It sounds perverse, but one of the emerging problems for investors and company executives is cash, too much cash.
According to Standard and Poor's, cash on hand at the nonfinancial S&P 500 companies will top half a trillion dollars for the first time ever by end of this quarter. While it's only an estimate, because not all companies have reported yet, so far, with 193 companies already in, cash and short-term equivalents is up 17% over the first quarter of 2003, which itself was up 25% over 2002, according to Howard Silverblatt of Standard and Poor's.
How much cash is there? Think of it this way: Microsoft, with $51 billion in cash, could give 51,000 entrepreneurs $1 million to start new businesses.
General Motors has some $37.5 billion in cash. Intel is sitting on $15.7 billion. At a share price of about $26, roughly 9% of its stock price is just cash.
Meanwhile, even with interest rates very low, long-term debt has risen more slowly, up just 6% from 2003. A record number of S&P 500 companies, 43, have less than $5 million in long-term debt, according to S&P.
Behind the rise in cash are surging revenues amid still-stringent cost containment. Meanwhile, companies have been paying lower taxes, both part of the Bush tax-cut plan along with increased use of loopholes. Corporate taxes as a percentage of gross domestic product in 2003 were just 1.2%, their lowest level in 21 years.
Elsewhere in the article the columnist Steve Liesman says, "The unlocking of this cash through higher salaries and increased hiring would really secure the economic recovery, creating that virtuous circle of increased salaries and spending that will supplant the stimuli of tax cuts and mortgage refinancings."
Because we aren't seeing the increased hiring and higher salaries as a result of this cash bonanza, it's obvious that the dubious tax cuts and the refinancing craze are just so much gas to pump up a punctured balloon.
No investment in jobs, capital infrastructure, or research... just more and more and more tax-free dividends for the leisure class. A half trillion dollars and counting.
That was the plan all along.
Meanwhile, here's an idea: American businesses that profited so handsomely from unwise Bush economic policies ought to foot the bill for another of its unwise foreign policies.
Let's have the S&P 500, with its $500 billion in cash, pay for Iraq.
A senior Defense Department official is under investigation by the Pentagon inspector general for allegations that he attempted to alter a contract proposal in Iraq to benefit a mobile phone consortium that includes friends and colleagues, according to documents obtained by The Times and sources with direct knowledge of the process.
John A. Shaw, 64, the deputy undersecretary for international technology security, sought to transform a relatively minor police and fire communications proposal into a contract allowing the creation of an Iraq-wide commercial cellular network that could generate hundreds of millions of dollars in revenue per year, the sources said.
Shaw brought pressure on officials at the U.S.-led Coalition Provisional Authority in Baghdad to change the contract language and grant the consortium a noncompetitive bid, according to the sources.
The consortium, under the guidance of a firm owned by Alaskan natives, consisted of an Irish telecommunications entrepreneur, former officials in the first Bush administration and such leading telecommunications companies as Lucent and Qualcomm, according to sources and consortium members.
Shaw's efforts resulted in a dispute at the Coalition Provisional Authority that has delayed the contract, depriving U.S. military officials and Iraqi police officers, firefighters, ambulance drivers and border guards of a joint communications system.
That has angered top U.S. officials and members of the U.S.-led authority governing Iraq, who say the deaths of many Americans and Iraqis might have been prevented with better communications.
Even Darrell Issa makes an appearance in the latest scandal.
"Hiding the death and destruction of this war does not make it easier on anyone except those who want to keep the truth away from the people," the father, Bill Mitchell, wrote yesterday. The letter has not yet been published.
In a postcript to the letter, he added: "I would be willing to help that poor woman in Kuwait [Silicio] who lost her job over the picture which she felt needed to be seen. Possibly even with enough press coverage, the other parents who lost children on the same day as my son would also feel that she did a service for us."
And yet both pages make mention of a "$2 million [reward] being offered through a program developed and funded by the Airline Pilots Association and the Air Transport Association." So the FBI pages were clearly prepared after 9-11 and informed by the events that took place, but conspicuously silent on the suspected connection between Osama bin Laden and the New York and Washington attacks.
With speculation escalating on an impending indictment, Ken and Linda Lay are not out much these days. Except for last week when they arrived at the very public Holocaust Museum Houston annual dinner, attended by more than 1,300.
The Lays were anything but hunkering down. They were seated at a table in the middle of the packed ballroom at the Hilton Americas-Houston and received well-wishers with bear hugs and kisses. You couldn't miss them with that steady stream of admirers.
