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. . Capitalist Imperialism or Socialist Communism? ... http://www.egroups.com/group/Communist-Internet ] [Subscribe: [EMAIL PROTECTED] ] . . ----- Original Message ----- From: <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Thursday, June 27, 2002 5:26 AM Subject: [kominform2] The Empire Whimpers: Corporate Amerika Implodes From: [EMAIL PROTECTED] Subject: The Empire Whimpers: Corporate Amerika Implodes The Empire Whimpers: Corporate Amerika Implodes Via NY Transfer News * All the News That Doesn't Fit The Empire Whimpers WORLDCOM'S $3.8 BILLION SCANDAL SENDS STOCKS, US DOLLAR INTO THE MUD; AMTRAK MIGHT LIMP THROUGH SEPTEMBER WITH $200 MILLION FROM FEDS [George Bush might just be the US President to preside over the nationalization of major strategic national industries -- railroads, telecommunications, airlines... Fidel Castro, who has aptly described international capitalism as a "giant casino," might be able to give the po' boy from Texas some lessons on how it's done. With the help of his team of thieves who've stolen everything they can get their hands on (including the 2000 Presidential election), the half-wit occupying the White House has brought down the Empire -- he needed no help from Osama bin Laden. Global Crossing's value evaporated in an overnight bankruptcy; Qwest Communications seems to be next in the line of collapsing houses of cards; the value of the yankee dollar is in the toilet while investors flock to gold; despite three Japanese interventions overnight on June 25-26 to prop up the dollar, the Euro made gains and is now at near-parity with the yankee buck. The shell game of American Capitalism is folding. The casino is exposed for what it is. Too bad for investors, too bad for employees who lose their pensions and their jobs. The corporate directors walk with billions in loans, bonuses and obscene salaries skimmed off during the boom years of merger mania. It's all such poetic justice -- after all, it was Daddy Bush who privatized the Internet.] * Reuters Market News - June 26, 2002 via Yahoo US, Amtrak in tentative deal to end crisis WASHINGTON, June 26 (Reuters) - The Transportation Department and Amtrak reached a tentative deal late on Wednesday for a bailout that would resolve the railroad's immediate financial crisis and avert a shutdown threatened for as early as next week. In a joint statement Transportation Secretary Norman Mineta and Amtrak Chairman John Robert Smith said the two sides had made "excellent progress" in bringing the crisis to an end, and were on track to finalize the deal possibly by Thursday. While details were not disclosed by the Transportation Department or Amtrak, a government source said the two sides agreed to take a two-stage approach. First, the government would directly lend Amtrak $100 million to cover spending priorities for the first half of the summer. In the second stage, the Bush administration would work with Congress to come up with another $100 million at least to keep the trains running through September. Congress, which leaves town on Friday for its July Fourth recess, could either appropriate the additional funds or agree to a loan guarantee. That would enable Amtrak to borrow the money it needs from its banks. * BBC online - Wednesday, 26 June, 2002 http://www.bbc.co.uk Shares Plunge on WorldCom Scandal Shares on Wall Street have plunged in response to news of a massive accounting fraud at US telecoms firm WorldCom. Within half an hour of the opening bell at 1330 GMT, the blue-chip Dow Jones index was down 133.19 points or about 1.3% to 8,993.63. Meanwhile, the Nasdaq index - where WorldCom and the bulk of its fellow technology stocks are listed - had dropped 3%, or 44.12 points to 1,379.87, a new low for the year. The falls followed a torrid morning on the European exchanges after WorldCom's announcement that it had overstated its profits. By 1400 GMT, London's FTSE 100 blue-chip share index was down 131.6 points to 4,499.4, not far above the five-year lows hit just after 11 September. Germany's Dax index and the French Cac-40 had fallen even further, each losing about 4% of their value by the same time. The euro, which has been creeping higher against the dollar in recent weeks, broke through $0.99 for the first time since 1999. The legacy of Enron In the aftermath of the collapse of US energy company Enron late last year, investors have become nervous about both the honesty of accounting practices at big firms, and the fundamental health of corporate America. Now WorldCom, the number two long-distance phone company in the US, has revealed that its profits between January 2001 and March 2002 were overstated by $3.8bn (=A32.5bn).