We've all seen the signs, and felt the pain of it. It's about time we stated the simple reality of it. America got ENRONed.
Corporate Gangsters using the Energy Market as their pinata manipulated false shortages and spiked demand, combined with trade speculation to reap massive super profits until the entire House of Cards came crashing down.
It's complex and twisted. Hard to follow, but as is shown in the excerpt from "Enron: The Smartest Guys in the Room" - it all began with two shady Oil speculation traders. Enron CEO Ken Lay had been warned and informed about the risks and out and out fraud they were perpetrating. But rather than firing them - he decided to keep them because he felt they were the Only Profitable Portion of the Company.
Please Keep Making Us Millions.
Eventually those guys went to jail, but then Lay hired Jeff Skilling who transformed ENRON into a "Stock Market for Energy"... and that's when things really began to fall off the rails.
Here's Part 3.
Jeff Skilling had a very Darwining View of how the world worked. He had a very famous saying that money was the only thing that motivated people.
So began a system of firing 15% of the workforce every year and only those who generated the highest profits were retained, no matter what they had to do to create those profits. "Survival of the Fittest" or Survival of the Most Callous, Vicious, Blood Thirsty person willing to STOMP ON THE NECK of anyway to extract more and more profit.
These guys were like adrenaline junkies, addicted to the risk. Out of control Gamblers, taking higher and higher chances until finally - Crash!!!
Most of us know what happened next. The companies stock value crashed. It collapsed. The retirement accounts of all of their employees, the investments of all their shareholders literally vanished over-night. All that phantom wealth, disappeared right back into the ether. Poof!
So did traders and speculators learn their lesson? Did the Moral Hazard shown by the example of Enron automatically correct itself in the Magical Self-Regulating Market.
Frack NO!
As was shown in the Academy Award Winning Documentary "Inside Job" - if Wall Street Learned anything from Enron, it was how to commit fraud
This week Rachel Maddow explained how what ENRON did was repeated by companies such as Global Crossing, Adelphia and WorldCom. And how so many of them feared the power wielded by the former Dragon-Slayer of Wall Street, Elliot Spitzer.
Speculating on traded assets that had no actual value? Why that's a strategy that ENRON wrote the book on when they created their "Hypothetical Future Value" Accounting system where they recorded profits - and subsequently spiked their stock price - for things they hadn't even done, only thought about doing.
Part 2 w/ Rachel as she interviews Delaware Attorney General Beau Biden who has filed suit against the key mortgage bundling companies.
So when you look at the documented record of damage that bad corporate behavior - how do you square that with the Lunatic Libertarian View that the true guilty party in all of this financial trading fraud is really The Government?
Let's take Judge Anthony Napolitano for example...
Napolitano: A guy shows up at your door with a gun and demands your money, saying he's going to give it away in your name. You try to call the police and it turns out it's an IRS agent. Why would you give your money to this crackpot?
Stewart: Because you think they're going to hire a bunch of people, who if your houses catches fire, they're going to come there with water.
Napolitano: I can do it better for you if I have an insurance company that promises to keep my house free from fire
I'm sorry, but that's just crazy - because there was a time when we did exactly that. Fire Departments used to be privatized and they would only put out of fire for homes and business that they Insurance premiums paid up. For everyone else, they would Just LET IT BURN!
This isn't a hypothetical, this has happened, recently when a local fire dept began to charge a fee to protect people in their outlying county area.
This is what Enron did to California.. they let it burn down. (although in truth, they also Started the Fire) This is what happened to our Mortgage Industry.
Meanwhile people like Napolitano continue to believe that anything the government tries to do is BAD. That trying to prevent the damage that is left behind by corporations and companies who discriminate by catering only to their paying customers can create a hazard for everyone else because Fires Can Spread.
The Loss in value can not be localized. Toxic Assets can Spread.
Stewart: Do you think there's been progress in America, would you have us go back to 1890?
Napolitano: There has been progress in America, despite the Government
What!?
