As an aside, I don't think state lotteries should be allowed to advertise.
Actually, I agree. Although given the profitability, it's easy to justify tax dollars being spent on it.
1004. dusty - 2/2/2002 5:21:49 PM
judithathome
But it's easy for someone who understands more about stocks and plans and things like that to think everyone ought to understand that stuff. Sometimes, people have a hard time with things getting it, that's all I'm saying.
I'll immodestly say I am good at it. I don't always have a sense of what is obvious and what is not so obvious to others. That's why I would like to come up with some rules of thumb and promote them. If it turns out everyone understand what they should do, and makes stupid decisions anyway, then there isn't much I can do. But I think if it isn't obvious to me whether a 5% discount on an individual stock makes it more attractive than a diversified fund, maybe some others might have trouble figuring it out.
I think it should be fairly obvious that, within a 401(k), the amount that should go to company stock is usually zero. However, while I feel this is obvious, and Calgal thinks it is obvious, I'm not yet convinced that everyone understands why one should not (in general) buy company stock in a 401(k). Obviously people do it. And it isn't simply Enron executives lying to their employees. the proportion of Coke stock in their 401(k)'s is higher. The proportion of P&G stock in employee plans is even higher.
33.2% of 401(k) balances (not counting the employee match portion), in plans that have employer directed contributions are in company stock. Why so high? Is this solely due to mendacious management? I doubt it.
1005. CalGal - 2/2/2002 5:28:44 PM
But it's easy for someone who understands more about stocks and plans and things like that to think everyone ought to understand that stuff.
But I'm not good at it. I don't think one needs to be "good" at it. There are plenty of people to turn to for advice--much of it free, or close to it.
However, this isn't a matter of being "good" or "bad" at it. This is a simple case of understanding that stock prices can go down to zero. Everyone would get that answer right on a test.
1006. CalGal - 2/2/2002 5:34:22 PM
But I think if it isn't obvious to me whether a 5% discount on an individual stock makes it more attractive than a diversified fund, maybe some others might have trouble figuring it out.
I agree that plenty of people would have trouble figuring it out. I would also say that anyone who doesn't want to take the time to figure it out should stay the hell away from it.
But that's again neither here nor there. Because the issue isn't which of these two options is the more "attractive". The issue is if these are the only two options, and this represents all of your retirement money, is there any question as to which choice you should make?
1007. wonkers2 - 2/2/2002 5:37:51 PM
The taxpayers are subsidizing a private retirement program, not a lottery or a casino. The rules need to be changed. Let people gamble with their after tax dollars.
1008. dusty - 2/2/2002 5:44:19 PM
CalGal
As for the rest of your post, I think we're talking past each other. I don't care what "correct allocations" ought to be. Truly. And in fact, I have no idea.
I'll try again.
You say it is obvious that one should not put 100% of savings into a single stock.
I agree it is obvious to me, and I accept it is obvious to you. I think it should be obvious to most people, but I am open to hearing opinions of others, to determine whether it is or not.
Presumably, if someone asked your advice on retirement funds investment allocations, you could say without hesitation:
"Do not put 100% in any one stock"
So far, we agree.
And I do realize there are anecdotal stories about people that did this. So we can agree that they should have known better.
But a person making a savings decision needs more help than "Do not put 100% in any one stock."
If I wanted to be picky (but think of this in coding terms), that rule would allow 99%. Staying away from rules for a second, and just thinking logically, if 100% is a bad choice, 99% is probably also bad.
But what if the person asks what they should do.
Suppose they say that they have three alternatives, and so they are going to divide the money equally.
Is that a bad decision (Hint: yes)?
Is it an obviously bad decision?
I don't know.
It is obvious to me, but I know how to do the math. Is it obvious to the average person making the decision that a one-third allocation between the equity fund, the individual company stock, and the ESOP choice is a bad decision?
More importantly, even if you can figure out that the right answer is zero per cent for the company stock 401(k) option, I don't see immediately how to decide between the ESOP and the 401(k).
1009. dusty - 2/2/2002 5:44:35 PM
To out it another way - people that put 100% of their savings into Enron stock made an egregiously bad decision. A decision so bad they don't deserve sympathy for being so stupid.
How about the people that put 2% of their six per cent savings into company stock. This is also a bad decision. How obvious is it?
1010. CalGal - 2/2/2002 6:33:29 PM
Dusty,
I would consider it an insult to tell any educated person not to put all of their retirement income in one stock. I'd expect a sarcastic snort--"oh, thanks. I could have gotten that from my five year old."
But I think you are now agreeing that we are talking about different things, so I'll play. (g)
Yes, I agree that we could give people more assistance with their investment decisions. In fact, I certainly could have used some. I don't think we've really begun to experience the downside of the shift from pensions to 401(k)s--even though I think 401(k)s are much safer in the long run.
How about the people that put 2% of their six per cent savings into company stock. This is also a bad decision. How obvious is it?
It is far less obvious, but in most cases, I think it is a manageably bad decision. None of the horror stories have come from people having made that decision, anyway. (Also, if they had the option to sell the stock I don't know that it was a bad decision.)
But while the people who took that option might suffer a significant hit to their portfolio, how much money would they actually have lost?
1011. wonkers2 - 2/2/2002 10:38:38 PM
Cal, Just curious. Why do you think 401ks are safer than defined benefit pension plans? They are more portable which is a big plus, but I don't see how they are safer.
1012. Cellar Door - 2/3/2002 11:13:43 AM
1013. wonkers2 - 2/3/2002 11:34:15 AM
Quite a difference between Ken Lay's values and those of Warren Buffett, Bill Gates, William Clay Ford, Gerard Levin, Richard Parsons, Ted Turner, Sam Walton, Charles Schwab, Michael Bloomberg, Bill Cosby, Oprah Winfrey, David Packard, William Hewlett, Alfred P. Sloan, Charles F. Kettering, et al. My point being that the Ken Lay's of the world are outnumbered by business people whose values are more enduring.
1014. dusty - 2/3/2002 1:26:17 PM
Cellar Door
That article didn't make you barf?
You must have a higher tolerance for unmitigated bullshit than I have.
1015. CalGal - 2/3/2002 2:09:02 PM
Well, paring away the hyperbole, I've read a number of conservatives who agree that Enron's failure is a particularly Republican problem--that is, if they want everyone to believe in the wonders of markets and capitalism, they have to make damn sure it's safe.
Hence Will's great comment: Capitalism is a government program.
1016. robertjayb - 2/3/2002 2:39:21 PM
Dave Barry explains Enron...
Today we're going to explain the Enron story, using simple financial terms that you can understand, such as "dirtballs."
1017. CalGal - 2/3/2002 6:23:30 PM
Oh, that's hysterical. I love Barry.
Q. Doesn't Enron have a board of directors whose members are responsible for overseeing the corporation?
A. Yes. They are paid $300,000 a year.
Q. So how could they have allowed this flagrant deception to go on?
A. They are paid $300,000 a year.
Q. But didn't Enron have outside auditors? Why didn't they discover and report these problems?
A. Yes, Enron had one of the most venerable auditing firms in the nation.
Q. What do you mean by "venerable?"
A. We mean "stupid."
1018. robertjayb - 2/3/2002 6:37:03 PM
Professor Robert Fisher recalls a disquieting conversation with Enron executives:
A few years ago, when I was teaching at the University of Houston, I was invited to participate in a "Great Conversations" fund-raiser for the university's Honors College. People largely from the business community would pay to have dinner and conversation with a faculty expert. At my table, we were to talk about "community in Houston." I was facilitating a discussion with eight midlevel executives from Enron, all affluent, college-educated, pleasant and, as it turned out, the most narrow-minded group I've ever had the chance to talk with about social problems and public issues.
1019. Cellar Door - 2/3/2002 6:52:43 PM
Kenny Boy won't testify!
Hasn't he heard of the 5th Amendment?
1020. concerned - 2/3/2002 9:03:54 PM
Why isn't this the 'Global Crossing and Enron' thread? Isn't the common denominator really business with shoddy accounting practices?
IAC, jexster has been mining Enron for anti-Bush spin like a maniac for months now. What a fizzle the whole exercise has been for Lefties. GWB's popularity is still ranging in the mid '80's, the economy is turning around and spring is (almost) in the air.
1021. arkymalarky - 2/3/2002 9:35:04 PM
Kinda reminiscent of the Clinton impeachment, eh Concerned? Except for the economy turning around. It was just continuing to thrive.
1022. concerned - 2/3/2002 9:58:04 PM
Not at all. No wrongdoing by the Bush Administration has been suggested by investigators, for instance. In fact, it's hard to see how any was possible. Enron was invited, along with other corporations and groups such as the Sierra Club to provide suggestions to the Cheney Energy Task Force as to how the Bush Administration could best formulate energy policy. End of story.
The wrongdoing lies in the machinations and prevarication of the Left in trying to make people believe that things are other than as they are. At most, Bush administration policy would be questioned. Except, the Bush administration has hardly been in office long enough to even implement any energy policy. Besides Enron's internal wrongdoing, the only scandals are in Lefties' attempts to lie to and mislead the public about the essentially nonexistent role of the Bush administration in Enron's rise and fall.
1023. Cellar Door - 2/3/2002 11:12:56 PM
IT'S "HARD TO SEE THAT ANY WAS POSSIBLE" IF YOU'RE BLIND, DEAF, DUMB AND REPUBLICAN!
1024. concerned - 2/3/2002 11:16:50 PM
Sorry, cllrdr, baseless innuendo doesn't cut it wrt Enron and the Bush administration.
But if that's all you Lefties got, go with it, right?
1025. ronski - 2/3/2002 11:32:57 PM
Prediction:
Enron will be forgotten by November, 2002, and neither house of Congress will change hands.
1026. concerned - 2/3/2002 11:45:19 PM
Re. 1025 -
It's ok for me to post something like that, because it gets the resident Southpaws even more fired up, but you, they might actually start to believe it if you post it and they might even cut down on their foaming, and I want the likes of Jexster and cllrdr to be going balls to the wall all the way.
1027. ronski - 2/4/2002 12:08:47 AM
Connie, my friend,
Alas, I fear they will no more believe in my predictions than yours, I think, if only because by agreeing with you I am straying from the PC reservation.
Fortunately, for the sake of the Republic, you and I will be proven prescient, and they wrong, God willing.
1028. Cellar Door - 2/4/2002 12:48:45 AM
Well we've already forgotten September 11th and Osma Bin Ladin --why not ENRON?
1029. concerned - 2/4/2002 1:01:36 AM
cllrdr -
I think Ronnie's suggesting that your ilk won't keep 'outrage' about Enron's connection with the Bush administration alive. Better redouble your efforts just to make sure.
1030. concerned - 2/4/2002 11:08:34 AM
Global Crossing Faces SEC Probe of Accounting Practices on Leases
Hey, someone has to post something about the 'other' bankruptcy.
1031. Cellar Door - 2/4/2002 1:09:10 PM
YAWN!
1032. judithathome - 2/4/2002 1:31:25 PM
I'll bet Kenny Boy is wishing he'd gone ahead and showed up before the committee...they are all on CNN right now having a press conference and roasting him royally while announcing they are going to subpeona him.
One guy said ENRON wasn't a case of "All hat and no cattle...it was BULL." And Hollings just made a funny about Bush and Cheney saying "I did not have political relations with that man Kenny Boy."
1033. judithathome - 2/4/2002 1:36:57 PM
Hollings also threw down the gloves and called Bush, Cheney and Co, the "Cash & Carry White House".
1034. concerned - 2/4/2002 2:59:14 PM
Foghorn Leghorn Hollings is a decrepit fool.
1035. judithathome - 2/4/2002 3:02:29 PM
Maybe so but he had the microphone and gave good sound bites...it will be him on the news tonight giving shape to opinion for the great unwashed instead of Kenny Boy. Whether one agrees with him or not, he will be heard...
1036. Jonesatlaw - 2/4/2002 3:03:11 PM
What does it matter what one's strategy is in selecting stock when the numbers that are used in the selcction turn out to be fabrications? What is the point of having audits, when the auditors are thick as theives with the companies they audit. For all the appearance of rational discussion between Cal and Dusty, the reality is that it is like two marks on the street saying, "it's stupid to bet all your money on the queen being on the right" in a Three Card Monte game, "bet a little on the other two cards too."
