Amid a renewed wave of stock collapses on Wall Street and the continuing accounting scandals involving a greater and greater number of big corporations, President Bush has appealed to the nation's capitalists to use "honest" accounting methods in order to calm investors. Speaking on Wall Street on July 6 to a hand-picked audience of bankers, stock traders, and other business elites, Bush said that "faith in the fundamental integrity of American business leaders is being undermined. Nearly every week brings better economic news [?!] and a discovery of fraud and scandal."
Bush also called for increased funding for the Securities and Exchange Commission, the Federal body that regulates (rather de-regulates) the stock market, although he refrained from calling for the removal of SEC chairman Harvey Pitt, who is a former lawyer for the accounting industry. Lastly, the President also called on CEOs to hand over any profits from stocks sold on the basis of "insider knowledge".
Both houses of the Congress have also been busy debating over bills to address the crisis. The Republican House and the Democratic Senate both have bills of their own, and are now in the process of creating a unified bill. The bills range from creating an "independent" oversight committee to putting "stiff" legal penalties such as short prison terms and fines for double-booking on the law books. The Democrats have also been calling for the resignation of Harvey Pitt, the SEC chairman. Many Republicans have also called for his resignation, including John McCain.
Tom Daschle, the Democratic majority leader in the Senate has called on the SEC to investigate Vice-President Cheney's former oil company Halliburton, as well as re-opening the 1990 investigation of Bush's insider sale of his $848,560 in Harken oil shares before the company's collapse. The SEC's investigation of Bush was inconclusive, but in its final letter to Bush informing him that the investigation was ending it asked in the most respectful way that he never do it again. So, even Bush's own past insider trading and book cooking won't prevent him from preaching to the Wall Street elite on the issue! But, neither confusing lectures from Bush on "business ethics" or Congressional reforms will solve the problem. The CEOs are trying to grab the last scraps of the boom and to "take the money and run" and they won't waste the time to listen to morality lectures from people that they have paid good money for!
In the aftermath of the Great Depression the US state put hundreds of laws on the books to prevent another economic meltdown. But, unfortunately, boom and slump are the seasons of the capitalist economy. Boom necessitates slump and vice-versa. When there is an expansion of world trade and the productive forces, the contradiction between private ownership, social production, and the nation state is built up until the point where the contradiction has to be resolved, and since there cannot be any resolution of the contradiction on the basis of capitalism, a slump is born. The slump "cleans out" the problems built up during the boom (i.e. halting or slowing production to empty out warehouses of goods, etc). When the world's level of production has outstripped the confines of private ownership and distribution (the "market") a decline is necessary to bring the productive forces within bounds. No amount of legislation, moralizing, or even interest rate cuts can solve the problem until the cycle is ready to repeat itself. For example, the Japanese central bank has issued rate cut after rate cut, to the point where the real interest rate is zero, but to no avail. The Japanese capitalists are unwilling to invest and take on new loans. A similar situation could be unfolding in the US. The current slump will have to "bottom out" before it can be superseded by another boom.
Despite the false optimism of the government and the media, the recovery is not around the corner. They can't hurry the process, either. No matter how much Bush and the Congress may try to assuage investor confidence, the downfall of Enron, WorldCom and the continued dipping of stock values have already hit the investors hard, especially the workers who have lost their 401k funds. Capitalism cannot "reform itself", the only road open to those who have been ruined by these scandals and the slump is to seek a solution that can eliminate forever the seasons of boom and slump - to abolish private property and to administer the forces of production for the benefit of all, not just a handful of financiers and capitalists! Join the fight for a Socialist Future!