Posted on 07/10/2002 12:52:51 AM PDT by JohnHuang2
I get a kick out of watching politicians talking about "corporate responsibility" and "corporate accountability."
There's no question that some corporate fat cats are ripping off the American people, their employees, their shareholders and their customers. It's a shame that some employees have lost their life savings in pension-fund swindles. I'm not going to minimize the blatant accounting frauds we've witnessed recently with the Enron scandal and now WorldCom.
There's a story this week that Merck & Co. recorded more than $12 billion in revenue over the past three years from its pharmacy benefits unit even though the subsidiary never collected the money. What's the trick? The revenue in question is the co-payment paid by customers with a prescription drug card to their retail pharmacy to cover their portion of the cost of a drug under an insurance plan. The pharmacy keeps the co-payment. Merck explained that the practice was in line with generally accepted accounting practices.
Of course, you and I look at that and we see cooked books. We see a company padding its revenues. We see a company doing some creative accounting.
Merck, however, paid an immediate price in the marketplace. Its stock fell precipitously. The company, and others in similar situations, will think twice about trying to put one over on stockholders next time.
But what about government? What about the way Washington is lying to the American people about its own bookkeeping – especially with regard to Social Security revenues and the way they are used to offset the deficit? Did you know the deficit is growing again? Did you know Congress is quietly planning to raise the debt limit again without you noticing? Did you know the politicians of both parties are spending again like there is no tomorrow – without a thought as to where the revenues will come from?
No, you didn't know that. But you did know about Enron. Because the marketplace works. Government doesn't.
WorldCom execs, meanwhile blamed the company's former auditor for nearly $4 billion in accounting irregularities. Who's the auditor? You've heard the name Arthur Andersen. It once meant prestige in the business world. Now it means scandal. That's how quickly the marketplace corrects itself – without government intervention, without trials, without new laws, without endless hearings.
Who does the government blame for its creative accounting – the kind that would make Enron and WorldCom and Arthur Andersen look like pikers by comparison? No one. For a long time it's been said that if private companies kept their books like the government keeps its books, there would be a lot more CEOs in jail.
But nobody from government ever goes to jail for fooling the people. It's considered part of the job. You get paid more to be a good spinner.
We desperately need a new ethos to guide us in this country. It shouldn't be surprising, given the state of the nation's morality that big business would sometimes overlook the little matter of right and wrong in favor of the bottom line and cashing in on stock options.
Yet, as bad as the situation gets with regard to corporate ethics, you have to admit one thing – the market is self-correcting. The same cannot be said of government scandals.
Think about it. When the public started to get wise to Enron, the collapse of this giant company took place faster than the collapse of the Soviet Union.
The scandal served to wake up investors to the threat of fraud in other companies. That's where WorldCom and a dozen other smaller enterprises come in. The cleanup was in progress.
The politicians are holding hearings and writing new laws that will never have the impact the market has already made on fraud in the boardroom.
When was the last time you saw the government clean up one of its messes this quickly and efficiently?
Nevertheless, the political class in Washington loves these business scandals. They make them feel superior. They make them feel needed. They make them feel like saviors and guardians of the public interest.
Don't be fooled.
The real crooks – the all-stars, the major leaguers, the pros – are the folks yelling the loudest about all the new regulations needed to stop the business ripoffs. Like Mafia dons, the Washington elite seek to protect their turf. They want to monopolize the business of picking your pocket.
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President calls for new 'Ethic of personal responsibility'
Poor, poor Democrats. Small wonder they're in trouble.
The zinging tour-de-force the President delivered on Wall Street Tuesday, beyond co-opting yet another issue from struggling Democrats, proves this Texan meant business when he vowed to go after business -- phony business, that is.
On corporate reform, Bush is now center stage, "calling for a new ethic of personal responsibility."
Terry McAuliff must be flailing in pain.
Cleaning up the mess Clinton left behind is full time work, that much we've learn in the 17 months of this administration. Fixing the problems of Wall Street is part of the clean up.
But it's more than that.
To Bush, the 90s were reckless, a decade of impetuous irresponsibility, of unbridled license, a moral black hole for ethics, a contra bonos mores era run amok. In this crucible, corruption was 'in', integrity, 'out'.
But the tone was set at the top.
As the prince of sleaze, Clinton was the Zeitgeist of that era.
On many levels, the Clinton poison infected the culture, the ethos, the mores of the 90s. Things permissible -- indeed, rewarded -- while Clinton was "president", were unthinkable under Reagan.
Wall Street would not be immune. The harum-scarum emphasis on the bottom line, even to the point of fraud -- consequences be damned -- was the Clinton Doctrine applied in the boardroom.
Lying, cheating, stealing, bilking, conning, duping, fleecing, thieving -- who gives a rip?!. Get yours while the gettin' is good.
Just don't get caught.
That's the Clinton Doctrine.
Bush's speech yesterday was a watershed.
Message: The Clinton era is over. Washington -- there's a new Sheriff in town.
