Jewish World Review July 17, 2002 / 8 Menachem-Av, 5762
http://www.NewsAndOpinion.com | This stock market downturn is not a cyclical slump motivated by fears about the economy. An online survey conducted by Vote.com and sponsored by the Robert Weiss Law Firm makes clear that it is an investor strike. There might as well be pickets outside the New York Stock Exchange and the Nasdaq chanting slogans and saying that "we are mad as hell and we aren't going to take it anymore!"
The survey, conducted the night of July 9th, right after Bush's speech on corporate responsibility, revealed that one-third of the individual stock market investors in this nation say that they are planning to decrease their purchases of stock until the government takes bolder action to clean up the marketplace and eliminate corporate fraud. One investor in three owns or owned stock in companies whose CEOs have defrauded them and their investors like Enron, Global Crossing, Merrill Lynch, Merck, Worldcom or one of the other corporate wounded. Having taken a bath in the market, they are fed up with being lied to and plan to sit on their money until Wall Street cleans up its act.
Indeed, this market downturn most closely resembles the shell shocked atmosphere that predominated in the 30s and led to the creation of the SEC. Aware that investors were not about to trust their savings to the markets as they were run back then, FDR created the SEC and named as its chairman a tough investor who knew all the tricks of the trade -- Joseph P. Kennedy (father of JFK).
The phony measures proposed by President Bush, passed by the Senate, or voted by the House won't do the trick. The self-serving posturing which animates both parties in Congress before election day will not fool the investing public - arguably the brightest and best educated among us.
By proposing to double penalties for corporate fraud from five years to ten years the politicians play a shell game. Since each count of mail or wire fraud would draw a potential five and now ten year sentence, and since most indictments run to dozens or even hundreds of counts, the increase in sentences is just for show and won't really impact how long CEOs would actually be in jail.
In the meantime, Bush and Cheney, anxious to protect their corporate campaign contributors, and Tom Daschle, desperate to protect his wife's lobbying clients have both cooperated to kill the real reforms for which investors clamor and which Senator John McCain has proposed.
By 71-29, stock market investors want CEO stock options to be reported as expenses on corporate disclosures and by 81-19, they want these options to include a downside risk as well as an upside potential. More than 80% demand that the SEC be able to freeze compensation of CEOs and seize their assets when their company goes bankrupt and they have profited handsomely in the process. Vast majorities want to ban CEOs from selling shares of company stock while they work there and for a year after they retire.
Until and unless the likes of Bush, Cheney, and Daschle stop playing games and sheltering their corporate benefactors from real regulation, investors will continue to vote with their feet and stay out of the market.
Politically, of course, the scandal has the potential to be a Godsend for the Democrats. But, how can they expect to be taken seriously when two of their three chief public spokespeople: Daschle and National Chairman Terry McAuliffe have a lot to coverup themselves. Daschle's wife is one of the biggest coporate lobbyists and she reportedly persuaded him to oppose reform of stock options for CEOs. The Senator won't divulge the names of his wife's clients or how much they pay her. Similarly, McAuliffe's record in parlaying $100,000 into $18 million through investment in Global Crossing and his nimbleness in knowing just when to jump off before it crashed destroys his credibility on the issue.
When the GOP prepared to open fire on Clinton for Monica Lewinsky, incoming House Speaker Bob Livingstone resigned because of his vulnerability on sexual issues. Unless Daschle and McAuliffe do likewise, their attacks on Republican corporate greed will provoke belly laughs, not serious consideration.
And the Dow, the S & P, and the Nasdaq will sink lower and lower and
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07/15/02: Door open for drug testing students --- go for it, GOP!