Analysis: WorldCom wrecks Bush strategy

United Press International ^ | July 1, 2002 | Martin Sieff

[HAL9000]

WASHINGTON, July 1 (UPI) -- "There is nothing new in the world," President Harry S. Truman liked to say, "Except the history you don't already know."

He must have been reading United Press International analysis on "The decline and fall of the American economy."

Ten months ago, on Aug. 30, 2001 -- less than two weeks before the Sept. 11 terrorist attacks that destroyed the World Trade Center and mangled the Pentagon -- this column said, "The continued slide of the U.S. economy into serious recession and the failure of the Bush administration to either recognize the fact or prevent it happening ..."

That information could have been written this Monday.

Consider the news at the start of this far-from-festive Fourth of July week when it comes to economic indicators. The Nasdaq high-tech composite index, the Holy Grail of the great Clinton "Roaring Nineties" bull market over the last decade, collapsed to a five-year low, dropping even below the Sept. 21 base line it touched after the mega-terrorist attacks that killed 3,000 Americans.

The same day, USA Today reported at the top of its Money section, "Stocks on course for three straight losing years." Nasdaq, it reported, had lost 20.7 percent, or more than one-fifth of its value, in the most recent trading quarter. The DowJones industrial average itself was not far behind it, losing 11.2 percent, or more than one-tenth of its value during the same period of time.

These stories, of course, followed the latest great catastrophic meltdown of a multi-billion dollar giant information technology corporation, the WorldCom meltdown. As with Enron half a year ago, one of the largest corporations in the world was caught out in an enormous accounting fraud. They even had the same accountants the now-universally discredited Arthur Andersen Co.

Once again, locking the stable door after the horse has bolted, the Securities Exchange Commission has pledged to file fraud charges against WorldCom and to make sure that no cover-up takes place. Of course, as was the case with Enron, the crucial cover-up had already taken place when the trusting investors in the corporation were effectively robbed blind by behind-the-scenes scams before the public collapse finally took place.

But Enron and WorldCom are only two in a huge forest of falling trees. Global Crossing, Qwest Communications, Tyco, Xerox and ImClone are reeling from their own scandals. Mighty PsiNet has already been laid low.

UPI's wise, cynical old professional market bear, Business and Economics Editor Martin Hutchinson, has been warning in his weekly Bear's Lair column repeatedly over the past half year that Enron would indeed be only the first of many, and that the curse of naïve -- and worse -- accounting and assessing practices based on the delusion of an eternally-rising high-tech market meant many more business shipwrecks to come.

Sure enough, the floor of Wall Street is now littered with the wrecks of business Titanics and more of them seem to be hitting the iceberg of harsh reality and public exposure every day.

This development came as no surprise to us in UPI analysis either. Ever since the dot-com bubble burst, 2 1/2 years ago, we have repeatedly warned that the pattern of economic depressions going back to the time of the Dutch tulip craze in the 1620s and the South Sea bubble in the City of London a century later has always taught the same lesson.

That is: the initial bursting of the great speculative bubble is then followed by a long and painful -- often agonizing -- downslide of the general economy that usually lasts years. And in each case, the greatest loss is suffered not in the original, sudden, triggering market-crash but in the far slower but longer and inexorable market slide that then follows.

This is what happened after the Wall Street crash of Black Tuesday in October 1929. And it is the pattern that the plummeting U.S. business indices have followed since.

Just review some other USA Today headlines we reviewed in this column last August:

"Consumer confidence fall comes as a surprise;"

"Sharp drop hints recovery won't be arriving soon;"

"Gateway to lay off a quarter of workforce."

In the light of the WorldCom collapse, that headline assumes special significance. The Gateway Corp. has been one of the top personal computer manufacturers in the United States, but, USA Today reported, "Like nearly all high-tech companies, Gateway has been battered by the U.S. economic slump and weak global PC sales, which are expected to fall this year for the first time ever."

