Saturday, May 24, 2003


The swing set

Ah, so the 600 billion dollar -- Krugman prices it out at 800 billion - tax cut has been passed. The price tag in the headlines is, as everybody knows, a joke. We are in an extremely bizarre time. As the deficit piles up, we get a tax cut that is thinly justified as an attempt to bootstrap the market. Yep, get those equities flyin' again.

At the same time, the Bush administration is gambling with the dollar. This is, perhaps, all they can really do -- the brain-dead people in Bush's Treasury have no other options. So the race is on to press the dollar downward.

Now, LI is a simple country hayseed -- shucks, we just tried to buy the Brooklyn bridge from a passin' stranger yesterday. Yet even we noticed a curious disparity between the two strategies. Like, ain't it true, like they teach in the one room schoolhouse in the Hollow, that when you devalue the dollar, money flows to assets tied to other currencies? And don't that promote a flow out of US Markets and into other markets? And ain't that flow going to accelerate, as the wealthy, who benefit most from the tax cuts, seek a higher ROI than is going to be given by investing in dollar based instruments?

Of course, LI knows we don't have the rocket science of the fiscal system down, like our hero president -- well known fighter pilot and all -- but gee, won't the flight from dollars accelerate as the deficit grows, forcing interest rates upward, and shutting down business borrowing -- thus shuttin' down plant and other investment -- and thus upping cost cutting measures, such as shedding jobs?

So, what is happening here? A conservative Republican government is basically stoking the fires of inflation, in the hopes that we will get the system of production moving -- thus taxing the poor, basically, and the middle class, who are already facing the continuing inflation in housing, education and medicine -- and all of this supposedly in the era of "limited" government. Of course, since no Republican really has the guts to limit government -- they are throwing money hand over fist at Defense, and they absent mindedly voted in various medical benefits last year that add 300 billion dollars to that -- we are faced with pressures all along the financial dams.

Krugman is worried about a deflationary spiral. We personally think that this underestimates the integration of the American economy on other economies. Unlike Japan, we outsourced our manufacturing base long ago. Having depended for a long time on the absurdly low wages of foreign workers to underwrite our service sector economy, we think we are going to feel the effects of that soon.

Incompetent in war, disastrous in peace -- our administration. You gotta love em!

The Illusory Empire

One of the great problems with political scientists is that they base so much of what they think on analogies that are carefully plucked of all annoying dissimilarities. Take the great Empire boom spawned by the neo-con set. This has been going on for a while now, since one of the Kaplans wrote an article in Foreign Policy about the U.S. as a benign empire. This Kaplan went on to compare the U.S. with Britain in the 19th century. As in all such comparisons, a surface verisimilitude is achieved by comparing military force, and interventions over the globe. What Kaplan didn't mention was that 20 million some Britons left the U.K. to settle all over the globe. He also didn't mention British investment in the colonial enterprise. Both of which are very unlikely to happen to the U.S. any time soon. The U.S. Empire is defined by the fifty states, plus some commonwealths.

Iraq and Afghanistan are test cases of the imperial proposition. So far, what has happened in Afghanistan? The U.S. beat the Taliban and scattered its real foe, Al qaeda. Then we pretty much forwarded a minimum amount of money to the government we installed in Kabul, left a minimum contingent of soldiers there, and watched, with supreme indifference, as the center didn't hold. It is a good bet that some terrorist Rotary club is meeting, once again, between Peshawar and Kabul.

The British sometimes advanced and then abandoned and then re-inserted themselves in territories. The history of what is now Nigeria was full of that kind of thing. But if London had been attacked by a group from Nigeria in 1889, the British would have invaded in force and stayed.

We aren't saying this is a good or a bad thing -- it is a different thing. The Marshalll Plan response was an exception in American history, not the rule. It does not look like Iraq is going to be different. If this Financial Times story is to be believed -- and it is pretty standard for the Biz press view -- Iraq is going to need around one hundred billion dollars in investment in the next couple of years:

"Iraq's reconstruction is routinely costed at as much as $100bn (?86bn, �61bn), making it the largest such project since the Marshall Plan rebuilt Europe after the second world war.

Companies from all over the world have been clamouring for a piece of the work. Iraq is particularly appealing to them because it sits astride the world's second-largest oil reserves. There are also hopes that it could give rise to a robust consumer market."