If you want to see an even bigger Lunitarian Crackpot - watch this guy Richard Schiff as he tries to lecture the protestors at Occupy Wall Street.
Schiff's position is Total Anti-Governmentalism. Anything the Government does is bad and wrong. The Price of Education is high because government backs Student Loans, therefore there's no pressure for schools to reduce costs because everyone is flush with cash. Banks don't take any responsibility in how they invest your Savings because you're deposits are insured (by the FDIC) and therefore the risk is minimal for taking chances. During the 50's we had more financial freedom (never mind the significant back-step in Social Freedom) because we had few regulation and (in his mind) lower taxes.
In reality we had far high taxes during the 50's, with a top marginal tax rate of 90%. That was only brought down to 70% by JFK, and then later down to 30% and then eventually 20% by Ronald Reagan. And it's been only since Reagan that we've had massive defict spending in our Government.
Schiff imagines that a Business Owner hit with a 90% on every dollar they made over $2 or $3 Million would simply shut their business down on go on vacation rather than make just 3 cents on the dollar. Well, up until Reagan, that was exactly the tax structure we had in place and Nobody Did That!.
What people did was seek out tax shelters to put their money in, and the number one tax shelter available was to reinvest in their businesses. That's where the influx of Capital Schiff talks about came from.
The point here is the danger of this mythology. The mythology of the perfect infallable market. The idea that "No Corporation Would Expoit their workers".
Frankly, that's BullShit.
You don't have to use two clicks to find examples of Nike using underage sweatshop slave labor to make Air Jordan tennis shoes in Malaysia - TODAY! Not 100 Years ago - TODAY!
These types of working conditions. This type of Life is what the unfettered, unregulated Libertarian Ideal ultimately leads. Worse and worse working conditions, longer and longer hours, lower and lower pay - until there is literally no difference between this and out-and-out Slavery.
We have the minimum wage, workers compensation and workplace rules and regulations to Prevent Exactly This form happening.
We have regulations because 100 Years ago, there was the Triangle Shirt Waist Fire where inadequate safety provisions left tectile workers trapped - locked - in a burning building and forced many of them to leap desperately from the windows to escape the flames.
We have the EPA, thanks to President Nixon, because industrial pollution was once so bad in this country, that the Cuyahoga River Caught Fire. Several Times. By the way, Water isn't supposed to BURN!.
The image of a black, gooey hand coming out of the Cuyahoga like a B-movie swamp monster defined the plight of the Cuyahoga. By association, it indicted all industrial American cities -- and a culture that for a century had generally viewed natural waterways as a means to an end
This is the "Golden Era" of deregulation that the Tea-Publicans and the Libertarian Allies like the Koch Brothers are so desperate to Bring Back? Really? We need this like we need another Love Canel Chemical Waste Disaster Our Children are breathing much cleaner Air because of Air Quality Regulation. They aquireing far few cases of childhood, asthma and lung cancer because of it.
We have the FDA to help prevent tragedies like massive outbreaks in Salmonella.
CBS/AP) Government investigators are still looking for the source of a salmonella outbreak that sickened 76 people and killed a Calif. resident.
The USDA and CDC believe the outbreak that spread across 26 states is linked to tainted ground turkey. Cargill, a Minnesota-based meat company, said Tuesday that it has been contacted by the USDA as part of the investigation, but has not been named as the culprit.
That was in 2008, not 1935.
Libertarians see all these tragedies as good things. They see them as guideposts for good moral behavior on the part of business, but then again - they simultaneous fight against all methods to make corporations PAY for damage they've caused.
Whether it be government regulations or tort reform, they would remove the consequences of poorly advised immoral action on the behalf of business. They believe the only consequence that matters, is the consequence of the Market.
That only by shareholders withholding their investments, only by customers withholding their purchases can a company be felt to feel pain and correct it's coarse.