That was 10 months ago. But only last week, the New York Times soberly reported that even after WorldCom had laid off 17,000 of its own workers, some 10 percent of all the remaining workers in the U.S. high-tech industry looked certain to lose their jobs in the contraction of the coming months.

Where does that leave the Bush administration and its strategy of "spend wildly like there's no tomorrow to keep the recession wolf from the door?"

To coin another cliché, "it leaves it up the creek without a paddle."

One remembers the old favorite line of the late Sen. Joe McCarthy in his anti-communist witch-hunts, "If it sounds like a duck and looks like a duck and quacks like a duck, it's a duck." He was referring to the way to identify Communists, but one might say with considerably more cause, "If it sounds like a recession, and looks like a recession and bites like a recession, it's a recession."

Technically, the Bushies may be able to face the November mid-term congressional elections without having the albatross of recession hung over their shoulders. A recession is literally defined as two consecutive quarters of contraction in gross domestic product.

But what we reported then, before the Sept. 11 terror attacks were used as the excuse for a wild Bushie public spending binge, is all the more true now. "The domestic U.S. economy is slowing alarmingly, and more than predicted. And it is now barely above the water line of measuring shrinkage rather than growth."

Through all of this, Federal Reserve Chairman Alan Greenspan, apparently determined to wreck all his legendary achievements of more than a decade ago, has continued to do nothing except keep interests plugged at virtually zero, despite the rapid decline of the dollar against both the yen and the euro -- neither of them models of fiscal strength -- over since the start of this year.

Ten months ago, we noted that the remorseless slowdown of the domestic U.S. economy was taking place "despite the extraordinary measures of the Federal Reserve Board in slashing interest rates seven times in only half a year. And they have also occurred despite President George W. Bush's legislative success in pushing through Congress a giant $1.3 trillion tax cut over the next decade.

"They have also occurred in an international market place where global oil prices have been dropping significantly again from their highs of two and more years ago. The recovering clout of the global oil cartel, the Organization of Oil Producing Countries, has just been undercut anew by Russia's decision to boost its own oil exports to generate needed short term hard currency income and compensate for declining revenues by boosting market share.

"Yet lower oil prices have not jumpstarted investor confidence either. One can only conclude of Wall Street investors, 'If they do these things when the wood is green, what will they do when it is dry?' In other words, how will the markets react when really bad economic news comes along?"

Well, it's coming along now.

Bush should have followed the example of former President Ronald Reagan, the iconic hero of modern Republicans, 20 years ago. Had he tightened money supply and urged Greenspan to boost interest rates right after he took over from President Bill Clinton, he could very plausibly have blamed Clinton's dizzying and irresponsible booster policies and contrasted himself as a figure of tough but reassuring prudence, much as Reagan rode out the great recession of 1981-82.

But, we warned last August, "the longer the recession is delayed, the more responsibility for it is likely to be saddled on Bush alone. And the rejection of his own father, President George Herbert Walker Bush at the polls in November 1992, bore eloquent witness to the fact that while American voters may not have long memories, they do have short ones."

The 1991-92 Bush recession was still recent enough at the time of the November 1992 election -- indeed, it was widely, though erroneously, believed to be still going on -- that voters punished the elder Bush for it at the voting stations.

As UPI analysis noted 10 months ago, the longer Bush succeeded in delaying the onset of recession, the more likely he would be to suffer for it when he came up for re-election in November 2004. Also, the longer he could delay it, the more severe it was likely to be when it finally hit. The sooner he had it, the better the chance he would have had to maintain business confidence and macroeconomic stability and riding it out.

It was already clear last spring and summer, as we noted, that Bush and his economic planners had refused to swallow that bitter pill. They still hoped they could dodge the recession bullet completely. They might still manage to put it off until after the November elections, although even that is now increasingly unlikely.

Scores of thousands of high-tech, highly paid telecom workers now know their jobs are at high risk. Scores of thousands more have already lost them and had their retirement nest eggs wiped out as a result. Hundreds of thousands, perhaps millions, more Americans now fear the same thing could happen to them.

