Colext/Macondo
Cantina virtual de los COLombianos en el EXTerior
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Para Carrapo, que SÍ está por ahí, pero muy ocupado, según nos cuenta. Medio
parte dos después de lo de ayer. Encaja bien con lo que envió Montaner a
través de Lucianopulgar. Por ahí entre un extremo y el otro de todo esto, se
encuentra la respuesta. ...Pero respuesta a cuál pregunta?
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Steps to Wealth
By PAUL KRUGMAN
Why are George W. Bush's business dealings relevant? Given that his
aides tout his "character," the public deserves to know that he
became wealthy entirely through patronage and connections. But more
important, those dealings foreshadow many characteristics of his
administration, such as its obsession with secrecy and its
intermingling of public policy with private interest.
As the unanswered questions about Harken Energy pile up - what's in
those documents the White House won't release? Who was the mystery
buyer of Mr. Bush's stock? - let me now turn to how Mr. Bush, who got
by with a lot of help from his friends in the 1980's, became wealthy
in the 1990's. He invested $606,000 as part of a syndicate that
bought the Texas Rangers baseball team in 1989 - borrowing the money
and repaying the loan with the proceeds from his Harken stock sale -
then saw that grow to $14.9 million over the next nine years. What
made his investment so successful?
First, the city of Arlington built the Rangers a new stadium, on
terms extraordinarily favorable to Mr. Bush's syndicate, eventually
subsidizing Mr. Bush and his partners with more than $150 million in
taxpayer money. The city was obliged to raise taxes substantially as
a result. Soon after the stadium was completed, Mr. Bush ran
successfully for governor of Texas on the theme of self-reliance
rather than reliance on government.
Mr. Bush's syndicate eventually resold the Rangers, for triple the
original price. The price-is-no-object buyer was a deal maker named
Tom Hicks. And thereby hangs a tale.
The University of Texas, though a state institution, has a large
endowment. As governor, Mr. Bush changed the rules governing that
endowment, eliminating the requirements to disclose "all details
concerning the investments made and income realized," and to have "a
well-recognized performance measurement service" assess investment
results. That is, government officials no longer had to tell the
public what they were doing with public money, or allow an
independent performance assessment. Then Mr. Bush "privatized" (his
term) $9 billion in university assets, transferring them to a
nonprofit corporation known as Utimco that could make investment
decisions behind closed doors.
In effect, the money was put under the control of Utimco's chairman:
Tom Hicks. Under his direction, at least $450 million was invested in
private funds managed by Mr. Hicks's business associates and major
Republican Party donors. The managers of such funds earn big fees.
Due to Mr. Bush's change in the rules, these investments were hidden
from public view; an employee of Utimco who alerted university
auditors was summarily fired. Even now, it's hard to find out how
these investments turned out, though they seem to have done quite
badly.
Eventually Mr. Hicks's investment style created a public furor, and
he did not seek to retain his position at Utimco when his term
expired in 1999.
One last item: Mr. Bush, who put up 1.8 percent of the Rangers
syndicate's original capital, was entitled to about $2.3 million from
that sale. But his partners voluntarily gave up some of their share,
and Mr. Bush received 12 percent of the proceeds - $14.9 million. So
a group of businessmen, presumably with some interest in government
decisions, gave a sitting governor a $12 million gift. Shouldn't that
have raised a few eyebrows?
All of this showed Mr. Bush's characteristic style. First there's the
penchant for secrecy, for denying the public information about
decisions taken in its name. So it's no surprise that the proposed
Homeland Security Department will be exempt from the Freedom of
Information Act and from whistle-blower protection.
Then there's the conversion of institutions traditionally insulated
from politics into tools for rewarding your friends and reinforcing
your political control. Yesterday the University of Texas endowment;
today the Federal Energy Regulatory Commission; tomorrow those Social
Security "personal accounts"?
Finally, there's the indifference to conflicts of interest. In
Austin, Governor Bush saw nothing wrong with profiting personally
from a deal with Tom Hicks; in Washington, he sees nothing wrong with
having the Pentagon sign what look like sweetheart deals with Dick
Cheney's former employer Halliburton.
So the style of a future Bush administration was easily predictable,
given Mr. Bush's career history.
NY Times Editorial July 16th,2002
It's the Real Thing
With President Bush digging in his heels in defense of accounting
tricks that hide the true cost of stock options, and Congress
equivocating under intense corporate lobbying, reform has come from
an unexpected place - the Coca-Cola Company. Coke announced this week
that it would start counting against its yearly earnings the options
it grants employees. It is a bold commitment to reform, and one that,
particularly given the meltdown in the stock market in recent days,
the White House and Congress should take to heart.
Options, the right to buy stock in the company at a given and
generally favorable price, were a fast-growing part of employee
compensation packages in the 1990's. They can be worth hundreds of
millions of dollars in the case of top executives, but unlike
salaries and bonuses, they almost never show up as expenses on
corporate balance sheets. That works out nicely for the corporations,
which can report better earnings as a result.
In 1994 the Financial Accounting Standards Board, which sets the
nation's accounting rules, was on the verge of requiring companies to
count options as expenses. But under heavy pressure from Congress,
the standards board backed down. In the wake of the Enron and
WorldCom scandals, the board has made it known that it is once again
considering mandating that options be counted as expenses. If it does
so, as it should, Congress will probably be reluctant, in the current
post-Enron climate, to put up a fight.
Coca-Cola, to its credit, is not waiting. (In making the shift, it
joins other companies, including Boeing and Winn-Dixie, which have
counted options as expenses in recent years, and The Washington Post,
which made the decision in May.) Coke has also done something else of
considerable value - it has developed a new method of pricing stock
options. Defenders of the status quo argue that it is impossible to
count options as an expense because there is no way of knowing for
sure what they will be worth at the time they are ultimately
exercised. There is already one workable formula for pricing options,
called the Black-Scholes model. But Coca-Cola has devised a simpler,
cleaner approach: it will ask investment banks to place bids on the
options, and average those to set a price.
Opponents of the reform warn that it will drive down stock prices, by
lowering companies' annual earnings per share. There may be some
truth to the charge - Coca-Cola says that its profits of $1.60 per
share in 2001 would have been reduced to $1.51 per share if it had
reported options as expenses. But what Coca-Cola gains is credibility
with investors, who have been fleeing the stock market because they
have lost faith in corporations' accounting methods.
President Bush, speaking yesterday in Alabama, assured the nation
that "our economy is fundamentally strong." Like his speech on Wall
Street last week, this address was long on rhetoric and short on
substance. With the Dow down 8 percent over the last six trading
days, and a deep malaise settling on Wall Street, what the economy
needs now is not presidential cheerleading but serious reform. The
White House and Congress ought to be embarrassed that it took a
soft-drink company to lead the charge.
PANGosaurus***********
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