Reply to Jim D.
Jim D. sez: Look at how the FBI was unleashed against the anti-war movement during the 1960s. Nixon wanted to set up camps for that movement(and if I'm not mistaken, the plan to do so is still being held in reserve). Look at the way the cops treat those who protest the GOP/Dem political duopoly or the neoliberal revolution (a.k.a., corporate globalization). --the common desire (not always accomplished) to say "no" to the market economy (on this, Peter Temin has a quite nice essay on Nazi and Soviet economic planning in the 1930s) this was dealt with above. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine Seth sez: Let's not forget to mention the FBI's campaign to ethnically cleanse the American Indian Movement and the Black Panther Party during the 1960s, either (Churchill, Ward, and Jim Vander Wall. 1988. Agents of Repression: The FBI's Secret Wars on the Black Panther Party and the American Indian Movement. Boston: South End.). Seth Sandronsky Get Your Private, Free E-mail from MSN Hotmail at http://www.hotmail.com
Re: now you know
Justin: Holmes came around to the view that id the dictatorship of the proletariat was popular, there was no constitrutional objection to it. Charles: In theory. In practice, when he voted in the first First Amendment cases, he put socialists in jail, the quivering liberal. As you know, in the earlier cases, Abrams, Schenk, and Debs, he did vote to penalize speech. By a few years later, in Gitlow and Whitney, he had come around to a civil libertarian position. CB: Whitney still went to jail. I received above post sans attribution for third comment... Holmes position distinguished between "ordinary" "extraordinary" circumstances. Schenk advocacy of draft resistance during WW1 was "clear and present danger" that could lead to "evils that Congress has right to prevent." He held same position in both Debs Frohwerk cases (decided by Supreme Court about one week after Schenk) where plaintiff anti-draft comments had been used to convict then under 1917 Esponage Act. Of course, Schenk position was that of SP (with over 100,000 members and more than 1,000 elected officials) which government subjected to systematic repression, Debs was most famous US socialist, and Frohwerk was publisher of German language socialist newspaper. For Holmes, most important factors were always (as he wrote in Schenk) "proximity and degree." So contrary to above, Holmes dissented in Abrams case, calling A "unknown man" and referring to his (in concert with several other Russian immigrants) leaflet as "silly." Leaflet, issued near end of WW1 and targeted to Russian emigre workers), criticized Wilson for using US troops in support opponents of Bolshevik Revolution and suggested possible need for general strike. Holmes dissent in Gitlow is consistent with "proximity and degree" position. H held that G pamphlet "Left-Wing Manifesto" might well be suppressed if it called for immediate uprising against government. Plus, Gitlow's arrest for violating 1902 New York law on criminal anarchy occurred post WW1, more likely to be "ordinary" circumstances in Holmes mind (guess repressive state apparatus never dismantled following war wasn't "extraordinary"). In Whitney (Anita Whitney was member of Communist Labor Party) case, Holmes agreed with Brandeis concurring opinion about necessity of "free speech." Yet, both he and B voted with majority - on technical grounds - to sustain her conviction under California criminal conspiracy law. Holmes statement in Schenk that First Amendment does not protect someone "falsely yelling fire in a crowded theater and causing a panic" is excellent example of why all analogies are suspect *and* some more so than others. Michael Hoover
frontiers of environmental economics
Here are abstracts of two articles that represent the state of thinking today. I should say that people as early as the 1920s also discussed optimal soil depletion. "The Economics of Soil Nutrient Stocks and Cattle Ranching in the Tropics: Optimal Pasture Degradation in Humid Costa Rica" European Review of Agricultural Economics, Vol. 27, Issue 2, June 2000 BY: ERWIN H. BULTE Tilburg University Department of Economics Wageningen University B.A.M. BOUMAN International Rice Research Institute R.A.J. PLANT Wageningen Agricultural University A. NIEUWENHUYSE REPOSA Wageningen Agricultural University-CATIE-MAG H.G.P. JANSEN Agricultural Economics Research Institute (LEI) Contact: ERWIN H. BULTE Email: Mailto:[EMAIL PROTECTED] Postal: Tilburg University Department of Economics 5000 LE Tilburg,THE NETHERLANDS Phone: +31 13 466 9111 Co-Auth: B.A.M. BOUMAN Email: not available Postal: International Rice Research Institute Makati City, THE PHILIPPINES Co-Auth: R.A.J. PLANT Email: not available Postal: Wageningen Agricultural University Hollandseweg 1 6706 KN Wageningen, THE NETHERLANDS Co-Auth: A. NIEUWENHUYSE Email: not available Postal: REPOSA Guapiles, COSTA RICA Co-Auth: H.G.P. JANSEN Email: not available Postal: Agricultural Economics Research Institute (LEI) Burgemeester Patijnlaan 19 2585 BE The Hague, THE NETHERLANDS ABSTRACT: We present a model that can be used to analyse economically optimal nutrient (nitrogen) stocks in agricultural lands. The model is applied to study cattle ranching in humid Costa Rica. The numerical results indicate that, for current meat prices and discount rate, it is privately optimal to 'mine' soil nitrogen. In the long run, efficiency is consistent with degraded and abandoned pastures, as observed in the study region. Sustainable pasture management is economically