Saturday, May 27, 2006

Guilty of far more than the convictions say …

Enron former CEO Jeff Skillings has been found guilty of conspiracy and fraud. Enron founder Ken Lay has also been found guilty of conspiracy and fraud, as well as insider trading and false statements. I think that last one means “lying.”

I cannot imagine anyone is surprised by those verdicts. But the two men are guilty of so much more than the charges. Lest we forget, think back to some of what the leaders of Enron have done.

First, return to the year 2000. Enron was flying high. George W. Bush was running for President. Kenneth Lay, was one of the best financial friends George W. Bush has ever known, this side of Saudi Arabia. Lay and a number of Enron employees essentially bankrolled Bush's presidential campaign that year.

Even before Bush got White House stars in his eyes, he worked very closely with Enron on energy policy in Texas. So, during that first presidential campaign, he was also flying high -- from campaign stop to campaign stop -- in the Enron corporate jet loaned by Ken Lay, whom Bush publicly called, “Kenny Boy.” Bush touched down on tarmac after tarmac to stand in front of Lay’s Enron jet and pledge at each stop to restore dignity and honesty to the White House. In April, Bush interrupted a campaign schedule to fly to Huston in order to be there for his friend when Kenny Boy threw out the first pitch in the new Enron Field, since renamed.

After Bush was appointed President, he, and/or Cheney, temporarily installed Kenny Boy in a West Wing office where he interviewed candidates for high-level energy department positions in the new administration. Lay was also the one who handpicked the new chairman of the Securities and Exchange Commission--a former lawyer for his company accountant, Arthur Andersen. Kenny and his group from Arthur Anderson also made sure that accounting firms would be exempt from numerous regulations and would not be held liable for any irregular bookkeeping by their clients.

Kenny Boy spent time with his old buddy, Dick Cheney, former CEO of Halliburton. Enron and Halliburton, you should remember, got the big contracts from the first President Bush to "rebuild" Kuwait after the 1991 Gulf War, back when Cheney was Secretary of Defense, shortly before he became CEO of Halliburton.

Early in this new Bush administration, Lay and Dick Cheney formed an “energy task force" to put together the country's new "energy policy." A secret policy. Cheney still doesn’t want the names known of those who helped him with that secret American policy. For obvious reasons. It isn’t that the public can’t handle the truth; it is that Cheney cannot.

Enron soon went on to shut down electricity in California with “rolling black outs.” And Enron made out like those cliché bandits while "trading" the energy California desperately needed. Who got blamed for the rolling black outs? The Democrat governor of California, of course. Among other problems and charges, Governor Davis was blamed for not building more power plants.

Governor Davis was recalled; Republican Schwarzenegger was elected. There still have been no new power plants go on line in California, and the summer following the Enron manipulation was even warmer in the state. By then Enron was no longer a “player.” There was, therefore, no California energy crisis.

When Enron collapsed, Kenny Boy took the fifth and refused to answer questions from the Senate committee initially investigating the company. He kept saying, “I refuse to answer on the grounds that it might incriminate me.” Remember that. He feared the truth would incriminate him.

Now he has finally been convicted, and Kenny Boy still tells the press that he is absolutely innocent of any wrongdoing. Don’t you wonder, then, why he took the fifth so many times in those early inquiries about his company’s failure?

Kenny Boy sold millions of stock shares in the weeks just before the collapse of Enron, while touting the company’s solidity and stock value to his employees. Enron’s collapse is reported to have obliterated over $60 billion in market value, more than $21 billion in pension plans, and some 5,600 jobs. It is the largest corporate bankruptcy in history.

One cannot help but hope the judge remembers all that when deciding the sentence for the convicted Skillings and Lay. We all need to remember.

So, return, again, to the year 2000, before the collapse, when Kenny Boy was Cheney’s and W’s good buddy. Look at a partial list of the first term Bush League with ties to Enron.