Does anyone -- apart from Bush, his political strategy Karl Rove and his exceptionally complacent and inept team of economic advisers -- believe that business confidence sufficient to prevent a recession can be maintained in such a climate and with such policies?

Up to a couple of weeks ago, the answer to that might even have been "yes." But it is not now.

Copyright © 2002 United Press International

[HAL9000]

Mr. President, it's time to act to restore confidence in the tech sector of the economy.

It's time to dump FCC Commissioner Michael Powell.

"Promote" him to some position where he can do no more harm - like Ambassador to New Zealand.

Powell did not make WorldCom commit their fraud, but he is killing the telecommunications industry with his corrupt policies that are preventing deployment of advanced technologies, and that will be a huge obstacle to economic recovery. The FCC has been a major factor in the failure of many of the major technology companies. Reform the FCC and get rid of Powell before he drags the rest of the country into the toilet with the tech sector.

Michael Powell is an abject failure. Replace him with someone who will stop the hemmoraging of the tech sector by developing effective policies for a national telecommunications infrastructure.

[ArneFufkin]

You're full of crap. COMPLETELY!!!! Michael Powell is one of the most peceptive regualators that has served in government for decades. I've seen him in open forums, I've read his interviews in trade magazines, etc. What is your understanding of his "corrupt" policies? Worldcom was a house of cards throughout their buying binge from 1995 on. They ate too much too quickly, from Williams to Frontier etc etc etc. I met Ebbers when he ran LDDS. Tell us your view of an enlightened telecommunications "policy".

[cactusSharp]

getting my notes....will be rit' bak'

[Mike Darancette]

Bump - since this ought to get interesting.

[HAL9000]

Michael Powell is a corrupt, unethical weasel who is only concerned with developing regulations to outlaw competition against Verizon and SBC, and approving mergers where he has a profound conflict of interest - like the AOL-Time-Warner merger when his daddy was board of directors.

The other members of the Bush Administration are generally excellent, but Michael Powell is the worst. He doesn't belong.

In case you haven't noticed, the whole tech sector is in a major decline and it's dragging the rest of the economy with it. It was inevitable that the bubble would burst. This was easy to foresee, but thanks to Michael Powell's policies, there was no cushion to prevent an industry-wide collapse that is spreading into other segments of the economy.

Michael Powell would be perfectly content to sit on his hands forever to benefit his Bell benefactors, but the country cannot afford this. The price of failure may be horrible - Democratic control of both houses of Congress, and possibly the White House.

Doing nothing is not an option at this point. President Bush must take decisive action to restore economic health to our country. Getting rid of Michael Powell would be a good start.

[Recovering_Democrat]

please tell me this is an editorial, not a purported "news" story.

[ArneFufkin]

You can bluster all you want, but you haven't made a case that ANYTHING Michael Powell did during his tenure as an FCC commissioner or as the FCC Chariman had anything to do with the tech meltdown. The AOL-Time Warner merger was approved by the owners of both companies, the EU, the FTC and the FCC. There were no monopoly issues in that thing. Unless you have some evidence that either of the Powells benefitted financially from the merger, you'd best stifle those kind of allegations. They're conspiratorial and badly offered. Powell is for opening up competition in long distance, local service, wireless and internet. Go to his webpage on the FCC site and read his speeches and Q&A. He GETS it. The Telecom Reform Act was a Congressional mandate, bitch at them. I'm sick of this "EVERYBODY'S DOING ME" crap that permeates FR these days, I'm not specifically directing that at you personally. I got out of the Telecom/network/dotcom sector, because WCOM, JDSU, ADCT, JNPR, NT, CSCO, LU, AOL, QCOM and the rest were ridiculously inflated. Cisco Systems had a higher valuation than GE. Juniper Systems had a higher valuation than 3M. The Tech sector is in the crapper because we're sorting out the good companies from the bad, and we're starting to work on the gross overcapacity of fiber network capacity, and an excrutiatingly soft demand in the last mile for applications that require such high speed throughput. That has nothing to do with Michael Powell or the FCC, it's a correction on an IPO and stock market frenzy that created companies, infrastructure and jobs that were not able to be sustained by the profitible resale of their services. It's not a crisis, it's a winnowing process, and it's good.