efficient only for a discount rate close to zero or for meat prices at about twice the highest recorded value in 1985-1997. The results highlight the potential conflict between sustainability and economic efficiency. Caveats and externalities that are not included in our model are Ø discussed. xxx "No Such Thing as a Free Safe Lunch: the Cost of Food Safety Regulation in the Meat Industry" American Journal Agricultural Economics, Vol. 82, Issue 2 BY: JOHN M. ANTLE Montana State University Department of Agricultural Economics and Economics Contact: JOHN M. ANTLE Email: Mailto:[EMAIL PROTECTED] Postal: Montana State University Department of Agricultural Economics and Economics Trade Research Center Bozeman, MT 59715-0292 USA ABSTRACT: This study develops theoretical and econometric cost function models for the meat industry to test the hypothesis of safety exogeneity, i.e., that product safety does not affect productive efficiency. Using plant-level data from the Census of Manufactures, this hypothesis is rejected. Estimates of the impacts of food safety regulation on variable cost of production in the beef, pork, and poultry industries show that the efficiency costs of food safety regulations could plausibly exceed benefits estimated by the U.S. Department of Agriculture. Costs of regulation per pound of meat are found to be size neutral for all but the smallest plants. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Mike Andreas goes to jail?
Michael, thanks for mentioning this book, which I didn't know about but which I'll find soon. I've got a clipping file on ADM with a fantasy of a film script someday. Sounds as if Hoesch is already on that job. ADM got prosecuted not because the justice Dept was on the job but because the head of one of the ADM divisions went to the authorities and assisted in videotaping the conspirators, including Michael Andreas, in action. In one bit of tape, in a Honolulu hotel room as I recall, the hidden cameras were rolling when someone in the room unknowingly put a drink down in front of the lens. Soon an FBI agent, disguised as a waiter, entered the room to straighten up, and to give the camera a clear path. When the case went public, either through convening a grand jury or some other way, the first thing the Justice Department did was inform ADM of who, within its executives, was the informant. Somebody should spend a long time in prison for that, but is probably now promoted to some higher level. Later, a Federal judge in Chicago, re a civil part of recovering damages, put the opportunity to represent the class action participants out to bid. What better than the market to find the right law firm? He chose the low bidder and the low bidder chose to settle the case almost immediately, without any depositions or other investigation. An amazing story -- and again, someone (maybe both the judge and the winning bidder) should have been censured, but wasn't. The informant, meanwhile, was double-crossed in other ways by the FBI and Justice and ended up attempting suicide and then going into a mental care institution. He got prosecuted for stealing money from ADM in what looks to me like, rather than him stealing from the employer, rather a corporate money-laundering scheme to get cash for bribes or whatever. (ADM, you probably recall, in the person of Michael Andreas' father, delivered a briefcase full of cash to Nixon -- ADM seems to have kept untraceable cash handy.) The informant got a long prison sentence, much longer than Andreas or the other executive convicted with him, but he remarked to the judge at the sentencing hearing that he was much happier in prison than he had been at ADM. I look forward to reading the book you mentioned. Gene Michael Perelman wrote: A few days ago, Justin suggested that the ADM conviction was evidence of a certain degree of equity in the criminal justice system. A couple months before, I got a call from David Hoech, who was the ADM Shareholder Watch. I had posted something on pen-l concerning ADM. We had a nice chat any sent me a pile of papers. I know reading a fascinating book, Rats in the Grain by James Lieber, concerning the ADM case. It is clear, even though that I am on page 30, that David Hoech was the person solely responsible for keeping the case on track. So far, ADM has managed to get the price-fixing case moved to Washington where ADM's lobbyists are more powerful. It got the FBI to appoint as chief investigator someone who worked with Duane Andreas before. In short, to fix was in. If the next 300 pages are as interesting is the first 30, I will have an interesting day -- hopefully not in the Chinese sense. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
frontiers of environmental economics
ABSTRACT: We present a model that can be used to analyse economically optimal nutrient (nitrogen) stocks in agricultural lands. The model is applied to study cattle ranching in humid Costa Rica. The numerical results indicate that, for current meat prices and discount rate, it is privately optimal to 'mine' soil nitrogen. In the long run, efficiency is consistent with degraded and abandoned pastures, as observed in the study region. Sustainable pasture management is economically efficient only for a discount rate close to zero or for meat prices at about twice the highest recorded value in 1985-1997. The results highlight the potential conflict between sustainability and economic efficiency. Caveats and externalities that are not included in our model are Ø discussed. === The ghost of H. Hotelling... Ian
