USA “THE SUPER POWER” PART 2

In this article about some of my views of the Super Power I have chosen some few but important issues being of interest to the whole world since the USA is considered a trend setter and this applies to both good and bad issues.

THE LEGAL SYSTEM

Should the American Legal System impress the world? When a person like O.J. Simpson, who killed his wife and her friend, gets off the hook because he could afford pay the best possible defense (at millions of USD) and maybe on the side some bribes for witnesses to not being able to remember clearly what actually happened? His fortune secured him a free life instead of what he deserved the death penalty.

Is it a system which deserves admiration, when the congress passes on so many new laws that the legal system cannot cope with it and thus is more busy getting sentences passed so they can appeal and try the verdicts for years until they get to the final stage?

The final stage is the Supreme Courts notion, which then becomes the actual law. The legal system is busier with these issues than to spend time to investigate and reopen cases, which could secure that innocent persons are not executed. But of course many persons on the death row cannot afford a lawyer in the same “pay class” as persons like Simpson. The courts are filled with cases from “ambulance tracers “a business area with tremendous financial possibilities for lawyers, since the States have the toughest laws in the world for product liability. This area represents a never-ending source of income and a tremendous burden to the Courts. I wonder if that is the right way to spend so many resources, because the real money markers are the lawyers, the losers are poor people for whom the society shows little interest.

THE AMERICAN FINANCIAL WORLD

The case of the recent Enron collapse has turned me to be more doubtful about the blessings of the American System. This collapse is the largest (of course) in the history of bankruptcies in The States.

It has now been proven that the whole company was based a lot on fraud (it’s called creative accounting) of billions of dollars, and just one month before the collapse the top executives took out 150 million USD as bonuses. Some of them are now building houses for amounts between 2 to 7 million dollars, money stolen from banks, other financial sources and investors, among them shareholders. Most of the employees were forced to be shareholders and their pension funds were invested in the company’s stocks. These people, of which many are now out of jobs, lost whatever they had and cannot, according to the America Legal system get the money back and they can just watch their previous CEO build yet another villa for his family for the net sum of 7 million USD.

In America it is called social Justice? (I know that the individual States have own rules)

This case shows to flipside of the coin. It also reveals the game that corporate executives have played for years, and the name of the game is called Stock Options, which is the right for an executive to buy shares of his company at some future point of time at a bargain price compared to actual values. These options are often only awarded to top executives and last year the total of these “gifts “amounted to the neat sum of 162 Billion USD. The value corresponds to around 15% of outstanding shares according to an article in Business Week from April15th.

The CEO of Oracle exercised his “rights “at a value of USD 706 million in just one week. These “gifts “have big tax advantages for the company since they can be deducted but they do not show at the bottom line of the yearly report. Smart accounting.

There has been a big fight about this issue as The Federal Accounting board wanted more fair rules (among them that these awarded options are taxable income for the receiver), but it lost the battle (Mr. Joe Lieberman was the main sponsor) and as a result a company now just have to show the “gifts “as a footnote in the yearly reports, not being posted in the earnings or the true operation of the company which is reported.

No wonder that these rules are being utilized to boost the performance of companies by bending normal accounting procedures and by help of very special financial instruments like junk bonds and similar, the top executives can manipulate the accounts, the final result based on which they receive a huge amount of bonuses, for which there is no proper basis. But it works in favor of the top executives, the CEOs and the like.

I 2001 5 top executives received in total salaries and bonuses at an amount of 825 MIL USD, which was 500 times more than the average employee of same companies. During the same financial year these companies laid off 8% of the work force at the same time the CEO received more than 100 million USD.

No body, not even the most qualified CEO is worth that amount. This system is rotten so rotten that only Americans executives can love it. No other persons with decency would accept such packages, but they do not care, they smile or the way to the bank, where at the same time the worker, who lost his job, is getting nasty letters from the bank telling him to repay his loan immediately, otherwise serious actions will be necessary.

The greed for money replaces all decent rules for fairness. Is this a system we wish to adopt? In America they call the system equal rights for its citizens.

But thanks to Enron, the public is now getting more insight in these transactions and it seems to disapprove of it to such a degree that the rules most likely will be changed.

Oh, I forgot to mention that President Bush is strongly against any change of rules.