Also not exactly in hiding in Houston is the insaneJeff Skilling who was dangerously near former Enron executive and current Bush Pioneer Nancy Kinder, proving that the Enron clique remains intact, complete with all the armies of lawyers and plastic surgeons that the richest criminals could possibly need.
Federal prosecutors will try two ex-Enron (ENRNQ) officials and four former Merrill Lynch (MER) employees together for allegedly creating a sham sale of Nigerian barges that allowed Enron to inflate its earnings, a judge has ruled.
U.S. District Judge Ewing Werlein Wednesday refused requests to try the defendants separately. They had claimed they would be prejudiced by evidence against the others.
The judge also denied a number of requests from the six defendants set to be tried June 7 in Houston. All have pleaded innocent to conspiracy and other charges in connection with the Nigerian barge deal.
Okay, I have to ask again: why are federal prosecutors trying "officials" and "employees" of Enron and Merrill Lynch, when they indicted the entire 80,000-person firm of Arthur Andersen, only a handful of whom had anything to do with the Enron fiasco?* Similarly, why aren't Jeff Skilling or Ken Lay in jail yet?
I'm not suggesting Andersen individuals aren't culpable, but why is the auditor held to a higher standard than the fraudsters?
If Andersen the auditor was annihilated by the feds, shouldn't Enron the perpetrator (that faked the barges) and Merrill Lynch the investment bank (that bought an interest in the fake barges) be destroyed too?
*I know, rhetorical questions are a pain. The theory that's been promoted here often enough is that Andersen the firm was indicted lock, stock, and shredder because, with the intention of killing two birds with one stone, the feds' elimination of Arthur Andersen had the twin effect of deflecting media attention away from Enron at the moment it would have been hottest, and simultaneously destroying all the records of Andersen's financial audits of Halliburton while its CEO was Dick Cheney.
The government said [former Enron CEO Jeff] Skilling and his wife, Rebecca Carter, had drinks at the Four Seasons Hotel in New York City, where they were staying on the night of April 8.
Around midnight, they went with two men to a cigar bar called Bar & Books on the Upper East Side, where Skilling was at first friendly to a married couple and their friend who sat nearby.
They had several rounds of drinks and Skilling invited them to visit his River Oaks home, even saying he "would fly them down to Houston and provide them with their own maid," according to the report.
Skilling picked up a $171 bar tab for the group and they continued drinking with others reciprocating, the government said.
But Skilling turned hostile after several hours of drinking, falsely accusing several patrons of being FBI agents, the report said, and accusing them of using someone "as a decoy to lure (him) into lowering his guard."
The government reports that around 3:30 a.m., the bar manager asked Skilling and his party to leave. Outside, Skilling tried to forcibly remove the front license plate of a car parked near the bar to "gather `proof' " about the identity of the people he thought were agents, the prosecutors said.
The report says that when a woman started to get into that car, Skilling tried to stop her and attempted to lift her blouse, claiming he was looking for a wire. Another patron pushed Skilling away from the woman and a scuffle ensued.
One patron's nose was cut and Skilling grabbed his wife, who was using a crutch because of a foot ailment, knocking her over. The motion said that while he was at the hospital, Skilling admitted it was he who inadvertently toppled his wife.
Several people called 911. When police arrived, they found Skilling's wife sitting in the street. Skilling, who had chased the people he scuffled with, was stopped a block away.
A police report from that night indicates Skilling was "irrational and highly uncooperative" and "possibly suffering from paranoid delusions," accusing people of being "FBI agents stalking him," according to the document.
"At one point, Skilling went to middle of the street, put his hands behind his back and began talking to the sky, asking if FBI cameras were capturing what was happening," the government papers say.
Police sent Skilling in an ambulance to a hospital, along with his wife.
At the hospital the morning of April 9, Skilling's blood alcohol level was 0.19 -- nearly twice the legal driving limit of .10 in many states, the government report notes.
Prosecutors say Skilling's later accounts of the events, as told through his lawyers, were incorrect, showing he was not willing to be truthful even when sober.
Skilling's lawyers previously told reporters that Skilling and his wife were attacked by two men who knocked her down and rendered her unconscious.
It's indicative of Skilling's egomania that the FBI would monitor him when they can't even monitor Saudi Arabians in flight schools.
