Boom and busts
It is often said that we can only guess at the inscrutable reasons behind market moves. Analysts attributed todays bounce to rumors about a Fed emergency meeting , improved earnings reports from a few blue-chip companies, and/or a spirited defense by J.P. Morgan Chase of its relationship with Enron. In other words, they dont know. Its a noteworthy fact, however, that when the Rigas bust was announced today, stocks suddenly popped upward. This spike could be nothing more than coincidence. Or it could be a signal that investors want to see corporate crooks in handcuffs before they start buying again. These five alleged chiselers from Pennsylvania are not exactly smalltime they are accused of ripping off billions from their cable firm -- yet their rather swift arrests provide a contrast with the big suspects at Enron. After eight months of investigation, nobody from Houston has done the perp walk yet.
Post backs Priscilla
Predictably, the editorialists at the Washington Post have endorsed the confirmation of Priscilla Owen. The Posts habit of lining up with the Federalist Society dates back to its long love affair with Ken Starr, the man who saved the paper from a major libel judgment and taught the Grahams how helpful a right-wing jurist can be. (No mention has yet appeared in its pages of Starrs questionable fundraising for the Ohio Attorney General who is paying him to defend school vouchers.) The editorial backing Owen is weasel-worded, omitting basic facts about her record. It suggests that she is being criticized for accepting money from Enron, yet the writer must know that the real problem is the consistency of her rulings in favor of her corporate donors.
Different kind of Justice
Meanwhile former presidential counsel Boyden Gray is lining up figures such as Ed Rogers and Haley Barbour for an organization to promote the presidents judicial nominees, beginning with Owen. Rather grandly, theyve named themselves the Committee for Justice. (Not to be confused with the liberal judicial lobbying group with a similarly sonorous title, the Alliance for Justiceunless that similarity is intentional.) Rogers is a powerful corporate lobbyist who left the first Bush White House to flack for a Saudi sheik connected with the Bank of Credit and Commerce International. His partner Barbour is the former RNC chairman mentioned here recently in connection with WorldCom; Barbours cousin is that Mississippi judge who buried the WorldCom shareholders lawsuit. I can hardly imagine a more high-minded group to uphold the quality of the Federal judiciary. The gangs first initiative? An attack ad targeting Democrat Ron Kirk, the former Dallas mayor whose competitive race for the seat of retiring Texas Senator Phil Gramm is agitating the GOP.
[Posted: 1:40 p.m. PDT, July 24, 2002]
Except for the market fundamentalists, there seems to be a consensus of opinion among economists and analysts that the White House has yet to do anything effective to reassure investors. Although the stock market's decline hasn't proved ruinous to the broader economy so far, the accompanying national malaise could wreak severe deflationary damage in months to come.
There is a spooky feeling of historical dij` vu in all this, as if we had returned to the eve of the Great Depression. The president assures us that the basic indicators are in place for renewed growth, which is all too reminiscent of the only phrase we now recall from Herbert Hoover. "Prosperity is around the corner," promised Hoover, a very decent man who had no idea that what actually awaited him around the corner was a bread line.
Another disturbing parallel is noted on Consortium News, where an unsigned article compares stock prices during the first 18 months of the Bush Jr. and Hoover administrations. Measured by the Dow Jones Industrial Average, Bush still leads Hoover slightly; the drop in that index is a half-point less under Bush so far. In the S&P 500, however, Hoover wins. So far, Bush has seen that index decline by 36.9 percent, nearly doubling what the Hoover market endured. Yes, there are important differences between markets then and now. It's the similarities that are worrisome.
Bush also seems strangely disconnected from these realities. His economic program of tax cuts for the wealthy and Social Security privatization now seem like artifacts of another time, and so far neither he nor his advisors have proposed anything to take their place. (Empirical reasons not to move Social Security into the hands of stock speculators are explored in a new study by liberal economist Dean Baker, who shows that potential losses to retirees in recent years would have ranged between $29 billion and $78 billion under schemes proposed by the Moynihan commission. Read the commission's obituary here.)
Bush's economic gurus reportedly fantasize about further tax cuts for investors when talking among themselves, but dare not mention such notions publicly. Since they have no other ideas and never have, they say nothing. A tax cut targeted to middle-income households and wage workers would have a salutary stimulative effect, but that isn't in the Lindsey vocabulary. A progressive cut in the payroll tax should be part of a Democratic message, but they haven't had much to say about the broader economy, either.
[Posted: 8:17 a.m. PDT, July 24, 2002]
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