Fwd: Re: FW: CEPR paper--World Bank Research Faulted
X-Sender: [EMAIL PROTECTED] X-Mailer: QUALCOMM Windows Eudora Pro Version 3.0.5 (32) Date: Sat, 12 Aug 2000 10:19:26 -0500 To: [EMAIL PROTECTED] From: "James K. Galbraith" [EMAIL PROTECTED] Subject: Fwd: Re: FW: CEPR paper--World Bank Research Faulted Those following the controversy over Dollar and Kraay's "Growth is Good for the Poor" will find the issue addressed directly in Web Presentation #1 on the UTIP web-site. We have no complaint with the proposition that growth usually helps the poor. In fact, our evidence points fairly consistently to an even stronger result: in most developing countries strong growth reduces inequality; slow growth and recession increase it. The failure of the World Bank and other studies to find this relationship is mainly traceable to their data: the lack of comparability both through time and across countries that afflicts the major data set on income inequality, the Deininger and Squire compilation on which Dollar and Kraay (and many others) rely. This is no fault of the Bank's researchers; they are only compiling many disparate studies done haphazardly over the years by other researchers. Our work at UTIP is more narrowly focussed on pay, rather than income, but that is where the theoretical relationship between inequality and growth ought to be found, and with greatly superior data coverage we do, in fact, find it. But Mark Weisbrot puts his finger on the problem: growth has slowed dramatically in the developing world, and distributions have therefore worsened. This is the failure of the globalized financial system and of its agents, the Bank and Fund. There is no paradox of "poverty amidst plenty" or "growth with inequality." The fact is, the policies of tearing down social institutions that provide health care, education, housing, food and direct support for the wages of low-income workers are not good for growth. And crises, which are endemic to an unregulated global capital market, have disastrous effects on inequality. JG * James K. Galbraith LBJ School of Public Affairs The University of Texas at Austin Austin TX 78713 Phone: 512-471-1244 (o) Fax: 512-471-1835 (o) 512-480-0246 (h) Email: [EMAIL PROTECTED] See the UTIP web-site at http://utip.gov.utexas.edu/ See the ECAAR web-site at http://www.ecaar.org/
Re: Nader Demands Banning, Pulping of Harry Potter
BDL's new piece on Nader is civil enough, but it got me to thinking about a point that has come up before -- the business of comparing consumer benefits to worker losses in trade debates. Henwood brought this up (once) and provoked in me the realization that the logic of this exercise militates against all that we customarily understand as left politics, in the broadest sense. If consumer benefits (narrowly defined) are the highest priority, then we have to oppose any constraints on production cost minimization, in terms of minimum wages, industrial action, trade unionism, environmental regulation, etc. This is a problem for would-be progressive free traders, at the very least. Now I'm wondering how well it can be put in analytical terms. To elevate consumer well-being above working-class income is to say that, as an historical matter, cost reductions in consumer goods are the greater contributor to general well-being than increases in income (whether from labor or from government programs) and output. Now obviously a decrease in the price level for a given nominal wage is an increase in real wages, and an improvement in consumer well-being is good for workers as consumers. The problem is that these things need not dovetail precisely. The case of Nader is ironic here because no one did more to popularize consumerism, and no one is doing more right now to promote labor in terms of his power to earn income. The political connection between a defense of labor in one place and the well-being of labor in general is obvious but fuzzy from a quantitative standpoint. I would grant that the ultimate criterion is consumption, but with proper qualifications as to definition (i.e., considering non-market amenities) and distribution. We have to ask what openness with respect to trade does in this dimension, relative to managed trade and industrial policies aimed at holding up labor standards. If, for instance, gains from trade tended to be small and reaped by those scoring low by our consumption criteria, that would discount the merits of openness from our social welfare standpoint. By contrast, if trade management or international labor standards had negligible impact on incomes, that would commend free trade policies as progressive. BDL raises yet another consideration -- the impact on workers in other countries. This obviously complicates the analysis, but it also brings up the same offsetting factors that apply to the 'home' country. Ultimately one cannot do this sort of exercise without resorting to some kind of quantification, somet! hing that rarely enters into our debates and necessarily hampers them. Dean Baker was onto this some time ago at EPI and concocted a measure of the gains from openness -- he called them 'gatts.' It was easy to show these were dwarfed by contractionary fiscal/monetary policy, among other things. mbs We all know that you cannot evaluate the effects of trade policy by looking just at what happens to the incomes of those who lose. You have to look at what happens to the incomes of the winners as well--there should have been a paragraph about how the newly-hired China-based columnists working for $25 a column can now afford eyeglasses for their children. . . .