"The lure of heady profits of the late 1990s spawned abuses and excesses", said Bush. "With strict enforcement and higher ethical standards, we must usher in a new era of integrity in corporate America."
Window dressing?
Hardly.
The President announced a special task for to hunt down corporate wrongdoers and challenged the U.S. Sentencing Commission to urge stiffer jail terms for these miscreants.
He challenged Congress to get off the dime, calling for stronger laws against document shredding, doubling prison terms for wire and mail fraud to 10 years.
To put teeth into the Securities and Exchange Commission, Bush called for 100 additional enforcement officers and $100 million more for the SEC budget.
Here's a dirty little secret: To squeeze yet more mileage from corporate fraud politically, Democrats quietly hoped Bush's drive for reform would fall far short of criminal sanctions for wrongdoers.
Democrats still don't 'get it'. On Bush, they're clueless, utterly addled and befuddled.
To this President, the first MBA in the White House, the scandals on Wall Street are morally appalling.
Bush: "These scandals have hurt the reputations of many good and honest companies. They have hurt the stock market. And worst of all, they are hurting millions of people who depend on the integrity of businesses for their livelihood and their retirement, for their peace of mind and their financial well-being."
As a respectable member of the business community himself, George W. Bush takes umbrage at the sleazeballs and scammers tarnishing the community as a whole in the eyes of the public. As a man of unquestioned integrity and decorum, Bush is bound and determined to bring these criminals to justice, to restore public confidence in corporate America, to bring probity, honesty, decency back to the boardroom.
To Bush, integrity isn't a handicap, it's the key to excellency in business. A fervent believer in free enterprise, he knows free markets can not long survive amid a crisis of confidence, a climate of investor cynicism.
Bush aims to end this crisis, and he will -- by putting corporate criminals in leg-irons, in orange jump suits. Under this administration, these scumbags are going to prison, and will stay in he pokey for a very, very long time, too.
Bush: "With strict enforcement and higher ethical standards, we must usher in a new era of integrity in Corporate America. In the end, there is no capitalism without conscience, no wealth without character."
Democrats, in contrast, see corporate sleaze as campaign fodder -- an issue to exploit politically.
For Bush, it's a moral issue -- a question of right and wrong.
Democrats could care less about corporate wrongdoing, per se.
Eh?
That's right. Oh, they posture and handwring endlessly over Enron, WorldCom, Tyco, Qwest and Global Crossing. But political advantage is really what they're after -- capitalizing on what they wrongly perceive as vulnerabilities for Bush.
Rather than reaping political windfall, Democrats instead are in quite a pickle. By failing to act aggressively enough against corporate wrongdoing, Clinton allowed it to flourish. Indeed, by forestalling enforcement actions by his SEC, Clinton reaped the rewards -- campaign largess from corporate executives grateful to Clinton for keeping regulators off their backs.
Dittos the Reno "Justice" Department. On Clinton's watch, it was AWOL.
Small wonder Americans lay responsibility for the torrent of sleaze rocking Wall Street directly at Clinton's feet, much to the bitter chagrin of the media and Democrats who have feverishly sought to shield X42 from questions over his role as the book-cooking burgeoned while he was "president."
In the latest CNN/USA Today/Gallup poll, 51% of Americans say Clinton is "at least partially responsible ... because of the climate he set in office with his moral failings."
Haunted by the ghost of Clinton past, Democrats and WorldCom share startling similarities:
1) Both are battling to avoid bankruptcy; For Democrats, it's political bankruptcy; For WorldCom, it's financial bankruptcy.
2) Both are champions at cooking the books. Democrats, through cut outs, concealed millions of illegal campaign donations from abroad. WorldCom listed nearly $4 billion in expenses as capital outlays.
3) Neither of the two possess a modicum of ethics -- not a scrap of basic morality.Nor care that they don't.
And while Democrats and their media puppets have done their damndest to link the President with corporate sleaze -- indeed, they've smeared him as a crook and a criminal himself -- polls show their efforts have mostly boomeranged.
Despite politically motivated, coordinated Democrat/media slander, Americans overwhelmingly give President Bush the moral high ground on this issue.
Week after week, month after month, this President has been libeled, maligned, denigrated, disparaged, vilified, impugned, defamed. He's been pummelled with every ugly name in the book.
The Bush-haters spared no effort to bring down the President.
Yet, all was for naught.
Indeed, their hateful vendetta conflicts with their goal of assassinating the President politically. While Democrats thought they saw a chance to tar Bush with the WorldCom brush, 64% of Americans believe "big business has too much influence on" Democrats in Congress, again according to Gallup. While the President gets similar numbers, the survey puts the lie to media claims that Democrats have a built-in political advantage to press.
Moreover, on questions of morals and ethics, this Presidents continues to garner exceptionally high marks.
On issue after issue, the Democrat disconnect is staggering.
Democrats desire a crippled President, even while the country is at war; Americans pray for Bush to stay strong.
Democrats would love to see a double-dip recession; Americans are optimistic on the future.
