"Bush is a crook" says Mr. Krugman

[g8rguy]

It would, however, perhaps help those of us who are following this thread with interest if you would answer his questions. Frankly, I have to admit that I do sort of see his point. “When Bush sold his Harkens stock he was acting on information, which was material nonpublic information in his posession” is not entirely helpful in clarifying your position, I hope you’d agree?

Surely you must at least have suspicions about what kind of information Bush had (which, needless to say, would preferably be a little less vague than “material nonpublic information”)? Even if it later turns out that your initial suspicions are unsupportable, it would help the interested and not entirely informed reader (viz, me) if the better informed among us could go through and examine specific possibilities and either accept or reject them. I don’t think that’s too unreasonable, do you?

[Sam_Stone]

<b>Scylla</b>: Let me clarify. I’m not saying that the markets are always rational in that always accurately reflect the true value of things. I’m saying that the markets are accurately in reflecting the *perceived value of things. If irrational people make the decisions, irrationality could result. But it’s not the fault of the ‘market’. It’s the fault of the psychology of the people engaging in market transactions.

Perhaps it’s a difference that makes no difference. As it turns out, it’s a trivial sidepoint anyway, so I’ll just check out and let you guys continue hammering away.

[Scylla]

1. “There’s been a murder!”

2. “Where?”

3. “There!”

4. “Who dit it?”

5. “That guy! He’s bad. He’s evil!”

6. “Did you call the police?”

7. “Yeah, but they don’t care they’re in on it. He’s protected.”

8. “Ok, who’d he kill?”

9. “A guy.”

10. “What guy?”

11. “Just a guy.”

12. “Well when did he kill him?”

13. "Before."
    

14.  "How'd he kill him?"
    

15.  "How do you know he didn't"
    

16. "I don't see a corpse or a weapon"
    

17. "You're just trying to defend him."
    

18. “Who was it that got killed again?”

19. “This guy.”

20. “Well, where’s this body?”

21. “Where do you think it is?”

22. “I don’t see it around here.”

23. “You’re not looking hard enough. There’s lots of places a body could be. How do you know it’s not here?”

24. “Well, I don’t see it. If you tell me where you think it is, I’ll check.”

25. “Did you check in the garage?”

26. "I don’t see it.

27. “That’s cuz you’re in on it, like the police.”

28. “Let’s start again. Who got killed?”

29. “You’re trying to trap me! Answer my questions first and then I’ll tell you.”

30. “OK.”

31. “Could somebody kill somebody with a knife?”

32. “Sure.”

33. “Could somebody have killed somebody last week?”

34. “Sure.”

35. “Could somebody have killed somebody in the gargage?”

36. “Sure.”

37. "Could the police have covered it up?"
    

38. “Sure.”

39. “Well there you have it. What more do you need?”

40. “Who was it that you say got killed again?”

41. “HA HA HA. You must think I’m stupid! You’re trying to trap me! Do you think I’m going to fall for that? The moment I tell you who got killed You’re going to see if they’re still alive, and when you find they are, you’re going to try to use that against me. That’s the way you guys work. I see right through you. I’m much to smart for you!”

42. “Yes. I guess you are.”

43. “That’s right.”

44. “Yeah. Thanks for telling me about the murder. See you around.”

[Tejota]

Asking specifically what information Bush had is the same thing as asking for the result of an investigation that hasn’t happened yet.

I can’t speak for elucidator, But I’m on record as saying in this thread that the information Bush had was this.

The general health of the company - it was in bad shape, the Aloha deal is just a means of hiding that. Whether or not Bush knew about the Aloha deal, or knew it would be disallowed or not doesn’t change the fact that he knew or should have known that the general health of Harkin was not good.

Please address this question: Why is that, in of it self, not sufficient insider information? And why, would you believe
that a man in Bush’s position in the company would NOT be aware of the general health of his company?

It seems to me that you are using specific knowledge of the Aloha deal as a smokescreen for the broader issue of whether
it is resonable to believe that Bush was completely unaware that the health of Harkin had taken a downturn and the public was going to become aware of that sooner or later.

[Scylla]

The general health of the company - it was in bad shape, the Aloha deal is just a means of hiding that. Whether or not Bush knew about the Aloha deal, or knew it would be disallowed or not doesn’t change the fact that he knew or should have known that the general health of Harkin was not good.

