taxes would not get paid in taxes. In this way, unsold companies that run in the red can accumulate their tax losses for 15 years, thus becoming even more lucrative to the diminishing number of companies that have not yet jumped onto the tax avoidance bandwagon.

Congress goes through the motions of "preventing the trafficking of tax loss credits", however, loopholes are left to effectively get around the weak legislation. I could elaborate on the loopholes, but enough has been said about the topic of tax avoidance already. Those wishing to know how, can read "Guess which shell has the loss" on page 215 of the Nov 14 1988 issue of Forbes.; "It's the right thing to do", on page 104 of the April 17 1989 issue.; or "ESOP fable" on page 98 of the June 26 1989 issue.

In general, Congress defends its "hands off" policy with regard to mergers and acquisitions on the grounds that bigger corporations are necessary to compete internationally. This would have been an acceptable argument back in the old days when mergers used to occur between companies which produced components of a finished product. However, it is precisely these massive corporations that are being bought up by the takeover raiders and broken up to be sold off in bits and chunks to the highest bidders!

In any event, the fact that some genuine mergers are producing virtual monopolies is being casually overlooked amidst the circus of ongoing business abuses currently taking place. Reagan began taking the heat off of big business monopolies by cutting the government's anti-trust staff by about 60%.

An additional generous loophole was provided in 1984 with the introduction of the National Co-operative Research Act which provided exemptions from anti-trust lawsuits for companies engaged in joint R&D projects. Those most concerned with antitrust suits are now involved in joint R&D projects at least in a token way! {B68}

Society's Parasites (The Speculators)

If prostitution is the oldest profession, gambling is certainly one of the runners-up. The practice of increasing one's wealth without having to expend one's energy, or be productive in any way, has attracted followers from the dawn of time. In the West, individuals who do so as a career, have percolated to the top of the economic and social ladders because their predecessors have successfully lobbied for the legislation that makes it all possible.

Regrettably, the message being broadcast by the yuppies and the super rich is that putting in an honest day's work for an honest day's pay is reserved for suckers and those afraid to take risks. Accordingly, the fever to get rich quick, without really working, is causing countless lower class entrepreneurs to choose drug trafficking as an elevator to their financial success, just as stock market and real estate speculation is chosen by the upper class entrepreneurs. To put it mildly, Wall Street scandals are becoming commonplace, and stock markets seem more and more to be the playing field for inside traders and stock price manipulators. Legitimate balance sheet acrobatics makes it increasingly unwise for all but seasoned market professionals to invest in America's potential. The article on page 46 in the Jan 9 1989 issue of Forbes, entitled "Never, but never, give a sucker an even break", exposes just how easily the unwary can be parted from their money.

Although the stock market has always had a casino-like atmosphere attached to it, the contagious "get rich quick" fever, now seems to have pervaded virtually every aspect of legitimate business. Corporations are spending more time and effort on making profits through balance sheet maneuvers than through anything even remotely related to efficiency or productivity.

The investment departments of corporations have usually preferred to gamble on the stock market, and banks on real estate. But in reality they each gamble in both speculation games simultaneously, converting assets back and forth from real estate to stocks whenever they think one or the other of the speculation games is ready to crumble.

The October 1987 stock market crash was to the stock market speculation game, the equivalent of a national run on the banks in the real estate market speculation game. Stocks across the board had been traded back and forth until they were hopelessly overvalued, at which time the gamblers who did not get out in time, took their losses, and passed them on to their customers in the guise of price inflation. Of course there were the usual bailouts, but some of the brokerage houses still went bankrupt.

The key, to understanding why the public at large should be concerned about market and bank failures, centers around the fact that speculators rarely gamble with their own money. They normally borrow the money from someone else. To appreciate the magnitude of this problem, let's examine why so many banks and savings and loan thrift institutions have gone bankrupt.

Why Banks and S&Ls Go Bankrupt

The banking world, which has up to now enjoyed a reputation as a trustworthy, stable cornerstone of society, no longer merits either the respect or the trust which most citizens, in ignorance, continue to ascribe to it. One of the oldest jokes in the banking industry wryly acknowledges that "The easiest way to rob a bank, is to own one."

And in a nutshell, this is precisely why hundreds of banks and S&L thrift institutions have recently declared bankruptcy.

A knowledge of the root causes of S&L failures is so fundamental to an overall appreciation of society today, that a synoptic description of the scam behind the failures will now be outlined.

Most important is the fact that banks and S&Ls were, and still are today, vehicles for acquiring money to gamble with. Most depositors who deposit their money in a savings account, or on fixed term deposit, tend to think of banks as giant vaults in which their money can safely reside free from the ravages of fire, theft, and accidental loss. Even the massive amounts of money that flow into banks from pension funds are put on deposit basically for safekeeping. Decades ago, when interest rates, and property values were relatively stable and comparatively fixed, the image of banks as vaults was not that far off the mark. Most institutions made their money from the spread in interest rates between what they paid to their depositors, and what they received from those who borrowed from the bank. Times have changed.

With speculation profits as the lure, S&L thrift owners have been using depositors' money as their personal gambling stakes to engage in real estate speculation. They bought up plenty of actual properties, and also issued mortgages on others. Some of these mortgages were assigned, at preferred interest rates, to friends, relatives, and business partners, etc. In this way, a network of chosen insiders could also use depositors' money to engage in real estate speculation!!

As prices continued to rise, the speculators were free to sell their properties for profits. The mortgages could be paid out or passed on to the new real estate buyers, in which case, new properties could be purchased and new mortgages taken out. The profits for many were enormous. Prior to the real estate slump, prices had skyrocketed. Although much of the speculation involved commercial real estate, the price of residential real estate was also inflated in the process. Meanwhile, the innocent bank depositors were still only being paid their measly fixed low interest. The profit difference, which for some has been instant millions or hundreds of millions, was pure profit involving absolutely no productivity whatsoever, and for that matter, little or no risk either. Why little or no risk?

Well, when the real estate market inevitably collapsed, the banking and corporate gamblers start dumping their real estate holdings on the declining market. Almost instantly, there were no buyers in sight. The gambling bankers were left with overvalued properties, and overvalued mortgages whose holders predictably chose to default on. Hundreds of bank and thrift owners knew the party was over, and that they were on the road to bankruptcy.

Were the speculators now going to lose all the profits they had made on the way up? Not a chance. They were all capable of walking away from their institutions relatively unscathed, and here's how.

Between the time the gamblers know they have lost, and before a bank or thrift actually declares bankruptcy, the insiders purposely maintain appearances and keep the institution afloat as long as possible to buy time to carry out some or all of the following remaining steps of this much used scenario.

The present and future taxpayers, whose standard of living will be reduced in the process of paying back the two to three hundred billion dollars in S&L bailout money, are simply paying for all the profits taken out by the speculators who now pose as the nation's most successful entrepreneurs, and respected community leaders!!

{B68} "Trust the trust, or bust the trust?" The Economist (Sep 2 1989): p63