Stardust launch 1999
The WSJ article was about information gatherers who work with people in congress and/or their staff and in the course of their work get inside information about impending laws, i.e., "tips". The WSJ noted the existence of a "political intelligence" industry dedicated to making money from this unique source of information. The people involved sell their inside information or "tips" to whoever has the cash and money to capitalize on the information. Those folks then make stock trades and money. According to an attorney familiar with this industry, the "legal risks may well outweigh the financial benefits" if the proposed bill becomes law.
This whole thing started up two or three months ago when the WSJ ran an article and 60 Minutes news show aired a piece at about the same time about people in congress, their staffers and lobbyists doing inside trades based on what congress was or was not going to do. Insider trading by congress, their staffers and lobbyists who do business with them is legal and thus a good way to make money.
People in congress and their friends have been doing inside trades for a long time. Occasional stories about this have come up over the years, but the topic apparently didn't penetrate public consciousness until (i) the two high profile WSJ and 60 Minutes stories and (ii) the public approval rating of congress dropped to below about 17% last year, an all time low until more recently when it it hit 10%. Profound public disapproval coupled with growing awareness that people in congress and their cronies were inside traders may have finally prompted a reluctant congress to fix the "problem".
If those things are not the reason for congress' attention to this topic, then who knows what is. Regardless, there is a reason. Congress partly feeds its massive ego on being above the law. They won't mess with that exhaulted status unless something very serious forces a change.
The congressional effort to deal with this public relations issue may cause the political intelligence industry massive potential collateral damage (or maybe not, if Republicans get their way). That was the focus of the WSJ article. The trouble with the pending legislation is that it may require people who gather tradable information to file disclosure reports. The horror of that is that the firms who work in this industry and the people who buy that inside information would likely lose their anonymity and the fees paid for such information might be made public. That awful scenario would ruin the whole political intelligence industry and cause massive job losses among the very wealthy and well-connected. Economic chaos would ensue. Or would it?
A plethora of questions from the bemused/irate
taxpayer outside the beltway
Why would the political intelligence industry be damaged at all if they had to disclose the people, fees and profits involved? After all, what they do is perfectly legal. Perfectly legal. What's wrong with making money? What's wrong with screwing the party (admittedly, usually anonymous) without inside information on the opposite side of an insider's trade? Its legal in this context. This is just a matter of winners and losers in a deadly serious capitalist game of making money. Some economists defend insider trading and some Republicans (Eric Cantor) are trying to defend the fine, job-creating, mom & apple pie, all-American political intelligence industry, so there must be merit to it, right?Or, is it just that the people involved in this profitable industry don't want the rest of us idiots to know just how much money they make and how they make it, i.e., by cheating? But why? Are they embarrassed? Come to think if it, just what do inside trades do for the U.S. economy as a whole? It punishes fools without inside information and dumb enough to think they trade in a clean and fair marketplace. So, is inside trading good for the economy in some other way? Does it create confidence in our economy among those with inside access, wealth and power and that more than trumps any downside among the idiot masses or in the overall economy?
Allowing legal inside trading arguably undermines public trust in the federal government and financial markets by showing the reality of just how corrupt our government and "respectable" business people can be. It undermines public trust in congress. It is hypocritical, e.g., a few in congress complain about people in congress doing it but say nothing about people outside congress. If its bad for people in congress to do insider trades why isn't bad for those on the outside? Does the inside trade industry create jobs in the wider economy? If so, how many jobs and what are they - a few butlers and yacht and private jet salesmen?
The WSJ article quoted a political intelligence industry insider who said the new law will mean that some information providers "will simply quit doing it as the compliance creates burdens and costs." Huh? They will quit because they don't want to be outed and their information will likely become worthless or people will risk Martha Stewart's mildly adverse fate. That's probably not that big a risk, given the SEC's usual inability to police the markets, hedge funds and Bernie Madoff, but that's a different topic. Nonetheless getting caught by the SEC is a probably enough of a deterrent to cause the inside information to lose significant value to political intelligence operatives and their stalwart customers.
Fair and balanced
All that one can reasonably and fairly say about the people in congress, their staff and the fine "entrepreneurs" involved in the political intelligence industry is that they are sleazy cheats. Like Honey Badger, they just don't care. They are not criminals because what they do is legal. What Martha Stewart did and went to jail for, they do with impunity. This sleaze or variations of it has been going on in federal, state and local governments for decades, if not centuries.
Even Newt's failed fantasy called the 1994 Contract With America had a provision that laws applicable to us would also apply to people in congress. We all know how far that got. If insider trading like this was even marginally good for the country, then why doesn't congress just tell the public that and do nothing? On the other hand, if it was bad all along, then why didn't congress fix this in 1994 or decades or centuries ago? Either way, congress is far beyond being just ethically challenged. The institution is inherently corrupt. The people outside government who make money from this cheating scheme could not care less about the sleaze or the people they rip off so long as they (i) remain anonymous (look good via plausible deniability), (ii) make money and (iii) pay taxes, if any, at the 15% capital gains rate. Is that a sweet deal or what?
Now, how can a political story get any better than that? It is easy to see why congress' approval rating is 10%. They earned it.
No comments:
Post a Comment