[Nick Danger]

please tell me this is an editorial, not a purported "news" story.

No kidding. This author can't even think, let alone write. What a collection of gibberish. In one place he refers to "the great Clinton 'Roaring Nineties' bull market over the last decade." Only a few paragraphs later, the same phenomenon is "the dot-com bubble."

The guy crabs that, "Through all of this, Federal Reserve Chairman Alan Greenspan, apparently determined to wreck all his legendary achievements of more than a decade ago, has continued to do nothing except keep interests plugged at virtually zero.." What's he supposed to do, make them negative? Surely this idiot would not suggest raising interest rates with recessionary winds blowing, would he? Well, yes, he would. In fact he does exactly that:

Bush should have followed the example of former President Ronald Reagan, the iconic hero of modern Republicans, 20 years ago. Had he tightened money supply and urged Greenspan to boost interest rates right after he took over from President Bill Clinton..."

Frigging idiot.

[LenS]

Since the headline says "Analysis", UPI is not trying to pass this off as news and has correctly labeled it.

That being said, Mr. Sieff's seems to be recycling his incorrect charges of August and saying that they're now true. The funny thing is that the data then and the data now contradict him.

[HAL9000]

Unless you have some evidence that either of the Powells benefitted financially from the merger, you'd best stifle those kind of allegations.

It's not an allegation, it's a fact: Michael Powell voted to approve the AOL/Time-Warner merger when his father was on the AOL board of directors. It's a prima facie conflict of interest. If Michael Powell had any concept of ethical conduct, he would have recused himself from the case. Can you cite even one other case where a federal commissioner voted in favor of a merger where his parent was on the board of directors? The only remotely similar situation I can think of is when Bill Clinton pardoned his brother.

It's too bad about Michael Powell. He had an honorable and distinguished career in the military, and then he abandoned principle to become a corrupt stooge for the Bell monopolies. I've already read many of his speeches and essays - that's why I understand his role in this economic miasma.

As for your contention that demand is soft for the last mile, that is not the whole picture. There is a huge pent-up demand in all of the areas where the BOCs have not deployed service (most of which, by the way, are regions that voted for Bush). When that demand is met, the supply of content will increase and drive further increases in demand. As the number of worthwhile connection points increase, consumer demand will increase correspondingly.

Although the Bell companies love to whine to Michael Powell that the cable companies have a larger market share, the reason is not due to regulatory inequities as they claim, but the fact that the cable companies are deploying broadband more aggressively than the Bells. If the Bells want to increase their marketshare, they should cease their pathetic complaints and learn how to sell their product in the competitive market. Although that will be a novel concept for an entrenched monopoly, it's the American Way.

[HAL9000]

FYI - When FCC Commissioner Michael Powell voted in favor of the AOL/Time-Warner merger, his father had $13 million worth of AOL stock options, and was also a stockholder in Time-Warner.

[HAL9000]

One other thing - I agree with you that those companies you mentioned were ridiculously overvalued and a correction was due. But now we have an overcorrection, and no policies to serve as a basis for recovery. It's nearly impossible to make competitive business plans in the current environment.

Unfortunately, Michael Powell's policy is destroy competition rather than promote it, so the future is bleak unless President Bush removes Powell from his position at the FCC.

[doosee]

But Enron and WorldCom are only two in a huge forest of falling trees. Global Crossing, Qwest Communications, Tyco, Xerox and ImClone are reeling from their own scandals. Mighty PsiNet has already been laid low.

***************************** The bookkeeping scandals have had a severe impact but the Telcom industry is also a victim of market economics. Price wars in voice fees have driven costs from 30/minute to 5/minute. You can add ATT to the above list, no one can make money at 5/Minute. On the digital side, many corporations put in frame relays back in the early 90's, with bandwidth of a fractional T1 (64kb to 128kb). Guess what, most have not had to upgrade. The lines are handling the traffic fine. No upgrades, no new money coming into tcom.
What is missing in all of this are the apps that would require video data streaming, heavy graphical content over the pipelines. Until the apps catch up with the capacity, this industry is in a stall. Take a look at wireless, it's growing but nowhere near projections.
That is my take on it, I think the regulators have an influence, but the market is evaluating tcom every day, the invisible hand.

