July 15, 2002
Two weeks ago, in The Tribulations Of The Toads, I mentioned New York Times Op-Ed columnist Paul Krugman and his scathing columns of May 21 ("Enemies of Reform") and June 14 ("Plutocracy and Politics") against President Bush (aka, Dubya, Sonny, George, Resident in Chief), all the president's men, and the "System" (of which Krugman is one pillar among many). Following a well-deserved week of vacation, Krugman is back at Dubya's throat. On July 7, he concludes his column, "Succeeding in Business:" "Mr. Bush portrays himself as a regular guy, someone ordinary Americans can identify with. But his personal fortune was built on privilege and insider dealings -- and after his Harken sale, on large-scale corporate welfare. Some people have it easy." On July 12, in "The Insider Game," he starts his column thus: "The current crisis in American capitalism isn't just about the specific details -- about tricky accounting, stock options, loans to executives, and so on. It's about the way the game has been rigged on behalf of insiders." And he goes after the White House Resident in Chief in relatively strong terms, or as strong of terms as you may find in The NY Times.
In both columns Mr. Krugman is livid, morally outraged!
He goes on, "And the Bush administration is full of such insiders. That's why President Bush cannot get away with merely rhetorical opposition to executive wrongdoers. To give the most extreme example (so far), how can we take his moralizing seriously when Thomas White -- whose division of Enron generated $500 million in phony profits, and who sold $12 million in stock just before the company collapsed -- is still secretary of the Army?"
The two columns are filled with solid information about Bush's highly lucrative deals with Harken Energy Corporation and the Texas Rangers. How do you think Dubya got his bucolic Texan retreat, the 1,600 acres Prairie Chapel Ranch? We are not talking peanuts here, but millions of dollars, though it looks like peanuts in comparison to Dick Cheney's dealings at Halliburton. This has yet to be more fully flushed out. But The New York Times lifts the veil a little bit on Halliburton and its well-known subsidiary (for those of you who have been reading Swans for a while), Kellogg Brown & Root (KBR). A July 13 article, "In Tough Times, a Company Finds Profits in Terror War," details the juicy contracts that KBR has concluded with the US Military from Camp Bondsteel in Kosovo, Knanabad Air Base in Uzbekistan, to Guantánamo Bay, Bosnia, Croatia, Russia, Central Asia, etc. The list is too long for this space but here we are not talking millions. We are talking Billions...of taxpayers' money. Of course, Dick Cheney who was the CEO between his stint at the Defense Department under Daddy and his return to power in January 2001 as Sony's VP was not involved in these dealings. He knew of them certainly but he was not involved, the article tells us. We are glad to know.
As to Sonny's Harken's sweetie, it was, we hear, fully "vetted" by the Securities and Exchange Commission (SEC). So, you have it! There is nothing here, right? No albatross, right? Of course, the fact that Daddy, who at the time was the Prez, had appointed "a good friend as SEC chairman, and the general counsel, who would normally make decisions about legal action, had previously been George W. Bush's personal lawyer -- he negotiated the purchase of the Texas Rangers," (writes Krugman who adds, "I am not making this up.") had absolutely nothing to do with the SEC's decision to bury the matter. Absolutely nothing!
Poor Sonny, so unfairly treated by the malfeasant, politically motivated sharks, can only explain, "in the corporate world, sometimes things aren't black and white when it comes to accounting procedures" (The NY Times, July 9, "Bush Defends Sale of Stock and Vows to Enhance SEC"). This for sure is not the "War on Terror." No good vs. evil here as remarked a reader with some gleeful fascination!
Even the folks at the top of the ladder are shocked, shocked, shocked. On July 10, the paper published two editorials on "The Corporate Scandals." The first one, "Cleaning Up," expressed the disappointment the Editors felt after Bush had delivered his July 9 "clean up your act or else" message to Corporate America which was "devoid of tough proposals to remedy underlying problems in accounting, corporate governance and the safety net of federal laws and regulations that is supposed to prevent abuses." The second editorial, "Coming Clean" (don't you love the byline creativity of The Times?), full of moral outrage last seen during Clinton's cigars and other peccadilloes, asked Bush and Cheney to buckle up and, as the byline indicates, come clean. "The public needs some frank explanation."
