Tuesday, February 13, 2007

Protection of whom...

An interesting article in the New York Times this morning:
S.E.C. Seeks to Curtail Investor Suits

The article details how the Securities & Exchange Commission (SEC) is moving toward protection of large public firms instead of traditional protection of investors:
The Securities and Exchange Commission has begun to take steps on two fronts to protect corporations, executives and accounting firms from investor lawsuits that accuse them of fraud.

Last Friday, the commission filed a little-noticed brief in the Supreme Court urging the adoption of a legal standard that would make it harder for shareholders to prevail in fraud lawsuits against publicly traded companies and their executives.

At the same time, the agency’s chief accountant told a conference that it was considering ways to protect accounting firms from large damage awards in cases brought by investors and companies.

Critics said that the moves signaled a major retrenchment from the post-Enron changes and showed that a lobbying push by big companies, Wall Street firms and the accounting industry was gaining traction as they seek to roll back what they see as onerous regulation and excessive investor litigation.

This is a different, and interesting tactic that the SEC is using, reversing much of its history. The statutory purpose of the Securities Acts (the Securities Act of 1933 and Securities Exchange Act of 1934) is to protect investors by promoting full disclosure of information thought necessary to informed investment decisions.

Protect Investors; Promote Full Disclosure; Informed Investment Decisions.

Yet, this is a very difficult issue, with very fine lines to maneuver. It is vital to protect investors for many reasons: ensure demand for capital investment into our markets; provide for a level playing field among investors so that investors who feel they are at a disadvantage do not take their capital elsewhere; and to provide remedy to the "average" investor who may be more easily taken advantage of by the "professional" investor who may be more informed. But all of those really boil down to ensuring that capital wants to flow into our markets because investors have complete confidence in those markets.

On the other hand, we also have to provide both ease of access into our markets, and also demand for businesses to generate capital from our markets. This requires that we keep barriers to entry low enough to ensure access and demand.

Those are somewhat conflicting interests that must be managed to effectively regulate a market. It is very easy to slip too far to either extreme too quickly. Clearly, in the late 1990s, early 2000s - in the midst of the Enron, WorldCom, Adelphia, Tyco scandals - the companies had gotten out of control, and oversight (primarily from the auditors, not necessarily the SEC) was lacking. Yet the response - Sarbanes-Oxley - is (in one man's opinion) an absolute disaster of a regulation. It is horrendously expensive to public companies, yet in real terms it simply does not increase controls - at least not in proportion to the cost incurred.

How do you balance these interests? In my opinion, the auditing firms bear much of the blame for some of the recent scandals and financial disasters...yet, there should be real concerns among the investing comunity that there are only 4 major public accounting firms left. That simply does not appear to provide adequate competition, and would seem to lead to more conflict of interest, more incentive to hedge, more dependence upon these public companies for their revenues and growth (and therefore less incentive to questions their financial decisions).

Although investors might immediately read an article like that above and jump to the conclusion that the Bush Administration is using the SEC as a tool to benefit large corporations - and that those companies and accounting firms have deep pockets to lobby for these changes that add to their bottom line. But to those who look with a more critical eye, maybe providing protection to accounting firms (in an attempt to prevent consolidation), and lessening the burdens on public corporations (in an attempt to bring more companies in to the market to raise capital - thereby giving investors more choices) is a long-run help to investors.

Clearly, the pendulum could swing too far, but these issues are much more complicated than "the SEC is selling investors out!" Our Securities laws have worked reasonably well for 70+ years now, and our markets are some of the most transparent, and trusted in the world. Even if these policies arguably go to far to protection of large firms at the expense of investors, this is unlikely to be the end of our consistently effective securities regulation traditions.

Thursday, February 08, 2007

US 2 - 0 MEX - The Domination Continues...

A few quick comments on last night's US National Soccer Team's 2-0 victory over Mexico. This performance continued the recent domination of Mexico by the US - and I think last night's victory was one of the more important over the past seven years, even though it was "merely" a friendly.

