The rise and fall of Enron is an instant classic in the annals of capitalism because, in one calamitous stroke, it wipes out so many sanctified illusions that rule in the magic marketplace. Enron embodies Nobel-class hubris like that of the market sophisticates who brought Long-Term Capital Management to ruin in 1998. It also smells of the raw monopolistic greed common a century ago. An energy-trading company that Wall Street had valued at $80 billion ten months ago is now a penny stock. Meanwhile, California consumers and businesses are stuck with the ruinously inflated electricity prices that Enron rode to brief financial glory. The firm's gullible creditors include some of the best gilt-edged names in American banking--J.P. Morgan Chase, Citigroup--whose ancestral houses were big players during the first Gilded Age too. Unfortunately, then and now, these venerable financial institutions lured millions of innocents to the slaughter, unwitting shareholders who bought the exuberant promises.

In this case, the lambs include Enron's own employees (thousands of whom are abruptly out of work) because top management cleverly prohibited their 401(k) accounts from selling Enron's plummeting stock while the big boys were dumping theirs. If the financial losses to banks are severe enough--we don't yet know the full truth--then US taxpayers may be burned too, their money used once again to rescue delinquent financiers from their just deserts in the name of "saving the system." Nobody ever said capitalism was pretty.

Markets are imperfectible human artifacts and always subject to gross error, not to mention high-stakes fraud, because the transactions are always the work of human beings. Computerization and esoteric mathematical formulations do not change that humble fact; neither does the Internet. This same lesson was learned from great pain and loss in the early twentieth century and led eventually to the political understanding that markets without governors and regulators will repeatedly throw off disastrous consequences--extreme price swings, occasional busts and clever larcenies--so stabilizing rules and limits were imposed. That knowledge was pushed aside by the modern era's deregulation.

Enron was a massive experiment in e-commerce--a commodity-trading firm that used the Internet to connect distant buyers and sellers of everything from electricity and natural gas, steel and newsprint to pollution credits and financial derivatives hedging against interest rates or the weather. If you check out Enron Online, you will see the hubris still on display, despite the bankruptcy. "Why Enron?" the company's website asks. "We have strong skills in risk intermediation and good systems to control risk.... We have successfully sourced capital for all potential investments." As it turns out, these are the very qualities that were missing, the "new economy" conceits that brought it down. Enron's siren song was plausible enough (if you left out the human folly and greed). Deregulation, combined with Internet trading, exposed the old-line utilities to fierce, continuous price competition, the firm explained, forcing them to eliminate inefficiencies or get out. Consumers would win from the lower wholesale prices; so would producers of "soft energy" alternatives, like wind or solar. Enron would preside like a wise monarch.

But while Enron promised to scrutinize the soundness of buyers and sellers, nobody was scrutinizing the trader king. The middleman is unregulated in this brave new world. When Enron management made a series of outrageous and self-interested off-the-books deals to raise capital, its auditor, Arthur Andersen, gave approval. The credit-rating agencies remained mute. Enron's bankers were busy touting the stock as on its way to the moon. Enron and chairman Kenneth Lay, meanwhile, pumped nearly $2 million into the election of George W. Bush, who returned the favor by letting Enron pick federal regulatory appointments. Lay and his agents were all over Vice President Cheney's secretive energy task force, and White House economic adviser Lawrence Lindsey received $50,000 last year as an Enron "adviser."

The disaster of California's blackouts and soaring electric bills was a prima facie case of monopoly price-gouging--artificial scarcity induced by utilities simultaneously shutting down electricity generation for "repairs"--that cries out for criminal investigation. Collusion has not yet been proved nor Enron's involvement, as far as I know, but the firm profited spectacularly. While California groaned, Enron's share price more than doubled. Enron then used its new glamour status to leverage still more debt, expanding its reach worldwide and opening more trading tables--financing it all in ways even savvy analysts couldn't understand. It was the classic behavior of unfettered freebooters, and it ended in the familiar way.

What did we learn? First, wholesale deregulation has a vicious downside for ordinary citizens and is open to gross manipulation. Second, as Floyd Norris of the New York Times pointed out, Enron is essentially not an energy company but a financial institution that trades various financial instruments, utterly free of regulating limits. Like a bank, it must raise huge capital flows to maintain liquidity to underwrite the transactions, but unlike a bank or a financial market, it operates without oversight. Third, nearly every party to this debacle--Enron itself, its auditor, the bankers and brokerages--is guilty of profound conflicts of interest. They do not tell the truth to retail customers like small-scale investors for fear of offending their big investment clients. Enron, it seems, didn't tell the truth to its bankers either, and they didn't ask.