(1) Lawrence Lindsey, chief economic advisor and a former advisor at Enron.

(2) Former Treasury Secretary Paul O'Neill, once the CEO of Alcoa, whose lobbying firm, Vinson and Elkins, was the #3 contributor to the Bush campaign. Vinson and Elkins is the law firm representing Enron. O’Neil proved to be an outspoken critic of the Bush League, however, and was counseled to resign. That is, he was fired.

(3) Timothy White, the Secretary of the Army, a former vice-chair of Enron.

(4) Robert Zoellick, the first term Federal Trade Representative, a former advisor at Enron.

(5) Karl Rove, the man behind the President, owned a quarter-million dollars of Enron stock.

(6) Defense Secretary Donald Rumsfeld held a large Enron stock portfolio.

(7) As mentioned above, SEC Chairman Harvey Pitts was handpicked by Ken Lay for the position, partially due, perhaps, to his aversion to governmental regulation of any kind.

Individually, where is the impropriety in any one of those appointments? Collectively, there is an appearance of blatant cronyism, at the least.

Changing the subject only slightly, one might wonder what example or signals gave those Enron higher-ups the idea they could rip off employees, stockholders, and the public with lies and dishonest practices and reporting of earnings.

I don’t know, but consider this. The first term Bush administration needed 1.4 trillions of dollars to buy off middle class America with a three hundred dollar check while W’s millionaire supporters got millions in tax reductions. So, the Bush League just had those friendly bookkeepers at Treasury make it look as if there were no deficit, until after the bill had passed. Only then was it publicly confirmed that the Clinton-era surplus was gone, and the deficit was escalating rapidly.

Where, then, you ask, did those Enron foxes get the idea that they could misrepresent earnings, profits, and not mention losses and overhead in their hen-house company and scam millions for themselves before the bubble burst? Where, indeed! Perhaps they saw how easily it had worked for the Bush League at Treasury. The administration set a great example for the Kenny Boy crowd, if they needed one.

The foxes in charge of the Enron hen house were connected at the hip to Bush and the Bush League and knew they had a friend and fellow fox pretending to be the President. After all, they had helped buy the Presidency and install the figurehead. So who would care that foxes were in charge? Kenny just kept Enron problems quiet and told everyone else how great the earnings were and inspired the employees to buy stock while he sold his. A truly foxy deal.

Here’s a warning that needs wider recognition: “When foxes take over the hen house, other animals should be wary of investing in either chickens or eggs.” The end of Enron.

Back to the future, the Bush League plan for retiring the national debt now seems to be to bill our grandchildren, if China doesn’t foreclose on their loans to America first. And with the Enron debacle winding down since the conviction of Skillings and Lay, we await the judgment of their future. So let’s not forget the details of it all before the sentencing, the Fox News interviews and spin reports, the inevitable appeals, and later, the presidential pardons.

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On a non-related matter: Ultra right wing, fanatic Christian shill Pat Robertson claims to have leg-pressed 2,000 pounds. Stop that laughing!

It’s possible, by employing the same math used to figure the age of Methuselah.

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Friday, May 12, 2006

Yes, of course, we can handle the truth

There are statements that have little literal meaning, but are repeatedly made anyway. When an official of government or a large corporation unexpectedly “quits,” for example, it is always reported that he or she “resigned” or “retired” (read those words as, “was fired”) “…in order to spend more time with his [or her] family.” Does any reporter who writes that believe it? Does any reader?

An investigative reporter gets an official to reveal information not wanted to be revealed by the principals involved, and the one telling the truth uses the reporter/source confidentiality rules to remain anonymous. “The official spoke on the condition of anonymity.” We have read it countless times. But the statement has recently evolved.

Now we read, “An administration source who spoke on the condition of anonymity because of the sensitivity of the ongoing investigation said that…”

What does that mean, “because of the sensitivity of the ongoing investigation”? I think first of that movie a few years ago when the Jack Nicholson character on the witness stand tells the Tom Cruise lawyer character, “You can’t handle the truth!”