Well, hope springs eternal, even in a nut house. But the reconstruction projects we have seen so far are coming out at about a billion bucks. And those bucks aren't an investment in Iraq, really -- they are things like starting a tv station for Iraqis, which is really a way of getting some US tax dollars to SAIC. When the money from Iraq's frozen assets runs out, what is the US going to do for the other 99 billion dollars? Take it out of the budget? The scheme to pay for things via Iraq's oil rather misses that, well, if we pay big fat US corporations with that money, nothing will be left for the Iraqis. They won't be able to afford those tv sets to watch SAIC TV. It is what you call a paradox. Or an empty piggy bank.

There's no plan for that whatsoever. There should be. Since the U.S. got into this war, we owe them. You know, for wrecking the cities and all. Things like that. Colonialism would be a step up, actually. Moral responsibility, things like that. So far, we simply have a country eyeing the little money left in a country it is occupying, and thinking of making a dash for it. On the other hand, the Bush-ites are stuck. If they treat Iraq like Afghanistan, the country will surely slip into a virulently anti-American mode. If we try to chintz on reconstruction, we are going to literally starve Iraqis. There's only one source of money left -- U.S. taxpayers.

Of course, there's also the little problem that Iraq, since the prosperous days of the late seventies, has gotten a lot more populous and a lot poorer. That consumer revolution is going to need a lot of very long range credit cards, because these people, like the Saudis, and the Libyans, aren't going to see those days again. The inheritance has been pissed away, mostly on weapons. Saddam or House of Saud, same song and dance.

At the moment, though, the thought is this: We broke it -- we pay for it. Isn't that the rule in this celestial toy shop?

Chalabi is, reportedly, a man who likes to play close to the edge. He has a habit of going over it without a parachute. Perhaps he did it again when he attacked Al - Jazeera and the Jordan government with papers the INC had gathered from Saddam's files.

Saddam's files are truly amazing things. They pop up here, labelled in big magic marker, George Galloway bribery papers; they pop up there labelled Al -Jazeera, our contacts in. But where, pray tell, is the folder entitled, Donald Rumsfeld, talks with, 1984; or George Herbert Walker Bush, covert aid supplied by, 1932-1989? I guess those papers just incinerated. And guess what? Neither the Times of London or New York, neither the Daily Telegraph nor the Washington Post, are looking very hard for them.

Although I'd guess, just guess, that the US Military did look for those state secrets.

Well, Chalabi's problem is that he depends too much on the kindness of strangers -- who he then rips off. So, mistaking himself for Donald Rumsfeld, he paper rattled in the direction of Amman. He forgot that Amman can paper rattle back. The Wall Street Journal just got a look at some documents released by the Jordanians in re the case of Petra Bank.

The WSJ report does not show Chalabi as a corrupt man -- rather, he was a businessman in a hurry. And like many such businessmen, he succumbed to the temptation to inflate his business, which required doing an increasing amount of shady legwork inside the business. Plus, he seems to have smuggled money to his family. Two point six million dollars that the bank earned for instance, for snagging a loan to Sudan would be diverted to the Chalabi brothers' pockets. Arthur Anderson audited the bank after Chalabi fled:

"Now in control of Petra Bank, Jordanian authorities asked for an audit. Four months later, Arthur Andersen accountants declared the bank insolvent. Shareholder equity wasn't $50 million as reported, their 267-page report said, but a negative $268 million. They said an additional, hard-to-explain $158 million had flowed out but not come back. Much of that involved "transactions with parties related to the former management of the bank," it said."

Oh my. We do wonder how Chris Hitchens, Chalabi's main press supporter in this country, is going to explain this. In his last column on this subject, Hitchens let slip the fact that Iraq was a partner in the bank. Wow. If this is true, Chalabi, like his friend, Donald Rumsfeld, was working with Saddam in the nerve gas eighties. Since Hitchens didn't footnote his source, we don't know if he learned this from Chalabi himself, but it is a promising clue to Chalabi's sudden interest in overthrowing Saddam.