When I saw the lineups for the match, I immediately thought the US was toast. Mexico brought their "A" team - even incluing 5 players in their 30s have have little hope of making a difference for the El Tri in the 2010 World Cup. Generally, these first-year-of-the-cycle friendlies are for testing new, young players to see if they can cut it at the international level. Not for Mexico - they wanted to embarrass the US. The US, on the other hand, went with a bunch of youngsters, and only a few of the veterans to the international game - including Landon Donovon, Pablo Mastroeni, and Carlos Bocanegra.

I'm delighted (and proud) to say the US proved me completely wrong. Thoughts:

~ Jonathan Bornstein looked great at left back. He started a bit slowly, but in the second half, he was just running right by the guys on the Mexican right flank. He provided solid defense after the first 10 or 15, and was a nice little offensive force later in the game. He could be a real find.

~ The defense was shaky at times on the flanks - but was (in my opinion) great after that first US goal, when Mexico POURED players forward (including 4 or 5 pure strikers) for about twenty to twenty-five minutes from 55-75 or 80. Over and over, Conrad and Bocanegra repulsed attacks, and when their was a break down, due to too many Mexican players in the box, Tim Howard was rock solid in goal. The defense certainly withstood an amazing amount of pressure and came through with the shutout. Jimmy Conrad was a deserving Man of the Match.

~ I was a bit disappointed with hometown Houston Dynamo Ricardo Clark in the first half - but in the second, I thought he was really composed, and smooth on the ball. He reminded me so much in the second half of American-great Claudio Reyna - so smooth, simple passes, never too flustered. Clark made mistakes, but I thought, in the face of a wildly attacking Mexican side, he was cool, calm, and collected.

~ Clint Dempsey really has the self-confidence (or arrogance, depending on your perspective) to become one of the real key-factors in this team over the next eight years. I'm hoping that his fitness issues are simply a factor of the off-season - but the last couple of times I've seen him play, he seemed winded early.

On the not so bright spots:
~ Chris Rolfe looked lost and completely unready for intenational football.

~ Eddie Johnson is really disappointing me. It just doesn't appear that he's willing to work hard. He appears to have the talent of an all-time great, and the work ethic of a rec-league player. Maybe that was simply in contrast to my final point:

Landon Donovan looked really, really good in the second half. I have not historically been a big Donovan fan. Last night, for the first time I can remember since around 2002, he really decided to put his stamp on the match, and I thought he did so. He worked so hard, both up top, working back into the midfield to get touches and provide a link, and - maybe most impressive to me - in tracking back into defense during that twenty-minute Mexican onslaught. He worked so hard - and absolutely deserved his late goal...and I was so excited to see him actually make an aggressive move to the goal and provide a nice simple finish. These are all things that I have historically been most critical of Donovan: poor finishing; not being aggressive; not working to get his touches. He really impressed me last night - on a significant stage. No, it wasn't the World Cup - but it was a full-strength Mexico, our biggest rival, and closest competitor in CONCACAF.

Of course, it doesn't look like their really that close anymore!

What's Good for Who?!? is Good for America?...

About a year an a half ago, I posted about General Motors, and health care costs here: GM pushing Union on healthcare cuts...

In that post, I commented that cutting union health care benefits is not a valid long term strategy, and quoted Prof. Katherine Stone (UCLA Law):
Efforts to shift costs onto employees or cut back on health benefit coverage has meet with intense opposition. The alternative is to shift the cost to the government. General Motors' competitors in Germany, Japan, and the United Kingdom all have national health systems to pay for their workers' health care needs. Fair trade requires a fair playing field, and so we need to level our field upward if we want to compete. The lesson of the General Motors' impending doom is that national health insurance is not some socialist pipedream but good policy for American business. After all, as General Motors Chairman Charlie Wilson told the U.S. Senate in 1955, "What is good for General Motors is good for America."
But, after all, it is a new age. Maybe the up-to-date version of the classic quote above would be: "What is good for Wal-Mart is good for America."