“…because of the sensitivity of the ongoing investigation.” Such crap. We aren't allowed to know who is telling the truth about the case because of the sensitivity of the investigation? What difference would it make to know who it was who leaked/planted/revealed the truth during a “sensitive investigation”?

What we need is for a reporter to write, “A government official who spoke on the condition of anonymity because he wanted the truth to be known, but feared being ostracized or fired, said that...”

Nicholson is a great actor. But his character was wrong. Perhaps liars can’t handle the truth, but the rest of us can. It is just that we are so rarely told what it is.

Wednesday, May 03, 2006

Competition among gas stations is not like it was

I am old enough to remember adding just over five gallons of gasoline to Dad’s car after an evening of cruising the streets of my hometown. It was 18.9 cents a gallon at the new, cut-rate station, 20.9 at all the others. Dad was unaware of how far I drove, since the car's odometer had long ceased to function. It cost me one dollar to disguise my cruising. Some nights I added only fifty cents worth, two gallons and a dribble.

When the cut-rate station opened, jokes and urban legends began circulating. A friend knew someone who had a friend who filled up at the new station, and his car stalled before he drove it a mile. People claimed cars using the cheaper gas were towed in for repairs, and the owners discovered the carburetors were hopelessly gummed up. One joke: “Name two cars that start with ‘P.’ Answer: “Pontiac, and any car that uses the cut-rate gas.”

But the station did big business, and the owner thrived and became a civic leader and a city councilman. That all began in the 1950s.

Back then, there were “gas wars.” Station managers seeing that the cut-rate business was cutting into their own businesses lowered their prices to 18.9 cents a gallon to compete. The cut-rate station immediately lowered its price to 16.9 cents a gallon. Other stations followed suit, and for a few days or a week or two, prices fell as competition kept drivers adding inexpensive gas to top off their tanks every day or so. I remember that for one brief day, gas was sold for ten cents a gallon at a competing station. After each round of competition, prices returned to 18.9 and 20.9 cents a gallon until the next “gas war.”

Competition is one of the basic laws of economics we used to have in America. But it no longer exists among filling station owners. It wasn’t so long ago, really, that gas was approaching one dollar a gallon in the nation. I remember the televised newscast that showed the first station to raise the price that high. At least the first in the city where the filming took place. The dollar gas was advertised on a huge sign at a corner station, and on the opposite corner stood a station with gas advertised at ninety some cents a gallon.

What amazed me then, and now, is that there were cars at the pumps where gas was a dollar! I had thought that the station would have sold not a drop, with cheaper gas right across the street. What happened to the economic law of competition? At that moment, it seemed to change.

I now live in the sixth largest metropolitan area of the country. Gasoline prices vary considerably all over town. Why? If it is because some stations lower their prices to attract customers, then why don’t those stations do so much more business that the others will lower their prices to compete?

I recently saw a station manager raise the price to over three dollars a gallon. Stations on two of the other three corners advertised it for less. Did the high priced station stop doing business? Not at all. Motorists lined up in the usual numbers to pump the $3 gas. The other stations followed with gas above three dollars within a day or two.

It is easy to be a curmudgeon and cynically observe that it seems to be a case of individual stations gouging the public for as much as their customers will pay. Perhaps station managers now compete to see who can get away with the highest prices, not to see who can compete for the most business by lowering prices. If that isn't the case, then explain why stations in the most affluent suburb sell gas for ten cents more a gallon, on average, than stations in the least affluent suburb of this same metropolis. They are all, undoubtedly, served by the same tank trucks and suppliers.

Perhaps motorists are, on average, too affluent to care about competition and gas "only" two cents or a dime a gallon cheaper across the street from where they usually buy fuel. I don’t know how else to explain it. But if the old laws of economics worked, stations that raised their prices first would cease selling gas, and those with cheaper prices would notice an immediate increase in customers.