Thursday, May 22, 2003


Blood business

Douglas Starr wrote an essential book about the trade of blood, entitled, no doubt by an agent, Blood: the Epic History of Medicine and Commerce. . One of the book's major concerns was the way the blood industry accidentally spread AIDS to hemophiliacs. There's a chapter excerpt from the book on a PBS site. We have to quote this graf, which explains how the blood business became a moneymaker after new techniques allowed companies to extract plasma, and thus made it possible to up the amount of blood a donor could give dramatically:

"New classes of people became involved -- shadier buyers, more desperate sellers. Experts had warned about the potential for abuse. During a 1966 conference at Cohn's Protein Foundation, Dr. Tibor Greenwalt, a leader in nonprofit blood banking, cautioned against "exploiting for its proteins a population which is least able to donate them" -- yet that gave little pause to commercial entrepreneurs. Tom Asher, a fifty-year veteran of the plasma industry who worked as a manager for the Hyland division of Baxter Laboratories, ruefully recalled that his company set up its first center at Fourth and Town streets in Los Angeles -- "absolute dead center, Skid Row. We'd immunize donors with tetanus to increase their antibodies for tetanus gamma globulin. When hurried, our doctor, who was also the bouncer, would occasionally give them shots of tetanus antigen right through their trousers." Later the company took to "bankrolling all sorts of characters" to meet the booming demand for source plasma, many with questionable ethics. Another Los Angeles center, called Doctors Blood Bank and run by two local pathologists, paid donors in chits redeemable at a local liquor store."

Starr points out that blood became a major third world industry. Nicarauga, under the malign vampire, Somoza, became a major blood and plasma supplier, for instance -- an industry that Somoza took a big cut from -- and in fact it became a major political factor in the Somoza overthrow. The owner of Plasmaferesis assassinated the editor of La Prensa, apparently on Somoza's orders, after the paper investigated the "House of Dracula. More importantly, the hemophilliac medicines that required compounding thousands of different donations of plasma together was starting to circulate in the First World. Factor VIII was a standard, profitable medical instrument. And it was a loaded gun. As Starr shows, AIDS among hemophiliac's was, perhaps, the first neo-liberal epidemic: it came from unregulated free trade, it came out of the principles of that trade (the cost of labor and the cost of raw materials should be lowered to its lowest level), and it carried a social cost that was supposed to be cheerfully borne by third parties.

Well, we are going on about this because the NYT has fingered Bayer today. This should be a major story, although in today's atmosphere, who cares if companies kill?

Here are the first two grafs:

" A division of the pharmaceutical company Bayer sold millions of dollars of blood-clotting medicine for hemophiliacs � medicine that carried a high risk of transmitting AIDS � to Asia and Latin America in the mid-1980's while selling a new, safer product in the West, according to documents obtained by The New York Times.

The Bayer unit, Cutter Biological, introduced its safer medicine in late February 1984 as evidence mounted that the earlier version was infecting hemophiliacs with H.I.V. Yet for over a year, the company continued to sell the old medicine overseas, prompting a United States regulator to accuse Cutter of breaking its promise to stop selling the product."

Remember that this took place in the gogo Reagan years. The Feds knew and disapproved of the Cutter sales. They called in Bayer officials. This is what happened:

"Federal regulators helped keep the overseas sales out of the public eye, the documents indicate. In May of 1985, believing that the companies had broken a voluntary agreement to withdraw the old medicine from the market, the Food and Drug Administration's regulator of blood products, Dr. Harry M. Meyer Jr., summoned officials of the companies to a meeting and ordered them to comply. "It was unacceptable for them to ship that material overseas," he said later in legal papers.

Even so, Dr. Meyer asked that the issue be "quietly solved without alerting the Congress, the medical community and the public," according to Cutter's account of the 1985 meeting. Dr. Meyer said later that he could not recall making that statement, but another blood-product company's summary of the meeting also noted that the F.D.A. wanted the matter settled "quickly and quietly." Dr. Meyer died in 2001."

Ah, the sweet, deadly smell of money! Undoubtedly Meyer was also thinking that the Reagan administration would reverse itself if it publicly looked like it was doing something unfriendly to a corp bud. Meanwhile, Cutter, acting, according to the latest Bayer broadside, was considering the ethics of lining its pockets by selling a majorly dangerous product to uninformed suckers in Asia. Hmm, what should a company that wants to make money in the dirtiest way possible do?

"The new product [heat treated plasma compound], meanwhile, was selling briskly, leaving Cutter with a problem: "There is excess nonheated inventory," the company noted in minutes of a meeting on Nov. 15, 1984.

"They needed to get the return for what they invested," explained Michael Baum, a Los Angeles lawyer who has represented dozens of United States hemophiliacs in suits against blood-product companies. "They paid the donors. They had processed the plasma, put it into vials, kept it in warehouses � and all that expense had already been incurred." (One vial is roughly equivalent to a small dose, though more may be needed to stop severe bleeding.)