[John W]

"Clinton "Roaring Nineties"
Should have copyrighted it.However,he left out the "House O' Cards" modifier.

[palmer]

Michael Powell's policy is destroy competition rather than promote it

Can you specifically spell out how you would promote competition in the last mile? There is one useful piece of wire (the twisted pair is useless in Bush country). There's plenty of bandwidth especially if you consider UWB, but the vested interests won't allow that to be opened up.

[an amused spectator]

It appears as though Martin Sieff is severely OC("objectivity challenged"):

a38939e1c78c2.htm

REVOLTING SUCK UP TO CLINTON BY UPI--SEVERE BARF ALERT (Joe Montana)

Clinton presidency a paradox

United Press International - January 29, 2000 19:45

By MARTIN SIEFF
UPI National Security Editor

(UPI ANALYSIS)

DAVOS, Switzerland, Jan. 29 (UPI) -- He is in his lame-duck year. He is still
the president Republicans love to loathe. And by now, the whole world knows
about Monica Lewinsky.

But the world's most powerful leaders and business tycoons gathered in the Swiss
resort of Davos gave Bill Clinton a standing ovation after he had delivered his
last speech to the World Economic Forum as President of the United States.

Clinton is now in his lame duck year as president. Last fall, the
Republican-controlled Senate dealt him the biggest legislative humiliation
any president has suffered in 80 years when it rejected his Comprehensive
Test Ban Treaty.

U.S. officials traveling to Davos with Secretary of State Madeleine Albright
on Friday tacitly acknowledged they had abandoned any hope of getting key
Republican senators to change their positions on the treaty during the course of the
current Congress.

Albright's new initiative -- led by former Chairman of the Joint
Chiefs of Staff Gen. John Shalikashvili and veteran arms control chief John
Holum -- is to "educate" senators in the next few months on the treaty's virtues.
But officials admitted there are no plans to follow up and resubmit the treaty
for Senate ratification before the November elections.

But none of that seemed to faze Clinton. He stood tall, confident and proud
as he delivered a ringing defense of his free trade and open market policies,
a speech that brought more than 1,000 of the world's most influential power brokers
to their feet.

It was a striking example of one of Clinton's most overlooked achievements
and paradoxes. The president, who at home has repeatedly been embarrassed by
sexual accusations and scandals, and endured controversy over how he avoided
military service during the Vietnam War, remains throughout the world one of the
most respected and admired American presidents in recent history. In the past 40
years,only Clinton's hero John F. Kennedy and Ronald Reagan have matched him in
that regard.

In Northern Ireland, Clinton is revered by both moderate Protestants and
Catholics for his efforts to achieve peace. He has been acclaimed as a hero
whenever he has visited the region.

In Britain, Prime Minister Tony Blair openly praises Clinton as the inspiration
for the free market and social democratic policies that swept Blair's Labor
Party back into power after 18 years in the political wilderness.

At Davos, the applauding audience included Palestinian Authority
President Yasser Arafat and former Israeli Prime Minister Shimon Peres.
Both have both repeatedly expressed appreciation for Clinton's untiring efforts
to boost the Middle East peace process.

South African President Thabo Mbeki also applauded. It was during Clinton's
watch - and again with his untiring support -- that South Africa, guided by
Nelson Mandela, completed its transition from a white supremacist regime to a
truly democratic state.

The Clinton that the world reveres is, in many ways, the opposite of the president's
popular image that appears in press cartoons and on American late night comedy shows.

The Cartoon Clinton is a shallow opportunist who lies through his teeth and
changes his policies at the drop of a hat.

The World Statesman Clinton is a strong and consistent leader who has not
weakened America's military commitment to East Asia and to the Atlantic
Alliance.

