Barron's recently stumbled across several hedge funds that have hired a five-year-old Boston company called Business Intelligence Advisors, which employs a number of former CIA and other national-security operatives to do behavioral analyses of corporate executives. The intent: to detect when managers are being less than candid or lying in their communications with shareholders, during interviews and quarterly earnings conference calls or even in press releases or management discussions in 10-Ks.
[...]
Other cues that BIA experts place a lot of stock in are management replies larded with irrelevant specifics, meant to obscure some troubling issue. Often the details are accurate as presented.
Qualifying words can be important also. When executives resort to such locutions as "candidly," "honestly" or "to tell the truth," watch out. They might be trying to manage perceptions rather than convey fact.
Ad hominem attacks on accusers are another staple of managements seeking to cover up problems and blunt charges. Typically, whistle-blowers and other critics are dismissed as "disgruntled former employees" or "cranks." The aim is both to impugn an accuser's credibility and to avoid having to directly deny the charges.
Nonverbal cues can also be important, though they are often subtle. For example, BIA officials assert that, in judging credibility, most people are overly biased by such nonrevelatory externals as lack of eye contact, apparent nervousness and posture. Instead, BIA looks for such indicators as what it calls "shifts in anchor points." Executive zingers are often proceeded by a sudden shift forward in body weight, for example. The onset of fidgeting -- such as playing with a water bottle or cup of coffee -- can likewise betoken acute discomfort in an executive. This is particularly telling if it contrasts with previous mannerisms and tics.
Where are the ex-CIA spooks when you really need them? I'll tell you where: in Boston, collecting sweet fees from hedge funds grown fat. Too bad, because I think can think of a really big liar who regards himself as a CEO to whom all of this applies. Everything: the reliance on irrelevant specifics meant to obscure some damaging truth, the verbal qualifications, the ad hominem attacks on accusers as an avoidance strategy, the disingenuous body language. It's all there in a highly managed choreography of deception.
Except that this whopper of a liar doesn't have a stock to short. Wait a second, hang on, I almost forgot — he did.
In Felton, south of San Francisco, [German utility and owner of American Water] RWE became embroiled in a battle with a group called FLOW, or Friends of Locally Owned Water. American Water secured ownership of Felton's water system in January 2002 when it bought the water holdings of a Connecticut company that had long controlled the asset. Eight months later, American Water, in the process of being acquired by RWE, asked the California Public Utilities Commission for approval to raise rates in Felton by 74% over three years. It noted that rates hadn't been raised since 1998 and cited the cost of infrastructure repairs.
Soon after, FLOW was formed. Members handed out literature at shops, knocked on neighbors' doors and lobbied county politicians to stir opposition to RWE. "I've had no vacation in three years. It's all I've done," says 85-year-old Frank Adamson, a retiree and FLOW member.
People in Felton complained that response times to broken water mains and the like slowed as RWE centralized operations. Accident reports from Felton were routed to a call center in Alton, Ill. Daniel Kelleher, senior vice president at American Water, says the national call center is aimed at boosting service. "It became a much more difficult project than we anticipated, and it's still a work in progress," he says. While state regulators didn't grant the entire rate increase, they decided after more than a year that American Water could raise rates 44% in Felton. Momentum grew in the community to try to take over the Felton water system and return it to public control.
[...]
In Monterey, about an hour's drive south of Felton, RWE spent more than $300,000 to defeat a measure proposing a study of whether to buy back the water system. In Chattanooga, Tenn., where water has been in private hands since the Civil War, Mayor Ron Littlefield has approached RWE's local unit about a municipal buyout. He thinks the city can save money by combining water with municipally owned power and sewer utilities. Chattanooga's water, he says, is a "private island in the middle of a sea of public utilities."
Laurel Prussing, the mayor of Urbana, Ill., became interested in a municipal buyout after a growing number of "boil orders," when people are told they must boil their water to make it safe to drink. When she tried to investigate a boil order in February, she says she was put on hold for 25 minutes before being connected to a call center in another city. An American Water spokesman disputed that boil orders have risen in Urbana and said the company distributes special telephone numbers that municipal officials can call in an emergency.
Privatization is quite often the opposite of efficiency. In the case of water privatization, all it does is efficiently remove money from communities.
Meanwhile, the UN says privatized water is "creating social and political discontent, and sometimes outright violence" in poorer countries. Poorer countries like the USA — which happens to be trillions of dollars poorer than it was just a few years ago, thanks in no small part to the privatizers, the Halliburton/Bechtel/Enron/Kinder/Carlyle GOP, a crony scheme on a global scale.