Re: Re: Mike Andreas goes to jail?
Gene, if you are really interested in the film, I might be able to find Hoech's number among my papers. Eugene Coyle wrote: ADM got prosecuted not because the justice Dept was on the job but because the head of one of the ADM divisions went to the authorities and assisted in videotaping the conspirators, including Michael Andreas, in action. Not quite. Andreas believed that a sabateur was responsible for poisonous materials that ADM sold. He called on the FBI. The mole eventually, told them about the price fixing. I never understood why. In one bit of tape, in a Honolulu hotel room as I recall, the hidden cameras were rolling when someone in the room unknowingly put a drink down in front of the lens. Soon an FBI agent, disguised as a waiter, entered the room to straighten up, and to give the camera a clear path. I don't think that any of the tapes were ever released. The mole, Whitacre, was a wierdo. When the case went public, either through convening a grand jury or some other way, the first thing the Justice Department did was inform ADM of who, within its executives, was the informant. Not quite. Williams and Connely lawers offered to represent the employees. The mole thought that his talk with his lawyer was confidential. It was not. Later, a Federal judge in Chicago, re a civil part of recovering damages, put the opportunity to represent the class action participants out to bid. That was truly wierd. What better than the market to find the right law firm? He chose the low bidder and the low bidder chose to settle the case almost immediately, without any depositions or other investigation. An amazing story -- and again, someone (maybe both the judge and the winning bidder) should have been censured, but wasn't. The informant, meanwhile, was double-crossed in other ways by the FBI and Justice and ended up attempting suicide and then going into a mental care institution. The 2 suicides were questionable. He was unstable, at least after he came under pressure. He got prosecuted for stealing money from ADM in what looks to me like, rather than him stealing from the employer, rather a corporate money-laundering scheme to get cash for bribes or whatever. (ADM, you probably recall, in the person of Michael Andreas' father, delivered a briefcase full of cash to Nixon -- ADM seems to have kept untraceable cash handy.) However, the book gives evidence that Whitacre did not steal the money -- that sending money to Switzerland seems to have been standard practice in the company -- to give non-taxable bonuses. A friend of a friend was instrumental in sending the money abroad. The informant got a long prison sentence, much longer than Andreas or the other executive convicted with him, but he remarked to the judge at the sentencing hearing that he was much happier in prison than he had been at ADM. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Fwd: Re: FW: CEPR paper--World Bank Research Faulted
Sen, Amartya Kumar. 1999. Development as Freedom (NY: Knopf) does an excellent job of showing the weak link between growth an development. I described his graph in an earlier post -- showing that growth of life expectancy was negatively related to growth. As Galbraith noted, the tearing down of the social infrastructure is crucial. According to Sen, that destruction is positively related to growth. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Nader Demands Banning, Pulping of Harry Potter
BDL's new piece on Nader is civil enough, but it got me to thinking about a point that has come up before -- the business of comparing consumer benefits to worker losses in trade debates. Henwood brought this up (once) and provoked in me the realization that the logic of this exercise militates against all that we customarily understand as left politics, in the broadest sense. If consumer benefits (narrowly defined) are the highest priority, then we have to oppose any constraints on production cost minimization, in terms of minimum wages, industrial action, trade unionism, environmental regulation, etc. This is a problem for would-be progressive free traders, at the very least. Now I'm wondering how well it can be put in analytical terms. True. But... Nah. It's time for pas d'enemie sur la gauche.The neoclassical assumption that your welfare is primarily your welfare as a consumer (plus a *private* disutility of work term) automatically rules out any concern for the producer-side benefits of living in a vibrant production-based community rather than being an anomic seller of one's labor-power. Bob Reich had a nice piece around 1990 about how most of the game is in how "legitimate" interests are defined. Brad DeLong
Re: Re: Nader Demands Banning, Pulping of Harry Potter
Not long after Jevons et al. formulated neoclassical economics, political commentators began to tell workers that they should evaluate their situation in terms of rising levels of consumption rather than their working conditions. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
krugman???