But then, how many people have to DIE before that happens? How many people have to get Cancer from Asbestos? How many people have to find that their Drinking Water Explodes due to Hydrological Fracturing? How many mines have to Blow Up from inadequate Methane Venting and Collapse before some people start to rethink this "Drill Baby Drill" Mania?
Just how long does it take for the Market to Magically Self Correct, decades? Centuries? Can we afford to wait that long?
How many people had their consciences shocked when they saw what was happening beneath the surface during the BP Gulf Spill?
After this, how many people have divested themselves and swore to never purchase from BP or their subsidiaries ever again after the Deep Water Horizon disaster? How long will it be before we truly realize the impact of millions of tons of Corexit 95 in the Gulf? How have they been held accountable by the Market? How much has their bottom line by impacted by those damaging and deadly decisions?
Not Fracking Much from what I can tell.
This is where the theory fails in practice. Corporations are NOT people. Corporations can not be Executed. They can't be jailed. The truth is that a Corporation is a Legal Construct designed to protect the people behind it from Liability and Responsibility for their Actions.
It says it right in the name - "Limited Liability Company".
If you create a Corporation, and the actions of your Corporation and it's employees lead to Death, Destruction and or Cancer in your employees, customers or neighbors - You can easily avoid LIABILITY for that outcome.
All you have to do is LIE about it Then keep lying.
You can lie to regulators. You can lie to Congress. You can force your employees to lie by having them sign legally binding non-disclosure agreements that would send them into bankruptcy from legal fees if they even dared whisper the truth.
That's exactly what the Tobacco Industry did for decades. That's what they did until Dr. Jeffrey Wygand finally came forward, putting his family at risk, to tell 60 Minutes that the Surgeon General was right decades ago, Nicotine is Addictive and the Industry has known it the entire time.
This is the Reality. This is how Corporations really work. I don't say this to accuse all Corporations, or all Capitalism as being Evil or Bad - far from it . I'm not advocating Marxism or Socialism, but instead to pointing out that they can't be allowed to run wild and unregulated like a pack of wild dogs.
They have to be tamed.
They have to be brought to heel.
They can't be trusted to "Self-Regulate". That's never happened. That's Never worked.
It doesn't have to be that way, Corporations can act as good Social Citizens, but they have to be concerned with more than just their shareholder profits, they have to also be genuine concerned about the benefit and welfare of the customers - not simply worried about whether they'll be able to write off the cost of the negligence lawsuits - and they have to be genuinely concerned about the safety, health and well-being of their workforce - not just figure they can deny health care and let the Government pick up the tab for the Emergency Room. Being a profitable company isn't mutually exclusive with been a Good Company, but you certainly be one without being the other.
But our society is not just about Companies and Corporations. They aren't the only pathway to the American Dream. It's not just about Government. It's also about the people. The people who work, the people who consume, the people who invest. Just as our Government is broken in to three equal branches, so is our society broken into these three seperate - and equal - branches.
And they must remain equal, or else the entire balance of our society begins to spin out of control. Bad Corporations have to be kept in check by Good Government and Good People. Similarly, Bad Government has to be kept in check by Good People and Good Companies both willing to do the right thing to pull that government back in line. Bad People, also, have to been countered by a Good protective Government and a Good Companies that refuse to endorse, excuse and perpetrate their bad behavior.
We have to be working at this all together. As a team.
Government is not the problem. Not by itself. Corporations aren't the problem. People aren't the problem.
But if we are all at each other throats - if government can't do it's job to protect the people, if people can't speak up to protect themselves, if the drive for lower and lower prices pushes corporations to cut more and more corners and take greater and greater risks, if all we're doing is pointing fingers, ignoring inconvenient realities, then the problem grows. Unchecked. Unlimited. Unregulated.
Like a Cancer. The Enron Cancer.
I think it's time for some surgery. And I hope that the Occupy Wall Street movement just might finally get an Ambulance Rolling to save the patient.
Who of course, would be US.
They may not perform the surgery themselves, but they are calling 9-1-1 at the top of their lungs. And for that they should have all our thanks.
Vyan