[Corp. Watch] Corporation Watch is now a blog!

[Corporation Watch]

Dear Corporation Watch subscribers,

	In the interest of providing Corporation Watch list subscribers with  
more and better-presented information, we are in the process of  
converting it to a web-based log (blog).

	We have chosen to use the free and open-source WordPress service to  
host the Corporation Watch blog. (If WordPress proves unworkable for  
some reason, we will move the blog to another host, possibly including  
the soon-to-be-revamped CounterCorp website itself.)

	To maintain the existing functionality of the Corporation Watch list,  
we will continue to send e-mails of the articles/posts to list  
subscribers.

	These messages will be slightly different from the previous ones  
you've received, however, because they won't consist of a single,  
entire article. Rather, they will comprise one or more postings to the  
Corporation Watch blog, with links to the articles referenced in the  
posting(s).

	You can use the e-mails to read the blog posting(s), or use the links  
in the e-mails to read the articles (which were previously were sent  
out to the list in their entirety) on which the blog postings are  
based, or just use the e-mails to prompt you to go to the blog itself  
and read (and comment) on everything there.

	The new e-mail format is itself a work-in-progress, as we work to  
find the best way to deliver blog updates to our subscribers. Below is  
an initial effort to provide the first two postings to the Corporation  
Watch blog.

	Please feel free to send your feedback about the changes to us at editor at corporationwatch.org 
. And we invite you to go to the Corporation Watch blog and comment on  
the posts themselves. Thanks for your interest and support,

Corporation Watch Editor



"Corporation Watch" - 2 new articles

Cherry-picking bad apples in a broken barrel
Fox Security, Inc: Myth of supply and demand enables corporate plunder  
of economic henhouse
Search Corporation Watch


Cherry-picking bad apples in a broken barrel

Investigate journalism website Pro Publica posted a June 23 article  
about uber-fraudster Bernard Madoff’s most remunerated client, lawyer/ 
accountant/investor Jeffry Picower.

Picower was among a group of eight super-investors who received  
special treatment from Madoff. In Picower’s case, this meant annual  
returns at 100% and above (at a time when most stock indexes were  
offering returns that hovered around 10%), amounting to a total of  
about $5 billion — which Pro Publica speculates is more than Madoff  
himself made.

Leaving aside the difference between Madoff’s Ponzi scheme and the  
generally Ponzi-esque nature of Wall Street and stock markets in  
general (i.e., the need to bring in ever more investors to pay off the  
investments of those who’ve already bought in, or the whole things  
collapses), this bring up a recurring theme in the Madoff scandal and  
corporate crime in general — the difference between the “bad apple”  
and “broken barrel” theories of malfeasance.

The bad apple theory says that certain individuals — or occasionally,  
specific companies (e.g., Enron) — are rotten apples that spoil the  
rest of an otherwise unblemished barrel. By laying the blame on one  
person or a small number of wayward individuals or companies, the bad  
apple theory helps corporate apologists avoid having to confront,  
explain, and remedy the recurrent and systemic nature of corporate  
crime.

In contrast, the “broken barrel” theory says that it’s the barrel  
itself that caused the rotten apple to go bad, and thus there are  
likely to be many more rotten apples in a broken barrel. They can’t  
simply be explained away as the isolated failings of a few individual  
apples, which couldn’t be addressed by repairing or replacing the  
barrel. A broken barrel demands change.

When politicians, the media, and members of the public seize on  
Bernard Madoff as a uniquely greedy and manipulative individual who  
acted in his own self-interest, they exclude the system that  
encourages and enables that behavior, and benefits from it. Anyone who  
thought that Madoff alone benefitted from his ongoing swindle ignores  
people such as Picower who were right there alongside Madoff, cramming  
the ill-gotten gains into their own pockets.

As the Pro Public article observes:

In 14 instances between 1996 and 2007, a group of Picower trading  
accounts experienced annual returns of more than 100 percent. On 25  
occasions, the annual return exceeded 50 percent. During this same  
period, the biggest annual gain in either the Dow Jones Industrial  
Average or the S&P 500 was 31 percent, for the S&P in 1997. The S&P  
500’s annual average for that period was slightly under 9 percent.
The annual rate of return for two of Picower’s regular trading  
accounts in the four years between 1996 and 1999 ranged from about 120  
percent to more than 550 percent annually.
In 1999, one account earned 950 percent.
No one — especially not a professional investor, accountant, and  
lawyer such as Picower — could possibly have believed that those kinds  
of returns were the product of normal investments. The profits Madoff  
generated for his clients were nothing short of financial alchemy, and  
Picower and others must have known it.

To act as if they were not complicit at some level in his fraudulent  
scheme is to deliberately ignore the condition of the barrel.

And, sure enough, the Pro Publica report cites a May 18 Wall Street  
Journal article, indicating that federal investigators are looking at  
Madoff’s special investors, who are being sued by a trustee overseeing  
the bankruptcy liquidation of Maddoff’s firm, saying they knowingly  
took a substantial portion of Madoff’s ill-gotten gains for themselves.


Fox Security, Inc: Myth of supply and demand enables corporate plunder  
of economic henhouse

Radio commentator Jim Hightower has posted an item on Alternet  
debunking the orthodox economics explanation — floated by Big Oil (to  
cover their butts) and parroted by the media (because they’re  
essentially “embedded” in the corporate economy) — to justify the  
recent and utterly manipulative rise in gas prices.

Hightower’s June 25 article Gas Pump Thievery: Who’s Really Behind the  
Rising Prices at the Pumps? notes that the standard supply-and-demand  
cover story makes no sense:

Supply and demand? The supply of crude oil has risen this year to its  
highest level in nearly two decades, even while the demand for  
gasoline has dropped dramatically, having fallen this month to a 10- 
year low. Let’s see — supply up, demand down. That’s a classic market  
formula for cheaper prices at the pump. Yet our prices have steadily  
moved up, rising by two-thirds since the beginning of the year (and by  
60 cents a gallon in the past two months alone).

This kind of basic analysis always seems beyond the abilities of  
college-educated journalists, who rarely question the conventional  
wisdom — which they themselves help to create by mindlessly repeating  
whatever corporate PR flacks, business analysts, and orthodox  
economists tell them.

Hightower then goes on to give a far more plausible explanation for  
the recent run-up in prices:

What might surprise you, though, is that the wheeler-dealers now  
jacking up our pump prices don’t operate under the  
BPExxonMobilShellChevron brands — but the logos of Goldman Sachs,  
Morgan Stanley and other Wall Street traders that have been placing  
vast, unregulated, secretive bets on the future price of oil. They’re  
playing an electronic casino game in a global “dark market” of exotic  
derivatives and credit swaps.

If this sounds vaguely familiar to you, it’s because this is the same  
game that Wall Street played with sub-prime mortgages, leading to the  
present crash of our economy. And, yes, these are the exact same  
banksters that you and I are presently bailing out with our trillions  
of tax dollars.

And finally, he provides the names of those responsible for creating a  
system whereby companies that don’t actually buy or sell any oil — or  
even put down much (if any) money — are able to distort the prices of  
basic commodities such as oil and food:

Among the enthusiastic backers of this legalized thievery were [former  
Goldman Sachs senior executives] Robert Rubin, the Wall Streeter who  
was Bill Clinton’s Treasury secretary, and his protege, Larry Summers,  
who is now Barack Obama’s chief economic advisor.

Which is why Obama’s recently announced deckchairs-on-the-Titanic  
economic “reforms” are more chump change than real change …


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