The fall of Enron lead to yet another big financial scandal for the international previously highly respected auditing company ARTHUR ANDERSEN. This company knew about the false accounts of Enron, and bent all ethic rules in order to keep the cash flowing coming in from the big client. Enron’s CEO has good connections to The White House and these clients do not come cheap. It is beyond believe that a company such as AA would accept a situation where it knowingly verified and signed wrong financial statements based on which the financial situation of Enron seemed to be on the sunny side of the street allowing it to get more investors to put up cash, which was then taken out by the top executives as bonuses.

It is deep irony that AA for years has been sponsoring a weekly program on the CNN channel worldwide. The text was Business Unusual and it showed how various entrepreneurs have made the way from zero to success, meaning being multi rich. I wonder who will now sponsor a program for AA, which for sure did some unusable business?

Why do things like these happen, and how comes that these top executives get away with fraud? In Europe they are jailed, all assets frozen, in The States they go to a hearing before a senate committee where they sit and lie and are just waiting for the wife to call and say she needs another 500.000 USD for the interior decoration of the new house they are building.

My brother in law told me, that most likely some of the executives would have news jobs within short. Justice?

As you will recall I do hold many years of working experience with of or for US companies. I have seen the development from a sound base, as we in Europe consider conservative accounting principles, to the latest described situation. When you talk to an American company today, you will only hear about how many percentage sales have increased and other performance figures. When you ask them if they can generate enough funds to repay the debts, they have, they look at you as if you are completely from another planet.

When the IT industry started to move some 12 years back they invented a new financial instrument to finance the expansion, they bought today but based the payments on shares which were 100% connected to future earnings. They never had the cash money for expansion; they produced false investments prospectus based on which investors bought shares as mad people believing in the “ promised land “ waiting just around the corner. When the whole industry collapsed many got hurt, among them innocent private investors, who invested through funds, giving limited insight in the true value of their investments.

A fresh example is the just published accounts from VODAFONE, which needs a write off of billions of GPB and still it cannot produce cash enough to cover interests and repayments on huge debts. 3 years ago the shares were considered as solid as gold. The shareholders have since taken an almost 50% cut of share value; the CEO however still is paid 4.5 million GBP. In Denmark we saw this happen as well, so again my question is, do we wish this kind of policy? See note 1.

MONEY AND SPORTS

Not too many years back, we used to have sport! Real old fashioned sport based on a gentleman like set of rules. We have lost all that as well when the new American Sport System entered our world. We do not have sport anymore; we have sponsored and manipulated shows advocated by giants such as Coca Cola. We have sports-machines instead of human beings. We have live entertainment-machines instead of players. Sports clubs are now long term financial investment possibilities and the players are investment objects as they are bought and sold following the rules of supply and demand. Today top players easily make between 15 to 30 MIO USD/year.

A few years back anybody who was on the team winning a big cup would say, that she/he was proud of being on a winning team. When asked now they answer, this cup gives me 1 MIO USD extra as bonus.  Now I can sell my body for more advertising purposes since my value has increased. Is this behavior in the sports world what we want? In the greed and pursuit for money, drugs and other dirty tricks assist the pursuit. Make my dreams come through please!

We have now players, who are only 100% investment objects; we have rules of the games never seen before where you are allowed to do things, which were unthinkable 20 years ago. We had the big corruption scandal in the Olympic Committee and believe me we will never know how many before this actual one and we will have more to come. Coca- Cola and other multinational sponsors do not care as long as it can increase sales.

In this month we see the FIFA chairman standing accused of some missing funds from the accounts, only 110 million USD. It may be even the case that FIFA is close to a bankruptcy. Mr. Blatter claims that a lot of funds have been send to various countries in Africa to support the sport. The same countries just secured his second term as the top head of this organization. What do you call this? See note 2.

We used to have fair play now we have a corrupted system, orchestrated to sell maximum of advertising and sponsorships, never mind the sport. We also see that the coming World Cup in Koreas and Japan is titled COCA -COLA FIFA 2002 World Cup.

Recently Tiger Woods signed a sponsor contract with NIKE at a total value of 825 MIO USD for 5 years. I do not mind that if were it not for the true background. Nike makes a fortune on its products. They buy e.g. here in Thailand a tracksuit for 15 USD and they sell it for 200. Happy days. If consumers want to pay to show that they can afford to be stupid, so be it. What I disapprove of is the huge amount of sponsor contracts Nike has with sports clubs with rules mainly favoring Nike. They sponsor a club, sign a contract according to which the club has no saying about sports dresses to be used by the clubs members, campaign articles etc.