1037. thoughtful - 2/4/2002 3:07:03 PM
j@h, Lol on #1032
1038. thoughtful - 2/4/2002 3:43:32 PM
One need only look at the runup in enron stock price from $30/share to $90/share in a little over 18 months to answer the question, why would someone leave all their 401k money in a single stock? One of the results of enron and the dot.com collapse is a wake-up call to many new and young investors who never lived through a crash, never thought stocks did anything but rise and thought risk was just a state of mind for old fogies who weren't clued into the "new economy."
I can remember a conversation I had with a young exec here who was looking for investment advice. I was pushing TIPs...the treasury inflation protected bonds and he said a 4.5% real return was just too low for him, even if it was risk free. He looked at me like I was crazy. 4.5% return ex inflation looks darn good against enron stock going from $90 to 0.65 in 18 months.
1039. CalGal - 2/4/2002 3:46:51 PM
For all the appearance of rational discussion between Cal and Dusty, the reality is that it is like two marks on the street saying, "it's stupid to bet all your money on the queen being on the right" in a Three Card Monte game, "bet a little on the other two cards too."
So you keep all of your money under the mattress?
1040. dusty - 2/4/2002 8:30:07 PM
thoughtful
I was pushing TIPs...the treasury inflation protected bonds
Good advice, although I may be biased, because I bought some myself a few months ago, along with their kissing cousins, I-bonds.
1041. dusty - 2/4/2002 8:38:20 PM
Jonesatlaw
Points for clever imagery, but it is inapt, so your "analogy" is worse than no advice at all.
I wouldn't pretend that all, or even most companies post financials that are pristine, but, in an attempt to use an analogy with some imagery, a woman wearing light makeup and a Bourbon Street drag queen are both using makeup to deceive, but the "deceptions" aren't in the same league.
And I'll echo CG's question: What do you do with unspent money?
1042. dusty - 2/4/2002 8:56:18 PM
The 30-year bond has a coupon of 3 3/8, and is currently priced to yield 3.43% (real). I vaguely recall one issued once with a coupon above 4, but my file is at the office.
I have an on-and-off project to do more homework on the TIPS, so we can decide whether to include them in our recommendations to clients. Right now, there is a concern that they are too thinly traded.
1043. Thoughtful - 2/4/2002 8:57:07 PM
Maybe jones has none? credit card millionaire?
1044. bubbaette - 2/4/2002 9:57:33 PM
So as far as Jone's analogy goes, are you saying "we know it's crooked, but it's the only game in town"?
1045. CalGal - 2/4/2002 10:34:30 PM
No. I'm saying that Jones' assertion that the stockmarket is wholly rigged and irresponsible gambling is idiotic on its face. And if he is invested in anything other than savings bonds, his attack on the rationality of our discussion is completely dishonest.
I will allow for hysterical and overwrought handwringing, if he admits to it. But those are pretty much the sum of his choices, given such an asinine statement.
And your failure to grasp the same thing is equally incomprehensible. Unless you, too, have a fondness for mattress banks.
1046. bubbaette - 2/4/2002 10:37:18 PM
It's the punchline to an old old joke. I should have known it would send you into a tizzy.
1047. arkymalarky - 2/4/2002 10:45:03 PM
At least what you put in a mattress stays there. Unless Ken Lay is in the house.
It's important to take Jones' question at the beginning of his post into account before attacking his analogy. How do you know which stocks you're looking into purchasing are on the up-and-up and which ones are pulling an Enron? It seems to have more to do with the holes Enron ran through, creating a sense of insecurity about stock investment as people see that it's fairly easy to leave the stockholder in ignorance about the reality of the stock value, than saying "all stock values are lies."
1048. CalGal - 2/4/2002 11:21:42 PM
How do you know which stocks you're looking into purchasing are on the up-and-up and which ones are pulling an Enron?
What does this have to do with the discussion? Is it okay to invest 100% of your portfolio in one stock if you are completely secure about the accounting?
1049. Jonesatlaw - 2/5/2002 12:18:53 AM
Cal- The risk of putting your money in any one investment depends on the nature of the investment and the quality and quantity of the information available to discriminate between your choices. There is a risk in all investment, but how do you rationally measure that risk when the information available to you is crap?
Which is the best compromise between risk and rate of return- muni bonds, preferred stock, REIT's, treasury bills, top rated commercial bonds? How can you know if you don't know the reliability of the information you use to make the analysis? You can read Enron's public information all you want, but you don't really have the information necessary to make a rational decision based on facts. No one wants to admit it, but the stock market and most other financial markets are based as much on a leap of faith as Scientology or Catholicism.
1050. CalGal - 2/5/2002 12:41:19 AM
The risk of putting your money in any one investment depends on the nature of the investment and the quality and quantity of the information available to discriminate between your choices.
This is cheap talk, and frankly, it is a disservice to American markets. I find such misrepresentation unseemly. It is possible to find the auditing failure troublesome and support change while not declaring the entire market a fraud and hopeless.
To say nothing of the fact that millions of Americans are living off their investments in one way or another right now.
No one wants to admit it, but the stock market and most other financial markets are based as much on a leap of faith as Scientology or Catholicism.
Again. You are either an idiot or a hypocrite/liar. Which is it? Where's your money, Jones? I don't need specifics. A binary is fine--it's in the stock market, it's under your mattress.
I suspect you don't believe your doom-laden pronouncements any more than I do.
Who's auditing your statements, anyway?
1051. Jonesatlaw - 2/5/2002 12:44:20 AM
For all the self actualizing bullsh#*$% that the brokerage houses and the discount guys spew on TV, its safe to say that not one in a million investors actually makes an investment on first hand knowledge. The top of the food chain makes their decisions largely on third hand information-
Company/auditor (like there's a difference)to SEC- to sector or company specialist analyst, and then finally to the gal or guy making the institutional investment decisions. The rest of us are two or three more transactions removed- trade journalist/analyst to brokerage house to broker to investor; or specialized sector/or stock analyst to business journalist to popular journalist. Now of these layers of people, how many actually can read the damn SEC required disclosures and understand them sufficiently to paint an accurate picture of the financial condition of a company, or to assess the general accuracy and reliability of the opinion wending its way down the information food chain? How much does any one of these levels know of the interests of the ones above it?
1052. Jonesatlaw - 2/5/2002 12:45:00 AM
to Cal cont'd
Enron is a howling example, but there are others out there waiting to blow. Posing the same problem but to a lesser degree are all the corporations that are within the letter of the law, but painting rosy scenarios which are very unlikely to be true. These are legion.
When was the last time you read an annual report that said "we took it in the shorts this year, and next year won't be much better?"
When was the last time you saw one that didn't have significant "happy crap" news sprinkled throughout? IOW we laid off 40% of our workers because demand for the product was lower than ever, and if it goes back up we can never produce enough at current margins to be profitable at the current level of staffing- turns into "weakening demand challenged management to right size our workforce, and management exceeded the cost cutting target by 6% while retaining key employees and maintaining production capacity of 110% of intermediate term needs projections?"
1053. Jonesatlaw - 2/5/2002 12:52:47 AM
So Cal- I have money in "the mattress" and in some stocks. I have regretted every stock purchase I didn't make on having some direct knowledge of the company or the market. As a whole, the stocks I have owned where I've known something of the market or business itself, have been okay.
I've never deluded myself into thinking I really knew with any real precision what some stock was worth based on anything other than accepting arguements from authority on finance and my own self of world events and mass psychology. IOW about on par with betting NFL football. In fact, I would love to see a fair analysis of the quantity, quality and validity of the information available to the average football bettor on the week's games versus the average mutual fund, stock, insurance policy or bond.
1054. wonkers2 - 2/5/2002 12:54:19 AM
Well, it's a mistake for anyone to invest all his savings in a single stock, however pristine the company's accounting and however good the company's prospects appear. Beyond that, it's a mistake for most investors to own individual stocks other than for recreational purposes. Solid no load, low cost mutual funds are by far the smartest alternative for nearly everyone. No load index funds are the best of this group in the long run.
Going to a broker and buying individual stocks is a analogous to going into a casino and expecting to come out a winner. The game of Wall Street is set up to make money for the brokers and company insiders, not for individual investors. Betting on individual stocks is a losing game because the "house take" (commissions and other transaction costs) and income taxes eat up too much of any gains.
1055. Cellar Door - 2/5/2002 12:57:32 AM
Have they found Ken Lay yet?
1056. CalGal - 2/5/2002 12:58:15 AM
Jones--you own no mutual funds? No index funds?
1057. CalGal - 2/5/2002 1:00:24 AM
Beyond that, it's a mistake for most investors to own individual stocks other than for recreational purposes.
I agree. Nothing wrong with buying stocks in small amounts as recreation, but I certainly wouldn't recommend it.
In fact, I read somewhere that many companies provide full-function broker services for 401(k)s. Is that true? If so, that's something I would support changing. I see no reason why we should allow people to do with their primary retirement fund. If they want it bad enough, they can open their own IRA.
1058. CalGal - 2/5/2002 1:01:08 AM
I certainly wouldn't recommend it. ...as an investment strategy.
1059. wonkers2 - 2/5/2002 1:02:41 AM
They'll probably find bin Laden before Lay, and the chances of getting either of them to testify are about the same-zero.
1060. Jonesatlaw - 2/5/2002 1:10:43 AM
Cal- Nope- not a single mutual fund of any significance, nor an index fund etc.
Not to worry, at present my investments are small, and I don't plan on living off of them even in the future. Due to some somewhat unusual family circumstances, my investments are rather tangible, although my wife's are very conventional. SHE has mutual-type funds almost exclusively, save for a few stock fliers that she took on her own knowledge.
1061. Jonesatlaw - 2/5/2002 1:13:48 AM
Cellar- think that Lay's about to do a Robert Vesco? Sounds like a great plot turn...
1062. Cellar Door - 2/5/2002 1:17:02 AM
I think you're right, Jonesy!
1063. CalGal - 2/5/2002 1:21:55 AM
SHE has mutual-type funds almost exclusively, save for a few stock fliers that she took on her own knowledge.
Well, unless you've got one hell of a prenup, those count as your investments, too.
Would you tell a 21-year-old to save for retirement by putting their money in a savings account to draw 2%? Or would you tell them to put it in an index fund?
1064. Jonesatlaw - 2/5/2002 1:54:30 AM
Well, unless you've got one hell of a prenup, those count as your investments, too.
Not in separate property states,like most of the country. Community property is a left coast thing.
Would you tell a 21-year-old to save for retirement by putting their money in a savings account to draw 2%? Or would you tell them to put it in an index fund?
Right now I'd tell them to take a hard look at T-bills, muni bonds-especially tax-free ones, and put whatever money they just had to have in the stock market into Uncle Warren's hands (Buffet, and the "Uncle" is merely a local sobriquet). The best advice I could give is to follow Buffet's advice, and for a 21 year old that really means waiting for a little seasoning and knowledge of what they were buying before plugging any serious money into stocks. An index fund would be fine as an inflation hedge, so long as the costs are absolutely minimal.
1065. CalGal - 2/5/2002 2:07:08 AM
Right now I'd tell them to take a hard look at T-bills, muni bonds-especially tax-free ones, and put whatever money they just had to have in the stock market into Uncle Warren's hands
So you recommend that a 21 year old invest all of their retirement money in t-bills for the next 40 years?
You do realize that you haven't once answered the question without hedging, which essentially confirms the fact that you aren't an idiot, but a hypocrite.
Are there really civilized states where the lower-income spouse isn't allowed to raid the other's assets in a divorce? How wonderful. It gives me hope.
1066. Jonesatlaw - 2/5/2002 3:06:07 AM
CalGal- I'm not saying that the stock market is a confidence game inherently, I am saying that at present there is far too much hiding the ball for an individual investor to make informed decisions for themselves on more than a handful of companies or perhaps a single sector, and that assumes that one has significant financial resources and works at studying those sectors or companies rather hard.
In the short term, there are problems that need to be fixed if there is going to be a healthy amount of investment in Wall Street. Boring investments in bonds etc might be okay if overseas money decides that Wall Street has become too Wild West for their taste.
If the internet and information revolution were to hit capital markets with alternatives to traditional stock markets in the assembly of risk capital, index funds might suck as an investment over the next 40 years.
1067. joezan - 2/5/2002 8:10:06 AM
RUT-RO! Is Kenny swimmin' wit' da fishes?.
