The dollar is falling, but the treasury secretary is off in
Africa debating a rock star. Enron aftershocks continue to sound through
corporate America, but Congress can't pass a bill to right the
accounting-fraud wrongs. The head of homeland security has a color-code
system for terrorist alerts that not one person in a thousand takes
seriously. The president says there's no science to back up the so-called
global-warming threat, but then he issues a lengthy report on the subject to
the United Nations. He also insists that the government will be frugal with
taxpayer money, but then he signs every spending bill Congress sends him,
making LBJ look like a skinflint.
No wonder investing America has put itself on hold. No wonder
stocks are tanking. The world's turned upside down.
Investors need answers. They need to know who's in charge, and
they need to see America's unsettled accounts get settled. Until they do,
the market is going to struggle.
For starters, America needs to know who's in charge of reaching
closure on the accounting scams and the complete breakdown of corporate
governance. But SEC chair Harvey Pitt seems incapable of putting together a
much-needed reform plan. Will executive compensation gained from fraudulent
or inappropriate activities be given back? That's hard to answer, because
Pitt no longer talks about it.
Shouldn't corporate boards of directors be comprised mainly of
outsiders, people who can make independent decisions? They should, but
they're not. Shouldn't stock options be scored as legitimate liabilities,
matched against the human capital of those who receive them, and then
expensed properly on an income statement when the options are exercised? And
shouldn't option re-pricing be banned altogether? Sure, but that's not
happening. Shouldn't off-balance-sheet partnerships be properly and
transparently scored when corporate credit risk is backing up the
partnerships? Of course, but that's not happening, either.
Shouldn't the conflict of interest between auditors and
consultants be resolved? Not happening. Shouldn't an outside oversight board
be formed to advise the SEC on all these and other issues -- a board
comprised of independent thinkers who are not in anyone's back pocket? Not
in place. When will Pitt name such a board? When will it begin its
If this lack of answers isn't bad enough, we also hear almost
daily from the president on down that terrorists are about to bomb us again.
Trouble is, we have no details. Will it be poisonous gas wafting over our
shores? Will it be a homicide-bomber lighting himself up in the lobby of one
of our great buildings, or atop a bar at a chic restaurant? Will terrorists
hit an Amtrak train? A nuclear facility? A tunnel? A harbor? An airport?
Will they scuba-dive their way in? Will they fly in? Will we actually know
them because we see them at the neighborhood deli? Can anyone answer these
The FBI says the CIA didn't tell them. The FAA says the FBI
them. And the director of the CIA, who is
supposed to oversee all of our intelligence operations, is too busy advising
Yasser Arafat's Palestine Liberation Army on how to set up better security
arrangements and how to smooth the way for the inclusion of Hamas in a new
Arafat coalition. Is this for real? Sadly it is.
The stock market is falling -- and no, it's not the economy,
stupid. The data show that production, factory orders, housing, consumers
and even corporate profits are recovering from the recession. Interest rates
are low, the Fed is putting plenty of new cash in the pipeline, and even
taxes are coming down a bit.
No, it's not the economy that is driving the stock market down.
There's a malaise over Wall Street because people are worried, fearful,
aggravated and downright blown away by the incongruous behavior of our
leaders and elected officials. This level of indecision, finger-pointing and
suspended animation shouldn't be happening in this great country, but it is
What's the solution? Where are the answers? No one knows for
sure. But decisive action by our nation's leaders in business, finance,
accounting, law and governance must emerge. We need a Paul Volcker at the
SEC, but we're stuck with a Harvey Pitt. We need Bill Casey at CIA, but
we've got George Tenet. We yearn for Rudy Giuliani to replace Robert Mueller
at FBI. We need corporate builders like ITT's Harold Geneen, IBM's Thomas
Watson, Citibank's Walter Wriston or even old J.P. Morgan himself -- but
we're saddled with Kenneth Lay and the rest of the "formerly of " crowd that
includes Dennis Kozlowski (Tyco), John Rigas (Adelphia) and Gary Winnick
We need help. More specifically, we need leadership, action and
closure in order to keep our businesses open and get people safely home to
their families. Now.