All have to be approved by Nike and the products bought from them at high prices. These contracts make the clubs slaves and they are happy to give up their freedom for a sponsorship from Nike, which in return makes a fortune big enough to pay Tiger Woods and similar sports stars amounts of mentioned size. These contracts bear the name IMAGE CONTRACTS, where is the pride of the sport?

Example; Nitta and I gave last year a quotation to a medium sized Danish football club for outfits. The prize was about 55 DKK. They had forgotten about the conditions in the sponsor contract, so when they checked it they told us they could not buy from us but had to buy from the sponsor at 200 DKK for same outfit. Both are coming from the same factory here in Bangkok!  Is this a fair way to exercise sponsorship?

I mentioned that the players are now more to be considered working within the entertainment industry. When you watch the games to day you will see that many top players are among the best actors in the world. When they “go down to eat the grass” they can give an incredible performance of suffering from pains, partly hoping that the referee will give them a free kick in return and partly they enjoy the fact that millions are watching the game. Most of them are better actors than the ones used in Hollywood.

In closing this small chapter I wish to add one remark. I watched Denmark play football the other night (the qualifying match for the coming World Cup). When the fight was over the speaker continued with some remarks about the coming events in South Korea and Japan and he proudly exclaimed: “Man, is this going to be big Business!”

Not; “Hey guys we are looking forward to some interesting games and hopefully some nice surprises “, but no, only BUSINESS.

What happened to sport?

THE ENTERTAINMENT & NEWS INDUSTRY

In Thailand we are very depending on cable TV in order to get a more widespread picture of world events than we can receive from the local Thai channels. There is very little competition, most of the channels and the satellite system needed are owned or controlled by two players, one belonging to our PM, the richest man in Thailand. So for entertainment, read films, we have in principle only two “foreign” channels both owned and controlled by the same. One is called HBO (Home Box Office) and it operates 24 hours per day. The other one is CINEMAX.

Less than 10% of the movies shown are of acceptable standard, 50% is pure Bullshit and the remaining even worse. HBO and CINEMAX are both owned by The Time Warner Company (Ted Turner), again a part of The AOL COMPANY, or vice versa, the largest entertainment company in the world. They are the owners of the whole system, so they are in 100% control. 99% of the movies shown are produced in the States of course. Do you think that they could dream of showing quality movies from Europe? No never, why? They do not understand what quality is, only what garbage can be produced at lowest possible costs and sold at the highest amounts. And the European movies are in local languages, not English and the average American cannot read the subtitles as fast as they appear on the screen. In Europe we have local subtitles, of course. We can read.

Naturally we have alternatives here, like STAR MOVIES etc, but guess who owns and control them?

In an interview a few days back Woody Allen said to the press that quality movies are no longer produced in the States, they are coming from Europe, which produces the best films in the world. He says that in the USA filmmaking is an industry only where the most important issue is the box office figures. The producers have no clue about quality, no creative zest the result being “industrialized movies “.

Let me just mention the slogan of HBO, they call themselves SIMPLY THE BEST, in Thailand we have replaced the word best by worse.

For news we have to go to the CNN Channel. Many prefer the BBC Channel, which is far more objective, but unfortunately a major part of the Thais wish to see American TV and also Thais do not like the British too much.

The CNN Channel is worth a PHD study in American Communication.

You have first of all the CNN picture on your screen. It has a text showing that you are watching the CNN channel, an AOL /Time Warner Company. Then it will show additional text just to make sure that you KNOW are one the CNN. This is a special CNN broadcast, this is a special CNN transmission, and this is CNN. When it is over the text will explain to you: You just watched a special CNN transmission, you just etc.

Now CNN take it that you are a US citizen, because they need to be told what they are watching since they have access to more than 200 channels in the States for normal people with average intelligence there is no need to do that.

40% of the one hour “show” is used for advertising, mainly for themselves and their related TV channels. When interviewing guests, the journalists ask lengthy questions during which they want to show that they actually know more than the guest interviewed or they interrupt constantly.

A few days ago Henry Kissinger was on the screen being asked his highly qualified opinions about the crisis in the Middle East. In a middle of an import answer he is interrupted, sorry we are out of time, we will now make a break, please do not go away, dear viewers. What did they show instead: Advertising for their own products? Instead of hearing remarks from an extremely qualified person about a very important issue, we can listen to all the junk messages. Quality? I can find another word that is not nice.