While Democrats try to undercut public morale, and undermine resolve, Americans overwhelmingly bond with the President; on matters of security, they trust him immensely.
Having failed to dent Bush's popularity, and with midterm elections looming ominously, Democrats are reduced to recycling inane "questions" over 10-year old stock deals at Harken Energy, where Bush was a director. For years, campaign opponents of the President have beaten the Harken drum, to no avail. The SEC investigated Bush ad nauseam, but found no evidence of impropriety.
But the haters aren't about to let niggling facts stand in their way. Senator Daschle, appearing on CBS's Face the Nation, continued to level vicious attacks, insinuating criminal wrongdoing on Bush's part.
Never mind that Linda Hall Daschle, his wife, moved from airline lobbyist to acting administrator of the FAA, then left FAA to resume lobbying for the airlines. Her clients included some of the biggest government contractors in the airline industry.
Nuff said.
Yet, for all the sniping, all the slander, all the insults -- the fierce torrent of hate, bitter Democrats have zip, zero, nada to show for.
A whopping 76% approve of Bush's job performance, according to Gallup, and 65% are confident Bush will take corporate miscreants to the cleaners.
No more fuzzy ethics, no more fuzzy math. There is, indeed, a new Sheriff in town, O Democrats, and he's aiming to stay in your face.
So get over it.
Anyway, that's...
My two cents...
"JohnHuang2"
With regard to the ever-increasing spending by the government, I specifically asked a friend (Ph.D. in Economics, long-time banking bigwig of a MAJOR bank, was director of their global strategic planning for 10+ years)
His answer is that the currency that the global economy works off of is the dollar; it is the ONE universal currency that everybody accepts as the standard... For this one reason alone, the other countries do not challenge the USA on its' debt...
However, when I pointed out the increased spending, the sagging real GDP, the lowered interest rates (which will increase inflation), etc., and asked how long it will be before the other countries notice Lady Liberty has no clothes...
He couldn't give me an answer, and simply said "it's never happened before..."
Somehow, this didn't comfort me much...
That is unnerving.
No it's not:
The Fed’s discount rate is the only interest rate directly set by the Fed. The discount rate is the rate at which the Fed lends money to banks who must borrow from the Fed in order to have the required reserve level set by the Fed. Ordinarily, borrowing from the Fed is something that occurs when a bank is financially distressed – borrowing directly from the Fed is rare and infrequent.
However, the setting of the discount rate has value to the market as a signal of the Fed’s intentions or desires.
If the Fed raises the discount rate, it generally signals a tighter monetary policy. For a bank to borrow from the Fed, it will cost more. The intended signal to the banks is: Don’t engage in deposit creation (lending under the fractional reserve system) to such an extent that you overstep the bounds of the reserve requirement. Because of the profit motive, banks will lend right up to the edge of their reserve requirement limitations, knowing that if they need to, they can borrow from the Fed. The signal of increased discount rate tells the banks to cool it, it will cost more to recover if you are too loose in lending.
The opposite signals are sent when the Fed lowers the discount rate. The Fed is saying to banks: Lend away, we are here to help and at a cheaper price. The encouragement is for banks to engage in money creation by lending, all the way to the limits of their reserve requirements. (W/ acknowledgments to OwenKellog).
If Congress would attend to putting its own fiscal house in order then it might be able to teach the private sector about marketplace ethics.... If the government were run like a private sector company, most of our leaders would already be behind bars.
Can I say that if the government were held accountable like the private sector most of our leaders would already be behind bars.
Also, if a private sector company was run like government -- funding itself with the extortion-barrel of a gun -- the private sector would all be in jail. Come to think of it, the government has created so man laws that virtually every citizen is a lawbreaker. Yet despite all those law breakers people and society continue to prosper.
Despite power-usurping politicians and self-serving bureaucrats that create and implement 3,000 new laws each year -- "must have" laws they and the media tell us; that without them people and society would run headlong into destruction -- people and society continue to increase prosperity.
How ever did we all manage to do so well for years and decades without having next year's do-or-die, must-have laws or the laws that will come the year after next and the years to come?
The fact is, politicians and bureaucrats are parasites and the workers of the world are the host. Without our work ethics they would perish, -- without their ethics of parasitism the workers of the world would flourish almost beyond imagination.
The War of Two Worlds
Value Creators versus Value Destroyers
Then I would suggest you take some upper-division classes on macroeconomics.
There are two ways the Fed can stimulate economic growth: lowering the prime interest rate, and selling T-bills at a lower-than-current interest rate. However, either way, this causes more money to enter the market. More money results in a devaluation of the money over the long term. Ergo, lower interest rates do lead to higher inflation. If you have statistical data to contradict these facts, I would be interested in examining it, and performing my own statistical analysis of the data...
Actually, they are. See the above post.
And if an increase in intrest rates causes a reduction in inflation explain the 70's. Particularly the Carter years.
The main website is www.ucdavis.edu/ You'll be able to track him down from there...
Either get educated, or continue the rectal-cranial inversion you currently suffer from.
Get some knowledge between your ears, then join the conversation...
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