Posted on 06/29/2002 10:14:53 PM PDT by gcruse
'It's all about greed!" hissed the lady next to me in the airport lounge, when Martha Stewart came on TV. Martha was chopping cabbage and ducking the tough questions. "I want to focus on my salad," she said. "I will be exonerated from all this ridiculousness."
Blondenfreude is in the air. (Blondenfreude, a term I did not coin, is the wish to see fair-haired uber-females get their comeuppance). Talk-show hosts are cracking jokes about how to decorate a jail cell.
But Martha's merely a handy poster girl for market manipulation. All she did was tell a teeny-weeny lie and get caught out. She gets all the airtime because she's got all the footage.
Martha cooking soufflés has better visuals than anonymous accountants cooking books.
Martha carving pumpkins is more fun to watch than WorldCom carving 17,000 employees from its payroll.
Martha creating 10 new ways to use a glue gun is easier to parody than CEOs creating 10 new ways to manipulate their cash flow. And explaining how she cheated on a $228,000 (U.S.) stock sale is easier than explaining how WorldCom cheated $3.85-billion on its EBITDA (earnings before interest, taxes, depreciation and amortization).
Sure, she's got a big house in the Hamptons and is rude to underlings. But she never tried to screw the shareholders. She never loaned herself a billion dollars, or went on a loony acquisition spree, or threatened to fire the help unless they helped her fake the numbers. She never gave herself $100-million worth of stock options, or laid off 17,000 people when things didn't work out. Martha Stewart taught us about taste and gracious living and how to torch a crème brûlée. The crooks and thieves at WorldCom and Enron, at Global Crossing and Tyco and Adelphia, taught us that nice guys never finish first, and suckers never get an even break. They gave capitalism a bad name.
Martha Stewart created a real business. WorldCom created only a mirage.
WorldCom was once worth $180-billion. Soon it will be worth $0. It's worse than Enron -- the biggest business fraud of all time, perhaps until next week, when there might be another one. Who needs true crime stories when you've got the business section?
Altogether, something like $2-trillion has evaporated from the market, and it would be a mistake to think we've hit bottom yet.
"I see a near total collapse as the endgame," says Susan Kalla, a New York analyst who blew the whistle on the telecoms back in the year 2000. "There was a systematic fraud in the industry." Ms. Kalla was so unpopular that she was shouted at in conference calls and received the odd death threat.
The popular analyst was Jack Grubman. Everyone deferred to him. He told people to load up on telecoms, and no one cared that he was in business with many of the companies he covered. Last year, his firm paid him $20-million for his genius. He was bullish on WorldCom right up until this Monday, when he mysteriously changed his mind the day before the company went kablooey.
No wonder people don't trust the stock market any more. It's been attacked by terrorists and evildoers, and no one has the least idea how to stop them, or where they might strike next. The common euphemism for what ails the market is "governance problems," which is a polite way of saying that fraud, theft, and drooling greed got completely out of hand.
Last Monday I asked one of the biggest brains on Wall Street if the worst was over yet. He said no. Just passing it along.
I have no idea how many of the guilty will get what they deserve (my hopes are low). But it's safe to say that several million innocent bystanders this side of the border will be splattered by the gore. Remember Nortel? WorldCom was a major customer. Heard of Telus? It went on a wild acquisition spree, too. Now it's laying off nearly a third of its work force and trying to persuade the rating agencies not to downgrade its humongous debt mountain to junk. Good luck.
"It's not Martha who's so evil," I explained to my husband, who has come down with a case of blondenfreude. "It's Bernie Ebbers. He ran WorldCom. He used to be a milkman in Edmonton."
Martha may be guilty of obstructing justice. But Mr. Ebbers and his posse of corporate cowboy friends are guilty of shredding your pension fund, along with the bankers who loaned them money, the accountants who cooked the books, the rating agencies that believed what they were told, the directors who were bought off with stock options, the analysts who shilled, and the media that waved their pompons like dumb blondes on the sidelines. How were the spectators to know the game was fixed?
Now the game is over and it's back to the real world. No more easy money from investing. Forget those 15-per-cent-a-year returns. You'll be lucky to get five. The only way to make money is to save it. No more Freedom 55, like your friendly financial planner promised. Start thinking Serfdom 77.
It's possible that Martha will be exonerated from this ridiculousness. Personally, I doubt it, because they'd really like to get her, and also because I think she's guilty. What I know for sure is that you and I will not be exonerated from this ridiculousness. It doesn't matter if we're innocent. We'll pay anyway.
mwente@globeandmail.ca
It won't fly. I rarely hear any "real" news being discussed while I am out and about (except 911 news). But I have overheard a handful of strangers discussing Martha and they are pissed!
Or you can continue to make a solid gain in the market by BEING A CONSERVATIVE INVESTOR, STAY INFORMED, BE KNOWLEDGABLE OF THE STOCKS YOU INVEST IN AND DIVERSIFY........
OR YOU CAN BE A GREEDY, SPOILED YUPPIE AND TAKE A BEATING.
Stocks still rock if they are part of an overall investment strategy......just don't be an idiot.
It reminds me of the great line from Throw Momma From the Train "One little murder and I'm Jack the Ripper."
But she doesn't have to prove she thought a stop loss was in effect. Rather, they have to prove she knew there wasn't at the time she said there was. It will probably come down to whether the jury believes her or a crooked, plea bargaining Merrill Lynch broker.
Arrrrghhhh !
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.