Half the cells in our federal prisons are filled with drug offenders, while this idiot is free to cover a $171 bar tab, fly strangers to Houston and even "provide them with their own maid," which sure sounds like a coded offer to me.
Enron was of course one of the most generous and visible supporters of Bush-Cheney 2000. The thieving, hateful, paranoid Jeff Skilling is the sort of person who profits when a fellow thief is in power.
The anti-Wal-Mart sentiment has gone beyond simple protest to become a social phenomenon. Outrage against the store is politically energizing neighborhoods. It is introducing neighbor to neighbor - in a sense, binding the communities that opponents of the retailer argue Wal-Mart would destroy.
Wal-Mart, a symbol for many of consolidation and globalization and capitalism, has become the national ink-blot test. How people feel about Wal-Mart speaks as much about them, where they are in their lives and what they value as it does about the store.
"It's a reflection of the world we live in," said James Hoopes, a professor at Babson College in Massachusetts and a prolific business history scholar.
Hate of Wal-Mart cuts across all geographic and demographic areas, from inner cities to rural towns to affluent suburbs.
For some people living in small towns, Wal-Mart has become a symbol of their dying heritage. For others living in urban cities, Wal-Mart is the hand of homogenization on their once unique neighborhoods. For still others living in booming suburbs, Wal-Mart epitomizes the growth that threatens to destroy the tranquility people moved there for.
"The movement against Wal-Mart these days I think has made Wal-Mart the most reviled retailer in America," said Al Norman, a prominent anti-Wal-Mart activist.
Wal-Mart is just a convenient symbol of a much larger problem. But that doesn't make it any less responsible for the communities it tries to decimate with its predatory practices, not to mention its aesthetic evils.
Now if you want to read a really sickening story about Wal-Mart, you will have to go to Respectful of Otters.
See also this big profile of the Wal-Mart phenomenon in The Economist: 'According to A.T. Kearney, Wal-Mart's three-biggest sources of cost advantage are low corporate overheads, the efficiencies of its supply-chain and, above all, its low labour costs. A newly hired “associate”, as Wal-Mart calls its employees, could earn as little as $8 an hour, some 20-30% less than unionised workers at rival supermarkets. Union members might also have benefits, such as health-care insurance.'
The job discussions were initiated by Druyun's daughter, Heather McKee, herself a Boeing employee for whom the company had created a position two years earlier after her mother contacted a senior Boeing executive. McKee sent a series of encrypted e-mails negotiating her mother's potential employment to a senior executive of Boeing, court documents said. The senior executive met Druyun at a private conference room in the Orlando airport and offered her a job a month before she recused herself from decisions involving the Air Force and Boeing.
When the meeting ended, court documents said, the executive told Druyun: "This meeting really didn't take place.''
The senior executive was not named, but Druyun named [former Boeing chief financial officer Michael M.] Sears when asked by the Judge with whom she was negotiating her potential employment at Boeing. Sears has not been charged and has denied any wrongdoing. Druyun and the Boeing senior executive conspired to cover up their discussions before Druyun eventually admitted them to an investigator for Boeing, court documents said.
More from FindLaw: 'Druyun and her daughter declined to comment after the hearing, but Druyun's brother, Edward Lofton, a Catholic priest in South Carolina, said the deal on her daughter was critical for Druyun. "It's been very painful for her," he said.'
So Heather the encrypted matchmaker walks away uncharged (and still works at Boeing!), but also off the prosecutorial hook is Michael Sears, the now-discredited author of a book on management and business ethics that was to have been published in February 2004.
Can't get enough of that military procurement corruption? More about the Druyun saga here, here, and here. Perhaps we can get Edward Lofton, Druyun's priest brother, to lead us in prayer for the safe return of all the money that has vanished from the US Treasury thanks to his sister's lack of a conscience.
The objective of one war was neglected in order to start another unrelated war. So not only was the Iraq war a hollow farce but the war in Afghanistan was too, because of the distractable caricature of leadership that calls itself the Bush White House.
An Interview With Ned Davis -- It's at critical junctures that we want to know what the proprietor of Ned Davis Research in Venice, Fla., is thinking. We evidently called the right guy last week, because that's exactly where this master of market history and technical analysis thinks the market is at the moment.
