Partners - Stock market, economic and political commentary by Patricia Chadwick

Are we back in Salem?

Enough is enough. If the stock market is ever to turn all the way around, there must be an end to what is clearly becoming a witch-hunt on the part of the Congress. Congress, which cannot seem to keep its own books straight, is hell bent on straightening out corporate America – and it is obviously acting, with elections around the corner, for political gain.

Well, let Congress beware. Their grandstanding, holier-than-thou unctuousness is doing more damage than good. Their significant effort to make every top corporate executive a scapegoat is now creating a serious crisis of confidence for everyday, hardworking American employees and investors who are watching their portfolios and life savings deteriorate. Investing America – an enormous demographic – is scared, and rightly so, as they watch congressional corporate-bashing day after day and are bombarded with newspaper headlines, vigilante television reporting, and demagoging editorials that blast nothing but bad news and then more bad news.

The fever pitch emanating from congressional investigations reminds me of the Watergate hearings which I watched intently, as I lay recuperating from an operation, 28 years ago. But let’s put things in perspective. Adding laws and rules and regulations will not prevent illegal behavior. In fact, the more complex and onerous the regulations become for businesses, the greater the incentive for creative, capitalist minds to devise ways of avoiding the negative economic implications of over-regulation.

Making CEOs swear on a stack of bibles that corporate earnings are true down to the last penny may make for more CEOs who are intent on staying out of jail. But let’s remember the primary function of a good CEO. A good CEO – and there are many, many good ones – provides sound, ethical leadership and demands that employees behave similarly. If a CEO cannot provide this function, in the vast majority of cases he or she will be out the door. Corporate boards take care of that. Employees take care of that. The market takes care of that. Investors take care of that.

Endless litigation and investigation will only serve to tear down one of the great strengths of this country – we lead the capitalist free-market, and for that we are the envy of the world. For those who so piously pit the sins of American accounting against the transparency of European accounting, I ask: Why on earth are so many of the European stock markets down more than the U.S. markets in local currency terms? Like it or not, accounting is a combination of art and science – it is meant to be that way, and it will never be perfect. Adding 1,000 new rules will not improve accounting, only complicate it.

If the current inflammatory environment does not come to an end soon, the stock market will most assuredly be the tail that wags the economic dog. Since last September, all 280 million American consumers in this country justifiably live with a fear of terrorism, and we know that fear will not go away for many years. What the Congress is now foisting upon all of us is a fear of our economic way of life.

In an election year, one can expect to be deluged with more than the usual amount self-serving, malicious, and unseemly behavior on the part of politicians. But the depths to which political greed has sunk, in an effort to undercut a popular president, has the prospects of turning a budding economic recovery into another serious economic slowdown. Maybe this is exactly what Democrats want, but let voters beware representatives who would harm constituents for personal and political gain.

Remember: There were no witches in Salem, but the witch-hunt went on for a long time and many innocent people were destroyed. Congress is now engaged in a witch-hunt that is eroding confidence in our economy and in our capital markets. That is a serious malfeasance.

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