Posted on 07/13/2002 5:14:53 AM PDT by JohnHuang2
Edited on 05/26/2004 5:07:26 PM PDT by Jim Robinson. [history]
July 13, 2002 -- WASHINGTON - President Bush is planning a major economic speech on Monday to restore investor confidence, while his chief corporate crime fighter vowed yesterday to be aggressive in going after crooked execs.
At the White House, Bush met with his new corporate fraud task force - in a gathering that was hastily scheduled just yesterday morning - followed by an announcement that the president will lay out measures to shore up the economy on Monday in Alabama.
(Excerpt) Read more at nypost.com ...
It'll help politically, but will it do anything for the market? The financial risk comes from not knowing who ELSE is out there, not from wondering what will happen to the ones we already know about(where the hell is Gary Winnick anyway?) Announcing some indictments will help with the President's political risk, and I hope he does it, but I don't see how anything but time or--perish the notion-- maybe a good month or two without a new business scandal is going to eliminate the negativity in the markets.
Might as well, since everyone is reporting losses this year anyway. What difference does it make? I'll tell you, it was pretty sad seeing Mitch Daniels out there trying to explain how "no one saw any of this coming." The Dems have a real issue with the budget now, and the President has only himself to blame. Is he going to argue that the Farm Bill was part of the war on terror?
This is one of the things Bush has done that I just can't get past (there are a few others). I wonder how many people realize that this horrid piece of trash will cost each taxpayer roughly $2,000. I'm not lying, do the math.
White House Says It Expects Deficit to Hit $165 Billion.
And consider the Senate has a cure for corporate malfeasance worse than the disease:
Beware.
It'll cost more than that, because it makes it IMPOSSIBLE for him to argue convincingly against ANY spending on principle. Impossible. There he was, leaning on the podium, talking about the "trifecta". Aw shucks. Never mind the budget. So you have the Dems attacking him on the budget. Then you might say, well how can they attack the President on the budget and then demand RX for seniors? Because the President hasn't got a leg to stand on in the budget debate.
I think you are exactly right. Where the hell is our war on terror? The President came out and gave some great speeches, then we went and bombed the hell out of Afghanistan and defeated the Taliban, even though as far as I know they weren't responsible for the attacks. Osama and his boys get away and we have our leaders virtually promising us another attack worse than 9-11.
OK. Americans have learned to stomach that. But now here comes the President with another "tough" speech, and meanwhile Tyco boy is out yachting, where's Ken Lay? Where's Gary Winnick? They testify before Congress. Then what? It looks like this guy Pitt is set up to be the next Taliban. He didn't actually commit the crimes, but we have to bomb someone. Or maybe I am dead wrong. These are just the perceptions of a typical dumb American.
"The largest 10 percent of the farms get 75 percent of the subsidies"
You sure ain't dumb Huck. You're a normally mild mannered, easy going type who's finding his "pissed" gene. Stay that way and get out there piss off everyone you meet.
The problem with the stock market is valuations. In 1996 Alan Greenspan said the market suffered from "irrational exuberance." At the time the DJI was about 6-7000. Instead of cutting back on the money supply he boosted it because of a series of international problems. By 1999 the money created was "inflating" the stock market by increasing the valuations such that the S&P 500 P/E was over 40. Then good old Alan suddenly increased short-term rates to 6.5% to "fight inflation." Of course there was no inflation. In spite of reducing short term interest rates faster and farther than at any time in history, Alan has kept increasing M3 and, if he ever ceases, expect another major down draft in the market.
In short order, the market tanked and investors (to date) have lost 7-8 trillion dollars; however, the S&P 500 P/E at the end of June 2002 was still 26. The average P/E for the S&P 500 has been 13.5 over the years and 7 at the end of a bear market.
Teddy Roosevelt once said whenever the common man loses his money he becomes like a snake and strikes out whoever is at hand. Remember, Herbert Hoover was elected in 1928 and took office in March 1929 and the market did not crash till the Fall of that year. No one blames Cal Coolidge (his predecessor).
I believe President Bush is going to be blamed. If he wanted to do something he could urge Congress to kill the one million dollar tax deductible limit on executive pay which was passed by the Congress in 1993. This was would be far preferable to the "McCainiacs" proposal to expense stock options. Expensing stock options will result in lower earnings and valuation of the stock market; hence, another reason to tank further. Stock options became a problem when corporations switched these when they could not adequately expense their salaries for IRS purposes. Also, the President could mention that the politics of envy are not only destructive to society and capitalism, but they are prohibited in the 10 Commandments. These two little efforts would actually help the market. Bashing CEO's is just another mistaken deflection of blame and reason.
I'm having a real problem seeing much difference between the Demorats and Repubbies when it comes to doemstic issues. Both believe that the Central Government can take care of every bump in the road.
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