At the November meeting, the minutes show, Cutter said it planned to "review international markets again to determine if more of this product can be sold." And in the months that followed, it had some success, exporting more than 5 million units (a typical vial might contain 250 units) in the first three months of 1985, documents show."

A saga of entrepreneurship that we can all be proud of.


Forbes quotes a "London based" analyst with this remark about the story:

"You can never entirely rule out upsets, but this looks like a rather old story and will probably not affect Bayer's financials."

Marx himself couldn't come up with a more deadpan line about the moral bankruptcy of capitalism.

Pigs, pigs, pigs

Over at Junius, Chris Bertram briefly notes an article in Capitalism magazine criticizing Forbes and Fortune for giving in to the "socialistic" idea of reducing CEO pay. The Capitalist magazine rehearses a familiar idea: CEOs are like movie stars or athletes. Extraordinary pay is necessary to attract talent. This argument is a foolish disguise for a situation that is anything but laissez-faire. Movie stars and athletes commoditize an impression. If you go to a movie because you like x, or a basketball game because you like y, then x and y have successfully extracted a certain amount of money from you -- which is why they are paid the prices they are paid. Winning is nice, but a star on a NY team that doesn't win a championship will probably make more than a star on a team from North Carolina that does, because of the economics of the above. CEOs aren't in the impression business, give or take Oprah and Martha. Nobody bought GE products because of Jack Welch. There are moments when equities depend on name CEOs -- when they are hired, or when they leave -- but these are epiphenomenal events.

The star analogy simply disguises a traditional inefficiency in the job market. This inefficiency has been created in the traditional way: a guild exists, composed of CEOS, who protect each other's compensation. CEOs usually make up the compensation committees that decide CEO salaries. As long as this continues, CEOs will be grossly overpriced. The effect of that overpricing is disguised by various dodges to make it look like CEO compensation is not a cost to the firm. It is a cost to the firm.

There's no magic here.

So, what does LI suggest? The problem could be solved in two stages. First, the compensation committees cannot be composed of CEOS. Second, saving money to the firms all around, the compensation experts who will take the place of the bigwigs don't really have to be paid more than twenty bucks an hour. Why? Because really, CEO compensation could be determined pretty much by computer program. To make this program, take the list of the CEOs of the Fortune 500. Find those with the lowest total compensations. Use them as your anchor points. Mixing a set of variables that track company performance against those salaries, you create something like a career series. Then plug in the CEO candidate. Track his performance at other companies against your base performance rates. Depending on how the candidates do, you allot extra compensation -- or you subtract it. Because certain sectors might be special, your anchors could be shifted to these sectors -- but the standard would always be the lowest paid CEO. Presto chango, you have an objective compensation program that plugs in competition. The rises in CEO pay that might come as the bottom level rises will be compensated for by new companies which appear, setting new standards.

The CEO salary then becomes a standard for other higher exec compensation. Crazy, huh?

Simple or what? And I give it to the world free. Cause I'm such a nice guy.

Wednesday, May 21, 2003


For the Devil can work upon stagnating filth to a very great degree.
For I prophecy that we shall have our horns again.
For in the day of David Men as yet had a glorious horn upon his forehead.
For this horn was a bright substance in colour and consistence as the nail of the hand.
For it was broad, thick and strong so as to serve for defence as well as ornament.
For it brightened to the Glory of God, which came upon the human face at morning prayer.
For it was largest and brightest in the best men.
For it was taken away all at once from all of them.
For this was done in the divine contempt of a general pusillanimity.
For this happened in a season after their return from the Babylonish captivity.
For their spirits were broke and their manhood impair'd by foreign vices for exaction.
For I prophecy that the English will recover their horns the first.
For I prophecy that all the nations in the world will do the like in turn.
For I prophecy that all Englishmen will wear their beards again.
For a beard is a good step to a horn.
For when men get their horns again, they will delight to go uncovered.
- Christopher Smart, Jubilate Agno