Five years after 9/11 is too late for counterfeit displays of concern. In the years immediately following the destruction of New York's World Trade Center, Chicago's Mayor Daley repeatedly requested that the Federal Aviation Administration impose a no-fly zone in downtown Chicago, now abruptly the home of the United States' tallest building, but this simple and logical (and cost-free) protection was denied. Instead, obscene amounts of money were spent protecting Mount Rushmore. Three million people live here. No million people live at Mount Rushmore. As I said back then, in George W Bush's America, human beings are expendable. Presidential images are not.
The dubious Sears Tower plot was supposedly foiled by a secret program of financial transaction tracking (WSJ) — emphasis on the word "secret." In other words, the whole story was planted in the media as a head fake to make American citizens welcome more intrusion into their privacy and to forget the secret NSA intelligence surveillance of their phone records in collusion with telecom companies like AT&T.
Obviously, your banking and other financial records are next up for scrutiny.
Here's the real Republican revolution — polarizing and ghettoizing everything in the whole fucking country. They started with how people vote by re-engineering congressional districts and now have even affected how people save. Will we someday have savings accounts in your choice of Red or Blue?
How far can this insanity go? Should you have the choice of mutual funds in all of the following flavors?
Democrat Republican Independent Smoking No Smoking Christian Non Christian Gay Single Gay Married Moderately Sane White Support-the-Troops-Ribboned-SUV Chickenhawk KKK White Supremacist Nonwhite Immigrant Smelly Hippie Other
Let's take the idea a bit further. At mediocre restaurants in strip malls there should also be separate parking sections for each self-identified tribe. After all, what makes the handicapped so special?
Stop! Enough with the divisive identity politics already. Everything from our retirement pensions to our health insurance have been converted to privatized investments like IRAs, 401(k)s and HSAs. It's bad enough that privatization is enabling unwary investors to make stupider and stupider investment choices — "choice" being the code word for really bad idea, or "God's gift to Republicans." And adding ideology and identity politics into the mix makes the choices worse and worse.
The Blue Fund Group's mutual fund is anticipated to cost 1.75% of assets in fees. That's high, and high is bad. So investors will be paying a premium for ideological purity. Is it worth it, or have we up-ended the entire idea of investing? How is it even possible to judge the competence or success of such funds? Can you imagine yourself saying, "My Blue State Fund is down ten percent, but that's okay because it reflects my values"? If so, are you nuts?
I can understand not wanting to invest in Halliburton, but the proper way to fix that is to fix the US government as opposed to creating new investment ghettos as a workaround. Isolationism driven by ideology in personal investment makes no sense. It's a bad idea for bad times.
HONG KONG -- Global private-equity firm Carlyle Group LP said yesterday it raised $668 million for its Carlyle Asia Growth Partners III Fund, which invests in private companies across China, India, Japan and South Korea. [...]
Carlyle Asia Growth Partners III is the third fund managed by the Carlyle Asia Growth Capital group, which has an aggregate committed capital of about $1 billion in the region.
Carlyle Asia Growth Capital also manages Carlyle Asia Venture Partners I, which was launched in 2000 and has $159 million in assets, and Carlyle Asia Venture Partners II, which was launched in 2002 and has $164 million in assets. Combined, those two funds have invested in 37 companies in Asia.
U.S.-based Carlyle Group has $39 billion under management globally.
"We look for companies with outstanding management and track records, differentiating and proven business models, as well as large potential markets," said Wayne Wen-Tsui Tsou, Carlyle Asia Growth Capital's managing director.
Suddenly the tapping tiptoes of wimpy WASP ex-presidents with billion-dollar purses can be heard skittering into dozens of Asian boardrooms, according to the June 2006 edition of Asia Business & Investing:
Former President George Herbert Walker Bush probably had no visa problems when he quietly visited China recently.
Late-night calls to contacts in Beijing not only determined why the former president was in China, but his favorite Beijing restaurant and hotel.
It turns out the former GOP president was in China doing some legwork for his pals at the enormously powerful, and very privately held Carlyle Group. It's a Washington, D.C., investment firm with huge clout and a huge international roster of advisors and managers.
Its Chairman is Louis V. Gerstner, Jr., its Chairman Emeritus is Frank C. Carlucci, Senior Counselor is James A. Baker, III (you remember him from the 2000 Bush Supreme Court presidential campaign) and its senior advisors are Richard G. Darman and Arthur Levitt.
Trust me, the Carlyle team is just as well stocked at the bottom as it is at the top.
Anyway, it looks as though Bush 41 was in China because the Carlyle Group is opening a Shanghai office. It plans to invest up to $1 billion in China over the next two years.
The most enlightening part of this article is seeing how foreign business interests regard American democracy as the laughable sham it is: "... James A. Baker, III (you remember him from the 2000 Bush Supreme Court presidential campaign)."
"Supreme Court presidential campaign" is the best four-word description of 2000 I've ever heard.