As we learn more, the fall of Enron may be seen as the logical result of repealing the Glass-Steagall Act, which prohibited commercial banks from merging with investment houses. The remedial agenda would start with the reregulation of banking and finance, in order to restore a milieu of prudence and honest dealings at the heart of capitalism. Other sectors should follow: energy, telecommunications and airlines, for starters.

It would be comforting to think this event will turn politics around and put a little spine in our legislators. Certainly many state governments have learned from California's pain. But don't count on Washington. Even after Enron's meltdown, leading Democrats continue to shill for more deregulation, aware that their money patrons will be most upset if they reopen fundamental scrutiny of how wealth is created in the magic market. Elite opinion leaders will probably stick with the laissez-faire dogma, as it continues to fall apart, until the bloody losses lap over their shoes too.

The AFL-CIO has opened its 24th Biennial Convention here in the glitzy neon heart of this very unionized Sin City, but Big Labor's mood is anything but frivolous.

Franklin Serrano, an economist at Federal University of Rio de Janeiro, recently lamented the large proportion of graduate students in economics who leave for the United States. "But there is something worse than them leaving. It's when they come back."

"Brain damage," he says, "is worse than brain drain."

Argentina is the latest Latin American economy to be mismanaged into a crisis by US-trained economists. Unemployment is above 17 percent, the economy is in its fourth year of recession and the country is now in the process of defaulting on its unpayable foreign debt. It's not easy being the poster child of neoliberalism.

Argentina's currency has been pegged to the US dollar since 1991. This worked for a while, but in the past few years the peso has become highly overvalued. Rather than devalue the currency, the country piled up mountains of debt to prop it up and watched its interest rates soar as investors demanded ever higher risk premiums. For comparison, imagine the United States borrowing $1.4 trillion (70 percent of our federal budget) in order to keep our own overvalued currency from falling.

This is not the first time in recent years that the IMF has burdened a country with billions of dollars of debt in order to prop up an overvalued currency. In 1998 it did the same thing in Brazil and Russia, with predictable results. In both cases the currency collapsed rather quickly in spite of the loans. And in both cases the economy responded positively to the devaluation, with Russia in 2000 registering its highest growth in two decades. The fund's argument in the case of Brazil and Russia was that if the currency was devalued, the result would be runaway inflation. But that never happened.

The IMF has also insisted on budget austerity for Argentina--which makes about as much sense during a recession as high interest rates. First in line for cuts have been state pensions, salaries, unemployment benefits and other social spending, insuring that the burden of "adjustment" will continue to fall, as it usually does, on those who can least afford it. And even the debt "restructuring"--i.e., default--now under way may not lead to economic recovery: If the currency remains fixed at a rate that investors still see as overvalued, the crisis will continue until it collapses.

Why does the IMF seem incapable of learning from repeated failures? The interest of foreign bondholders cannot be overlooked: The longer the fixed exchange rate holds, the smaller will be the losses of US lenders--even if the peso eventually collapses. But there has been a broader political concern as well: Argentina has done everything that Washington has told it to do, and the economy is a wreck. As a result the Bush Administration, despite its distaste for IMF "bailouts," was reluctant to be seen as abandoning the Argentine government. It kept pouring money in until it became clear that Argentina's debt could never be repaid.

The sacrifice of Argentina's economy for the sake of Washington's imperial interests and the interests of "emerging market" bondholders fits a pattern at the IMF, including some of the most high-profile interventions of recent years. In Russia and the transition economies, the first priority has been to execute a rapid, irreversible change to a market-driven society, regardless of the economic consequences. Russia lost half its national income in about five years of IMF-led transition, an economic decline never before seen in the absence of war or natural disaster. In Asia, the fund's desire to open these economies to US capital flows--in countries that because of their high savings rates had little need for foreign borrowing--caused a severe financial crisis in 1997-98. The fund then exploited the crisis to further open these economies, worsened it with exorbitantly high interest rates and fiscal austerity and convinced the governments of the region to guarantee the debt owed to foreign lenders.

The IMF is able to decide these major economic policies for dozens of countries because it sits atop a creditors' cartel, much like the OPEC oil cartel. Those who refuse to take the fund's "advice" find themselves ineligible for credit from the World Bank and other multilateral lenders--like the Inter-American Development Bank or G-7 governments--or even for private credit.

The fund's aid packages are generally reported approvingly in the press as "bailouts." But it is the bankers and bondholders, particularly foreign, who are being bailed out; the people, especially the poor, are tossed overboard. Over the longer term, the neoliberal program of the IMF and the World Bank--and their ability to enforce it--has contributed to a substantial decline in economic growth over the past twenty years throughout the vast majority of low- and middle-income countries. In Latin America, per capita GDP has grown a mere 6 percent over the past two decades, as compared with 75 percent in 1960-80.