Jim Devine asked me to forward this quote, which sounds Krugmanesque. "The efforts of economists during the last hundred and fifty years has resulted in the establishment of a body of generalizations whose substantial accuracy and importance are open to question only by the ignorant and the perverse." ... but which is really from Lionel Robbins (quoted in Bill Tabb's new book). -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: krugman???
Michael Perelman wrote: Jim Devine asked me to forward this quote, which sounds Krugmanesque. "The efforts of economists during the last hundred and fifty years has resulted in the establishment of a body of generalizations whose substantial accuracy and importance are open to question only by the ignorant and the perverse." ... but which is really from Lionel Robbins (quoted in Bill Tabb's new book). Well, this is not a surprising quote from Lionel Robbins who was an Englishman but not a Marshallian which was the dominant school of thought at the time in England if not the rest of the English speaking world. Lionel Robbins was more a follower of what some call the "continental" school which included the thinking of Jevons and Menger. Perhaps Robbins was feeling himself in the ignorant and perverse group being surrounded by Marshallians who most likely would not have taken too kindly to his "continental" thinking. As far as fitting Paul Krugman into the quote, I believe he is more like Robbins embracing a more "continental" thinking, not in the same vein as Jevons and Menger, but as it relates to economic integration, the principles of which are much more accepted as mainstream thinking on the European continent than the US. But I get the feeling Michael you have another interpretation in mind. Please correct me if I'm wrong. Diane Monaco Assistant Professor of Economics Manchester College
The Internet Anti-Fascist: Friday, 11 August 2000 -- 4:65 (#450)
--- Sponsor's Message -- Gator is FREE software that fills in forms and remembers passwords with NO TYPING. Plus Gator comes with $100 in coupons just for trying it! Fast download. Grab the Gator. http://click.topica.com/vlbz8SnrbAjwjxa/Gator __ The Internet Anti-Fascist: Friday, 11 August 2000 Vol. 4, Number 65 (#450) __ Reader Feedback: Jamie McCarthy, "... the antithesis of public discussion would be ... repression," 8 Aug 00 tallpaul, "A QUick, Brief Response On A Theme By McCarthy" Web Sites of Interest: Ireland and the Spanish Civil War -- No Pasaran! Real Political Correctness: People For the American Way, "Federal Court Enjoins Virginia Internet Censorship Law: 'Harmful To Juveniles' Law Ruled Harmful to Free Speech," 9 Aug 00 Rightwing Rightwing Quote of the Week: Anonymous, "... = CHILD MOLESTER??" Usenet post to: alt.politics.nationalism.white, 29 Jul BadJuJu. "A multiple choice test for ...," Usenet post to alt.revisionism, 12 Aug 00 What's Worth Checking: 20 stories -- READER FEEDBACK: ... the antithesis of public discussion would be ... repression Jamie McCarthy 8 Aug 00 [In TINAF 4:63 of Friday, 4 August, 2000, tallpaul wrote] "Those who see some all-encompassing right of 'free speech' for fascists might ask if Kykekillers triple anonymity is a contribution to public discussion over the Concorde crash or the antithesis of such discussion." How can any statement, placed in the public sphere, be the "antithesis" of public discussion? It seems obvious to me that what _would_ be the antithesis of public discussion would be the repression of such an anonymous statement. -- Jamie McCarthy - - - - - A QUICK, BRIEF RESPONSE ON A THEME BY McCARTHY tallpaul This post, coming from someone like J. McCarthy with a long activist history opposing Holocaust Deniers, shows that anti-fascists can disagree among themselves over many issues. My response below should be seen more as "comments on a theme" proposed by McCarthy, not a assertion of his particular beliefs. (Let us hope that he writes more on these topics.) Let me divide my comments into two groups: "repression" and "public debate." Of course we want to repress the type of anti-Semitic libel that blamed the Concorde crash on the Jews. The question is merely how we will go about it. We may pick methods that are principled and unprincipled, legal or extra- legal or illegal, tactically wise or foolish. We repress all of the time. We repress murderers by depriving them of their "freedom of movement" and in so doing we repress murder. We similarly repress con artists by forcing them to return the money, thus depriving them of "their" property. In a different context we repressed fascism with military force during World War II and the hangman's noose afterward. We did not support a military advance up to the border of pre-war Germany and then stop. We did not liberate the death camps outside Germany and permit those inside on the guise that to remove all the camps would repress actions. Nor did we support the existence of fascist publications immediately after the