The Cartoon Clinton has no political principles.

The World Statesman Clinton has remained committed to international free
trade.

At WEF sessions on East Asia and Southeast Asia, it was remarkable how the
region's senior ministers, one after another, declared that only Clinton's
unwavering commitment to keeping the U.S. domestic market open to their exports after
the 1997 Asian financial crisis had saved their economies from collapse.

The Cartoon Clinton is a superficial boor who tells teenagers on cable TV
what kind of underpants he wears. (Indeed, he did.)

The World Statesman Clinton effortlessly draws striking lessons from 20th
century history and economics to include in his speeches and conversation.

That Clinton was on display again at Davos during his impassioned defense of
free trade and globalization. He drew remarkable analogies. The president
pointed out that from the 1970s through the 1990s "developing countries that
chose trade grew at least twice as fast as those who chose not to open to the
world. The most open countries had growth that was six times as fast."

The Cartoon Clinton is a cynical opportunist who enjoys socializing with
billionaires and who has no concern for the sufferings of the poor, both
at home and abroad.

The World Statesman Clinton certainly enjoys endless policy conversations
with the world's most successful people. But he has also presided over the longest
peacetime economic expansion in U.S. history, which has created 20 million new
jobs over the past seven years. And last fall, Clinton pledged that the
United States would forgive 100 percent of debts owed it by developing nations.

The dynamic of American politics seems designed to ensure that the
most successful and outstanding two-term presidents are always perceived as
"lame ducks" at best, or lucky non-entities at worst, as their second and final
term of office draws to a close.

Dwight D. Eisenhower, whose 1950s presidency is now seen as the apex of
domestic prosperity, stability, and American global power and pride, was regarded
by most media pundits of his day as a smiling fool who wasted all his time on the golf
course.

And Ronald Reagan was regarded by many press analysts as a stupid, lazy and
mediocre ex-actor whose domestic and foreign policies were simplistic and
unworkable. But the rest of the world has been copying his economic
strategies ever since, and the foreign and defense policies Reagan put in place
played a major role in the collapse of communism and the disintegration of
the Soviet Union.

Clinton still has another year left in office and the final assessment of his
presidency may not be clear until long afterward.

Serious analysts criticize Clinton for letting American military power dwindle
while taking on too many peacekeeping commitments around the world. He has also
come under attack for a deliberate reluctance to develop and deploy anti-ballistic
missile defense systems and the bungled American involvement in Russia's crash privatization, which ultimately led to widespread suffering among Russians
and their estrangement from the United States.

But Clinton was consistent in his policies and loyal to his allies. And for
at least the first seven years of his presidency, Clinton presided over an unexpected
golden age of American economic growth that has combined peace with prosperity. The
president's success, like the achievements of Eisenhower and Reagan before him, returned America to the pinnacle of international power and prestige.

Successful U.S. presidents, like Biblical prophets, may be doomed to be
without honor in their own country. But they do get respect abroad.

At a time when Eisenhower was derided as a fading lame duck at home, he
toured Western Europe and received an unparalleled outpouring of love and affection
for his World War II military achievements that helped destroy Nazi tyranny, and
for his success in defending Western Europe from the Soviet Union.

Clinton has always loved his annual brainstorming sessions at Davos. He went
out this year a hero, with applause ringing in his ears.

--

===============================

Bush can't put Enron behind him [barfer]

UPI - url yet | 1/18/02 | MARTIN SIEFF, Senior News Analyst

WASHINGTON, Jan. 18 (UPI) -- President George W. Bush has so far proven
masterful at toppling murderous tyrants and the terrorists they protect half
way around the world. But he has suffered a devastating political wound at the
hands of close friends based in his own home state.

For the Enron scandal now reverberating across the nation is big. It is very
big indeed, much, much bigger than Monica Lewinsky. She only got a sitting
president impeached -- unsuccessfully. Enron may change the political dynamics
and climate of the entire United States for years, even for a generation to
come.