As Latin America's economies grind to a halt, dragged down by the recession in the United States, the dismal reality of this long, failed economic experiment is sinking in. The reign of US-trained economists and their sponsors in Washington may be coming to an end.

The organizers of the Globalization and Resistance Conference, held at the City University of New York's Graduate Center on November 16 and 17, had a very bad stroke of luck.

No one will mistake the WTO agreement in Doha, launching a new round of global trade negotiations, as a victory for the people. The usual cast of characters, led by the biggest kid on the block, the United States, orchestrated a familiar drama of high peril--world cataclysm if the negotiations fail--and then congratulated themselves for achieving a comparatively modest agenda for going forward. Poorer peoples of the world did not win; neither did the millions of citizens from wealthier nations who have mobilized to oppose the advance of corporate domination. On one issue after another, those people were losers. What else?

Well, in fact, there was something new about this diplomatic dust-up. The big kids realized they had to make nice with the little kids. If you are among the protesters whom the Wall Street Journal unaffectionately calls "Luddite whackos," you may take a little credit for that. At Seattle, remember, one of the central themes raised by people in the streets was the terrible inequities visited upon developing nations by globalization and its dominant powers, the multinational corporations. The initial reaction from governing elites and their media camp followers was disbelief. What on earth are the rabble talking about? Don't they know that globalization lifts all boats, especially those of the poor? Two years later, those pious sermons have been dropped. The governors instead made confession and solicitude the themes of their speeches. It's true, they announced, the poor have been screwed, but we want to make it up to them. Thus, they claim, this new round will be devoted to "development" and correcting the economic injustices.

That's rhetorical blather, of course, and the poorer countries weren't deluded. Still, it is one more small banner of progress in the long and difficult march toward forcing real reform. The developing countries have gained some leverage for their independent views and sovereign aspirations--not a lot but some. They were assisted in this by those voices in the street.

A far more substantive advance is the great concession made by the United States and others when they accepted that public health in poor countries comes before the patent rights of Big Pharma. The monopolistic greed of the drug companies is so blatantly inhumane that one hardly needs to congratulate our trade officials for recognizing it. Given the spongy nature of these agreements, we cannot even yet be sure that the breakthrough is real. Still, this was another major objective of the grassroots movement, led by ACT UP and other activists who campaigned alongside the ministers from Africa, Asia and Latin America. If the pharmaceutical lobbyists maneuver to undo the achievement in the back room, they will be up against a still broader phalanx of ferocious protest from rich and poor nations alike. If the leaders of globalization slyly try to rescind their concession, the WTO's weakening legitimacy will sink further and faster.

Building power globally by uniting distant peoples who seem powerless is a long march, uphill all the way. But we knew that. The lesson from Doha is that zesty, conscientious and honest dialogues across the vast space of global differences can yield real results. With many more conversations and agitations, the vision of coalescing citizens will endure--vigorous, viable and someday capable of winning much larger victories.

How the right is using trade law to overturn American democracy.

A final declaration for the fourth WTO Ministerial Session was finally issued on November 14 after negotiations that extended well past the original deadline.

What goes down comes around. Amidst all the attention to United Airlines' post-September 11 woes, no one noticed the ringing irony of its tapping John W. Creighton Jr.

It's been more than five years since Congress ended welfare as we knew it by passing the Personal Responsibility and Work Opportunity Reconciliation Act, over the objections of activists who warned of a large-scale social catastrophe once a recession came. Those dire predictions were dismissed as alarmist, and after four years, with welfare rolls down 50 percent, the law was declared a success. Now, with the economy in recession and unemployment spiking to 5.4 percent, the disaster is imminent, if not already upon us. Congress has begun to debate the reauthorization of the act, which expires next year, and this time, its critics are vowing not to go down without a serious fight.

Thanks to welfare "reform," this is the first recession since the 1930s in which we have virtually no safety net. Of the 415,000 jobs the economy shed in October, 111,000 were in the service industry--a sector dominated by the kinds of temporary, low-wage, low-skill jobs commonly portrayed as a stepping stone out of poverty for welfare moms. Only 40 percent of those tossed out of work collect unemployment insurance, an outrage the so-called stimulus package passed by the House does nothing to address. Of the rest, a disproportionate share are poor single mothers, who don't qualify because they have worked part time, left jobs as a result of childcare problems or recently come off welfare. (Before it was eviscerated, welfare functioned as a sort of unemployment insurance system for such women--offering the added benefit of stimulating a sluggish economy by steadying their purchasing power.) Immigrants who entered the country post-1996, comprising a growing share of the low-wage work force, are mostly ineligible for welfare and other benefits. Worst of all, in most states, poor families will be reaching their five-year welfare time limit over the next six months, just as the recession may be deepening.