=20 The result has been a rout in technology, media and telecom stocks - first in Asia, where Tokyo's Nikkei 225 fell more than 4%, then in Europe. Banks have also taken a pounding as investors scrabbled to avoid those they suspected might be exposed to WorldCom's debts. The next stop is the US, where the blue-chip Dow Jones industrial average is still smarting from massive falls in recent weeks and a 155-point tumble on Tuesday, before the news broke. Biggest Losers [in Europe]: - Alcatel (down 18%) - France Telecom (down 13.7%) - Vivendi Universal (down 13%) - Xansa (down 11%) - Axa (down 6.9%) - Zurich Financial (down 6.9%) - Ericsson (down 6%) - Friends Provident (down 6.75%) - Siemens (down 6%) - Nokia (down 5.8%) - Vodafone (down 5.75%) - Prudential (down 5.5%) - Deutsche Telekom (down 5.5%) - Royal Sun & Alliance (down 5.5%) - Abbey National (down 5.25%) - Lloyds TSB (down 5%) - British Telecom (down 4.5%) Market falls on Wednesday have reflected WorldCom's disgrace as well more general problems with companies such as Vivendi Universal, France Telecom and Alcatel. "We have convergence of dodgy accounting, plus telecoms and over-indebtedness," said Robert Kerr, European strategist at Bank of America. "It's the trigger of the beginning of the final wash-out, but I don't think this is the final wash-out." Nomura, the Japanese investment bank, was even more scathing. WorldCom, it said, "has delivered the final blow to trust in the US equity market." "There was plenty of other unpleasant news in the background, but WorldCom is a timely reminder that Enronitis was a systemic problem," Nomura economist Anais Faraj said. "Even though the markets were never going to go onwards and upwards for ever, the US markets had priced in perpetual growth," he told BBC News Online. "Basically, the US market is dead now." Losers Vivendi Universal has taken a battering in recent days after a controversial deal to reduce its stake in its utilities arm, and criticism of its chief executive Jean-Marie Messier. There were also concerns from the French government about France Telecom's level of debt, while Alcatel was hit after launching a new restructuring plan and issuing a profit warning. The UK insurer Prudential suffered in particular because of its reported exposure to WorldCom debt. Shares in the Pru sank more than 5% in early trading. "WorldCom is a good alibi for a bit more flogging of the market," added Mr Kerr. Shock waves around the world The WorldCom announcement came after the US markets had closed on Tuesday and in after-hours trading the company's stock plunged 58% to 35 cents. Stocks in Tokyo fell 4% overnight on the news, with the telecoms sector hit particularly hard, while shares in South Korea fell 7.4%. * CNN - June 26, 2002 http://money.cnn.com/2002/06/26/news/worldcom_shoedrops/index.htm THE DEATH OF CONFIDENCE WorldCom's gigantic fraud may send investors to the exits for a long, long time. by Justin Lahart NEW YORK (CNN/Money) - Tuesday night, the other shoe dropped. Ever since Enron, investors have worried that something big was lurking in the wings. A steady stream of scandal -- Global Crossing, Qwest Peregrine, Adelphia -- kept the fear alive. And so it came: WorldCom, perpetrator of what looks like one of the biggest accounting frauds in history. If trust in Corporate America was already broken, now it's in shambles. With that, many investors may decide to exit the U.S. stock market. And not come back. "I think you're going to have people withdraw money for good," says Todd Clark, managing director of listed trading at Wells Fargo Securities. "People are going to say, 'I'd rather bet on the New York Giants because I have a better chance of guessing the result than of knowing what some management team is up to.'" With the market whipping lower before a late-day recovery took it back to the flatline, Clark's worry was echoing all over Wall Street. "We're seeing basically complete distrust in financial accounting in the Western Hemisphere," says Phil Ruffat of Mizuho Securities USA's futures division. "People are going to pack it up and go." Of particular concern is global investors