Q: What do you make of the economic numbers? A: My underlying view is there is too much debt and there was never any buildup of savings during the recession, so there is really no pent-up demand. The consumer isn't in a position to do much. That is what all the bears say. Then I sit and look at the money supply and I see that when mortgage refinancings are booming and tax cuts or tax refunds are hitting, the money supply explodes. If you put a lot of money in people's pockets, they are going to spend it. We saw that in the middle of last year. The second half of last year was the best half since 1984, or maybe 1981, when there were tax cuts. It's a guarantee that if you give tax cuts or refunds, there will be surging growth. Is it sustainable? I don't think it is. March is going to be strong. April is going to be strong. It is going to be May or June before we know if the economy is slowing a bit and, by that time, there will have been two Fed meetings already.
Q: How does the war in Iraq factor into your outlook, since it seems to be worsening? A: Personally, it makes me sick to my stomach. From a contrarian standpoint, though, it is probably the one thing out there that has kept people from getting really manic and crazily bullish here. The uncertainty is going to weigh on the market. Every week, you say, "Oh my God, what is going to happen next?" We certainly didn't go there to fight a religious war, but somehow when you start killing Muslims, other Muslims see us as a Christian army, and that is very ugly. I don't want to overdo it because during the Vietnam War, we had plenty of bull and bear markets. Wars don't necessarily drive markets. But we don't need this extra uncertainty.
Q: If we have a Democratic president elected this fall, what should we expect from the market? A: The stock market has actually done better under Democrats than it has under Republicans. Even better than a Democratic president has been gridlock. The explanation for that is neither party can do too much damage and it's just checks and balances. I'm not sure that a Kerry victory is really going to shock the market, especially because the polls now show he has got a chance. And it is still going to be a Republican Congress. In 1960, we had a bouncy first part of the year and then the market rallied in the middle of the year. When it looked as if Kennedy had a chance, the market went straight down until the election and then headed straight up for the next 12 months. It had totally discounted that a guy with the initials JFK from Massachusetts would win. That could be a pretty good pattern for what might happen if Kerry wins. Election years are normally bouncy early in the year and then the market takes off. From August to November there is a very dramatic difference if the incumbent wins or the incumbent loses. If the incumbent wins, it goes straight up. When the incumbent loses, the market goes down. In August, after the conventions, you can make a pretty good bet on the stock market. If it looks like Kerry is going to win, the market is going to go down after August.
Someone on NPR was saying this morning that our intelligence problems aren't structural; they're cultural. Probably they're founded on the shifting sands of the Peter Principle: that everyone rises to his level of incompetence. Although it's a general principle that applies to all administrations, the Bush administration seems to have brought it to a shiny new state of perfection, a Platonic ideal of the Peter Principle, the ne plus ultra of pious incompetence, with examples as far as the eye can see of an insular Dilbert-like universe rewritten as tragedy: Rice, Wolfowitz, Rumsfeld, Ashcroft, Cheney, and, of course, the lifelong exemplar of the Peter Principle, George W. Bush.
There was plenty to dislike about O'Neill. Like Clarke, he's accused of "arrogance," the standard code word used by the incompetent against anyone who makes them look bad. What the street-smart (even in Yemen!) O'Neill managed never to be, as opposed to Bodine or Pickard or any of Bush's cronies, was inert or leisure-oriented or obsessively focused on politics over actual threats.
O'Neill had investigated Al Qaeda to the point where two of the Flight 77 hijackers' names were on his desk when he was forced out of Yemen by Barbara Bodine in 2000 and out of the FBI by acting weasel Tom Pickard in August 2001.
Pickard, Ashcroft, and Rice were all responsible for national security in August 2001. The fact that they live in a frenzy of bureaucratic cowardice, pointing fingers at anyone else in their testimony to the 9-11 Commission, while O'Neill died in the World Trade Center is the purest demonstration that they do not deserve their positions.
If John O'Neill were alive to go before the 9-11 Commission, no one would be holding his hand. In that, he is more of a man than the cowardly president of the United States, who will cling behind closed doors to his security blanket Dick Cheney.
A clarification: This is not about State vs. Defense, or FBI vs. CIA, or Democrat vs. Republican. National security is like engineering: either the building stands or it doesn't. The World Trade Center fell.
John O'Neill knew.Orcinus reminds us that at least one man in the FBI was well aware of the Al Qaeda threat and was gutsy enough to do something about it, as Richard Clarke explained to PBS Frontline:
I saw a report that indicated that the man who had plotted the World Trade Center bombing in 1993, the ringleader, Ramzi Ahmed Yousef, was about to move within Pakistan. There was a closing window to catch him. So, thinking there might be somebody in the FBI on a Sunday morning, I called and John answered the phone. I said, "Who's this?" He responded, "Well, who the hell are you? I'm John O'Neill." I explained, "I'm from the White House. I do terrorism. I need some help."