LI recommends an essay in the Glasgow review on Chris Smart, with whom Samuel Johnson once kneeled in prayer on the street ("I'd as lief pray with Kit Smart as anyone," he famously remarked to Boswell). The author, Ross King, recounts some interesting bits from Smart's hectic life.
Smart was a typical eighteenth century literatus, in some ways -- for instance, he flattered Alexander Pope as a young man, translating some of his poems into Latin, which earned him a little patronage. He then attempted to float his own literary broadsheet, much in the style of Addison and Steele. It was in this framework that he first designed a satiric female figure, Mrs. Midnight, who seems to have exerted a peculiar fascination upon her creator, according to King:

" is interesting to consider the figure which Smart presents to the public ten years previously at the Castle Tavern in Paternoster Row and the New Theatre in the Haymarket. For beginning in December 1751 Smart dresses in petticoats and acts onstage the transvestite role of `Mrs Mary Midnight' a grotesque old woman whom he invented a year or two earlier in the pages of his threepenny monthly journal The Midwife. Variously called `The Old Woman's Oratory' and `Mrs Midnight's New Carnival Concert', the performances display carnivalesque inversions whereby more `serious' literary, theatrical, and musical practices are parodied by players in masquerade, by musicians with salt-boxes and wooden spoons, and by troupes of performing dogs and monkeys - all presided over by Smart's grotesque female figure of misrule, Mrs Midnight. Smart is attempting during this time to establish a serious literary reputation for himself by publishing imitations of classical verse, but, despite various learned allusions in the orations, these popular entertainments are enthusiastically plebeian, dedicated to the amusement of the rabble. As such they exemplify the debased literary palate which Pope condemns some years earlier in the first lines of The Dunciad when he laments the spread of the `taste of the Rabble' manifested in the shows and entertainments of Barthomomew Fair.[2] Smart's performances therefore subvert both the gender distinctions which Jubilate Agno would enforce and the literary and cultural practices in which, simultaneously, he hopes to establish his own career as a man of letters. What then is the nature of the relationship between Mrs Midnight and the poetic voice of Jubilate Agno a decade later?"

The question of whether Jubilate Agno is attempting to "enforce distinctions" is an interesting one in itself. Smart's most ardent fan in recent years has been Christopher Hawes, who has argued that Smart's poetics has to be viewed in the perspective of a rhetoric of mania, spawned during the great years of the English Civil War, developed by Ranters and Levellers, and persisting in the eighteenth century in an increasingly secularized form within literary culture. The key transformation between the millenarianism promised by the Ranters and the task of prophecy that poetry takes up is, according to Hawes, pictured, satirically, by Swift, in his Tale of a Tub. This tracing of a secret geneology, which is also Marcus Greil's project in Lipstick Traces, is an attractive project to LI. All of these projects are influenced by The World Turned Upside Down, Christopher Hill's marvelous history of the English Civil War's "infantile left," which rediscovered such figures as Abiezer Coppe, whose Fiery Flying Roll might have been known to Smart. In this tradition, the difference between man and woman is archetypal for all the boundaries between Heaven and Earth that will melt away at the Last Judgement. And the Last Judgement is taken from sacred history and reconfigured as a terminus in one's internal history -- a history that can only be understood through a form of sacred poetry. Here's a nice bit from Coppe. He is reporting a vision:

Upon this the life was

taken out of the body (for a season) and it was thus resembled,

as if a man with a great brush dipt in whiting, should with one

stroke wipe out, or sweep off a picture upon a wall, &c. after a

while, breath and life was returned into the form againe;

whereupon I saw various streames of light (in the night) which

appeared to the outward eye; and immediately I saw three hearts

(or three appearances) in the form of hearts, of exceeding

brightnesse; and immediately an innumerable company of hearts,

filling each corner of the room where I was. And methoughts

there was variety and distinction, as if there had been severall

hearts, and yet most strangely unexpressably complicated or

folded up in unity. I clearly saw distinction, diversity,

variety, and as clearly saw all swallowed up into unity. And it

hath been my song many times since, within and without, unity,

universality, universality, unity, Eternall Majesty, &c.

Tuesday, May 20, 2003


Yesterday, in Britain, GlaxoSmithKline shareholders actually voted down the compensation package for
its directors. The package was rather notorious even before the vote. Here's a BBC description of it:

"GSK shares, for instance, have lost about one-third of their value in the three and a half years since chief executive Jean Pierre Garnier took over, amid concerns that the firm has failed to develop new best-selling drugs. This poor track record steeled investor opposition to a pay deal which would have given Mr Garnier a pay-off of up to �22m ($35.7m) if he was dismissed."