1068. thoughtful - 2/5/2002 8:29:58 AM
Dusty, re TIPs thinly traded...that's why they are a good deal. From 1960 to present return on stocks has been 5% per year with all the implied risk...even a 3 1/2% risk free return seems like a deal to me...at least for some portion of my portfolio...and probably a growing portion of my portfolio as I age.
Jones, re muni's for a 21-year old, remember to max out the value from munis one needs to be in the highest income tax bracket which most 21-year olds are not. Regular bonds/government bonds would be better.
1069. thoughtful - 2/5/2002 8:32:46 AM
Personally, I have done very well in stocks. Not all of them, but the total porfolio has done very well and even survived the recent downturn nicely. Whether luck or by accident, I also had the fortune of starting my equity investment in 1984 and riding up the biggest bull market in stock market history. However, as Shiller has so wisely pointed out, from stock market peak to the next peak in the real S&P 500 takes about 25-30 years.
1070. dusty - 2/5/2002 9:38:08 AM
thoughtful
Dusty, re TIPs thinly traded...that's why they are a good deal
Thinly traded means the opportunity for decent returns, at the cost of liquidity.
I should emphasize that I wear two hats when it comes to interest in TIPS. One, as a personal investor, looking for investments in my own portfolio. My liquidity aren't that high, so they make a good choice for my portfolio.
However, I am also looking them as a possible invest for insurance companies, where liquidity needs can be an issue. These companies have to worry about the possibility of selling these securities at a time when others are selling securities (This was a meaningful issue in the London market to pay for 9/11 claims). I still think TIPS make sense, but there are only about 800 million of them in existence, so there may not be enough to justify formally modeling them as an asset class.
1071. Cellar Door - 2/5/2002 9:45:02 AM
Krugman Unbowed.
Incidentally, Sully is clearly off his meds. Check his website notes about how he's been "experimenting" and is tired of suffering the side effects of the cocktail. He attributes a sharp spike in his viral load not to going off his medication but to his being upset over Sept 11th.
At this rate I don't think he's going to make it to Christmas.
1072. thoughtful - 2/5/2002 9:47:54 AM
dusty, I understand. Since you're in insurance, let me ask you a question I was asked which I answered with an economist's usual "it depends". Are insurance companies helped or hurt by lower interest rates? What's your take?
1073. CalGal - 2/5/2002 11:28:14 AM
Jones, the accounting rules have been in place for at least ten years. Are you arguing that you would have been safer putting your money into savings in 1990, rather than investing it?
I'm not saying that the stock market is a confidence game inherently
Actually, you did. You also made no mention of the fact that the rules have been in place for a long time. You are also egregiously overstating the case.
If you can point to a post you made prior to Enron in which you told everyone not to invest in the market because the last 10-15 years it's been nothing more than a confidence game, I'd love to see it.
You declared that a conversation about the relative risks of investing in just one company as opposed to a diversified portfolio was foolish because both were shell games. This is, on its face, accounting rule changes or no, a pretty fucking stupid thing to say. Flail and hyperventilate if it makes you feel better, but try and be more responsible in your equivalencies.
1074. bubbaette - 2/5/2002 12:08:39 PM
Maybe Kenny Boy is hanging out with Cheney at an undisclosed location.
1075. dusty - 2/5/2002 1:27:52 PM
Thoughtful
Are insurance companies helped or hurt by lower interest rates? What's your take?
Your answer, "it depends" is exactly right :)
Of course, you probably can't away with stopping at that point.
I'm going to assume that the question relates to recent events, where we have moved from moderate interest rates to lower interest rates (as opposed to asking - Do insurance companies prefer a long-term low interest rate environment or a high interest rate environment?)
Insurance companies tend to be large holders of fixed income securities.
Obviously, a drop in interest rates increases the market value of these securities so is a good thing. However, insurance companies typically report under two different accounting standards - GAAP and statutory. Stated values of bonds are carried at market for GAAP purposes, but not for statutory.
The drop in interest rates will reduce future investment income as new cash flows are reinvested at lower rates.
Insurance companies (particularly life) tend to be large holders of mortgage-backed products. The attractive yields of these products is mitigated by the negative convexity. I don't know how common the term is, so I'll note that mortgage-backed assets tend to drop in value when interest rates go up (for obvious reasons) but also tend to go down in value for moderately large decreases in interest rates (because of prepayments). So the recent decline in interest rates does has a negative impact on a fair amount of insurance company assets.
1076. dusty - 2/5/2002 1:28:18 PM
continued
I've mentioned the asset side, but there are liability side impacts. For PC companies, it will matter whether rates are dropping because of inflation (which will tend to reduce the liabilities) or reflect a reduction in real yields available (which won't reduce the liabilities). Additionally, insurance specific inflation is correlated with general inflation, but not perfectly correlated. So it is possible that a general reduction in inflation causes a reduction in interest rates, but insurance specific inflation remains higher.
Many life companies include minimum interest rates to credit cash values. Typically, those are set at values like 3% (2% in Japan, 4% in UK). In each place, available yields are below, or dangerously close to dropping below the minimum. In which case the liability doesn't drop, but the income does.
Life insurance companies have to do something called cash flow testing. If they "fail" which is more likely in a low interest rate environment, they have to increase the liability reserve, but cannot take an offsetting change in the asset.
Finally, I haven't addressed whether the duration of the liabilities is longer or shorter than the assets. This will affect whether a reduction in interest rates increases or decreases the surplus.
I'm only scratching the surface, but I'm sure no one else is interested. Please send me an email at freetochoose@yahoo.com if you want to talk further; analyzing the impact of interest rate changes on insurance companies is one of the most important things we do.
1077. rubberducky - 2/5/2002 1:39:17 PM
or, you could discuss it in the Slow Thread...
1078. robertjayb - 2/5/2002 1:41:41 PM
Astros want to dump Enron...
HOUSTON (AP) - The Houston Astros want to shed the name of Enron Field.
The baseball team asked a federal bankruptcy judge in New York on Tuesday whether the team should continue its stadium-naming agreement with Enron Corp ., the energy giant that collapsed in an accounting scandal.
1079. Jonesatlaw - 2/5/2002 2:20:19 PM
Cal- The conversation started with your assertion that the folks who got creamed by Enron deserved it for being foolish enough to put their money in a single stock or concentrating it excessively in their company's stock. You point out that access to financial advisors is easy and that they shouldn't have been caught with their pants down by Enron. Well, hate to break it to you, but Enron employees were not alone. Lots of the financial advisors you tout got creamed as well, in large part because Enron's reports and reality did not match.
You are in full "blame the victim" mode. It isn't enough to say that portfolios should have been more diversified, that just spreads the damage amoungst more investors. You seem comfortable that there aren't a number of other Enron's out there ready to blow up, but given that the publicly available information didn't tell us about the orignial one, I don't share your confidence. I am not sure in the face of information that we now have cause to question, you are. I think the hyperventilation is your denial, not my uncertainty.
It's true that the accounting rules have been in place for 10 years. What does that have to do with the reality of how they have been complied with in spirit? Is it possible that there are actually trends in compliance, or non compliance that do not correspond with the pronouncements of what constitute generally accepted accounting practices? Did soft money in politics take on the importance that it has in the last two election cycles immediately upon the change in campaign finance legislation, or did it evolve? Why wouldn't the audit function do the same?
1080. thoughtful - 2/5/2002 2:34:06 PM
Thanks dusty. Very thorough as usual. I hit some of the answers right especially that it depends on the underlying assets and if/how hedged they are and about how interest rates impact income from equities differently than income from interest-bearing assets, impact of low interest rates on economy and thus demand and consumer incomes, impact on yields on competing investment products and so on. So everything I answered was about right, especially the part where I suggested he talk to someone in the insurance industry! Thanks again.
My apologies to other posters for the temporary derailment.
1081. Cellar Door - 2/5/2002 7:53:50 PM
1082. CalGal - 2/5/2002 8:01:54 PM
The conversation started with your assertion that the folks who got creamed by Enron deserved it for being foolish enough to put their money in a single stock or concentrating it excessively in their company's stock. You point out that access to financial advisors is easy and that they shouldn't have been caught with their pants down by Enron.
This is incorrect. And since it is incorrect, you may as well stop there. Inventing positions that go hand in hand with your rebuttals is convenient, but counterproductive.
Your other paragraphs are equally inaccurate, which makes sense given how far away from reality you began.
1083. Al D - 2/5/2002 9:01:49 PM
Congress has reached an amazing state; over 200 of them took money from Enron and they are now saying how evil Enron was for buying influence. Hey, if they weren't selling, Enron wouldn't have been buying.
1084. CalGal - 2/5/2002 9:08:13 PM
Actually, right now they are saying that Enron was evil for cooking the books.
1085. wonkers2 - 2/5/2002 11:10:54 PM
Good article on Cheney. He's the slickest sleazeball since Nixon.
1086. wonkers2 - 2/5/2002 11:12:13 PM
Rather, Cheney equals Nixon's sleaze but is far to Nixon's right on most issues.
1087. arkymalarky - 2/5/2002 11:21:09 PM
I can't help but jump waaaayyy ahead and wonder if he'll pull an Agnew.
1088. Jonesatlaw - 2/5/2002 11:51:37 PM
Cal- Now why oh why would I think that you were blaming the Enron victims for their plight? Perhaps this is why-
It highlights again that Enron employees had only themselves to blame.
1089. CalGal - 2/5/2002 11:54:24 PM
Jones,
Please describe what "it" refers to in that sentence.
1090. Jonesatlaw - 2/6/2002 12:00:18 AM
Maybe I got the idea here-But other than that narrow instance, the employees dug their own grave. Or perhaps this 988. CalGal - 2/2/02 6:25:18 PM
it is not so glaringly obvious that people can be called idiots for not knowing it.
I disagree. Everyone has access to financial planners. Everyone understands--and is, by law, informed--that stock can go up and down.
You certainly don't need math knowledge or any special training
Or is it something else that you care to deny?
1091. Jonesatlaw - 2/6/2002 12:13:47 AM
Cal here's the "it" referred to-Dusty to judithathome
Or do you mean as employees, they should have know better than to tie up so much of their stock in their own company?
Essentially, that is the question I want to address.
The employees didn't know better. Why not?
My tentative answer is that, while it is fairly obvious to people with some combination of math training and understanding of markets, it is not so glaringly obvious that people can be called idiots for not knowing it.
Which was followed by your post quoted above disputing the Dusty's denial that the people (Enron employees)could be called idiots.
Seems straightforward reading to me.
1092. judithathome - 2/6/2002 12:15:37 AM
It did to me, too.
1093. CalGal - 2/6/2002 12:41:42 AM
Jones,
Message # 972 is the post you quoted from. What is the sentence immediately after the sentence you quote? Here's the whole paragraph:
It highlights again that Enron employees had only themselves to blame. This doesn't mean they don't have the rights of any stockholder, but that's as far as it goes.
If you read the entire post, you'll see that I was discussing a strategy used by Schwab employees to protect their retirement overexposure. The "it" was the example, demonstrating that the Enron employees had remedies for even that portion of their overexposure that they couldn't directly control.
Now, let's look at what your restatement is:
The conversation started with your assertion that the folks who got creamed by Enron deserved it for being foolish enough to put their money in a single stock or concentrating it excessively in their company's stock. (emphasis mine)
So your first reference to my post, in which I only mention Enron employees (which were not all stockholders) is, on its face, proof that you didn't bother to read what I said.
My sole point--that I've said many times--is that Enron employees are responsible for their own 401Ks. That regardless of one's individual stockmarket knowledge, it is entirely realistic to know how foolish it is to invest 100% of one's portfolio in one stock, and that any financial adviser--again, regardless of their specific advice--would state clearly and unequivocally that this is a bad idea.
You instead claim that I say Enron stockholders (not employees, but stockholders) are responsible for their own problems, and then quote from posts where I clearly state that stockholders are due remedies.
I think you should play with Judith and Jex, Jones. They're more your level.
1094. Jonesatlaw - 2/6/2002 12:43:55 AM
Finally, I have not intentionally asserted that the stock market is a confidence game by its nature. Ideally, it is distinguished from a confidence game by these factors: that it is possible to win; that the rules will be consistent and fairly enforced; that the outcomes are not manipulated by the "house", IOW those who operate the market cannot force an outcome to their advantage, but may profit from particular outcomes occurring due to forces contemplated by the "players;" and that the players have an even opportunity at information concerning the play of the game. More akin to a casino than a con job.