It must first of all be said that if the seventh-wealthiest corporation in
the United States is going to go bust, Bush and his spinmeisters have been
handling it as well as anyone possibly could. And they have been aided by a
still largely complacent media that has strayed far from its old muckraking
traditions of previous generations, especially on its op-ed and business pages.

The White House has emphasized -- and the media so far has largely eaten it
up -- that Bush and other top administration officials are "clean" and not
implicated in the Enron collapse because they refused to intervene as it
happened to try and improperly prevent it coming about. With amazing chutzpah,
Treasury Secretary Paul O'Neill has even hailed the collapse of the gigantic
Houston-based energy conglomerate as part of the genius of capitalism.

But the collapse of Enron is no triumph for capitalism. It instead threatens
to undermine and discredit much of the genuine progress that free-market
deregulation has wrought in the U.S. economy over the past 20 years.

And the truly damaging threat for Bush and his colleagues, as they very
well know, is not what they didn't do after Enron started to implode, but what
they did in the years before that made that implosion inevitable.

For Enron did not spend its $6 million on campaign contributions to the
Republican Party in vain. Nor was its funding to Clinton Democrats a waste of
money either.

The endless regulatory loopholes that the Republican-controlled House of
Representatives gave Enron in the years following 1994 are now a matter of
record. So is the clear reluctance of the Clinton administration to start
digging for dirt in Enron's practices. Now, it has also emerged that Enron did
not even pay any tax in four of the past five years.

Rep. Henry Waxman of California, the ranking Democrat on the House
Government Reform Committee, alleged Wednesday that no less than 17 provisions
in Vice President Dick Cheney's energy plan last year "are virtually identical
to the positions Enron advocated."

And because the Enron executives knew that no one was watching or regulating
them like they should have been, they were able to get away with fiscal murder.

Republicans who fastened on a petty, sordid story of self-indulgent but
essentially harmless sex between two consenting adults to launch the first
impeachment proceedings in more than 130 years against a sitting president are
likely to find that Enron will prove a far more potent political weapon in the
upcoming midterm elections than Monica did.

The Monica scandal backfired on the GOP. They lost significant ground in the
House in the 1998 midterm congressional elections after their attempt to
impeach Clinton over the Lewinsky affair failed. But the Monica scandal did
not involve the wealth or well-being of anyone outside Monica herself and the
first family.

By contrast, thousands of Enron employees have lost their life savings and
have been impoverished for life while the people responsible for that are now
wealthier than ever.

The cost of Enron's collapse is put at around $100 billion. Its bankruptcy
is the largest in U.S. history. It comes at the very time when energy prices
had slowly started to rise again and when the White House was announcing its
belief that economic recovery had started following the loss of a million jobs
in the U.S. economy last year.

If recovery does indeed come, the president and his congressional Republican
allies will still be badly embarrassed by the scandal. But if no smoking gun
emerges tying the president -- a twice-elected governor of Texas and prime
beneficiary of Enron support in his election campaigns-- the issue should not
prove central to Bush's re-election prospects in 2004.

But if the U.S. economy should not rally in the months ahead but continue
its now nearly two-year inexorable slide into serious recession, and perhaps
even worse, then Enron will cast ever-longer, ever more dire, shadows over the
White House and the man who occupies it.

For the greatest danger the president faces is that Enron may become
emblematic of a whole philosophy of government and doing business that has
dominated the nation for the past two decades and that Bush himself
exemplifies.

Bush's basic personal and political credo -- and that of all the leading
House Republicans as well -- is that government regulation is inherently bad
and the freer the market, the more wealth and growth it will create.

But Enron's executives abused that philosophy and the freedoms it generated.
They used it not to create wealth, but to pillage it. Instead of generating
widespread prosperity among ordinary people, they generated widespread ruin
and despair among those who most trusted them.

The Enron story is rich in irony and chickens coming home to roost. It looks
sure to prove a classic study in business and political nemesis, the Greek
concept of avenging, angry, appropriate fate.

[an amused spectator]

See my post #16 for Martin Sieff's bonafides. ;-)