Poppy's fortune cookie says this: "You will get richer and richer, and then die." My prediction is that Poppy will die in 2010, the one year when there is no estate tax — compliments of his son — and his heap of Carlyle millions will eventually go to Jenna tax-free so she can invest it, as only she can, in vodka and Marlboro Lights.
Plaintiffs' attorneys in the Enron shareholder lawsuit filed papers Tuesday saying Houston law firm Vinson & Elkins helped executives at the company conduct a massive accounting fraud that led to that firm's December 2001 bankruptcy and billions of dollars in investor losses.
V&E was no "mere scrivener, drafting, assembling and presumably even stapling closing documents," for Enron, "oblivious to the import and impact of what its most important and largest client was doing," the filing made in U.S. District Judge Melinda Harmon's court said.
Rather, V&E and Enron were "joined at the hip," with more than 600 firm lawyers having worked on hundreds of transactions over the years, according to the filing made by Bill Lerach, lead lawyer for the investors.
From 1997 to 2001, Enron was one of V&E's largest clients, paying $160 million in legal fees, the filing said.
Lay, Skilling, Cheney and Bush — you have to give them credit for amazing amounts of consistency in their defiance against reality in the stock markets, in Iraq, and in New Orleans. And you have to credit V&E in their ability to enable the most insidious evils to gain such national and international importance.
As you may know, President George W. Bush has three brothers and a sister. Together, the five Bush children have produced 10 combat-capable enlistment age adults who would be suitable for military service in this, a time of war declared by their father or uncle.
These children are the president’s daughters, Jenna and Barbara; Jeb’s sons George P. and John Ellis Bush Jr., and daughter, Noelle; Neil Bush’s daughter Lauren and son, Pierce: Marvin Bush’s son* Marshall; and Dorothy Bush Koch’s son Samuel, and daughter Ellie.
So far none of them have chosen to take up arms in the great battle for freedom that is Iraq.
And neither did the great swath of chickenhawks among their elders in the administration.
"There's been nowhere to hide," says Jeffrey Saut, chief investment strategist at Raymond James. "This is one of the more deadly declines [in the Dow Jones Industrial Average, down 6% since May 10] I've seen in a while." [Ian McDonald, WSJ]
Aw, Jeffrey, don't be a gloomy Gus! Look at the bright side! Bush's economic policies are working, Rove said so! Didn't you hear his speech? And here's the proof — tax preparers, private prison operators, and funeral homes are all in the black...
"Other lower-growth, but stable businesses that have stayed out of the red over the past month are tax preparer H&R Block Inc. -- up 6% over the past month -- private prison operator Corrections Corp. of America -- up 6.7% -- and funeral-home operator Service Corp. International, whose stock is up nearly 1%."
All hail the Republican growth economy: death, taxes, and incarceration.
WASHINGTON -- President Bush, in a last-minute schedule change, will travel to Budapest this month to mark the 50th anniversary of the Hungarian revolution.
Where's David Broder when you need him?
After all, thanks to his non-penetrating insights into the Clinton marriage, he ought to be pointing out to his dear readers that the recently appointed ambassador to Hungary is one of Bush's old girlfriends: April Foley.
Where will Laura be that day? In "congress" or not?
In June 2002...the Pentagon quickly drafted plans to attack the camp [but]....the plan was debated to death in the National Security Council....The Pentagon drew up a second strike plan, and the White House again killed it....The Pentagon drew up still another attack plan, and for the third time, the National Security Council killed it.
Military officials insist their case for attacking Zarqawi’s operation was airtight, but the administration feared destroying the terrorist camp in Iraq could undercut its case for war against Saddam.
Unlike Saddam, Zarqawi really was developing poisons such as ricin and cyanide for use in terrorist attacks in the West and elsewhere. But we hesitated to take action because destroying the Ansar al-Islam camps might have been inconvenient for George Bush's speechwriters.
Zarqawi has reportedly killed at least 700 people since then. But it might be many more. We will probably never know for sure how many people died at his hands because of George Bush's uncertainty in the face of danger.
Will you hear that on CNN or NPR?
The only media talking head who has a chance of getting this story right is Jon Stewart, now that farce has officially eclipsed journalism in the USA.
The market speaks.WSJ: "The Dow Jones Industrial Average, which fell nearly 200 points yesterday, lost another 90 points to 10969, taking it below the 11000-point level breached early this year. If the pace of selling holds, the Dow's total two-day decline would be the worst of the year, topping a 2.55% swoon on May 17-18." It's continuing to fall as I write this, and the market's not closed yet.
That's what happens when banning gay marriage is more important than preventing Central Asian wars or enforcing federal fiscal discipline.