Enron is akin to sitting down at the blackjack table, winning a bit, watching someone else win big and walk away and finally getting wiped out as the dealer never busts. Then the players find out that all the jacks have been removed from the shoe, or that its a six deck shoe instead of the one deck advertised.
Just because the above happens doesn't mean that all gambling will stop. It sure might put a dent in the handle for awhile, and maybe craps or slots will pick up some business.
Finally, you said the following to me:Your other paragraphs are equally inaccurate, which makes sense given how far away from reality you began.
However tenuous my grip on reality, I can remember what I wrote in the last twenty-four hours.
I would also note a lead page story in McPaper today which attributes heavy stock losses by Tyco International, Williams Co., 3M, Avaya and United Technologies to "an accounting complexity penalty." It also notes that Tyco International is "long suspected of accounting tomfoolery" and the stock "plundged $6.96 to 29.90, making Tyco the most heavily traded stock on the NYSE.
1095. Jonesatlaw - 2/6/2002 12:52:25 AM
The "it" was the example, demonstrating that the Enron employees had remedies for even that portion of their overexposure that they couldn't directly control.
Pure, unalloyed and unadulterated bullshit.
The Schwab example was about conversion of stock by quitting the job and avoiding an age restriction, but Enron employees had no such out when the chickens started to come home to roost. Their stock was frozen until a date certain, across the board. It ignores the fact that there was no fraud in your example and there clearly is in the Enron case. Finally, it ducks the whole tennor of the previous exchanges with JAH and Dusty asserting that holding company stock in any quantity in a 401k is foolish, the harm is due to their foolishness, and they shouldn't have any sympathy as employees, but should be lumped in with any other shareholder.
Twist as much as you like, but anyone who can read will see through it.
1096. CalGal - 2/6/2002 12:53:53 AM
Incidentally, Moneyline just reported the Enron employees were buying stock heavily in October.
1097. CalGal - 2/6/2002 12:57:03 AM
The Schwab example was about conversion of stock by quitting the job and avoiding an age restriction, but Enron employees had no such out when the chickens started to come home to roost.
Jones. Please. Be honest. They were 100% invested in Enron stock, and you are saying that October was the first time they had any reason to act?
Finally, it ducks the whole tennor of the previous exchanges with JAH and Dusty asserting that holding company stock in any quantity in a 401k is foolish,
This is an out and out lie. Please find the quote in which I said this, or retract. Anyone who can read apparently doesn't include you.
Don't restate my opinions anymore; you have demonstrated an inability to grasp anything that doesn't neatly fit a rebuttal you have handy. Use direct quotes--and complete ones--or go play with people who won't object to your inability to read complete sentences.
1098. Jonesatlaw - 2/6/2002 1:24:23 AM
Cal- I use direct quotes and you deny they say what they say.
It damned tricky of me to get you to post things that fit my rebuttals before I've composed them myself don't you think? The problem is not the completeness of the quotes, its that you wish to disavow what you've previously posted. You attempt to play off your quote by adding that you recognize that they (employees) have the rights of any other stockholder. You fuss about the "it" being a reference to strategies used at Schwab to diversify their portfolios including quitting and hoping to be rehired so they could cash out. The point you are studiously avoiding is that I called you out on blaming the victims and your Schwab example is your example of how they could have protected themselves by cashing out of Enron. So if they could have limited their exposure,as per your example, their losses are their own fault for being overexposed is what you were saying or you were saying nothing comprehensible. Be honest with yourself at least and decide what you meant. Then keep it to yourself, because if you don't mean what you write, there's no point to a response in this forum. I'm not Miss Cleo and I won't try to read your mind, just your words.
1099. jayackroyd - 2/6/2002 3:30:33 AM
I haven't read through the thread, and it's too late for me to do so. But a couple of comments.
1) In Dusty's examples of alternative investments where a) the employer is providing discounts on the stock and b) the investment (and growth, if any) is pretax, there must exist some discount where it is worth buying company stock.
2) There is an important point lurking in thoughtful's three card monte example. If I base my investments on things like price to book and price to earnings ratios, Buffet style, it's really important that those reported values be correct. I know people have ripped the analysts as third in the sinners' line, but to my mind they should be in the front. It's their job to raise doubts about the validity of Enron's earnings and book value. That they did not, at least, discuss the opacity of their financial statements is incredibly negligent. When you combine that with auditors who do not audit, certifying fallacious earnings and asset holdings, then all analyses get polluted,even those done by a hardworking individual investor with an honest financial adviser.
1100. jayackroyd - 2/6/2002 3:40:03 AM
And in response to CalGal's challenge, I almost never buy an individual stock. It's almost always a sucker bet. Once in a great while, I'll believe that I have an idea ahead of the market and look for a pure play. (VISG happens to be a very small current investment, made about a year ago.)
Currently, the retirement portfolio is mostly foreign stocks and bond mutual funds, and a little S&P 500 index. The liquid portfolio is almost all cash, and has been for some time. I missed the peak, but didn't crash. What is not cash is in the S&P 500.
Individual stocks are sucker bets for two reasons.
1) Information reaches individual investors very late. You therefore lose a significant fraction of your investment by getting in higher than the people who talked you into the stock and get out lower--even if you were convinced by peoplr who happened to be right.
2) There's no real way to know what management is doing in anything like a timely fashion. If they are looting the company, you will always find out too late. If they have adopted a butt-headed strategy, you won't know until the stock has fallen.
1101. thoughtful - 2/6/2002 8:27:37 AM
jay, the three-card monte was a good example, but it wasn't mine.
1102. Cellar Door - 2/6/2002 9:38:08 AM
Have they found Ken Lay yet?
1103. judithathome - 2/6/2002 9:40:47 AM
No, but when they do, he will probably have a Caymen's tan...
1104. Cellar Door - 2/6/2002 10:25:34 AM
1105. CalGal - 2/6/2002 12:07:54 PM
And in response to CalGal's challenge, I almost never buy an individual stock.
That wasn't my "challenge". My question to Jones was whether or not he had any holdings in the stock market, based on his assertion that it was completely rigged. Thus, your answer to my "challenge" is that yes, you have holdings in the stock market. I've never asserted that individual stocks are safe--in fact, quite the contrary, I agreed with Wonkers that it wasn't wise.
1106. CalGal - 2/6/2002 12:12:24 PM
I use direct quotes and you deny they say what they say.
No, I agree with what they say. You just don't seem to understand them.
And you haven't retracted this: Finally, it ducks the whole tennor of the previous exchanges with JAH and Dusty asserting that holding company stock in any quantity in a 401k is foolish,
Please do so, or provide a quote where I made this statement. You have not.
The point you are studiously avoiding is that I called you out on blaming the victims
I have never denied "blaming the victims", if by "victims" you mean "Enron employees who lost their 401(k) holdings. They have only themselves to blame for having lost all their retirement funds.
Your mistake was in convoluting "Enron employees" with "stockholders". By doing this, you go beyond distorting my position; it becomes a wholesale fabrication.
1107. CalGal - 2/6/2002 12:33:06 PM
Enron Executives Say They Debated Freeze on Pension
It wasn't a regular window, it was something that could have been postponed. It doesn't appear as if they did it specifically to prevent employees from dumping their stock, but the possibility can't be eliminated. They also clearly sent out conflicting information.
Any employee who can document that he or she tried to sell during the freeze period should be given the amount they would have gotten for dumping stock at the price at the beginning of the freeze.
But I really wonder how many employees there were, given that employees were actively buying during the same time.
1108. Phoenix Rising - 2/6/2002 3:39:51 PM
Enron 401(k) plan is fairly typical. Here are some good facts on plans. In the fine print at the bottom is the real story.
Company -Plan Size - Percent in company stock
Home Depot 2.02 B 84%
Coca Cola 1.4 B 78%
Bell South 8 B 55%
UPS 1.5 B 38%
SunTrust Banks 1.43 B 66%
Southern Co. 2.62 B 53%
Delta Air Lines 4.06 B 13.6%
1109. CalGal - 2/6/2002 3:45:09 PM
Actually, what that article provides is good anecdotal evidence that the employee behavior is common.
1110. wonkers2 - 2/6/2002 3:55:14 PM
Analysts, aside from the problem of conflicts, make mistakes. Abby Cohen was recommending Enron last October, apparently based on how far down it was from its high. She is Goldman Sachs' market guru. Goldman is a premier investment bank and retail broker for wealthy investors. If Goldman didn't have good information or analysis on Enron, who would? One or two tenacious, skeptical bear fund managers/analysts. (Ursus)
1111. CalGal - 2/6/2002 4:05:04 PM
Wasn't Goldman getting deals from Enron in which they were informed of its actual financial opinion? I really hope the investment banks get slapped around, too.
1112. CalGal - 2/6/2002 4:11:14 PM
its actual financial opinion
Ha. actual financial status.
1113. wonkers2 - 2/6/2002 4:18:20 PM
Could well be. I don't know. It's hard to keep track of who has their snout in the trough.
Another comment. Enron employees were screwed on two counts--as stockholders along with all the other stockholders, by Enron, Andersen, the analysts and investment bankers and as employees by Enron's blackout on 401k changes or withdrawals and by apparently deceitful advice on the stock given them by Ken Lay as the titanic was already sinking. However, they weren't screwed as badly as they say they were--their actual savings was much less than the paper profits they had at the peak in their 401k plans. So, their actual losses are less than advertized. I am compelled to confess that I, the advocate of indexing, had worse happen to me in several individual stocks during the past two years--Healtheon, Schwab, EMC, Cisco, Microsoft. Only in two cases have the stocks dropped below what I paid for them, so, in one sense, my gains still exceed my losses. But it still hurts. I can feel their pain.
1114. CalGal - 2/6/2002 4:24:42 PM
their actual savings was much less than the paper profits they had at the peak in their 401k plans
Yes, I've made that point, too. They didn't lose all that much, since the gains they made were based on incorrect information.
My Schwab stock was worth $58,000 last year some time. Now it's worth about $20K. It just kills me--even though the original investment was $600!
1115. dusty - 2/6/2002 4:52:01 PM
Very interesting article, thanks for the link.
P&G is a company where the percentage of company stock in the 401(k) is even higher than Home Depot (IIRC).
The article did mention that some people do get stock at a discount. For those that care, I am still working on a formula to determine how much of a discount is sufficient to make company stock a sensible purchase. However, my employer has noted that, not only would this not help our business, it may be counter-productive to our business, so I have to work on it during "free" time.
1116. dusty - 2/6/2002 4:55:28 PM
wonkers2
However, they weren't screwed as badly as they say they were--their actual savings was much less than the paper profits they had at the peak in their 401k plans. CG (I believe) has been making this point. I'd like to see it quantified.
1117. judithathome - 2/6/2002 5:14:16 PM
One thing they did get screwed out of, though, is time...all the time they were investing in their retirement funds can't be retrieved. So sure, they may not have lost any more than their original investment but if they spent 5 years investing (or however many years) they have that amount of time LESS to build toward retirement now.
For younger people in their 30s that might not be so bad but if someone was near retirement age, it really sucks. I know this could happen in any investment scheme but it is still the pits.
1118. wonkers2 - 2/6/2002 5:18:22 PM
True. The law should be changed to prevent employees from concentrating their 401k savings in their employer's stock and assure their right to sell any stock contributed by their employer within a reasonable time like 6 months or a year at most. Let them invest their after-tax savings in company stock or whatever else they want, unsubsidized by the taxpayers.
1119. Jonesatlaw - 2/6/2002 5:53:57 PM
Cal- There was no convolution at all. Not all Enron employees are stockholders. Those who had no Enron stock in their 401k's haven't lost their retirement. No one was talking about such people. You were talking about Enron employees who held Enron stock in their 401k's. Your distinction between "stockholders" and "employees" is empty air because the only employees you, Dusty, JAH were talking about were the ones who fit both categories, employee and stockholder. You had no sympathies for Enron employee/stockholders losses because they didn't do what your former co-workers at Schwab did and quit their jobs to be able to cash out their profits and broaden their portfolio. See your posts 972, 977, 988 featuring characterizations such as "Enron employees have only themselves to blame" or that they "dug their own grave" and finally "They took the risk. They lost."
How would any of this be different from any other stockholder? In short, it isn't at all different.
1120. Jonesatlaw - 2/6/2002 5:54:34 PM
Cal continued-
Of course, all of this ignores the fact that the decisions of all Enron stockholders (including employees) were distorted by false and misleading informtion based on fraudulent accounting practices by the company itself and its accounting firm, and for employees, there were specific communications from Ken Lay encouraging ownership of the stock to employees long after he knew of the weak financial position of the company.