Well, either way you say it, both point in the same, new direction:

Healthcare Reform Calls Get Louder

An unusual new coalition of big employers, labor unions and politicians united Wednesday to push for "quality, affordable" healthcare for all Americans by 2012.
The proposal adds to growing pressure on Congress, President Bush and statehouses across America where governors including California's Arnold Schwarzenegger are calling for a major overhaul of health insurance coverage.
The idea united some bitter adversaries Wednesday and indicates that there is business support for change.
Wal-Mart Stores Inc., the nation's largest private employer, joined with one of its biggest critics, the Service Employees International Union.
AT&T Inc. signed on along with its major union. Silicon Valley is represented by chip maker Intel Corp. So are both major political parties.
"The fact they even got to the same table to talk about this in the first place is pretty amazing," said Helen Darling, president of the National Business Group on Health, a national nonprofit organization that represents large concerns such as Exxon Mobil Corp., IBM Corp. and Procter & Gamble Co.
The proposal was short of specifics but had four broad themes: universal health coverage by 2012, better preventive care and disease management; more efficient healthcare delivery, and cost-sharing by workers, employers and governments.
The initiative, dubbed Better Health Care Together, also guarantees that healthcare will take on an even larger role in the 2008 presidential campaign.

How about that - acknowledgement that universal health care would be a competitive advantage to our American businesses. This merely confirms what many of us have thought for years and years - that a healthy (physically, emotionally, and financially) America is a better America.

Maybe this time the folks in Washington will actually listen - since the voices of big business are joining the voices of the average citizens in calling for health care reform.

Friday, February 02, 2007


A few thoughts that I have been having lately...

Bush's escalation plan for Iraq is very instructive as to the true motivations of Bush and the neocons who ordered the invasion and occupation of Iraq. Let me explain what I mean...

Let's think back to the justifications for the invasion four and five years ago. Obviously, there were a series of differnt justifications offered by the Bush Administration, but they essentially came down to these four:

~Link between Iraq and Al Qaeda and the terrorist attacks of Sept. 11
~Weapons of Mass Destruction
~Sadaam Hussein was a really bad dictator
~Bring democracy to Iraq

Each of these justification broke down and forced Bush to scramble to the next one, but these were the basic ideas of why we had to invade.

Now, I have always opposed the invasion. Having said that - look at what happened after we did invade:

~We swept to a quick and decisive military victory over Iraq
~We toppled the government of Sadaam Hussein
~We confirmed there were no WMDs
~We killed, arrested, and/or convicted the leadership of Hussein's government
~We oversaw democratic peaceful elections in Iraq

In short - we won. Look at the (admittedly trumped up) justifications for the invasion that the neocons listed above. Are there ANY of those reasons/goals/justifications that were not met? Clearly not. We won.

But we're still there - now in the midst of a civil war that was easily foreseen, but completely unplanned for. Not only are we still there, but Bush and his neocons are actually escalating our presence there. Why?

Because the justifications that Bush and his administration spouted were never the reasons why we invaded Iraq. If ANY of those were genuine, we would be out by now. No - those were never the motivations for the invasion. So, what is the real motivation?

Well, to answer that, let's look at why we still have our military there, and why we are escalating our involvement in a tribal civil war...

The only answer is empire.

The neocons wanted Iraq as a foothold - as an extenstion of American Empire into the middle east. They wanted a puppet government to use. They wanted expansive military bases to use. They wanted access to Iraqi oil assets. They wanted to use these "assets" in any future instability/conflict in the middle east. In short - they wanted Empire. That is why we are still in Iraq. That is why we are esclating our involvement.

There was no link between Iraq and Al Qaeda. There were no WMDs. Sadaam is gone. Democracy - at least a primative form of it - has been established. And yet we are still building military bases, we're still sending more troops over.

Bush and the neocons who have supported the invasion and occupation of Iraq have never been truthful about their real designs for Iraq - and they are not being truthful now.