So I told him my story on the classified phone line. He had never worked on the case before, but he obviously knew the importance of it. He went into action over the course of the next two or three days; he never left the office. He worked the phones out to Pakistan, he worked the phones to the Pentagon, and he worked the phones at the State Department. Together with us, [he] put together the rush team that managed to catch Ramzi Ahmed Yousef in Pakistan just before he moved into Afghanistan, which would have been beyond our reach. It was a pretty intense couple days, but it worked. It was, in the way, the beginning of a beautiful friendship, because the same drive he brought to that first encounter, he brought to everything he did.
I think the intelligence community, the FBI, were unanimous, certainly throughout the year 2000 into 2001, that there was in fact a very widespread Al Qaeda network around the world in probably between 50-60 countries -- that they had trained thousands, perhaps over 10,000 terrorists at the camps in Afghanistan; that we didn't really know who those people were. We didn't have names for very many of them, and we didn't know where they were; but since bin Laden kept saying the United States was the target, the United States was the enemy, that we had to expect an increasing rate of sophistication of attacks by this large Al Qaeda network against the United States.
As John O'Neill kept saying, there was no reason to think they're always going to go after us in Saudi Arabia or Africa or Yemen. They tried to go after us, O'Neill would say, in 1993, in the first World Trade Center attack. O'Neill was convinced, in retrospect -- and it took the FBI others a long time to realize it, many years actually -- but O'Neill was convinced by the year 2000, certainly probably earlier than that, that the 1993 attack was in fact a bin Laden-led attack. We hadn't heard the phrase Al Qaeda at the time.
We now know, going back through historical documents, that there was an Al Qaeda [back then]. It had just been formed, just been given that name. It was small. But O'Neill would say the attack of 1993 was Al Qaeda. The attempted attack at the millennium in the United States was Al Qaeda.
Whatever deterrents we had that said "you should never try to attack us in the United States," that hadn't worked. Therefore, he would say -- and I think everyone in the FBI leadership and the CIA leadership was saying -- "The attack is going to be big. It could be in Saudi Arabia or the Middle East. It could also be in the United States."
Our obsession with John O'Neill began with his obituary in the New York Times in September 2001, followed by this post on the PBS Frontline episode David Neiwert cites above.
The names of two of the hijackers who flew into the Pentagon on Flight 77 were on O'Neill's desk before he left the FBI. Not exactly a "lack of specificity" of information, as the White House now claims. There was plenty more that could have been done by any administration that chose to pay attention.
Former Enron CEO Jeffrey Skilling was taken to a Manhattan hospital early Friday after several people called police saying he was pulling on their clothes and accusing them of being FBI agents, a police source told The Associated Press.
Police took Skilling to the hospital after finding him at 4 a.m. at the corner of Park Avenue and East 73rd Street and determining he might be an "emotionally disturbed person," said the source, speaking to the AP on condition of anonymity.
Speaking of raining on Enron employees' parades, did you know Jeff's brother Tom Skilling is my weatherman?
When Condoleezza Rice takes her seat before the independent 9/11 commission here Thursday her assignment will be nothing short of halting the most serious assault yet on the credibility of U.S. President George W. Bush.
Sitting in the hearing room as Rice testifies will be a 33-year-old former FBI translator who may yet hold the key to the question now engulfing this nation — did an indifferent Bush administration ignore specific warnings that Al Qaeda was about to launch horrific attacks in the United States on Sept. 11, 2001?
While allegations brought by former counter-terrorism chief Richard Clarke have swung the tide against the Bush White House in recent weeks, Sibel Edmonds delivered her own broadside against her government in private, during more than three hours of testimony to investigators for the 9/11 panel on Feb. 11.
Edmonds, who was hired as a translator by the FBI nine days after the attacks, told the investigative panel she has seen and handled intelligence documents and cables that show Rice, the national security adviser, is wrong when she says there was no advance warning of air attacks on U.S. soil.
She saw intelligence documents that pointed to the use of aircraft against skyscrapers in major U.S. cities.
"We had various information from various sources and investigations," she said in an interview yesterday.
"In terms of specific cities? Yes. It was not only New York and Washington, D.C. There were four or five cities specifically named.