war. In each case we chose to repress. There exists a mistaken view that "free speech" is *the* fundamental right, standing above all others, absolute and inalienable. It is not, as is shown by various national and international laws on defamation. "Free speech" like all other rights may be alienated or violated or both. Only the violation is illegal or unethical. A lawful[1] alienation of the defamers speech is not a violation of "free speech" anymore than a lawful alienation of the con man's money or the murderers freedom violates the rights of property and movement. A think a similar confusion exists among anti-fascists over "opinion" and "fact." As numerous judges have maintained "there is no such thing as a false opinion." Opinions are a-factual and thus beyond the normal forms of reality testing. Fact -- at least since Zinger -- is a defense. But false allegations of fact add nothing to the specific debate[2] There are areas outside this dispute where false allegations of fact are actionable. Forgery constitutes one such crime. In the civil area, some citizens have a legal obligation to make true statements of fact. The accountant who certifies the accuracy of a set of financial books can be sued if the books are inaccurate. And of course perjury is perhaps the best example after defamation. Where then is the real contribution to public discourse in libel. Why way of example we reprint two recent examples of fascist defamation. In the "Rightwing
Rising Bankruptcy
The New York Times published this article about rising business defaults and another article describing why people from abroad want to invest in the U.S. economy. In a Humming Economy, a Rising Din of Defaults ROBERT D. HERSHEY Jr. With the economic expansion setting records for longevity, much of American business is reveling in prosperity. But all is hardly well. For reasons that include profligate lending and underwriting in the second half of the 1990's, many large businesses, and even entire industries, are suffocating from their debts. A major portion of the health care industry is in shambles. In retailing, competition from category killers has contributed to huge consolidation. And some auto parts suppliers, already beleaguered despite record car sales by Detroit last year, seem to have no place to go but south. That's not all. Household names like Pathmark Stores and United Artists Theatre Company defaulted on bonds this spring and are contributors to a total of $15 billion in defaulted debt across corporate America for the first half of 2000 -- a rate that could smash last year's record of $23.5 billion. Though the financial disruption at Pathmark and United Artists is nearly invisible to their customers, it is very visible to the bankruptcy lawyers and other people -- please don't call them vultures -- who make their living from corporate distress. For them, business has rarely been better. And judging from the agony in the market for high-yield bonds, probably the best predictor, it is likely to get better still. "The restructuring industry is in an expansion phase right now," said Al Koch, managing principal at Jay Alix Associates, a leading specialist in the category. Its staff has nearly tripled in size over the last five years as more companies have needed help in fixing operations and recasting notes and bonds. "Insolvency attorneys are all very, very busy," Mr. Koch added. Deryck A. Palmer, a partner and restructuring specialist at Weil, Gotshal Manges, can vouch for that. He points particularly to the bounty that awaits those involved in refinancing hospitals, which he believes are only beginning to feel the crunch that has affected other businesses. "What's amazing is you have this much activity in a robust economy," Mr. Palmer said. Whether these exceptions to the boom will lead to a full-fledged credit crunch depends on whom you ask. But there is no doubt that a rising number of companies, running out of financing options, are having to default. And with nearly all economists agreeing that the Federal Reserve will succeed, sooner or later, in slowing the nation's growth, the corporate distress will probably widen. If the Fed's tightening brings on a recession, as a few analysts now predict for next year, the defaults could intensify the contraction. As Henry S. Miller, vice chairman of Wasserstein Perella Company and head of its restructuring business, put it, "Most people who play in this business believe there is a lot more to come." Moody's Investors Service calculates that 6.2 percent of high-yield, or junk, bonds are now in default. It projects that the rate will rise to 7.1 percent by year-end, and to 8.4 percent by July 2001. Globally, the United States, which has the world's most accessible capital markets, accounts for 75 percent of the defaulted bonds by amount and 85 percent by number of companies. Most economists doubt that the soured debt will cause more than a blip in the nation's overall economic