Please address this question: Why is that, in of it self, not sufficient insider information? And why, would you believe
that a man in Bush’s position in the company would NOT be aware of the general health of his company?

Thank you for a straight answer Tejota.

The reason that is not enough is because in order for a transaction to be illegal, or even unethical for an insider there are three things that must occur:

1. It must be material (general health of the company is clearly material)

2. It must be nonpublic (The general health of the company would be a matter of public record. Bush would be entitled to act on information that was public. Harkens was looking at a loss that was inline with expectations at the time of Bush’s sale according to the SEC. So it fails this one.)

3. He must act on that information (It appears that Bush had reason to wish to sell Harkens that had absolutely nothing to do with Harkens’ specific circumstances i.e. purchasing the Rangers. The fact that Harkens was only one of several stocks that he sold specifically for this purpose is suggestive that the timing of the sale vis a vis Harkens’s health was coincidental. So, it is not clear or even likely that he acted on knowledge of Harkens, so it may fail this test as well)

[Tejota]

*Originally posted by Scylla *

1. It must be material (general health of the company is clearly material)

agreed

2. It must be nonpublic (The general health of the company would be a matter of public record. Bush would be entitled to act on information that was public. Harkens was looking at a loss that was inline with expectations at the time of Bush’s sale according to the SEC. So it fails this one.)

I disagree. Or rather, I fail to see how the Aloha deal serves any purpose of the public is already aware of the ill health of Harkin. Since the directors clearly felt that the Aloha deal served a purpose, I take that as clear evidence that they did not believe that the health of the company was public knowledge.

3. He must act on that information (It appears that Bush had reason to wish to sell Harkens that had absolutely nothing to do with Harkens’ specific circumstances i.e. purchasing the Rangers. The fact that Harkens was only one of several stocks that he sold specifically for this purpose is suggestive that the timing of the sale vis a vis Harkens’s health was coincidental. So, it is not clear or even likely that he acted on knowledge of Harkens, so it may fail this test as well)

Not proven. It’s known that Bush used the proceeds of this sale to pay off a loan he had taken out to buy his initial stake in the Rangers. But the fact that he used it to pay off a loan rather than to make the actual purchase suggests that at the time he bought the Rangers stake, he did not intend to sell stocks to pay.
Clearly he changed, his mind.

Does anyone know the timing and or terms of the loan? Perhaps his Harkin stock was collateral, and he had to pay it off as a consequence of the sale rather than visa versa.

[Measure_for_Measure]

*Originally posted by Scylla *
Personally, I’d prefer to see Bush appoint someone and charge them with corporate reform.

Warren Buffet would be my first choice. Jack Welch my second.

Jack Welsh is the all-time champion earnings “manager”. So I’d rather not put him in charge of corporate reform.

He is, however, an expert at running large, complex organizations. Welsh would be a good choice for heading up a commission on homeland security after 9-11, IMHO.

Warren Buffet, in contrast, would be an excellent choice to head a corporate reform commission.

Neither will happen, IMO. Politicians tend to be wary of independent thinkers with little political experience, correctly or incorrectly.

[Scylla]

tejota:

I disagree. Or rather, I fail to see how the Aloha deal serves any purpose of the public is already aware of the ill health of Harkin. Since the directors clearly felt that the Aloha deal served a purpose, I take that as clear evidence that they did not believe that the health of the company was public knowledge.

It seems to me that the general health of the company is not really the information that was nonpublic that you think Bush was in posession of. Rather, it was the general health of the company as affected by Aloha. Is this correct?

I’ll assume it is for the moment. Not being a member of the Executive committee, Bush would have had no inkling of Aloha’s actual structure or purpose (as it seems it was put togeter by the EE specifically to make Harkens look good to the board and investors.) The potential sale would appear to be a benefit to the company, bringing in needed cash.

So, it seems to me that what you are really saying when you say “General health,” is that Bush had knowledge of the structure of Aloha. If this is correct, how do you suppose he got it?