The Guardian has a fuller story and the background.

"The stage had been set for a rebellion at GSK after the Association of British Insurers (ABI), which represents the big insurance companies and which controls about 25% of the stock market, marked the company's remuneration policy as a so-called "red top" - a rarely used indicator intended to show serious concern to its members. The National Association of Pension Funds had advised its members to abstain."

Garnier, of course, is a privileged loser, one of those new generation of CEO-Pigs who use corporations as convenient troughs to root in:

"The row was not so much about the �5m Mr Garnier earned last year but more about the �22m he stands to receive if he loses his job. The French-born chief executive told the meeting he hoped never to receive the pay-off. He repeatedly defended his decision to live in Philadelphia rather than the UK, where GSK is based."

In a more colorful Guardian report about the meeting, it appears that Garnier's ordeal was personal and devestating. Shareholder after shareholder stood up and denounced the board, and the pay committee (made up as they all are of wheezing, greased CEOs of other companies, always willing to help each other out). We particularly liked this episode:

"One referred to a comment Mr Garnier once made that "if you pay peanuts, you get monkeys," waving a bag of peanuts and accusing the chief executive of not deserving his salary.

Mr Garnier opened the meeting by giving an upbeat slide presentation of Glaxo's corporate performance, showing pharmaceutical sales up 9% and trading profits up 23% in the first quarter; but much of the discussion in the hall was focused on the terms of his contract, instead of the performance of the company."

Over at BusinessWeek, there is another article about union activism to attack CEO pay packages:

"Delta Air Lines (DAL ) pilot Michael H. Messmore was incensed at the $28 million golden parachute handed to former Delta Chief Executive Ronald W. Allen when he resigned in 1997. To stop such excesses, Messmore, with the backing of the Air Line Pilots Assn., submitted a proxy resolution in 2000 demanding shareholder approval of such deals. The initiative was rejected three years in a row. But at Delta's annual meeting on Apr. 25, widespread shareholder anger over revelations of bankruptcy-proof retirement packages for current executives put Messmore's resolution over the top, with a 54% majority. Another pilot-sponsored proposal calling for the cost of stock options to be deducted from earnings racked up a 60% majority. "Executive compensation is out of whack," says Messmore."

Of course, BW asks the 22 million pound question:

"But will companies get the message? Shareholder resolutions, after all, aren't binding, leaving management free to ignore them. Still, the current spate of shareholder votes is likely to spur a fair amount of reform. For example, both companies that lost proxy battles over executive pay last year, Bank of America (BAC ) and Norfolk Southern (NSC ) Corp., eventually adopted the measures. "Everyone's a lot more sensitive to majority votes now," says Rosanna Landis Weaver, an analyst at the Investor Responsibility Research Center in Washington."

The use of shareholders, here, reminds us of the early days of the consumer movement, when acquiring stock in a company was preliminary, for consumer advocates, to attending shareholder meetings and criticizing the company. This often worked. However, with repeated use, companies built up an immunity to criticism. Right now, this is the best weapon to cut CEO pay down to a reasonable size, but the real answer is making top executive positions competitive. Contrary to Garnier, there are probably thousands of executives of his calibre who would even be willing to live in Britain to take the reins of GSK. The first step in making a competitive environment is ceasing to disguise the effect of outrageous compensation packages on companies. A nice instance is coming up: the union pension fund holding shares of PeopleSoft have introduced a resolution to expense stock options. The CEO of PeopleSoft, Craig Conway, is your standard issue pay porker. Here's what he said:

"Employee stock options have no economic impact on a company," PeopleSoft CEO Craig Conway said in his letter to shareholders, filed Monday as an amendment to the company's proxy."

Later on in the article, we get another, gentle reminder that economic impact, for Craig Conway, is a strange thing indeed:

"PeopleSoft, one of Silicon Valley's heavier users of employee stock options, said in a recent filing that it would have had a 2002 loss of $403,000 rather than its reported profit of $38.5 million, if it had used the fair-market method to expense employee share options."

And of course the inevitable piano drops on our head:

"Stock options make up a large portion of PeopleSoft's compensation to top executives, AFSCME said in PeopleSoft's proxy filed April 28. In 2001, Conway's cash compensation totaled $3.3 million, while the value of options he was awarded was between $13.2 million and $33.4 million, depending on the return assumption used."