In short, I cannot find a post that characterizes what you now complain of, because it is a distinction without a difference, a semantic slight of hand. You did mention that employees who lost their retirement would be entitled to whatever remedies stockholders may have. (Oh how generous and full of the milk of human kindness, you'll allow the law to treat stockholders as gasp, stockholders!)
Yet, you never actually assert that any Enron stockholders of any stripe would actually merit a remedy, or indentify what sort of remedy that might be.
Give it up. You're whistling past the graveyard. Bad things happend to these people because, unlike CalGal, they were stupid and so they deserve what they get. It can't happen to you, because you're not like them. Nope, it can't happen here...
1121. CalGal - 2/6/2002 8:38:34 PM
No one was talking about such people.
Um. Yes. We were. That's who we were discussing, Jones. The Enron employees who were upset at having lost their retirement, specifically those who had invested 100% of their retirement fund in Enron's stock. I do not sympathize with people who don't have a retirement fund because they invested in one stock. I do sympathize with any stockholder who lost money in Enron because of the fraud (legal or not) committed by Enron and Andersen.
These are two different issues.
Do you understand that? I think it's kind of important you grasp this before you waste your time pontificating further.
1122. Cellar Door - 2/6/2002 11:11:32 PM
1123. concerned - 2/6/2002 11:43:16 PM
GWB and Kenneth Lay: bare acquaintances, at most
1124. concerned - 2/6/2002 11:47:14 PM
Bloody Parasite McAuliffe Stonewalls Requests for Global Crossing Documents
1125. jayackroyd - 2/7/2002 1:32:52 AM
Saw Tauzin (R) and Dingell (D) (sp^2) on cnn yesterday, and the spin is clear.
"This company's principals violated the law, and will be brought to justice on the laws that defend investors from fraud. The surety and severity of our punishment under current will deter future violations of this kind."
Or, in other words, "We're in the tank, and spinning as hard as we can so you don't notice."
1126. concerned - 2/7/2002 1:51:56 AM
From the WSJ:
Cheney Is Right to Fight the GAO
By DOUGLAS W. KMIEC
The General Accounting Office is threatening to sue the vice president if he doesn't spill the beans about the closed-door sessions of his energy task force -- including, reportedly, meetings with top Enron executives. Despite no evidence of any wrongdoing, Democrats and the press are striving hard to create the dreaded "appearance of impropriety."
But think a moment about what the GAO is demanding. If its demand are met, the executive branch would have to report on conversations held in private. It would mean disclosing the names of everyone Mr. Cheney or the task force talked with, and what they talked about, including market and proprietary information that competitors don't share with one another. How can anyone, whether in government or out, work effectively without being able to hold private meetings?
To those who have balked at the audacity of its request, the GAO has retorted that this is all "routine." Unfortunately, the agency is telling the truth. The GAO has been in the habit of interfering with the constitutional functions of the presidency for the last quarter-century.
By statute, as Congress's auditor, the GAO has specific responsibilities: It is empowered to conduct financial audits that ensure federal dollars are not misspent. And it is empowered to evaluate the effectiveness of government programs created by statute. Nowhere is it authorized to play grand inquisitor, with the right to tell the vice president and the president who they can talk to, or how to formulate policy.
1127. concerned - 2/7/2002 1:52:25 AM
The GAO's mission creep doesn't have to be tolerated. Back in 1988, I had a face-off with GAO over its desire to supervise the National Security Council in its formulation of policy toward Panamanian dictator Manuel Noriega. The Department of Justice's ruling at the time left little wiggle room for GAO overreaching then -- or now. "GAO's investigative authority . . . is limited to auditing the finances of government agencies and is thus inadequate basis for the GAO Noriega investigation, which clearly goes well beyond a financial audit," Justice concluded.
GAO's justification of its actions on the basis of a catch-all authority to "evaluate the results of a program or activity the Government carries out under existing law" was also rejected. The phrase "program or activity under existing law," we noted at the time, only refers to activities that are carried out pursuant to statute -- not to any and every activity carried out by the president in the course of discharging his constitutional responsibilities.
Vice President Cheney would be well advised to make a similar argument. Providing, that is, he doesn't ask the president to summarily dismiss the lawsuit altogether. That course of action, while perhaps politically dicey, would be perfectly justified -- the president is authorized by statute to terminate the GAO's misdirected actions. Judicial enforcement is denied the GAO "whenever the Director of the Office of Management and Budget or the President certify that the information could be withheld," and "disclosure reasonably could be expected to impair substantially the operations of the Government."
1128. concerned - 2/7/2002 1:52:57 AM
Note that in all of this, the president need not even fall back on "executive privilege" to prevent the disclosure of information given to him in confidence.
Executive privilege has never fully recovered from the black eye President Nixon gave it when he misapplied it to cover up executive wrongdoing. But like other legal "privileges" (e.g., attorney-client), it exists for a good reason. As numerous judicial rulings make clear, executive privilege protects information about state secrets, pending law enforcement matters, or the pre-decisional conversations of those helping the president.
To be sure, the privilege is not absolute. Mr. Nixon had to give way to a Supreme Court ruling which forced him to turn over the White House tapes in order to ensure a fair trial for Watergate defendants. But often forgotten is the fact that the federal courts did not require Mr. Nixon's famous tapes be supplied to the Senate Watergate Committee -- only to the courts. That committee's work could be completed with the partial transcripts, the courts ruled, that the president had already delivered.
In our present moment, similar considerations should apply. Congress has already been given a comprehensive task force report by which to evaluate President Bush's energy policy. Aside from the Democrats' desire to cast suspicion on the president by insinuation, neither Congress nor its offshoot, the GAO, needs to know the strategies that were revealed to the vice president under the promise of confidentiality. Government is necessarily dependent upon the informational expertise of regulated industries in fashioning economically efficient and effective regulation. Those who say otherwise are spinning an unhelpful yarn.
1129. concerned - 2/7/2002 2:10:15 AM
What about Hillary Clinton's health-care task force? scream the Democrats. Didn't Republicans (and this editorial page) castigate Mrs. Clinton for not disclosing who her outside advisers were meeting with as they formulated an overhaul of the nation's health-care system? Yes, but there's an important difference.
The energy task force, made up entirely of executive officers, is outside the statutory scope of the open meeting requirements of the Federal Advisory Committee Act. Those requirements only apply when nongovernmental individuals are given direct say over policy making -- a line that Mrs. Clinton's task force (but not Mr. Cheney's) crossed.
Likewise, Congress has long exempted from the Freedom of Information Act the very kind of pre-decisional, consultative material that GAO now seeks. These exemptions are critical to preserving the constitutional balance secured by the separation of powers.
This is what the vice president is fighting for, as Congress, and the GAO, aim to tar a highly popular president with the misdeeds of a failed corporation. Mr. Cheney is not fighting for political advantage; he is fighting for high principle.
Mr. Kmiec, an assistant attorney general in the Reagan and Bush administrations, is dean of the Catholic University of America School of Law.
1130. concerned - 2/7/2002 2:10:34 AM
Kmiec makes very cogent points, which causes me to seriously wonder what control Socialist Henry Waxman has over 'Independent' GAO Comptroller General David Walker to cause him to damage his reputation by threatening such a specious lawsuit.
The meetings, attendees and much of the content of the meetings that the Cheney Energy Task Group held with individuals, groups and corporations are already available to all congressional committees and the GAO. Therefore, the only things that David Walker could be angling for are the internal deliberations of the Bush Administration and confidential information which some of the attendees had reason to believe would not be made public as a result of their deliberations with the Cheney task force. And who would be the recipient of this sensitive information? Why, Henry Waxman, one of the most partisan and politically motivated members of Congress. Not Congress as a whole, which the Bush Administration has already signaled that it would be willing to release such records to.
One reason that Walker's actions bothers me, besides the fact that they are clearly inappropriate and more or less purely politically motivated, is that it threatens the confidentiality of any decisions that an administration could make. Cheney caving to Walker would set a terrible precedent. The door would then be open for corrupt politicians and their GAO lackeys to put pressure on the administration to make public its entire strategy in any policy formulation area, whether relating to the war on terrorism, internal policy, trade policy or whatever. Walker's actions have the potential to be the start of a slippery slope causing incredible damage to the executive branch and the USA as a whole because special interests would be allowed to mine the presidency for information which specifically benefit them to the detriment of the US public.
1131. judithathome - 2/7/2002 8:14:58 AM
Cheney caving to Walker would set a terrible precedent. The door would then be open for corrupt politicians and their GAO lackeys to put pressure on the administration
This is untrue...I've heard several lawyers and professors (CNN, NPR) state that a one time waiver would do away with any "precedent setting".
1132. judithathome - 2/7/2002 8:21:44 AM
Concerned:
In Message # 1123 there is no mention whatsoever of GWB...is this your way of justifying the header on your post or has the link expired?
1133. OhioSTOPAS - 2/7/2002 10:13:10 AM
#1130: "The meetings, attendees and much of the content of the meetings that the Cheney Energy Task Group held with individuals, groups and
corporations are already available to all congressional committees and the GAO."
Really?
1134. jexster - 2/7/2002 3:05:06 PM
Senator Barbara Boxer (D-CA) is a member of the Senate Commerce Committee, and she is VERY disappointed Kenny Boy Lay cancelled his appearance at the last minute. "Deregulation kept the cash flowing while insiders unloaded and unsuspecting employees who worked for Enron lost their jobs, their pensions, and their dreams. Meanwhile, California faced the prospect of old people dying from lack of air conditioning, agriculture businesses losing everything due to loss of refrigeration and families having to choose between soaring energy costs and food for the table. This was a secret market. And Enron's friends in high places let the games continue. Ken Lay has left us in the dark once more, but my colleagues and I will make certain that the facts in this case see the light of day with or without his cooperation." You GO GIRL!
Bu$h and Kenny Boy Leave California in the Dark - Again - SF Chron
1135. Jonesatlaw - 2/7/2002 3:30:05 PM
Compare
Calgal-
[quoting me]No one was talking about such people.
[CalGal]Um. Yes. We were. That's who we were discussing, Jones. The Enron employees who were upset at having lost their retirement, specifically those who had invested 100% of their retirement fund in Enron's stock
and my original post contrastsing "such people" (Enron employees without stock) versus the people discussed, Enron employees with stock:(me:)
There was no convolution at all. Not all Enron employees are stockholders. Those who had no Enron stock in their 401k's haven't lost their retirement. No one was talking about such people. You were talking about Enron employees who held Enron stock in their 401k's. Your distinction between "stockholders" and "employees" is empty air because the only employees you, Dusty, JAH were talking about were the ones who fit both categories, employee and stockholder
1136. judithathome - 2/7/2002 3:30:27 PM
Skilling is answering questions at the hearings right now....
1137. judithathome - 2/7/2002 3:33:59 PM
Jones, that's who I thought she meant when we were first discussing it but I'm sure she recalls it differently.
1138. Jonesatlaw - 2/7/2002 3:37:58 PM
Now we look to the previous position-
CalGal
Message # 972 is the post you quoted from. What is the sentence immediately after the sentence you quote? Here's the whole paragraph:
It highlights again that Enron employees had only themselves to blame. This doesn't mean they don't have the rights of any stockholder, but that's as far as it goes.
If you read the entire post, you'll see that I was discussing a strategy used by Schwab employees to protect their retirement overexposure. The "it" was the example, demonstrating that the Enron employees had remedies for even that portion of their overexposure that they couldn't directly control.
Now, let's look at what your restatement is:
The conversation started with your assertion that the folks who got creamed by Enron deserved it for being foolish enough to put their money in a single stock or concentrating it excessively in their company's stock. (emphasis mine)
So your first reference to my post, in which I only mention Enron employees (which were not all stockholders) is, on its face, proof that you didn't bother to read what I said.
So CalGal is/isn't discussing non-stockholing employees, who did/didn't lose retirement, but she's sure its their own damn fault.
1139. judithathome - 2/7/2002 3:41:59 PM
1140. CalGal - 2/7/2002 3:43:04 PM
Jones,
You seem to think your last two posts made sense?
Can you track this? We were discussing the sympathy for the employees who lost all their retirement because it was in Enron stock.
Answer these questions:
1. Do you agree that there are Enron employees who had their retirement 100% in Enron stock?
2. Do you agree that there is an enormous amount of sympathy for this specific group of people?
3. Do you agree that Enron employees who had 100% in stock have a problem that is separate and distinct from any Enron stockholder?