The reporters and journalists are a study in promoting persons to a level, which I have never seen before. First they show us once every hour how fantastic the international team of correspondents is. This is how qualified they actually are. They have one speaker Michel Holmes, who has been reading us the news for some years. When the crisis started in The Middle East he suddenly showed up on the screen, wearing a helmet and a bulletproof jacket reporting directly from Palestine.

One hour later they showed the usual promotion of their team. Among was Michael, who is now all of a sudden one of our experts on the Middle East problems. He has never heard about Israel or Palestine before, now he becomes an expert in helmet and jacket chasing the Israeli soldiers as they move around, with a mike in his hand?

The Chief International Correspondent is a lady, born in Iran, by the name Christiane Amanpour. I think she deserves to be in charge of the team and I do think she is very qualified, but on the day of the funeral of the British Queen Mother, I got a surprise.

Guess who the commentator for the 4 hours transmission was. An American, who has no clue about the many special and deeply founded traditions of the Royal Family in England, suddenly becomes the expert? Right Christiane was the expert.

The Chorus of Westminster Abbey was about to intone the first hymn, when she reported to the whole world; “The chorus will now sing a song! “ How disrespectful can one be?

CNN has many splendid reports in the UK, why did it not use one of those? No, Amanpour is American and they know everything better and Amanpour saw this as another chance of promoting herself. They have no shame only obsessed with personal progress.

By the way CNN has closed its activities in Denmark. The Danes are lucky!

AMERICAN INTERESTS

Whenever the USA moves in, in whatever form or shape, we are told, that the moves are made in order to protect American Interests. It never moves, when help is really needed unless its own interests are at risk. When The Indonesian army occupied East Timor and started killing thousands of innocent people, the States just shrugged the shoulders. Why care about a minor matter like that? I would think that if you are number one policeman of this world you have to assist whenever injustices are exercised.

Still looking at Indonesia I see the development, which has been pushed by the States after the fall of the Berlin Wall. USA wanted more democracy and securing of human rights. Prior to this USA had supported Suharto and other local dictators, since they were needed to fight communism. We all remember that when the pressure for democracy became strong enough Suharto was removed from office. It goes for the Philippines as well.

Now not only Indonesians but also all of us noticed the shift in Bushe’s policy. No longer is it a war to support democracies, or a fight to replace dictatorships by it but a war on terrorism. The Superman Bush will judge the free nations by their will to fight terrorism and then decide if or not you are actually against the USA. The countries are being divided. Countries that were previously just considered neutral by Bush and his administration now becomes favorites, like Pakistan and Malaysia.

How will the Bush administration now handle the actual situation between India and Pakistan? Is the answer like we see it in Israel that India now gets the rights to fight the terrorists who are hiding in the northern part of Pakistan, even if the issue is the conflict over Kashmir?

The recent coup in Venezuela serves another example of American Interests. Was The USA behind, or just provided a helping hand in the attempt to topple the President? I have seen an article in a very well respected USA Newspaper, The Observer, and it claims that the persons behind the attempt had heavy connections to senior officials in The White House. The officials have a long record of “dirty hands “all the way back to Reagan. In this actual case it was most likely about to protect an important oil source supply chain. Read to protect American Interests. It is well known in the States that some of these top officials or advisors are experts in misleading the Congress when they want a nod or support for dirty tricks. How far can one go in the name of protecting a capitalistic system, and if that is so, is that a price we all want to pay, because at the end that is what is going to happen?

CLOSING REMARKS

I sincerely hope that you have had the patience to read this far. I know I have been around many issues but they all are part of the way I see the increasing differences and the actual development and influence of the American Capitalistic System. Let me close by giving a few examples, which will illustrate my points.

The King of Thailand recently told the Thais that they do not have to adopt the USA way of living. Thailand has all it needs, and do not need to the American way of living. He realized that the Thais are at the moment caught in between two worlds and asked them to consider the prize they are paying or have to pay.

When I worked in Lithuania I among many others admired the unique beauty of the Capitol, Vilnius. After the Russians pulled out, the city needed funds for a complete restoration of the beautiful old buildings. On the city square was an old building, which used to be a city hall. It needed a total repair and if done it would be restored to its previous beauty and position as an architectonic pearl. Instead it was bought by McDonald and transformed into a burger bar. The citizens of Vilnius were chocked and so was I.

