The market's down 3,000 points. Then one CEO is arrested, and the market rebounds 500 points.
Okay, I can do the math. Does this mean if we get six CEOs in chains, the market will make up all it has lost?
Let's see... The Tyco guy, the Enron guys, the Global Crossing guy... Martha, don't forget her... Not to mention the WorldCom guys — there's probably six right there in that one company.
Wanna know how bad the WorldCom deal is? I met a trader yesterday who put through a sell order for 50,000 shares of WorldCom... They fetched 12 cents each, or about $6,000 bucks for the whole lot. At one time, those shares were worth $3 million. Think it's possible somebody bought for $3 million and sold for $6,000?
That's why we need somebody in jail. So back to my point...
Yesterday, I said President Bush has to put some guys in jail. Today, he has. Does this mean he's listening to me? No. But when Dick Grasso, head of the new Wall and Broad New York Stock Exchange, says people have to go to jail… and when senators and Congress people are calling for jail, jail, jail... sooner or later, the cries of "jail" grow so loud you can hear it inside the White House.
So is this going to fix things? Not by itself. Warren Buffet, the famed Berkshire Hathaway investor, wrote in The New York Times that CEOs have to be convinced to do two things:
- Not make up numbers that have the effect of giving their companies earnings they don't really have (which, evidently, they do all the time)
- Actually count the money they take from stock options as real money in the accounting, instead of treating it as made-up money that comes out of the sky for free
Now me and you... we're kind of shocked that smart guys at the top think you can make up numbers and pretend the money you pay yourself as CEO comes out of thin air.
In the words of Federal Reserve Chairman Alan Greenspan, "infectious greed" is a powerful force and even smart guys were able to talk themselves into laughably stupid concepts.
So come to think of it... Jail, and more jail... and do it quick.
That's My Word.
What do you think? We'd like to hear from you, so send us your comments at email@example.com. Some of your emails will be featured on the air or on our site.
• Looking for some previous My Word columns? Click here!