"There were specific activities known. Domestic institutions were being targeted and airplanes were going to be used. That was known. Now, did it say Sept. 11, 8:30 in the morning? I am not aware of such information. Did it say it was going to crash the planes in the building? I am not privy to that information.
"But there was specific information on the use of airplanes. There were people issuing orders and information on people already in place in this country months before Sept. 11."
She said she is not passing on hearsay, but information on specific documents, the names of witnesses, the names of FBI agents and other information so investigators can rely "not on my word," but on the documents themselves. Most of them were dated April and May, 2001, she said. She has previously provided such information to congressional investigators.
Edmonds, a Turkish-born U.S. citizen, said she was "appalled" by Rice's public statements, delivered in a number of television interviews, that there was no information indicating planes would be used on domestic targets.
Had Rice indicated that she did not know, Edmonds may have given her the benefit of the doubt.
"Then I would say maybe the FBI did not take the information to her, maybe she didn't know," Edmonds said.
"But she's is saying 'we' did not know, including herself, her advisers and the FBI. That statement is not accurate. I've never really been diplomatic in life. It's a lie and a lie is a lie."
This commission is of enormous interest to me as I live within sight of Sears Tower, now the tallest building in North America, supposedly next on the list of desirable terrorist targets.
The whole point of the 9-11 Commission is not to level blame (although that is a useful secondary objective) but to prevent the next 9-11. And we must act now to fully understand the nature of any mistakes that were made and any warnings that were unheeded, while Sears Tower still stands and the people who work there are still alive and not trying to pitch themselves from broken windows on the 96th floor.
Condoleezza Rice, we could not care less about your "pre-9/11 mentality" speech. We could not care less about the hindsight and ass-covering of you and your fellow cowardly bureaucrats. You are part of the administration that chose to pursue irrelevancies like pornographers and the doctors who perform abortions and Tommy Chong and Saddam Hussein instead of Osama bin Laden and other true domestic and international threats, and that "mentality" has not changed even in the years since 9-11. Anthrax and large-scale blackouts come and go, and you folks are still falsifying intelligence, ignoring national infrastructure, and propping up your corporate cronies, blithely unaware of the rest of the world or even your own citizens. How many Marines were killed in a single day, yesterday? Twelve. And for what?
Your post-9/11 mentality is, if anything, even less competent than its predecessor. The world has changed, and you have worsened it.
"Your editorial page is printing letters in a ratio of seven-to-one in favor of gay marriage according to my sampling," complained a local college professor. "Surely this is not a fair reflection of your readers' letters?"
Actually, the ratio of incoming letters is even more lopsided -- more like 40 to 1 in favor of gay marriage -- according to the two editors, Glenda Buell and Peter Accardi, who compile the daily letters for publication.
Impossible, you say? Well, I haven't eyeballed every letter myself, but my quick review convinces me that -- surprising as it is -- the Globe indeed gets many more letters supporting gay marriage than opposing it. And that leaves editors scrambling to find suitable "anti" letters to run along with the "pro" ones reflecting the Globe's editorial stance on the issue.
On one recent occasion they were so desperate that they went to the resident conservative columnist, Jeff Jacoby, to see if he had any "anti" letters that could be used. He didn't.
The problem, the editors say, is compounded by the fact that many of the "anti" letters tend to be simple statements of religious or personal belief, rather than the more layered arguments that make the best reading as letters to the editor.
In the end, the paper ends up publishing one anti-gay marriage letter for every two or three pro-gay marriage letters -- a "pro" tilt, but a far less dramatic one than what is represented in each day's incoming mail.
Leo F. Wells has become one of the hottest names in real estate. His real estate investment trust is amassing an amazing amount of fresh capital: In 2003's first half he sold $1 billion of stock, amounting to nearly half what public REITs raised, and he's targeting another $1.5 billion by year's end. Like a latter-day Harry Helmsley, he is using the money for a buying binge of first-class office properties. In May his REIT bought Chicago's 83-story Aon Center, the third-tallest building in the U.S.
A cherubic fellow with an easy Southern charm, Wells, 59, combines a salesman's bonhomie with a religious conviction that he is doing good for his 100,000 investors. The company creed is "to glorify God and care for people." Meetings at headquarters in suburban Atlanta often begin with a prayer. Professions of atheism, casual dress at work and drinking are verboten. So are beards and moustaches. Last year Wells settled a lawsuit with Gregory Genovese, a broker for Wells until 1999, when he alleged he was fired for failing to shave.