Not proven. It’s known that Bush used the proceeds of this sale to pay off a loan he had taken out to buy his initial stake in the Rangers. But the fact that he used it to pay off a loan rather than to make the actual purchase suggests that at the time he bought the Rangers stake, he did not intend to sell stocks to pay.
Clearly he changed, his mind.

Well, he was urged by his counselors to get more liquid. He was liquidating other stocks (as the SEC documents show.) I don’t know if he changed his mind or not. I don’t think that you’ve shown he has or not, but it’s not really material. His personal financial situation was clearly one in which the sale of his stock seems logical for reasons unrelated to Harkens.

He has a strong motive for sale, at the urgings of different parties and his own cash needs. The fact that he liquidated other substantial holdings as well makes it very difficult to reasonably make the statement that he was acting with respect to insider information with the Harkens sale.

[xenophon41]

Not being a member of the Executive committee, Bush would have had no inkling of Aloha’s actual structure or purpose…

You keep asserting that, with no more evidence to support it than exists in support of the opposite assertion. It’s reasonable to question how much knowledge Bush, as a director, had of the deal. Wouldn’t it be nice to have your assertion verified by an independent investigation?

[Scylla]

Xeno:

You keep asserting that, with no more evidence to support it than exists in support of the opposite assertion. It’s reasonable to question how much knowledge Bush, as a director, had of the deal. Wouldn’t it be nice to have your assertion verified by an independent investigation?

Yes. It is nice.

…(2) a write-down of $7.2 million due to the impairment and restructuring of Harken’s Hawaiian retail facility, Aloha Petroleum Ltd,; (3) a write down of $2.5 million associated with the costs of restructuring Harken’s marketing subsidiary, Harken Marketing Corp (“HMC”); and (4) a $3.9 million interest expense.
The documents and other information gathered by the staff do not indicate Bush was aware of (or, indeed could have been aware) by June 22, 1990 of items (2) through (4) above, which compromised the majority of Harkens loss.

-From August 21 1991 SEC Memorandum

…Based on our investigation, it appears that Bush did not engage in illegal insider trading because it does not appear that he posessed material nonpublic information or that he acted with scienter when he sold the Harken stock

[quote]
The staff’s inquiry has identified tow difficulties with establishing that Bush posessed material nonpublic information when he sold his stock. First, the evidence establishes that Bush was not aware of the majority of items that comprised the loss that Harken announced on AUgust 20. As is noted above, the vast majority of Harken’s announced loss consisted of write downs and expenses (items 2 through 4 above) associated with restructuring efforts. These restructuring efforts occured after June 22, the date of Bush’s sale

-From SEC memo dated March 18, 1992, (my emphasis)

According to the documents provided by the staff, and Bush’s attorneys, substantial amounts of management and director oversight were accomplished by the executive committee of the board, of which Bush was not a memeber. For example, during June and early July 1990 the weekly Flash reports at Harken were circulated only to the Executive Committee and not to all directors.

The vast majority of the 2q loss was unknown to Management, Let alone to Bush

(their emphasis)

The staff’s investigation indicates that Harken management was not aware of the accounting effects of the ALoha transaction until mid-July 1990 at the earliest.

[erislover]

But wait… the SEC is a biased organization. Both Bush and the SEC are a part of The Government and it seems their investigation can’t be impartial. I’m going to have to disregard that information, Scylla.

[Scylla]

Silly me. Perhaps I can find something credible at Mediawhores.

[xenophon41]

Scylla, it’s not Bush’s anticipation of the amended 1989 report that I’m quibbling over; I’ve already said that I don’t think he knew or cared about it. The question I want answered is what did Bush know, in 1989 (the year before he sold the stock), about the 1989 sale of the 80% interest in Aloha to International Mining Resources (the Harken insider group), an obvious shell game intended to falsely portray the financial health of Harken Energy.

Involvement in this sort of shenanigan is directly relevant to Bush’s handling of the current ongoing revelations about dishonest corporate accounting.

(erislover, is there some sort of direct point you’re trying to make with your heavy irony? As you know, the OP and I are easily confused.)

[elucidator]

erislover

Well said, but poorly founded. There is no evidence offered, none whatsoever, that persons in the SEC even knew who Bush was. You will have to provide some cite for that. Something along the lines of “Mr. Bush, the President’s son…”

Well, of course, there’s a couple of guys at the very top, who were appointed by Bush the Elder. And, it is true that the general counsel of the SEC, Mr. Doty, was a close associate of Mr. Bush. But he recused himself!