Now, you could just dismiss all of the above with a shrug, contending that it's a smear campaign originating in the bastions of liberalism, The New York Times and all those whining Libs out there, and go back to focusing on the intellectual masturbations and mental contortions of those truth tellers who'll keep asserting that the attack on the WTC was made by the Mossad, the Israeli secret service; that Israel is "modeling itself after the Nazis" or that it's all about "encircling Russia and hell on earth" -- all undoubtedly entertaining conjectures when not utterly repugnant assertions -- or you can ask yourself, "What's going on here?"
Don't think either that the attacks on Sonny and his eminence grise come from the bad, bad, bad lefties. Paul Krugman, for instance, is Professor of Economics and International Affairs at Princeton University; was the Ford International Professor of Economics at M.I.T.; has written for Foreign Affairs, Harvard Business Review, Scientific American, and before joining The Times in 1999, was writing a column, "The Dismal Science," for M$ Slate between 1996 and 1999. He is not your run of the mill commie!
And if you are not convinced, then look at what three corporate leaders had to say to Paul Solman of WGBH in Boston on PBS' NewsHour on July 12. They were in the words of Solman, "Peter Peterson, the chairman of the Blackstone Group, a private investment banking firm, co-chairman of the corporate governance task force at the Conference Board and former Secretary of Commerce during the Nixon Administration; William George, until recently the CEO at Medtronic, a multibillion dollar medical technology firm; and Richard Syron, CEO of Thermo Electron, manufacturer of scientific center instruments. He is the former CEO of the American Stock Exchange." Not exactly commies either!!!
Pete Peterson: "There's certainly more bad apples already than I would have guessed. Second, I don't know how we answer that question accurately because how would we really know how many bad apples there are? And besides, with the total breakdown in public confidence, I don't think it matters very much what we businessmen think about ourselves. What matters is what the public thinks, because their public trust is what's really crashed. And I brought with me a survey that I just read this morning that is very melancholy, and it makes me sad and perhaps even a little ashamed." [...] "...We've got what I call a moral cancer or governance cancer and it's going to metastasize if we don't cut out this thing in a hurry or as soon as we can into an economic cancer.
William George: "...Our boards have not done the job in terms of governance and separating their role from management and have really conceded too much of the power to the CEO's, and you see the extreme excesses of what is really a lot of greed in our system, greed on the investment side, obviously greed on the accounting side and greed on the corporate side. I think we have to face into that issue." [...] "I don't think [Bush]'s gone nearly far enough. It's a little bit like putting a bad lock on the stable door after the robbers took our horses. [...] "I think what happened is too much of a good thing. We got greedy and we're killing the goose that laid the golden egg."
Two weeks ago, I was mentioning the top CEO's pay raises in the 80s and 90s. These fellows made 45 times more than the average worker in 1980. By 2000 it was 458 times. Since then you would think this trend would have abated, right? According to Pete Peterson, citing Business Week, it's now 541 times!
Oh, and what happened to the release of the VP-headed, ol' Dick's Energy Task Force Commission paper trail with the energy companies? Did First Doggies Spotty and Barney eat them, or did the White House computers crash? And Enron? Pete Peterson: "The Enron case has been around since what, October? ... And we've read of some egregious circumstances earlier than October. And nothing has happened in eight or nine months." Again, Peterson was Secretary of Commerce during the Nixon Administration -- another famous Dick (my apology to all the Richards that read this!).
Even Ross Perot is back in the news, denying that "his consulting company showed power suppliers how to manipulate California energy markets to drive up wholesale prices." (CNN, July 11). That's the Reform party "outsider" who wanted to change the system!
I feel somewhat sorry for Sonny. The poor kid is taking a lot of flack for having simply done what all his peers have been doing for a long while. Remember Terry McAuliffe, the Chairman of the Democratic National Committee and former chief fundraiser of Bill Clinton who made an $18 million return on a $100,000 investment in Global Crossing, the now bankrupt communications company? And Daddy was a top player too. How much did he cash in from the same guys, was it $14 million?
