Hiatus. See you next week.

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Tic tic... boom! Who knew? Apparently there's a whole industry of people whose job is nothing but to spot the tics of corporate liars, and to help their hedge fund clients profit from the resulting investment implosion by shorting the stock. From Barron's profile of BIA:

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.

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Quenching the thirst for privatization. Yesterday's WSJ had a good article about the utter failure of water privatization:

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.

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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.

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