who, to judge from the recent declines in the dollar, had already been pulling money from our fair shores. Ruffat, who works closely with Japanese clients, says that foreign confidence in U.S. assets has fallen to a new low. If that's what it's come to, one of the main drivers of the 1990s bull market has been turned on its head. Stringent accounting standards and active shareholder participation were supposed to make companies here more transparent than they had been in the past. This meant the risk of owning U.S. stocks was low both historically and compared to places like Japan. And so both here and abroad investors ploughed money into our stock market. Paul Kasriel, chief U.S. economist at Northern Trust, points out that by the end of 2000 foreigners owned financial assets close to 25 percent of the U.S. capital stock, up from 11 percent in 1990. It is hard, he thinks, to imagine foreigners keeping up that level of investment given what's going on. "Even without the fraud," says Kasriel, "return on capital has been plumbing the depths, the United States is at war, government spending exploding to the upside and we're imposing tariffs on steel and lumber. What's to like?" And of course it's not just foreign investors who might be asking that question. U.S. investors have been just as burned, and have just as much reason for disgust at the shenanigans companies have played, as their foreign counterparts. There are plenty of places to put money besides stocks (bonds, money markets, gold, under the mattress) and plenty of people may opt to do just that. While many market watchers, attuned to the big market bouncebacks from 1987, 1997 and 1998 talk of "capitulation" -- a period of blind selling that puts a firm bottom on stocks and marks the new bull phase -- the WorldCom debacle could just as easily mark the beginning of a long period of disinterest, where the stock market ends up being no better than a mugs game. "We're taking a lot of the people out of the market permanently," says Bollinger Capital head John Bollinger. "We're losing a whole generation of investors." What Bollinger expects is not the V-shaped rebound so many investors hope for but something like the long grind the U.S. saw in the 1970s and that Japan has been seeing for the past 13 years. After topping out at 1,050 in 1973, the Dow Jones Industrial Average wasn't able to pull clear of the 1,000 level until 1982. Tokyo's Nikkei hit its high back in 1989 and has ground steadily lower ever since then. Maybe the prognosis for U.S. stocks isn't so dire as that but one thing seems certain: investors who think WorldCom is the end of the accounting imbroglio are in for disappointments. What's so disappointing about WorldCom is that it proves the cockroach theory -- where there was Enron, there was more. "Telecom is where people thought the next Enron was going to be, and they weren't disappointed," says David Hawkins, a Harvard Business School professor who acts as an advisor to Merrill Lynch on accounting issues. Hawkins suspects that the breed of fraud that happened at WorldCom -- treating expenses as capital expenditures -- probably happened elsewhere in the telecom arena. With that kind of backdrop, some investors suspect that any rallies in the weeks to come will be short-lived. "The feeling is that confidence in corporate America has deteriorated so much that maybe you're going to see the typical step up, followed by multiple steps down," said Seth Tobias of the New York-based hedge fund Circle T. And as for those responsible for the WorldCom debacle? "I hope these people go to jail," says Tobias. ================================================================= NY Transfer News Collective * A Service of Blythe Systems Since 1985 - Information for the Rest of Us 339 Lafayette St., New York, NY 10012 http://www.blythe.org e-mail: [EMAIL PROTECTED] ================================================================= nytcari-06.27.02-00:12:02-26987 _________________________________________________ KOMINFORM P.O. Box 66 00841 Helsinki Phone +358-40-7177941 Fax +358-9-7591081 http://www.kominf.pp.fi General class struggle news: [EMAIL PROTECTED] subscribe: [EMAIL PROTECTED] Geopolitical news: [EMAIL PROTECTED] subscribe: [EMAIL PROTECTED] Katsauksia suomeksi: [EMAIL PROTECTED] __________________________________________________ ------------------------ Yahoo! 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