performance. But Alan Greenspan, the chairman of the Federal Reserve, watches the figures on distressed loans. And his staff has made inquiries recently about the ill health of the market for high-yield debt, defined as securities rated no higher than Ba-1 by Moody's or BB+ by Standard Poor's. ome casualties are in long-ailing businesses like steel. Others are in highly cyclical ones like heavy equipment. Harnischfeger Industries, a maker of mining equipment, survived the Rust Belt vicissitudes of the 1980's only to be driven into Chapter 11 bankruptcy by overwhelming fixed costs and falling prices in 1999. Borrowing for what analysts regard as ill-conceived acquisitions has also caused problems. Safety-Kleen, for example, tried to combine such fundamentally different businesses as hazardous-waste disposal with the more routine collection of used motor oil and recyclable materials. In still others, companies fell prey to rapid technological change or, as with hospitals and nursing homes, to new restrictions on government reimbursements. With a few exceptions, Internet companies have not made much use of the bond market, because of a ready supply, at least until this year, of equity capital. As a result, few have defaulted. Analysts say bad strategies or bad execution, or sometimes both, could not have occurred without a severe relaxation in standards that allowed weak companies to borrow freely from banks and bond investors. From 1996 to 1999, said
Re: Re: Re: Mike Andreas goes to jail?
Michael, the description of the incident in the Honolulu hotel room was reported in a daily newspaper. I probably read it in the Wall St. Journal but not sure that was the source. I've read, as you report below, that the money was secretly transferred to employees to be non=taxable bonuses. The dollar amounts were pretty large and the suspicion remains that it remained corporate money to be used for whatever. As I recall, the trial judge in the prosecution of Andreas did admit the tapes -- but I'm not sure they were ever played publically, or even at the trial. Gene Michael Perelman wrote: Gene, if you are really interested in the film, I might be able to find Hoech's number among my papers. Eugene Coyle wrote: ADM got prosecuted not because the justice Dept was on the job but because the head of one of the ADM divisions went to the authorities and assisted in videotaping the conspirators, including Michael Andreas, in action. Not quite. Andreas believed that a sabateur was responsible for poisonous materials that ADM sold. He called on the FBI. The mole eventually, told them about the price fixing. I never understood why. In one bit of tape, in a Honolulu hotel room as I recall, the hidden cameras were rolling when someone in the room unknowingly put a drink down in front of the lens. Soon an FBI agent, disguised as a waiter, entered the room to straighten up, and to give the camera a clear path. I don't think that any of the tapes were ever released. The mole, Whitacre, was a wierdo. When the case went public, either through convening a grand jury or some other way, the first thing the Justice Department did was inform ADM of who, within its executives, was the informant. Not quite. Williams and Connely lawers offered to represent the employees. The mole thought that his talk with his lawyer was confidential. It was not. Later, a Federal judge in Chicago, re a civil part of recovering damages, put the opportunity to represent the class action participants out to bid. That was truly wierd. What better than the market to find the right law firm? He chose the low bidder and the low bidder chose to settle the case almost immediately, without any depositions or other investigation. An amazing story -- and again, someone (maybe both the judge and the winning bidder) should have been censured, but wasn't. The informant, meanwhile, was double-crossed in other ways by the FBI and Justice and ended up attempting suicide and then going into a mental care institution. The 2 suicides were questionable. He was unstable, at least after he came under pressure. He got prosecuted for stealing money from ADM in what looks to me like, rather than him stealing from the employer, rather a corporate money-laundering scheme to get cash for bribes or whatever. (ADM, you probably recall, in the person of Michael Andreas' father, delivered a briefcase full of cash to Nixon -- ADM seems to have kept untraceable cash handy.) However, the book gives evidence that Whitacre did not steal the money -- that sending money to Switzerland seems to have been standard practice in the company -- to give non-taxable bonuses. A friend of a friend was instrumental in sending the money abroad. The informant got a long prison sentence, much longer than Andreas or the other executive convicted with him, but he remarked to the judge at the sentencing hearing that he was much happier in prison than he had been at ADM. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