Right-wing fund managers Steve Milloy and Tom Borelli are grabbing lots of attention for accusing companies of devoting resources to pet causes instead of maximizing profits. Last month they showed up at Goldman Sachs' annual meeting in New York to attack CEO Hank Paulson for, among other things, chairing the Nature Conservancy and authorizing Goldman's donation of land it owned in Chile to the Wildlife Conservation Society. But a look at the returns of the pair's grandly named Free Enterprise Action Fund suggests that their own bottom line could use some help. The $5.6 million fund gained just 2.32 percent from March 1, 2005, its first day in business, through the end of the year, net of expenses. That's well below the S&P 500's 4.72 percent gain during the same period -- and it doesn't hold a candle to the 18 percent appreciation of Goldman shares.
Sure enough, the partners hold their own venture to different standards. Their returns, they say, don't matter as much as their stated cause: counteracting the influence of so-called socially responsible investment firms, like Domini Social Investments and Calvert, on corporate behavior.
"We're not trying to be a high-performing mutual fund," Milloy, 47, tells Institutional Investor. "We are imitating the left. Left-wing social-political activists don't like capitalism. They hide behind human rights. We want to help oppose that."
The pair have plenty of experience standing up for corporate America's right to ignore do-gooders. In his spare time Milloy publishes JunkScience.com, a Web site devoted to debunking global warming as a "myth." He formerly ran the Free Enterprise Action Institute, which was funded in part by ExxonMobil. Borelli previously worked as a lobbyist for food and tobacco giant Altria Group. . . .
As Unknown Ideal points out, "I'm sure these self-professed champions of capitalism will attract a lot of investors with a fund philosophy like 'We're not trying to perform well.'"
It cracks me up that so much attention is being paid to Bush Pioneer and new Treasury secretary nominee Paulson as a global warming believer in direct contrast to the administration he loves so much. But the opinion of the Secretary of the Treasury on global warming is irrelevant — he wasn't nominated for Interior or Energy.
The grand irony, of course, is that so-called capitalists Milloy and Borelli are treating the stewardship of their investors' money as some sort of perverse attempt at advocacy. Talk about a dereliction of fiduciary duty. Now Republican madness has come full circle: capitalists who don't practice capitalism.
But Bush's failure to grow today's opaque economy, even with the nomination of his third pig-lipstick salesman as Treasury secretary, is beginning to appear more than a little ominous. You don't have to be a total market wonk to understand signals like James Turk's:
In “The 2005 Financial Report of the United States Government”, US Comptroller General David Walker reported that “the federal government’s fiscal exposures now total more than $46 trillion, up from $20 trillion in 2000.”
Yes, it’s insane. But it’s even more insane that people buy the US government’s T-Bonds and T-Bills thinking that they are a safe, low-risk investment. Maybe they used to be that, but things change. US government debt instruments are no longer a safe place to park your dollars.
So much for fixed-income investing. Don't tell Grandma — government debt is now as risky as a pump-and-dump penny stock.
The article is called "Economic Suicide," and Turk concludes: "It’s also monetary homicide. The dollar as we know it is being killed, poisoned by debt from the hand of the federal government with its accomplices in the Federal Reserve and the banking system. So far it’s been a slow death, with few people watching, but that’s about to change. With the horrific new amounts of debt being injected into the dollar’s weary remains, its death is not far off."
Turk was also the subject of an interview in Barron's in which he predicted gold at $8,000 an ounce, not exactly a sign of dollar strength.
The oddest thing to me is all this is that, in my old-fashioned view, Republicans are supposed to be all about country clubs and stockbrokers and finance and fiscal restraint and small government, not gay marriage or abortion or evangelical Christianity. At the very least, you suits are supposed to make money because your One True God is really The Market, and it used to be true that to old-school Republicans little else mattered.
But instead today's Bush-league Republicans waged a sham war that created the largest debts in human history, one that continues to depress the market, and therefore all investment in the broad swath of US businesses, signaling that you have moved on and no longer believe in the same market forces that worked so empirically and spectacularly well under Clinton. Instead of growing the economy Republicans have decided to loot it, starting with the US Treasury.
The market will not really rebound until "transparency" takes place, in which we collectively can imagine a future that most of us like. Then we'll buy some stocks, and wealth in the trillions will suddenly appear.
But that's not happening right now. Our worldwide reputation is at a historic low, our national debt is a malignancy out of control, a new salesman just arrived from Goldman Sachs to tell us how great it all is, and there's not a grown-up in sight.
Who is the loser? The so-called Ownership Society itself — the 401(k) accountholder, the pension fund, the entrepreneur, the homeowner, and most of all, the small taxpayer (there are no more big ones) who is paying off the balloon mortgage on the national insanity.
Until Bush is out of office the Invisible Hand of the market will do nothing but strangle the American taxpayer.