Sure, but are they good investments?
Not if you ask real estate pros Mike Kirby and Jon Fosheim. From this week's Barron's (sub. req'd.):
Q: Any developing trends in REITs?
Fosheim: There is a relatively new product probably being marketed to a lot of Barron's readers: private REITs that are publicly registered but not traded. They market via commission-based financial planners. It has a lot of similarities to the syndication days of the 'Eighties. As a general rule, we tell people to stay away from them because the fees are very high -- in many cases you are looking at a front-end load around 15%.
Some examples are Wells, based in Atlanta and not affiliated with Wells Fargo; Inland; and CNL. The private REITs primarily own office and retail properties and are characterized by the high intermediaries' fees and by relatively low sponsor ownership in the entity. Often, the real-estate company also owns the advisory companies, which poses a conflict. Hundreds of millions of dollars a month are being raised in these things and we have a feeling that it may well end badly. Wells, for example, has been the biggest buyer of office properties for about the last year and a half, bigger than Equity Office Properties.
I know it's not illegal to sell investors crap at fantastically high commissions (15% front load!), but isn't it illegal to fire your employees for professing atheism?
The Forbes article further downplays the investment potential of shares in Wells's trusts by pointing out the stagnant stock price, weak earnings, deteriorating dividends, sky-high fees, and the fact that Leo Wells, man of so much faith in Jesus, has so little faith in his own enterprise that he owns just $15,000 of the shares he sells to the public through his cult, even as he rakes in fees of $400 million.
Leo Wells provides still more evidence of the crypto-Christian agenda supplanting American business and political life.
For Brown, it was in September 2002, when Bush chief of staff Andrew Card uttered the infamous words, "you don't introduce new products in the summer." "That was a defining moment because I realized that these are parochial people. They're selling us a war, selling us a product for domestic purposes so W. can be Mr. Commander-in-Chief and on that we can win congressional elections," Brown says. "And that's when I said it stinks."
Kiesling is not a pacifist. When the Balkans were imploding in 1992, he says, "it was clear to me that our policy of just pious bleating in favor of peace and unity was not going to do anything, and if we wanted to save lives there the international community would have to be prepared with an incredible threat of force." He and a group of colleagues wrote a memorandum of dissent to the department urging U.S. military action. But then came 2002, and Kiesling, who had begun his foreign service career under Reagan as an analyst, was offended by the connection drawn between Sept. 11 and Iraq. "If there had been any connection at all, we would have trumpeted it from the rooftops," Kiesling said.
Wright arrived at her decision in January 2002, while watching President George W. Bush's State of the Union address on television in Kabul. Wright was sharing a two-room bunker with the four other diplomats assigned to the bare-bones U.S. embassy in Afghanistan (and, surely not pleasantly, sharing one toilet and one shower with 100 Marines) when Bush announced to the world that Iraq, Iran and North Korea had hereby been designated an "axis of evil."
Wright recalls: "We looked at each other and said, 'What? Why are they doing this now?'" Over the next 14 months she watched, dismayed, while 130,000 troops amassed in Kuwait even as the Bush administration ignored Israel and Palestine, refused talks with North Korea and imposed what she considered the "unnecessary curtailment" of civil liberties under the Patriot Act.
All three fear the war's effects on America's image abroad. "Americans have been considered vulgar, badly brought up, we don't know how to use knives and forks properly, we wear shirts that are too colorful?you name it," Brown says. "But nevertheless we didn't shoot first. And with this catastrophe in Iraq we shot first. Basically, we were the good guys and we're no longer the good guys."
The loud, vulgar adolescent behavior characteristic of many Americans is really just a minor nuisance, unless it's backed up with weapons systems, 200 billion dollars, and a bogus ideology that focuses on imaginary WMDs and missile defense instead of tangible threats. That's the point at which certain wealthy, barely literate graduates of Yale and Harvard and their corporate cabalist buddies become villains.
If only the French would invade the USA and save us from this evil regime.
"If only 540 [individual or corporate] taxpayers paid the amount Berkshire will pay [$3.3 billion in 2003], no other individual or corporation would have to pay anything to Uncle Sam," Buffett boasted. "That's right, 290 million Americans and all other businesses would not have to pay a dime in income, Social Security, excise or estate taxes."
Buffett, one of the most successful investors in history, also noted, "If class warfare is being waged in America, my class is winning."