Trouble is, the bad news keep coming faster than you can read these lines. The public is becoming ill at ease, believing that everybody at the top has their hands in the trough. Joe six-pack is unhappy. Joe six-pack actually is not the elites' real concern right now. He can be handled with a few more beers, Sports and the Flag -- and he does not vote. But the middle-middle class does; the second quintile and higher are more problematic. They see their stock portfolios dwindle, are not getting much back from the trickle-down tax cuts, companies keep laying off, consumer confidence is down, the country is back in the red, fear is seeping in (and the repetitive terror alerts from an administration put on the defensive are not helping), questions on the war on terror are beginning to be heard motto voce. The present run on confidence could easily get out of hand and turn into a stampede. See consumption be derailed by more bad news, see more deflationary measures instigated, and suddenly we could be facing not just a severe recession, but a full-blown depression.
So, I am not sure what's really going on. Sharks seems to be in a feeding frenzy but, more realistically, we are witnessing a damage control campaign in full speed and lots of people in the corridors of power running for cover which, as American traditions go, means getting on the offensive big time.
I've gone back to past analyses I have written as I wanted to check whether they made sense in light of current events. I've repetitively said that we tend to move from one occurrence to another and often ignore the patterns. We focus too much on the trees and too little on the forest. In October 1999, I wrote a series of three articles on the economy. The last piece ended thus:
"Whoever controls the free-market controls the system. The forces in play are immense. Even nations have had to adjust to those forces; at times they simply abdicate their responsibilities before such onslaught of raw market-driven power, backed, when necessary, by overwhelming military superiority (like in Kosovo).
"Welcome to the age of the worldwide rule by corporations. Welcome to Corpocracy!
"Corpocracy entails the convergence of the democratic process -- one person, one vote -- and the full control of the state apparatus by a tiny minority of plutocrats that commands the ideology as well as its dissemination.
"Our media and advertising agencies -- the disseminators of the ideology -- have been gobbled up by corporate giants. Universities and think tanks -- the makers of the ideology -- are fully supported and financed by the same corporations and their obscenely wealthy executives. The people, working ever longer hours to make ends meet, have little time or inclination to read, or share their opinions and experiences, or think; but they are immersed, almost drowned in that ideology. Their 'representatives,' to get and keep their jobs, depend on the largesse of the few to broadcast their positions (or non-positions) during electoral campaigns and are indebted to those few and to their interests. In other words, we are witnessing the melding of the Constitution and of Goebbels.
"Corpocracy is the first crusading battle of the coming millennium. So we better get used to this new word." (Let 'em Eat Cake (Part III) - 09/24/99)
Has Corpocracy reached an advance stage of disrepair? We are far beyond a few bad apples, or even the orchard here. The entire farm has become rancid. You can smell the rot all over the system. Are the elites panicking? They can't jail all the "bad guys" without putting themselves behind bars too! Who's going to take the fall? Not Enron's Ken Lay; he'd take Sonny with him in a hurry... So, what's all this noise really about? Should we view the debate or lack thereof about Gulf War II (they all agree about it but only differ on the methods and the timing) and this entire War on Terrorism cabal in light of the huge, gargantuan economic dislocations occurring under our blinded eyes?
Since the demise of the former Soviet Union in 1989 under its own bankrupt weight, we've seen a substantial intensification in US military adventures: The Gulf War, Panama, Somalia, Bosnia, Kosovo, The Sudan, Afghanistan I, Macedonia, and now Afghanistan II, Indonesia, Georgia, The Philippines, the forthcoming Gulf War II -- we actually talk matter-of-factly about waging war beyond the end of time. And I'm missing quite a few... US forces are engaged one way or another in over 100 countries. Since 1989 we've been demonizing entire swaths of the world. Are our own demons coming from our crumpling, disintegrating system? Are we also getting bankrupt under our own weight?
And how much blood will it take to realize it?
Meantime, if you are about making more money to finance your summer cruise to Bermuda or your retirement fund I'd suggest you check out the Carlyle Group and invest in defense industry stocks. I'm sure George and Dick will approve...and benefit! And I would love to know more about Paul Krugman's stock portfolio!
· · · · · ·
The Tribulations Of The Toads - 07/7/02
Generalized Anxiety Disorder: Or Is It Dystopia? - 05/20/02
Scene III - The Solution - 02/11/02
Scene II - The Lament - 02/11/02
9-11: Overheard on Main Street: Scene I - The Situation - 02/11/02
Let 'em Eat Cake (Part III) - 09/24/99
Let 'em Eat Cake (Part II) - 09/10/99
Let 'em Eat Cake (Part I) - 09/3/99
Gilles d'Aymery is Swans' publisher and co-editor.
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