Yesterday the US dollar fell to a sixteen month low against the Euro. The Dollar’s continuing international slide is not only the result of the shaky performance of many large US companies since September 11th, but the washout of the shadowy accounting practices that sunk Enron in the last quarter of last year. Foreign investors are loosing confidence in the overall strength of the US economy.
Perhaps the greater danger is the fact that European investors have seen the wobbly US market and taken a second look at the Euro, the relatively new single currency for the continent of Europe. In a strange twist of events the corporate earning jigsaw puzzle has given more credence to the one-currency idea, as conservative euro investors look back across the Atlantic to invest their newly minted coin.
Two events aggravated the slide of the Blue Chip yesterday- the resignation of New Hampshire headquartered but Bahamas-based Tyco CEO Dennis Kozlowski and the apparent suicide of an El Paso Corp.’s executive shook a market that wasn’t taking the Dollar’s weak showing real well. Mr. Kozlowski’s resignation comes after the Manhattan District Attorney’s office announced that they were going to prosecute him on tax evasion charges. Pared with the persistent rumors that there’s a major accounting scandal at Tyco about to have an IPO, Mr. Kozlowski thought it best to run for cover. Nobody is quite sure why the El Paso exec committed suicide, but it sent reverberations throughout an already pummeled energy industry. In a market desperately searching for normalcy, the NYSE and NASDAQ (dipping to an eight month low yesterday at 1,562.56 pts.) have yet to find any.
The “Roaring 90’s” are still rearing their ugly head as companies that were once considered staples of the American economy take what seems to be self inflicted nosedives. AOLCNNTIMEWARNERNETSCAPE takes a dive. WorldCom’s CEO Bernie Ebbers abruptly resigns just before his company gets the dreaded stamp of death- a junk bond rating. The list of troubled companies is large.
It has been said that the departure of Bernie Ebbers was the farewell to the 90’s, a decade marked by the immortal words of Federal Reserve Chairman Alan Greenspan- “irrational exuberance”. Not so fast. Loose corporate morality and the shady backroom profit deals have yet to work themselves into the light. Just because a few of the under the table dealings have surfaced, doesn’t mean that stockholders will not be looking for further indications- as profits once growing wildly each quarter- evaporate and CEO’s unexpectedly resign. Enron and WorldCom are just the beginning.
The lax morality and the “gimmie-what-I-can-get” mentality of the Clinton-Era trickled down to the lower levels of society where it ascended the corporate ladder to the boardroom. There, once highly accountable directors chose themselves over the interests of the individual shareholder. The problem would be best ameliorated by bringing some transparency to the problems and stopping the charade that has kept the balloon at bursting point for close to a decade.
Stephen A. McDonald Bigtreenews.com
Russia's Ambassador to Belarus, Mikhail Babich, said that Moscow would treat any military intervention in the affairs of Belarus as an attack on Russia