Recently I had a business meeting between a potential US investor, his American representative here in Thailand and the seller, who had brought his legal advisor with him. I represented the seller, a Thai company. The main issue was not the price but some legal differences between the Thai and the US law for the purchase of shares in Thailand and that was why we had asked the legal advisor to help us out. He is a top professor at the most respected university here in Thailand, the Chulalongkorn University and he is, among others, lecturing members of the Royal Family about the laws of Thailand.

We had a heavy discussion about some law principles and time and time again the professor had to point out, that when you invest in Thailand, in a Thai Company, the rules for same have to adhere with local laws. The mentioned representative, who is a young American, trying his luck here in Thailand, is a stubborn and ignorant example of the type of US guys coming here to teach the Thais about business.

He talks down to them and has no sense of how to cope with local rules, among these to show respect, even if he does not agree. Finally he had to admit that the professor was right and since the potential buyer did not agree to adhere with local rules for his planned investment, the deal did not come through.

The young American was angry and disappointed (he lost a nice commission and so did I of course) and when we were alone, after the meeting had been closed, he turned to me and said: ” Ole, why did you bring that stupid professor? He knows nothing! I have learned more about law during my business studies at Princeton, than this guy has learned his whole life! “

This once sentence proves in itself the US attitude I have tried to describe. Most of the US citizens have this attitude; we are the most powerful nation in the world. It needs us we do not need it. The question is to me; do we need this American attitude? Is this capitalistic system worth adopting? My answer is No, we do not want it, we deserve better.

We do not wish to have societies based on empty values we want life quality. We do not want the McDonaldism. We do not like to see the most powerful person in the world, being trigger-happy. In the year 2000, when he was “elected” President, he was the governor of Texas, this State executed 40 on the death row, which was the highest number ever in one year and the same State has the record figure of executions in the USA over a period of many years.

If any American President is to be considered the most powerful man in the world and the policeman number 1 for all other countries, then please give us the voting right so we can influence the result. We do not wish a playboy, who is fumbling around playing the super man. What results has he obtained declaring war on terrorism? Not a lot because he is using the wrong means. Power and weapons alone is a poor answer. He supports Israel and see what is happening? It still has suicide bombers in spite of its raids into Palestine. And they will not stop. Every day now a new attack in the States could happen and even worse than the one on September 11th last year. Soon the US citizens will have to live in daily fear when the victories in Afghanistan are forgotten and Bin Laden is still around having one desire only to destroy American targets. That is why CIA and FBI in future have to concentrate more on domestic problems rather than to be occupied abroad, but it is all coming at a price, and the ones, who pay and suffer, are the low-income classes.

What gives the US the rights to impose all their bad systems on us? Look at the States today, look at many the streets of New York and other big cities. Slum. USA has one of the highest criminal rates in this world and tremendous drug problems. Is that what we wish to adopt?

I found it amusing to hear the speech of the new President elect of Colombia Mr. Ubire. He said: My country needs now support from the States, we need the American democratic system and it’s high respect for human rights. Compared to the past of his country even this would be a welcomed change, but I found his words very much in contradiction to the reality of the US systems.

On the positive side I can see that financial experts these days are telling us, that the European Stock Market will soon surpass the States in values. One major reason will be that many companies in the USA will have to change the accounting principles after the Enron scandal. Their balance sheets are bluff.

If we talk money, which system is then NOW better, a true democracy or an US capitalistic model? Ayn Rand states in her book “Atlas shrugged “that any society needs the intelligences within all fields, and they are welcome to exercise their rights and have privileges as long as they put the brains at the disposal for the society. She does not say, the intelligent persons are supposed to be money hungry animals, as we see it now in the States. Her book is extremely well written, maybe the best ever on how she years back tried to foresee the development of the well-meaning capitalistic system. I wonder how she would react if she could see the reality today?

What we see now is a demonstration of power of any kind, actions that almost all demonstrate that the US is doing its best to destroy the true principles of democracy. This is the reason I have put my thoughts into writing. And I wonder if the US citizens realize the price they are paying?

Ole Casthoej
Chon Buri, Thailand

Late May 2002

Note 1 the telecom industry has lost 2.5 Trillion USD in 3 years

Note 2 FIFA has a yearly cash flow of 270 Billion USD

You may read part I here

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