Yes or no, please.
1141. judithathome - 2/7/2002 3:45:03 PM
Is anyone watching the hearings?
1142. PelleNilsson - 2/7/2002 3:49:23 PM
As a rule I don't find Art Buchwald very funny, but his latest is not bad.
1143. judithathome - 2/7/2002 3:54:35 PM
Skilling just gave an answer that rivals Gore's iced tea excuse...the power was out and the room was dark so he can't recall what he heard!
1144. rubberducky - 2/7/2002 3:55:34 PM
or follow this link to avoid the error message
(Pelle, you left a double quote on the end of your link)
1145. rubberducky - 2/7/2002 3:56:19 PM
maybe his memory is just murky, J@H ...
1146. judithathome - 2/7/2002 3:57:17 PM
Too much tea, I guess.
1147. CalGal - 2/7/2002 3:59:31 PM
Judith--I am watching them. Skilling's pretty brave. Don't know if I believe him or not, but that takes some balls.
1148. judithathome - 2/7/2002 4:01:41 PM
Yeah, he's great...he's not letting them rattle him at all. It's fascinating. I'm watching and hating him but admiring how he's doing it.
1149. PelleNilsson - 2/7/2002 4:02:56 PM
ducky
Sorry.
1150. CalGal - 2/7/2002 4:05:09 PM
He's good enough that it makes me wonder if maybe he wasn't as involved as has been portrayed. Don't know for sure, but to my mind, he's not hurting his cause.
1151. OhioSTOPAS - 2/7/2002 4:13:26 PM
Judith! YOU peddling one of the phony "Gore scandals" from the election? Say it ain't so!
1152. judithathome - 2/7/2002 4:15:04 PM
Ohio:
I was only making the comparison before Concerned or Joezan did...to remove the sting!;-)
1153. OhioSTOPAS - 2/7/2002 4:25:04 PM
I was afraid you'd gone over to the dark side.
1154. judithathome - 2/7/2002 4:31:40 PM
No worries there, believe me.
1155. Toenails - 2/7/2002 5:19:55 PM
Gee, in my experience, both sides are the dark side.
1156. judithathome - 2/7/2002 5:24:33 PM
You're right....it's better to be apolitical.
1157. concerned - 2/7/2002 6:02:38 PM
JAH -
You still have much kowtowing to do to the icon of PC-groupthink before you are forgiven for your (surely inadvertent)blasphemy.
1158. judithathome - 2/7/2002 6:04:05 PM
I'm shaking in my boots!
1159. Jonesatlaw - 2/7/2002 6:15:48 PM
Cal
Jones,
You seem to think your last two posts made sense?
No, they didn't. That was the point Cal. At various points you claimed that you were referring
to "employees" including those with stock and those without; employees that had stock only; and stockholders. I won't wait for the next variation on the theme, as the theme itself has lost its charm.
Now you can have the last word and tell us what you really meant, if it changed and when, or didn't. Then I'll leave the rest up to you and anyone who cares to read back through it.
1160. robertjayb - 2/7/2002 7:08:43 PM
Vote for the Ken Lay role in Enron movie...
LOS ANGELES -- A movie about the unfolding Enron scandal is in development for FX, the cable channel announced today.
FX has joined with Artisan Television on the project promising an "inside look" at the energy corporation that is the focus of congressional hearings.
1161. judithathome - 2/7/2002 7:38:16 PM
Joe Isuzu should play Ken Lay.
1162. robertjayb - 2/7/2002 7:44:09 PM
I remember this movie...it was called The Sting.
LOS ANGELES -(Dow Jones)- Some current and former employees of Enron Energy Services, the retail energy unit of Enron Corp. (ENRNQ, news, msgs), say the company asked them to pose as busy electricity and natural gas sales representatives one day in 1998 so the Enron unit could impress Wall Street analysts visiting its Houston headquarters.
More than a dozen former and current Enron Energy Services staff who spoke to Dow Jones Newswires said Enron executives rushed about 75 employees, including secretaries and actual sales representatives, down to an empty trading floor on the sixth floor and told them to act as if they were trying to sell energy contracts to businesses over the phone.
"When we went down to the sixth floor, I remember we had to take the stairs so the analysts wouldn't see us," said Kim Garcia, who at the time was an administrative assistant for Enron Energy Services and was laid off last December. "We brought some of our personal stuff, like pictures, to make it look like the area was lived in. There were a bunch of trading desks on the sixth floor, but the desks were totally empty. Some of the computers didn't even work, so we worked off of our laptops. When the analysts arrived, we had to make believe we were on the phone buying and selling electricity and natural gas. The whole thing took like 10 minutes."
1163. judithathome - 2/7/2002 7:46:26 PM
Good lord....
1164. robertjayb - 2/7/2002 7:52:33 PM
As CalGal said, these guys got balls!
1165. jexster - 2/7/2002 8:13:01 PM
As CalGal said, these guys got balls!
1166. jexster - 2/7/2002 8:15:44 PM
Teller is the logical choice but GENE HACKMAN?!?!??
Maybe the GH of The Tannenbaums..
1167. jexster - 2/7/2002 8:41:25 PM
"AUSTIN, Feb. 6 -- After President Bush last year decided not to reappoint Curtis Herbert Jr. as chairman of the Federal Energy Regulatory Commission (FERC), he gave the job to Texas lawyer Patrick H. Wood III, a strong advocate of energy deregulation who had the backing of Enron Corp. and the company's then-chairman, Kenneth L. Lay.
It turns out that Wood is a longtime favorite of Lay."
King Krony Kapitalist - What a Surpise!
1168. judithathome - 2/7/2002 11:16:34 PM
So they found a sleeping pill in Baxters stomach...hmmmmm.
1169. Jonesatlaw - 2/7/2002 11:37:40 PM
Cal- Yes,No,No.
1170. TheWizardOfWhimsy - 2/8/2002 12:36:52 PM
1171. Cellar Door - 2/8/2002 3:27:03 PM
1172. robertjayb - 2/8/2002 4:32:19 PM
a bit from the Molly column:
George W. Bush sides with the malefactors of great wealth not because he is a tool of the rich or because Enron bought him with campaign contributions -- that's who he is, that's what he really believes, that's his life experience.
1173. thoughtful - 2/8/2002 4:35:10 PM
I guess if your choice is between looking like an idiot or a criminal, it's better to opt for being an idiot. But somehow, when Harry Helmsley and Ronald Reagan pulled that "I can't remember" it was a tad more believable than Skilling's version. I think it would've sold better if he had another 40 years on him.
I wonder how it would've played if Clinton pulled that. Did you have relations with that woman? ....I can't remember...it was dark....I didn't know what was going on ... a lot of people were coming and going....the lights went out....I just don't know.
Or how 'bout...it was dark...I thought it was Hillary!
1174. concerned - 2/8/2002 4:38:33 PM
I wonder how it would've played if Clinton pulled that.
We know how it played when forgetfulness was affected hundreds of times by x42 and his wife and his administration officials, as a matter of fact.
Just one example:
Nobody 'knows' to this day who hired Craig Livinstone. Right.
1175. OhioSTOPAS - 2/8/2002 5:06:22 PM
"Nobody 'knows' to this day who hired Craig Livinstone"
It's a good thing, then, that nobody cares.
1176. jexster - 2/8/2002 9:47:54 PM
I know who hired Craig Livingstone, but I ain't tellin.
1177. jexster - 2/8/2002 9:49:37 PM
Heard on Letterman
"Did you hear that Congress can't find Ken Lay?
Maybe they oughta check in Dick Cheney's pocket"
1178. jexster - 2/8/2002 9:51:06 PM
If Rosie 'O Jesus ever sachets in here agin....
ENRON - The Thread so fine they made a movie about it
1179. Al D - 2/8/2002 11:44:42 PM
I think it's disgusting that any American citizen would excercise his constitutional right and take the 5th. Who does he think he is? Why that's just as bad as excercising one's right of free speach or other so called rights. It just ain't real American, that's all I say.
1180. joezan - 2/8/2002 11:50:10 PM
Exactly - if it was good enough for the pinkos of the '50s, it's good enough for the capitalists of the New Millennium.
1181. ronski - 2/9/2002 12:16:33 AM
You guys have the emphasis all wrong. The Inquisitors, excuse me, I mean Congresspersons, are only interested in ferreting out the truth to ensure that influence on Capitol Hill continues to be based solely on merit and never on financial contributions or quid-pro-quo politics, and that is why taking the Fifth is such a scurrilous assault on decency.
1182. ronski - 2/9/2002 12:42:36 AM
ENRON and Capitalism
(If jexster reads this post very slowly, he may finally come to understand why Ken Lay's vision of capitalism and laissez-faire capitalism are not the same thing.)
1183. Al D - 2/9/2002 1:12:21 AM
jexter doesn't do anything slowly!
1184. TheWizardOfWhimsy - 2/9/2002 1:12:58 AM
Oh Ronski that argument is ridiculous.
"Quis Custodiet ipsos custodes?" [Who will Guard The Guards?]
Rockwell is saying forget about any guards.
Look, it's about a rigged game for government as well as capitalism.
Whether it's stuffing the Supreme Court with ideologues or flexible accountants who decide new ways to look at money, the state of our national affairs is very much out of balance. And because the scales tip more now in corporate directions, this fool is advocating a more vicious jungle economics that would do away with the scales entirely.
The pyramid scheme continues and the deluded fools who put their faith in god & money will always lay down for the profiteers who exploit them.
1185. Al D - 2/9/2002 1:23:12 AM
What the Wiz is saying is down with Capitalism and up with Communism, but he will tell you not so for he is a Vet and he flys the flag. But be careful about what flag the Wiz is flying.
1186. TheWizardOfWhimsy - 2/9/2002 1:34:42 AM
::glug::
::glug::
::glug::
::glug::
::glug::
::glug::
1187. Al D - 2/9/2002 1:53:19 AM
I'll let others decide who has the better of this little encounter, the commie or the conservetive. What pleases me is that he doesn't deny his affiliations.
1188. jexster - 2/9/2002 11:09:28 AM
As co-moderator, I declare Al D, Al De Dupe of Krony Kapital the winner
1189. jexster - 2/9/2002 11:10:58 AM
The Pentagon's chief lawyer sent a memo Tuesday instructing all Defense Department employees to preserve any documents, correspondence or e-mail related to Enron Corp., drawing the massive agency into the high-profile probe. 1190. jexster - 2/9/2002 11:11:59 AM
Defense Department Included In Effort to Save Enron Data
O what a web we weave...
1191. jexster - 2/9/2002 11:25:53 AM
King Krony Kapital's Man in the Pentagon
What Kenny Boi wants...
The administration's highest-ranking former Enron employee is Army Secretary Thomas E. White, installed last May. At least two other former Enron employees joined the Army secretariat last year.
White, an Enron executive for 11 years, was vice chairman of Enron Energy Services, which provided energy management services. That unit has been under increased scrutiny for allegedly racking up hundreds of millions of dollars in trading losses and essentially hiding them in another Enron division. Geoffrey Prosch, a former Enron Energy Services director, is now the Army's principal deputy assistant secretary for installations and environment. Dominic Izzo, who worked in international engineering at Enron, is principal deputy assistant secretary of the Army.
White, as Army secretary, has been an advocate for privatization of military utilities. Energy Services, before Enron declared bankruptcy last December, had aggressively sought military contracts to manage utilities at bases.
1192. jexster - 2/9/2002 12:40:47 PM
'Who cares if there were a hundred meetings?' sniffed Mary Matalin, chief spokesperson VP Dick Cheney. In one phrase, she summed up the White House arrogance: It's a financial scandal, not a political one. It has nothing to do with the Bush administration. It doesn't matter how much money Enron gave George W. Bush, how many former Enron officials work in the White House, or how many secret meetings Cheney held with Enron executives in putting together his energy plan. Because there's no proof that Enron ever got anything for its money or access. Wrong. Maybe there was no proof before, but there is now; a secret memo -- personally handed to Cheney by Ken Lay, which helps explain why the White House is so skittish about Enron and why Cheney aand Bush stubbornly refuse to release the records of those energy task force meetings... Up until the very end, when it was too late to help, everything Enron asked for from the Bush White House, Enron got."
Panic Attacks Continue
1193. CalGal - 2/9/2002 12:52:37 PM
it was a tad more believable than Skilling's version.