So, what do we have here? We have a man who is in charge of a national company who has the balls to tell us that the cost of paying for employees has no economic effect on the company. This is a little bit like an airplane executive who doesn't understand gravity. Here's a brief from TheStreet about the oily Conway:

"Then there was PeopleSoft (PSFT:Nasdaq - news - commentary - research - analysis) CEO Craig Conway. While stock in his company dropped 53% in 2002, his compensation soared, largely on the strength of a $14.6 million restricted stock award. Conway's salary stayed flat at $1 million, his bonus dropped from $2.32 million to $1.92 million and he was granted 4.1 million options, compared to 1 million options the year before. I"In a Securities and Exchange Commission filing, PeopleSoft's compensation committee praised Conway's "outstanding" performance as a leader, cited the company's overall performance and said it considered equity grants made to CEOs of other similarly sized companies. Asked about Conway's compensation, the company said it had nothing to add to the information contained in the filing."

The outstanding independence of the compensation committee -- can't you just feel it? Which consists, by the way, of the CEO of Rite-Read, who paid himself a million six in 2001, the CEO of AskJeeves, and the CEO of Symyx Technologies, who paid himself only 478 K in 2002, when company revenues and earnings dropped precipitantly, but who supplemented his meager income by exercizing options for an equal amount last year.

Monday, May 19, 2003


Ah, the weekend. Suicide bombing is the new bungee cord jumping sport throughout the Middle East, the dollar is quietly plummetting in the background as the Bush administration, which argues that its tax cut will raise stock prices, shows that it could care less, and the Private Jessica Lynch rescue turns out to have been a little less dangerous than your average frat party.

Where to begin?

LI talked to D. -- okay, I talked to my brother yesterday, and he was full of outrage about the faking of the taking of Jessica Lynch, pfc. Since the networks were full of her story two weeks ago and she has been figuring heavily in the national press, we expected a story about the BBC report in the NYT or the Washington Post. So far, we haven't seen one. Since much of the rightwing blog community, leaking into much of the rightwing communitiy, is always on guard against media manipulation, we decided to visit spots we usually touch on very gingerly. There is a general blogger indignation that the BBC is putting out anti-American propaganda, since 1. The BBC claim blanks were used for the filming, and soldiers wouldn't have agreed to use blanks; and 2. blank ammunition has a different profile than real ammunition, and usually requires a modified weapon to fire it -- and, to quote a source I've avoided on this site,

So how do blank rounds work in the movies? Well, the weapons used are not real. They are specially produced replicas, often based on the mechanism of a real weapon, with the barrel partially sealed. They cannot fire live ammunition under any circumstances whatsoever. This is how film makers create realistic scenes of automatic firing without attaching a BFA to the end of the weapon.Clearly, no one will be carrying that sort of a �weapon� into a combat area.

The tone, here, is very interesting. It assumes that the American Military is always honest; would never risk troops for a stunt, and that the only reason a story claiming it was a stunt could possibly be aired is that any deviation from the Gospel version of the War must be motivated by malice.

This shows a certain shift in the way the Military is considered, at least in this sub-culture. It is a shift that is, perhaps, facilitated by the evident lack of acquaintance with the military. Having a volunteer army, which I think is a mark of civilization (rather like abolishing the death penalty) comes with its disadvantages, one of which is that military matters become subject to romantic illusion. The Military has not been particularly reticent to express its view that the truth is merely one strategy in the process of achieving victory. Stunts are pretty much the m.o. of American intelligence. Who would dare to broadcast entirely fake news of a mercenary army on the march to the capital in order to unseat a government? The CIA, in Guatamala, in 1956. This became a standard trope in CIA lore, and one bragged about, discretely, by the Company. In fact, if you hypothosize that the Lynch rescue was faked, would it have military value? Of course. It did. It was a morale builder. It is interesting that the war cannot, however, have fake moments in it for its most ardent fans. It is as if a bunch of wrestling aficianados were appalled to learn that some of the jumps from the ropes were practiced.

It is surprising how little is being made of the Lynch assertions, but we think that the NYT and the Washington Post are being particularly careful not to offend their thin-skinned American readers about their cherished stories. As Jack N. says, however, the Truth? You can't take the truth!
The military motto of our time.

olivier blanchard and the free lunch: a comedy of errors

  The neolib economist Oliver Blanchard tweeted a very funny comedy bit, in which he played the part of “social democrat”. And he wrote: “As...