They don’t call them Confidence Men for nothing
by Bryan Zepp Jamieson
8/15/02
http://www.zeppscommentaries.com/Politics/conmen.htmThe line to the woodshed is a long one: 950 of them. Nine hundred and fifty Chief Executive Officers of the largest public corporations in the United States. George W. Putsch, as part of his hilarious crackdown on corporate accounting crime (what used to be called “swindles” back before they became legitimate business tactics) ordered the CEOs to certify their quarterly reports.
It’s probably one of the strangest sights you’ll see in American politics and business this year, and that’s said with the full realization that it’s an election year.
Normally, of course, the President wouldn’t dream of subjecting the CEOs to such a thing. After all, he is, in large measure, their creation. They wanted their own boy in the White House, and oddly enough, George was the best they could come up with.
But the present scandal, in the delicate parlance of the corporate-owned media in America, had “shook investor confidence.”
That’s one way of putting it. It’s a little disconcerting to read in the paper that a stock you owned just gave a quarterly report showing $1.4 billion in clear net profit, which would have resulted in a dividend of forty cents a share. . .or would have, except the company declared bankruptcy later that day.
Yeah, stuff like that will tend to shake the old confidence a bit. That’s definitely one of those moments, like learning that the wad of one hundred dollar bills was two C-notes sandwiching Monopoly money, or that you don’t really own the passage rights to the Brooklyn Bridge. Oops. Nice beachfront property, only eight feet from the surface at low tide.
That a bunch of people were seriously bent because their pension plans and 401(k)s just went to hell was no big deal. Sheep always bleat when they’re being sheared. But the big boys, the major players on the Street, they were bailing, going into bonds, or commodities, or anywhere but the stock market.
The result was a staggering loss in value to the market of some $11 TRILLION dollars over the past three months.
When their losses started exceeding what they could steal, even when using both hands, it was time for them to sit down and reevaluate the old economic game plan. That’s what the CEOs did, and to their credit, they realized that the reason investors were bailing on them was because “investor confidence had been shaken” which was corporatese for “they found out we’re a bunch of Golly-gee thieves and con men and are running away.”
So they contacted the big guy, Dick Cheney, and they told him, “George is going to have to flagellate us. We have to put on a show of contrition, and George has to look good cracking down on us. Just make sure the idiot doesn’t do something he’ll regret later.”
Dick doubtlessly pondered this for a bit. Getting George to be mean to his corporate masters would be like trying to goad a loyal family pet to snarl at you. Servility was built in to George, and with good reason. He was born to serve.
So Dick cornered George, and explained that he was going to have to act mad at his buddies, but that everyone would understand that he wasn’t REALLY
being mean.
So the first thing they tried was a speech, condemning corporate crime and vowing to do something. George kept it upbeat, assuring one and all that he could fix this and restore investor confidence.
The market consists of two emotions, and two emotions only: greed and fear. This leaves precious little room for loyalty. While Putsch was speaking, the markets bombed as investors scurried. Even for George, it was embarrassing.
And the market kept hemorrhaging money at a truly frightening rate. So they went to plan “B”, which was the notion that Congress would Take Action (granted, the notion of Tom DeLay, Dick Armey and Dennis Hastert crushing the evil monopolists with an iron fist does not come immediately to mind) and pass legislation declaring that all the laws these guys were breaking were null and void, and would be replaced by laws saying roughly the same thing, and thus would convince people that at long last, something was done about Wall Street swindles.
Part of it, of course, was this Certification parade. The idea, designed to appeal to rich voters who can’t think (the base of the Republican Party) was that CEOs would shoulder personal responsibility for the accuracy of the earnings statements from then on, starting with these certifications. If you think that this sort of removes the “L”s from “LLC”, there’s a fair-to-middling chance that you aren’t alone, but in politics, form comes ahead of substance.
They made a show of tossing a few guys to the wolves, making some very stagy half-hour arrests of guys who will probably never serve a day, and set up the strange line up of the Certification: the biggest and wealthiest forced march to the woodshed in the history of America.
Not unexpectedly, it was a sham. Of the 950 odd companies required to report, it turned out that only 640 were ACTUALLY required to report (no, I don’t understand how that one worked, either), and of those, only about 450 actually did report.
And it might take a while to see if the reports were actually valid. A lot of CEOs might be hoping that this will have all blown over by the time the auditing is done, at which point, they pay a fine, and that’s it.
Over the next few days, we’ll hear about the ones that were turned in, and start getting an idea of how many “restatement of earnings” (corporate lawyerese for “um, now that the evidence is out, can I take back that lie now?”) we see, and see what irregularities emerge. The market went up 260 points today as the Bataan Death March for the Well-Heeled took place, an event that reminded me of nothing so much as Slim Pickins yelling, “Yee-HAH!” as he rode the bomb down.
Keep an eye on the markets, not the politicians, While George is telling us the system worked, and honesty had been introduced to corporate America, the market will tell you if he’s just fibbing, or telling a full-blown bull-goose looney of a lie.
Greed and fear, while not as noble as loyalty, will at least return a more honest answer in this case.
If the big boys on the Street think George is full of it and earnings
statements are still worthless, brace for more and bigger drops in the market.
Combined with out-of-control deficits, a tax cut that will cost trillions, consumer unease, and just for giggles, an unprovoked attack on a non-aggressor nation earning us the condemnation and possible economic sanctions of much of the
world, and we have a recipe for Slim Pickins’ wild ride, only on a national
level.
“Yeee-HAAAAHHH!”
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Heheheh this is one of Zepp's best essays in a while