Really? I thought Skilling was great. Michael Duffy caught my sentiments exactly on Washington Week, if you saw it--if not, I'll hook in the transcript whenever it's available.
He mentioned that Ken Lay is thinking of testifying, and he can't figure out if Lay is testifying to set the record straight vis a vis Skilling, or if he's thinking "Wow, Jeff made it look pretty easy. I can do that, too!"
1194. CalGal - 2/9/2002 1:14:41 PM
Jones,
Yes,No,No.
1. So you know that there were Enron employees that had 100% of their retirement fund invested in Enron stock. Check.
2. You disagree that any special sympathy has been shown them.
I fear you haven't been paying attention. Did you perhaps miss the hearings, where some of them were asked to testify about their losses? Did you see any non-Enron employee stockholders there? What about Jesse Jackson and Al Sharpton rushing down to demand justice for the people who lost their retirement money? What about the various congressmen who donated their Enron contributions to a special fund set up specifically for Enron employees who lost their retirement fund?
Of course there has been special attention paid to the employees' losses, Jones. That's why we were discussing them separately.
3. You disagree that their problem of a disappearing retirement fund is separate and distinct from being an Enron stockholder.
Ah, well, that's the problem. These are separate groups, and the discussion was about the first group--employees with 100% stock invested in Enron.
If you can't make that distinction, then argue about that. But your assertion that I feel all stockholders are to blame for their decision in Enron is completely inaccurate, and I expect you to stop caterwauling about it now and forever. You may, if you feel it necessary, begin to bleat about my lack of sympathy for greedy Enron employees. But further misrepresentations about my position need to stop.
1195. Cellar Door - 2/9/2002 1:31:01 PM
If Jesse Jackson and Al Sharpton said Word One about any of this you'd be all over them like a cheap suit.
Or an Ann Coulter dildo.
1196. judithathome - 2/9/2002 1:37:40 PM
They did say word one and more...they both came to Houston and were on the news several times spouting about it.
1197. robertjayb - 2/9/2002 1:45:06 PM
Howling-mad Hollings wants special counsel
WASHINGTON---"This week, when Kenneth Lay, former Enron chairman and George W. Bush's largest campaign contributor, failed to show up to testify before Congress, I became convinced that it is time to appoint a special counsel to investigate Enron. We need to name a special counsel, rather than relying on the Justice Department, because conflicts of interest abound in this case, particularly at the Justice Department. Federal law allows the attorney general to appoint such a counsel when the Justice Department's involvement would present a conflict of interest.
"Attorney General John Ashcroft recused himself from the Enron case because he had taken $57,000 from Enron in his failed bid for the Senate in 2000. His chief of staff also recused himself, since he was Mr. Ashcroft's 2000 campaign manager. That leaves Larry Thompson, deputy attorney general, to oversee the case — or to appoint a special counsel.
"While Mr. Thompson is a capable attorney, his former law firm has represented both Enron and Arthur Andersen, giving a taint of a conflict of interest. Moreover, Mr. Thompson may already be the busiest man in Washington because he is overseeing the Justice Department's counterterrorism activities.
"A special counsel can also be appointed if there are "extraordinary circumstances" that would cause the appointment to be in the public's interest. What could be more extraordinary than the largest bankruptcy in American history? When was the last time a corporate collapse had Wall Street so jittery, with investors questioning the accounting practices of every company and so many ripples spreading out through the economy?"
1198. Cellar Door - 2/9/2002 2:00:13 PM
They did judith? Then surely they should be shot by firing squad at sunrise. Right CG?
1199. judithathome - 2/9/2002 2:21:38 PM
Cellar, they didn't come as a team or anything...Sharpton came first and I felt he was using it for publicity purposes. Jackson came later and I'm not sure what he was doing; seems like he held a panel discussion with the ex-employees or something.
1200. CalGal - 2/9/2002 2:46:22 PM
Then surely they should be shot by firing squad at sunrise. Right CG?
No. But you should really track events before you start your righteous act, don't you think? And thanks for pointing it out, Judith.
Actually, I think it is extremely savvy of Sharpton and Jackson to identify with the Enron employees, even if I personally don't think they deserve any bailing out.
1201. Cellar Door - 2/9/2002 2:56:31 PM
And a lowered thumb is spotted in the grandstand once again.
1202. jexster - 2/9/2002 3:43:23 PM
Explainer: Who's Drilling Enron on the Hill?
1203. jexster - 2/9/2002 3:46:33 PM
Nowhere on the list will you find Dan "WatermelonHead" Burton's House Gov Ops Committee.
And the asswipe was soooooooooooo interested in FosterGate, Whitewater, Pardongate, Wen Ho LeeGate, Buddha Gate, JackOff Gate etc.
1204. jexster - 2/9/2002 3:52:06 PM
More Panic on PA Ave....White Palace caught in yet another lie
"[T]he two-minute phone call with Mr. Lay was solely about the legislative prospects, not the content, of an economic stimulus bill. Contrary to Rep. Waxman and Terry McAuliffe, no lobbying occurred. In fact, the provision to make the corporate alternative minimum tax relief retroactive had not even surfaced then, and neither I nor anyone else to my knowledge had even heard of the idea."
--White House Budget Director Mitch Daniels, describing an October 11 phone call in a letter to The Washington Post, February 1
"A $100 billion economic stimulus plan ... won approval Friday [October 12] by a Republicandominated House committee.... [Included in the package is repeal of the corporate alternative minimum tax, retroactive to Jan. 1 of this year."
--Associated Press, October 12, 2001 (Thanks to Spinsanity.com.)
1205. Cellar Door - 2/9/2002 4:10:29 PM
Let's see: we've got half a dozen former Enron execs on the Bush cabinet; Lay was on the Bush transition team; Lay vetted all appointments to the FERC; Cheney acted as a debt collector for Enron in India; as far back as '88 Bush was acting as a shill for Enron; Enron execs were in charge of the Florida state teacher's pension plan that dumped $335 million into its worthless, plunging stock...but no, it's not a Bush scandal at all.
It's a CLINTON scandal!
1206. jexster - 2/9/2002 6:05:02 PM
Yea that Evildoer Clinton...did you know he was the REAL power in Texas?
AUSTIN – As financial contributors to Texas politicians over the past decade, Houston-based Enron Corp. and its executives were major players, spreading hundreds of thousands of dollars among top state officials, judges and members of Texas's congressional delegation
Those Arkys are a tricky bunch!
Eroned Deep in the Heart of Texas - A Clinton Conspiracy Run from Arkadelphia & Bugtussle
1207. dusty - 2/9/2002 6:39:17 PM
Cellar Door
Of course it should all be laid at Bush's doorstep and not at Clinton's. Everyone knows that Enron was fairly valued during the Clinton administration, and only collapsed when the Bush administration delivered favors to the company (Some favors, huh?)
The help by Clinton for the plant in India is hardly worth mentioning.
The Powers report detailing all the blunders back in the 90's is obviously a Bush cover-up, attempting to portray this mess as starting more than a year ago.
Andersen is in on it. Sure, one the largest accounting firms may get wiped out, but I am sure the partners are willing to lose their seven figure stakes in the firm to pretend that they screwed up before Bush came into office.
You're becoming a caricature of yourself, which is an incredible accomplishment.
1208. Cellar Door - 2/9/2002 7:46:42 PM
Looking in the mirror while posting dear?
1209. CalGal - 2/9/2002 7:57:50 PM
Dusty (and anyone else),
Plan to Put Limits on 401(k) Holdings Draws Fire
There seems to be a lot of opposition to the plan to limit or restrict entirely the amount of company stock that employees can invest in, but I think it is a good idea. Corzine makes the argument well:
Senator Jon S. Corzine, Democrat of New Jersey, an outspoken advocate of caps, said that because the federal government was spending more than $70 billion a year to subsidize 401(k) plans, it should make sure that participants use the most basic of investment principles, diversification.
The subsidies take the form of tax breaks to 401(k) participants and to the companies that contribute both stock and cash to it.
"I believe subsidizing savings to promote retirement security is a good thing," Mr. Corzine said. "But subsidizing risky investments is not. If people want to risk all their investment dollars by placing all their investment in their employer, fine. But they should do it on their own dime, not the taxpayers.' "
It's true. 401(k)s are an employee gimmee. Why should the government fund their lousy investments?
In fact, I think it's arguable that the government should have more oversight of investment in 401(k). Alternately, they can stop subsidizing it.
1210. jexster - 2/9/2002 8:43:48 PM
Davis Enrons Riordan in Latest Attack Ad
When California was suffering at the hands of Texas Evildoers, Riordan was in a position to help. Instead, he chose to gouge Californians charging more than even ENRON!
Say Goodnight Dick
1211. jexster - 2/9/2002 10:43:12 PM
WASHINGTON (Reuters) - Enron Corp.'s close ties with the Bush administration have prompted a call for Federal Energy Regulatory Commission (news - web sites) Chairman Pat Wood to resign because of the alleged influence the failed energy trading company had over his appointment.
1212. jexster - 2/9/2002 10:44:46 PM
Riordan's Riposte to Davis Attack ad on his pro-life history ->
1. I hate abortion but its a matter of choice
and this is what makes it relevant to this Thread
2. Davis took more money from Enron than anyother US politician
1213. jexster - 2/9/2002 10:45:50 PM
And where are those 2 half-wits Cyg and Rosie O Jesus now with their "manufactured scandal" shit?
1214. jexster - 2/9/2002 10:47:12 PM
The Enron Scandal has achieved more traction and killing power in 8 weeks than Paula Jones - Ken Starr - Dan Burton could create in 8 fuckin years
1215. dusty - 2/9/2002 11:06:17 PM
Re Message # 1209
I don't think I'd surprise anyone by saying I'm not thrilled about the idea of the government making rules regarding permissible investments.
Having said that, some of the same issues arise in the context of SS privatization. That doesn't seem to be going anywhere at the moment, but if it does, the issue of what employees should be allowed to do will arise. I had given some thought to setting some guidelines with broad ranges in them. I wouldn't eliminate the option of choosing different allocations, but I would put limits on deductibility, or guarantees, or some other "soft" restrictions on making stupid decisions.
I would be tempted to do something along the same idea. OTTOMH, what if we allowed employees to put the money in anything they want, but employer match would only be allowed on non-company stock selections, or eliminate the company deduction on dividends paid on employee selected company stock, or some other combination of incentives?
As an aside, the Corzine/Boxer proposal to limit the amount of money in one company stock to 20% misses an important point. The maximum in any one stock should probably never get much more than 10%, so 20% may be a reasonable cap, but the employee's company is a special case. The limit should be smaller. If P&G employees want to put a lot of money in, say, K-Mart, they should be limited to some amount like 20%. But the amount they put in P&G should be closer to zero (absent financial incentives).
I'm working (slowly) on a way to quantify the special consideration of one's employer.
1216. CalGal - 2/10/2002 10:42:52 AM
Dusty,
I have no problem with keeping the government out of the 401k plans, but then it should be out of 401(k) plans. No subsidization, either. (Remember, you're talking to someone who is only allowed to deduct 2K in the years she doesn't have a lot of 1099 income.)
But the amount they put in P&G should be closer to zero (absent financial incentives).
I agree--I think the article mentions that at the end.
what if we allowed employees to put the money in anything they want, but employer match would only be allowed on non-company stock selections
Not only employer match, but tax exemption.
1217. jexster - 2/10/2002 11:20:22 AM
They called it "the matrix" -- a computer program that brought a scientific dimension to Enron's effort to seduce politicians and sway bureaucrats.
Bu$h Selection Busted Algorithm
1218. jexster - 2/10/2002 11:57:57 AM
Bush Is Quiet in Campaign Bill Fight
With Eye on Enron, White House Avoids Active Opposition
Face The Nation - Billy Tauzin criticizes Cheney for not turning over Kenny Boi material
1219. jexster - 2/10/2002 11:59:35 AM
administration officials indicated that, while their strategy could change, any intervention would be tempered by concerns that overt opposition to campaign finance reform would focus more attention on its ties to the disgraced Enron Corp., a major political donor.
1220. jexster - 2/10/2002 12:37:46 PM
[L]et the reforms begin.
For more than 20 years, the federal government has given companies fairly free rein, allowing them to operate with less and less regulation. Enron (news/quote )'s collapse may well halt that trend. As Congressional hearings unfolded last week, with some witnesses invoking the Fifth Amendment and others providing new details of chicanery, policy makers were lining up to fix American business. Suddenly, there may be a political price to pay for not acting, and the race to regulate is on.
