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Plop plop fizz fizz
By Jackson Murphy
Ever since Enron melted down late last year the press and congressional committees have been on a steady witch-hunt to find similar corporate sneaks and the occasional Mr. Burns. And hey, to be fair the business world isn't the only institution having problems. Just ask the boys running the Catholic Church about management problems.
By the time the stock markets closed this past Friday, it marked the fifth consecutive week of downturns. Sure the markets haven't hit that post-September 11 low yet, but they are trying as hard as they can. Terrorist warnings and Mid-East uncertainty surely aren't helping either, but the main concern seems to be from within.
A recent NBC News/Wall Street Journal Poll found that only 29 per cent of individuals have confidence in the information that stock brokers and corporations give out; 57 per cent said they did not have confidence.
Stocks are selling off like hot cakes as one corporation after another comes clean, either willingly or not, on nefarious accounting, insider trading, or inflated bottom lines. Companies that in recent years seemed untouchable and rock solid are getting in on the act. Drug maker Merck & Co. was the latest victim. It seems that a division of Merck was inflating revenue numbers. Oh and there was also news that four executives of Rite Aid Corp. are being indicted on fraud charges for manipulating the companies 1999 loss of $15 million into appearing as a $200 million profit.
There have been problems at ImClone, WorldCom, and Tyco too. And the CEO's are getting paid increasing amounts even for terrible results. Like Joseph Nacchio -- the former CEO of Qwest Communications who received $87 million last year for engineering a remarkable 65 per cent decline in shareholder value. Bravo pal!
This reminds me of the millions that mediocre sports talent gets. Think of the $8 million Tampa Bay Devil Ray pitcher Wilson Alvarez is getting in 2002. He has rewarded the team by averaging 88 pitches in six whole games of which he has won only 2. And did I mention he has a no trade clause. Yikes.
Think of it as a tragic reverse bubble. Back in the late 1990's you could throw a dart and make money, or buy anything cleverly labeled as a dot com and brag to your friends. Today take a dart and you'll probably find some sleazebag CEO pimping his stock or a company tampering with records.
The Washington Post's Michael Kelly wrote, "Our titans of industry are the best darned titans of industry in the world, and they deserve anything they can get, with both hands. It is not their fault that they turned out to be the greediest bunch of no-talent morons the world has seen since the Harding administration. It could have happened to anyone."
It is the no-talent morons part that strikes me. Think of all the businesses in North America and you have to figure that sooner or later someone had to start screwing up right? All that money in the 1990's was great and as we had come to expect incredible numbers every time out, the corporate leaders were happy to oblige even if they had to tinker with those pesky numbers.
Worse of all, is the systematic attack upon the queen of decorating and good things, Martha Stewart. Forgive her for being a Democratic political supporter, and please say what you will about her anal-retentive empire, but whatever you do don't ignore the fact that she is a walking, talking, American success story.
Instead of focusing on the big picture lawmakers are playing "gotcha" with Stewart who sold 3,928 shares of ImClone the day before it crashed after being denied key government approval for one of its products. Yes she has a relationship with the firm's former CEO who is up on charges of insider trading. But the idea that she would greedily want to use insider trading to save her $230,000 investment and thus risking her reputation and her own stock, Martha Stewart Living Omnimedia Inc., is ludicrous.
Martha's stock has slid 13 per cent even as the company announced better forthcoming results. Its cost her over a hundred million. Sure the only way anyone could live like Martha, which is basically all that she sells, is to be, well, Martha. But selling all that junk works and she is no Ken Lay.
This is, however, typical of journalism and government. They have tainted Martha Stewart while basically foregoing the actual problems. The same was true in the Enron case -- where the company has yet to be taken to the watershed while accounting firm Anderson is getting traded around like a pack of cigarettes at a prison.
I suggest looking at the makers of Alka-Seltzer or Pepto-Bismol as safe investments in the near future. The good news is that with so many investors companies would be foolish to keep acting like a bunch of Chinese bike factories during the Cultural Revolution.
Jackson Murphy is a commentator from Vancouver, Canada. He is the
editor of "Dispatches" a website that serves up political commentary
24-7. You can contact him at firstname.lastname@example.org.
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