: T L Comiskey who wrote (2753)7/21/2002 6:57:06 AM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
This is NOT surprising...

Bush was warned of Harken company troubles

WASHINGTON, July 21 (Reuters) - Government records show that President George W. Bush while in private business had confidential information in 1990 about financial problems facing a Texas oil company just months before he sold stock in the firm, The Washington Post reported on Sunday.

In recent weeks, Bush has been confronted with renewed questions from reporters about circumstances surrounding his sale of Harken Energy Corp. (AMEX:HEC - News) stock in 1990. Bush was an outside director of Harken at the time of the sale.

He has repeatedly responded that a Securities and Exchange Commission investigation of the transaction cleared him of any wrongdoing.

According to the Post report, documents released under the Freedom of Information Act show that four months before selling most of his Harken stock, Bush and other board members received information from management warning the company would "continue to be severely limited in our activities due to cash constraints."

The information was conveyed in a letter to Bush and his colleagues, which also said a failed deal involving a Harken subsidiary "left the company with little cash flow flexibility," the newspaper reported.

The documents were released on Friday by the Center for Public Integrity, which calls itself a nonpartisan organization that probes government and ethics issues.

Bush has brushed off recent suggestions that he ask the SEC to release all documents related to its 1991 investigation of the stock sale. "The key document said there is no case," Bush said.

The White House has also been fending off questions surrounding Vice President Dick Cheney's actions while serving as chief executive of Halliburton Co. (NYSE:HAL - News), a Texas-based oil services company.

The SEC is investigating Halliburton's procedures in accounting for cost overruns. Bush has told reporters he is confident the SEC would find Cheney did nothing wrong.

Interest in the business dealings of Bush and Cheney has grown as a wave of accounting scandals has enveloped U.S. companies in recent months, contributing to a declining U.S. stock market and stoking fears Wall Street's setbacks will hobble an economy struggling to grow.

Bush, in his weekly radio address on Saturday, called on Congress to enact legislation to increase penalties for corporate fraud and to strengthen oversight of the accounting industry. Doing so, he said, would "bring a new era of integrity to American business."



To: T L Comiskey who wrote (2753)7/22/2002 2:17:11 PM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
Calls Mount for Bush, Cheney, to Come Clean

thedailyenron.com

Questions about President Bush's and his Vice President's past corporate behavior continue to dog the administration's efforts to staunch the hemorrhage of investor confidence in corporate America.

Opinion polls over the weekend show that the majority of those polled believed the President and Vice President were not telling the whole truth and nothing but the truth about their prior business dealings.

Vice President Cheney has come under fire for his tenure as CEO of Halliburton, which is now under SEC investigation for accounting irregularities initiated during Cheney's years with the company. Cheney has refused to discuss the issues raised by the SEC, or a shareholder lawsuit alleging accounting fraud that names him as a defendant.

President Bush has deflected questions about his time at Harken Energy by suggesting that reporters consult SEC documents and Harken board minutes. Meanwhile, SEC commissioner Harvey Pitt has refused to release those documents unless the White House requests that he do so. But, the White House refuses to do so.

Sen. Joseph I. Lieberman (D-CT) said yesterday that the U.S. economy will continue to suffer a crisis in confidence unless President Bush and Vice President Cheney come clean by releasing details of their actions as private-sector corporate executives.

"Because of the president's involvement in the Harken Energy case, there is a large cloud hanging over his head," Mr. Lieberman said. "I am afraid if he doesn't eliminate it soon by giving full disclosure, [the suspicions] will diminish his moral authority — his presidential authority to lead the critical effort to restore confidence in the [stock] market."

The facts that have dribbled out in each case have only raised more concerns and questions. In a recent interview, Halliburton's current CEO, David Lesar, said Cheney was well aware that the company was counting cost overruns as revenue. The blunt admission raises the possibility that his former colleagues at Halliburton are sending Cheney a message; "We will not take a fall for you, Dick. If you let us go down, we will take you with us."

Lieberman directly addressed the Vice President's role at Halliburton, saying that "whereas the president's disclosures, so far, on Harken Energy have been inadequate, the Vice President's disclosures regarding Halliburton have been nonexistent."

"I just think that the longer this goes on, the worse it's going to be for the administration, but, more to the point, the worse it's going to be for our economy," Lieberman said. "Every day that the market drops and individual investors lose millions of dollars is another day crying out for the kind of restoration of confidence that has to come from the very top of our government as well as from the very top of the American business community."

Meanwhile, two other Bush administration officials continue fighting for their political lives. SEC chairman Harvey Pitt made the rounds of talk shows looking increasingly like a boxer who has taken too many punches to the head. Pitt's troubles began months before either Bush's or Cheney's, as critics focused on his close ties to the very accounting firms he must now discipline. As a private attorney, Pitt represented both Andersen and KPMG accounting firms before accepting his position at the SEC.

"I'm the right person for the job," he said on NBC's Meet the Press. "This guilt-by-occupation is really a needless diversion. I'm beholden to no one. I represent the American people," a wide-eyed Pitt recited.

Army Secretary Thomas White is recovering this week from an angry and confrontational session before a Senate investigating committee last week. White is currently under investigation for insider trading in relation to his sale of Enron stock after he left the company, where he served as head of Enron Energy Services.

"People are starting to view the administration as 'Ali Babba and the Forty Thieves," one Hill observer said. "It's becoming increasingly difficult for voters to feel confident that this collection of fat cats, who themselves profited from all corporate misbehavior, have the moral authority necessary to cleanse the system."