Enron Ignites Race to Regulate
Poor Ronski.
1221. jexster - 2/10/2002 12:38:41 PM
Not bad for a "manufactured" scandal eh Rosie O Dingbat?
1222. jexster - 2/10/2002 12:40:07 PM
"There is something very broad-based going on, and it's not anything that passing a couple of laws is going to change," said William T. Allen, the director of the Center for Law and Business at New York University. "Enron is a profound shock to the system because the fundamental causes are pervasive in the economy."
1223. dusty - 2/10/2002 3:25:38 PM
CalGal
I have no problem with keeping the government out of the 401k plans, but then it should be out of 401(k) plans. No subsidization, either.
Terminology, but I bristle when a decision by the government not to take some money is call "subsidization". It may be mathematically accurate, but the implication is that all your money belongs to the government, except that which they let you keep. I don't like that approach.
If you want to talk about whether the government ought to defer taxes on money saved for retirement, we can.
(Remember, you're talking to someone who is only allowed to deduct 2K in the years she doesn't have a lot of 1099 income.)
You can put $3,000 into an IRA. You can out 25% of compensation into a Keogh (up to 30K).
I agree--I think the article mentions that at the end.
I reread it and don't see it. There is a reference to the existing 10% limit on db plans, which is in the same spirit, but too high.
Not only employer match, but tax exemption.
What tax exemption are you talking about?
1224. jexster - 2/10/2002 5:12:42 PM
"Only the president has the right to executive privilege, not the vice president. It's never gone that far. It's really a uniquely presidential privilege, and the president himself must invoke it, and there has be no invocation of executive privilege here. What they've said is, we challenge GAO's authority to even ask for this information. That's different than executive privilege. What this appears, Paula, to me to be is the first step of a cover-up. This is the way you start it. You stall, you stall, you stall. You try to get something like this to go on until it is no longer an issue, until something intervenes and replaces it, or the issue becomes moot for some other reason. That's the early signal here... Certainly the way we did during Watergate was to try to stall everything, and this is a stalling action."
John Dean
1225. jexster - 2/10/2002 5:24:13 PM
Arteriosclerosis on the Presiduncy concerned?
1226. jexster - 2/10/2002 5:25:53 PM
"Gov. Jeb Bush spent up to a half-hour on the phone last April with Kenneth Lay, the former chairman of Enron Corp., the now-bankrupt Houston-based energy conglomerate that had an interest in breaking open Florida's energy market to outside companies. The disclosure that Bush talked to Lay was revealed in public records made available to several news organizations Wednesday. Bush said late last month he did not 'recall' meeting or talking with anyone from Enron during his tenure as governor, although he said he had met with representatives of an Enron subsidiary. Lay, who this week refused to voluntarily testify to Congress about the demise of his corporation, and Enron were one of the largest donors in the 2000 election to President George W. Bush, the older brother of Florida's governor. Several Enron officials -- including Lay -- also donated money to Jeb Bush's 1998 campaign for governor."
Sarasota Herald-Tribune
1227. dusty - 2/10/2002 5:42:54 PM
jexster
Thanks for the link.
I realize you didn't write this tripe, but perhaps you have some facts or opinions.
For more than 20 years, the federal government has given companies fairly free rein, allowing them to operate with less and less regulation.
Really? What are the examples of regulations that have been repealed over the last couple decades? I'll bet that there are far more new regulations than repealed regulations.
Politicians recognize that the estimated $1.2 billion in retirement money lost by Enron employees has frightened many of the 42 million Americans with 401(k) plans, and are competing to propose measures to protect the nearly $2 trillion in those plans.
This should frighten some Americans. Especially those that made stupid decisions. Like every single penny contributed by Enron employees that was lost.
President Bush's proposal would let employees sell stock that companies contributed to 401(k) accounts after workers hold it for three years. That responds to complaints that Enron barred workers from selling such stock until they turned 50.
I can't get excited about this one way or the other. I'd probably propose 5 years, if it was up to me. And while the author is undoubtedly correct that there were complaints, those complaints are over-blown. At least 89% of the Enron stock in those plans was unrestricted, even if one assume that not a single employee was over 50. The proportion is higher, but I don't know the proportion of stock held by people over 50.
.
1228. dusty - 2/10/2002 5:43:17 PM
continued
Many companies have filled retirement accounts with their own stock, to receive a tax break, to increase employee loyalty, and to keep shares in friendly hands.
"Filled" is misleading, as the company provides only the matching amount. The "filling" mainly comes from greedy and/or ignorant employees.
Many Enron employees were outraged that top executives were selling Enron shares for several weeks last fall when lower-level workers were prohibited from selling stock in 401(k) plans while the company hired a new plan administrator.
Yes, they were outraged, but a good reporter would point out the error of that outrage. Top executives couldn't sell stock in 401K plans any more than lower paid people. To be sure, the executives had other stock, not in 401(k) plan, that they could sell. Duh.
The freeze on selling is a normal event, whenever plan administrators are changed. It was announced in advance, and only a small portion of the decrease in stock value occurred in this period.
In another proposal with broad support, the president would require companies to give employees quarterly account statements and advice on diversifying.
I already get continuously updated statements. If people are getting statement less often than quarterly, they should complain. One hardly needs federal legislation.
I won't comment on the advice aspect as I may have a vested interest.
The Bush administration says one way to reduce overconcentration would be to educate employees.
I agree.
The article goes on, but I cannot
1229. CalGal - 2/10/2002 7:29:51 PM
Terminology, but I bristle when a decision by the government not to take some money is call "subsidization".
Okay, call it "expenditures". Nonetheless, the government makes money by taxing people. When it decides not to tax people, it is foregoing income. While you might approve of them foregoing income, I think you'd have to agree that if they decide not to tax certain types of income for certain reasons, they also have the right to turn around and start taxing it again.
So if you don't like calling it subsidization, you can still accept the fact that the government can say, "Fine. You have to pay tax on all income put in the 401(k) if you don't invest it by standards we find acceptable" and you're still back at employees having to pay taxes on all their money.
You can put $3,000 into an IRA. You can out 25% of compensation into a Keogh (up to 30K).
$3000 (just recently) as opposed to what--up to 13% in a 401(k)? We're going to pretend that's equivalent? Keogh is 15%, I thought, unless you want to fix it for life. But no matter, since that only works if you can count all your income as self-employed, which I can't. The IRS quite often forces me to work temp W2. Now, there's no question that in my case I'm caught coming and going by the nasty government. But ignore me for a moment, and focus on the fact that lots of temp workers aren't self-employed and don't have the option at all--and can only put $3K in, and that's without employer matching (also tax free). So it's a severe skew towards employees--and whether the government subsidizes it or not, there is no question that taxpayers who don't qualify for 401(k)s are subsidizing it for those who do.
1230. CalGal - 2/10/2002 7:32:18 PM
I reread it and don't see it.
From the article: Alicia H. Munnell, an economics professor at Boston College, has proposed denying employees the option of buying company stock in 401(k) plans in which the companies' matching contribution is in employer stock. She said, "If employees want to make imprudent investments, they should have to do it outside of the subsidized pension system."
What tax exemption are you talking about?
The deduction of the 401(k)contributions from taxable income. In other words, the government could say "sure, buy stock in your 401(k) plan but you'll pay tax on the contribution funds".
1231. jexster - 2/10/2002 7:53:57 PM
The NyT article above is an excellent review of Enron regulatory fallout...
I found this incredible.
Even now, some analysts are still recommending Enron stock. On Friday, when its shares traded for 38 cents, Richard Gross of Lehman Brothers (news/quote) still had a "strong buy," the same rating he has had since January 2001, when the stock sold for $81.
Securities analysts have been remarkably wrong about stocks in recent years. Nearly every company is a buy or strong buy. How then to account for the Standard & Poor's 500-stock index dropping more than 28 percent since its March 2000 peak?
How indeed.
1232. robertjayb - 2/10/2002 9:06:57 PM
Kenny Boy---He aint talkin'
WASHINGTON (AP) - Former Enron chairman Kenneth Lay, scheduled to testify under subpoena before Congress on Tuesday, will assert his right against self-incrimination and refuse to answer questions, his spokeswoman said Sunday night.
1233. dusty - 2/11/2002 11:06:45 AM
CalGal
Okay, call it "expenditures".
Let's not. That's worse. A government chooses to delay taking some money, and calls it an expense? Yes, I am aware that people talk this way within the beltway, but I'd like to discourage that type of talk.
Nonetheless, the government makes money by taxing people.
The government doesn't make money it takes money. I make money. The government does provide services that I need, and I am willing to pay for them. It also provides services I don't need, and I have to pay for those, too.
When it decides not to tax people, it is foregoing income.
Yes.
While you might approve of them foregoing income,
On the contrary, I wish they would do more of it.
...I think you'd have to agree that if they decide not to tax certain types of income for certain reasons, they also have the right to turn around and start taxing it again.
It isn't a matter of right, it is a matter of power. The government has the power to tax just about anything.
So if you don't like calling it subsidization, you can still accept the fact that the government can say, "Fine. You have to pay tax on all income put in the 401(k) if you don't invest it by standards we find acceptable" and you're still back at employees having to pay taxes on all their money.
Accept it? I think I proposed it.
1234. dusty - 2/11/2002 11:06:58 AM
continued
$3000 (just recently) as opposed to what--up to 13% in a 401(k)? We're going to pretend that's equivalent?
You are comparing apples to oranges. Both the employed and the self-employed can take 3k for an IRA (although there are income limits; I can't justify doing it myself.)
The employed put money into a 401(k), if their employer provides one. The limit for most people is 11k. I get to put in 12k. The self-employed can put money into a Keogh. According to This site, the Keogh limit is 25% or 30K. Sounds like self-employed get a better deal than employed. (But I grant that temp employed may get a raw deal.)
1235. PelleNilsson - 2/11/2002 11:12:14 AM
dusty
Since you are around:
It was not until the other day I realized that your previous moniker is the title of a book by Milton Friedman. The bottomless ignorance!
1236. dusty - 2/11/2002 11:14:06 AM
CalGal
From the article: Alicia H. Munnell, an economics professor at Boston College, has proposed denying employees the option of buying company stock in 401(k) plans in which the companies' matching contribution is in employer stock. She said, "If employees want to make imprudent investments, they should have to do it outside of the subsidized pension system."
Good for her!!!
Sorry I missed it. I'd go further and make that rule even if the company match is not in company stock, but it is a start.
The deduction of the 401(k)contributions from taxable income. In other words, the government could say "sure, buy stock in your 401(k) plan but you'll pay tax on the contribution funds".
This isn't a tax exemption, it is a tax deferral. Big difference. 401(k) contributions are fully taxed when withdrawn. (For the anal; some withdrawals won't be fully taxed, but that occurs only if the contributions were already taxed.)
1237. dusty - 2/11/2002 11:15:32 AM
PelleNilsson
Exactly!
Still a good book, even if it is a bit over the top. Did you read it, or just run across it?
1238. jayackroyd - 2/11/2002 11:20:54 AM
It's 15%, including individual contribution and any company match.
The counter argument to caps on percent holding that I find compelling is that as the value of the holding rises, you'd be forced to sell out. Mind you, that would have been a good thing for the Enron folks, but 1) not always a good thing and 2) not generally a good thing for the company, with a built in short interest in the stock.
Requirements to hold until age 50 should go, imo.
1239. dusty - 2/11/2002 11:24:41 AM
jayackroyd
The counter argument to caps on percent holding that I find compelling is that as the value of the holding rises, you'd be forced to sell out.
I thought about this a bit. While I think an argument can be made that this is likely to be a good thing (someone religiously following a n asset allocation percentage will find themselves buying low and selling high, generally a good idea), I would be open to expressing the rule in terms of contributions.
1240. jayackroyd - 2/11/2002 11:32:17 AM
As I've read the more recent Enron and Global Crossing articles, it occurs to me that it is entirely possible that no crimes were committed here.
For example, Ken Lay sold his shares by repeatedly repaying a 7.5 million dollar credit line with shares. This had the advantage of keeping him off the quarterly inside sellers report. The transactions did not have to be reported until 45 days after the end of the fiscal year--Feb 14. These trades are not insider trades--insider trading is defined as making a sale to buyer where you have material information the buyer does not. Certainly the company as an entity was privy to all information L