There is not one mention of Jr.s relationship to Elder in the documents given! We must therefore assume that the relationship between Elder and Jr. had no bearing on the investigation. It was conducted with the same impartial rigor (involving several telephone calls, long-distance!) that would be afforded any other citizen.

To state otherwise, you must prove beyond a shadow of a doubt that the investigators at SEC were aware that Jr. was the President’s son!

I demand an answer at once!

[erislover]

You know, Libertarian would be so damned proud of this thread. So much parody… then parody of parody…

[elucidator]

“Sir, we must ask you a few questions about this murder…”

“What murder? Where”

“There, sir. That corpse.”

“OH, that corpse. Just another corpse, happens every day”

“Well, yes, sir, but this one has three bullet holes and a knife protruding from his back”

“Maybe he was cleaning his gun!”

“And the knife?”

“He was cleaning that too!”

“Well, sir, we have to investigate…”

“You just did! Nothing more to see here, move along…”

“Still, sir,…”

“Oh, good, my lawyers here!”

“You don’t need a lawyer yet, sir. You’re not under arrest, and dont need representation.”

“Representation, hell! He’s here to confess”

Gee, this pointless sarcasm stuff is kinda cool! No evidence needed, no rebuttal possible. Just drool down the page and sneer!

So why won’t Jr. allow all the SEC documents to be released? He’s totally innocent, right? Got nothing whatever to hide.

So how come?

[Scylla]

Xeno:

Oh.

Well, I kinda suspect he didn’t know for reasons already stated.

Obviously, I can’t definitively answer you question.

Sorry I misunderstood.
elucidator:

FYI Bush waived lawyer/client privilege and cooperated fully with the investigation.

I too would be mildly peeved it twelve years later irrresponsible mudslingers wanted to go over it again just for the slander value.

[elucidator]

That’s it? He’s peeved? He could put this all to rest with a slam dunk (releasing all the SEC documents) but he won’t because he’s peeved?

[erislover]

[ul][li]Elucidator, your rhetorical skills are great, but I lose the point through them. Is it possible for you to be, well, boring? That is, do you have some specific concerns Scylla can address that he already hasn’t (multiple times)? Also, can you at list hint at what sources you would be willing to consider, or perhaps demonstrate how conclusions you wish us to draw are more well-founded than Scylla’s? You just…well… seem to have not developed your point, is all. To me. But maybe I’m lost in your rhetoric, as I noted. If so, I apologize here and will make some effort to try and see it.[/li][li]Scylla, I’m inclined to lean on your presentation as the fair one if only because you seem to have presented the most (possibly any; see above) information here. But you keep requesting that elucidator respond to some questions, which (AFAICT) he has not. May I ask you to put forth a post which contains only those unanswered questions, and if they aren’t answered to your satisfaction (I mean, hell, page 4 and all… only so much you can do here) then just drop it? Because you are a guy who won’t back down, and elucidator is the guy who… well, here we are. At any rate, I am very interested in this thread and I’d hate to see both sides degenerate into what it has (and i’ve egged on in my own way, much to my shame I think).[/li]
It has almost reached the point where Cecil would type, “THE EXCEPTION DOES NOT PROVE THE FREAKING RULE. Quite the opposite.”
[li]xen: my point is only that when we presume guilt over innocence over a claim so old and inherently buried by speculation it is impossible to prove innocence. It isn’t just that data gathered about ghosts is flawed or speculative at best, but that the scientific community is conspiring to keep this quiet. You see where such claims lead us here. I’m not suggesting that Bush can’t be a criminal. I’m just saying that the assumptions already made by elucidator do not permit us to judge any less biasedly than any party cited or concerned.[/li][*]This has been a good thread, Shodan and Jodi’s rather appropriate remarks on page 1 or 2 notwithstanding. No sense in letting it degenerate (or degenerate more, given different perspectives). Also, do you really suppose it would all go to rest? What would the documents have to say to convince elucidator?[/ul]

[erislover]

Hmm, my eyes played tricks on me. I thought xenophon has the most recent post before mine. Apologies.