It is against this ominous backdrop that the National Campaign for Jobs and Income Support, a coalition of grassroots groups, is partnering with organized labor, civil rights, women's and faith-based organizations to push for an overhaul of Temporary Assistance to Needy Families, the block grant that replaced the old system. Their "End Poverty: Make TANF Work!" campaign is asking Congress to stop the time-limits clock for families in compliance with welfare rules; expand education and training; create a decent public jobs program; restore benefits to immigrants; and insure that women never have to make a choice between their income and the well-being of their kids. Representative Patsy Mink of Hawaii has introduced a bill (soon to be followed by a companion bill in the Senate sponsored by Paul Wellstone) that includes many of these proposals.

In recent years, grassroots groups representing low-income women have made great strides at the local and state levels--winning increased welfare benefits, living-wage guarantees, healthcare for the uninsured, real job training and expanded childcare benefits. And they demonstrated some national strength this past spring, winning a partly refundable child tax credit in an otherwise feudal tax bill. Next year's battle over welfare will test their newfound unity. It's a fight many of their members simply cannot afford to lose.

This week, George W. Bush began peddling the "three legs" of his program to "restore confidence in the economy": fast-track trade legislation, his big-oil energy program and a multibillion-dollar piñata of corporate and high-end tax cuts. In other words, his old agenda repackaged as a response to war and recession. None of these could have been enacted prior to September 11. And remarkably, all are still in trouble now. The President's soaring opinion polls aren't making his agenda any more palatable.

In the war abroad, the President captured the middle ground by spurning the calls of the holy-warrior conservatives for a war of civilizations against Islam. By going with Colin Powell and coalition, United Nations-sanctioned diplomacy and a war targeted on Osama bin Laden, Bush cemented his support across the political spectrum. Democrats like Senator Joe Biden are now leading the defense of Administration policies.

Initially, Democrats offered similar support at home. Bush started meeting regularly with the leaders of both parties. Together they rushed through $40 billion in emergency appropriations for war and reconstruction and the $15 billion airline bailout, which did nothing for workers. They handed Attorney General Ashcroft virtually all the intrusive powers he sought in the antiterrorist legislation. Republican senators led the charge to federalize airport security, a bill that passed the Senate 100 to 0. House Democratic leader Dick Gephardt pledged that he would allow "no light and no air" between the President and the Democrats.

Bush seemed to reciprocate, even pledging $20 billion to New York City for rebuilding, and pinching Senator Chuck Schumer's cheek on national TV. He then signed off on the bipartisan principles for an economic stimulus put together by leaders of the budget committees.

But "patriotism," as that old Tory Dr. Samuel Johnson quipped, "is the last refuge of a scoundrel." Eight days after the terrorist attack, the Wall Street Journal laid out the scoundrel agenda in an editorial arguing that Bush's newfound popularity made his "agenda far more achievable"--including billions more in tax cuts, drilling in the Alaska wilderness and the appointment of reactionary judges. Scoundrel time opened immediately. Senate Republicans held up the defense bill, trying to attach the President's energy program to it. They filibustered foreign assistance appropriations, trying to force Democrats to confirm some of Bush's Neanderthal judicial nominees. House Republicans sat on the emergency airport security bill, theologically opposed to making that a federal function. US Trade Representative Robert Zoellick campaigned for fast-track trade authority, suggesting that its opponents, like bin Laden, reject the modern world. And House majority leader Dick Armey and others in what Newt Gingrich called the "perfectionist caucus" of the party went ballistic at Bush's embrace of a balanced stimulus package and marched up to the White House to bring the President to heel.

So, House Republicans passed, on a virtual party-line vote, a shameless special-interest bauble of corporate and upper-end tax cuts in the name of stimulus. The bill showers two-thirds of its $212 billion, three-year benefits on corporations and three-fourths of its individual tax cuts on the top 10 percent of income earners. In the name of giving a temporary boost to the economy, the bill permanently repeals the alternative minimum tax on corporations (a law that insures that no matter how clever their lobbyists and accountants, profitable corporations have to pay something in taxes). Laughably, the House bill makes the repeal retroactive for fifteen years, with the result that IBM gets $1.4 billion in rebates, General Motors $833 million, General Electric $671 million and Enron (the leading Republican contributor) $254 million.

More than 500,000 workers have been thrown out of work since September 11. Two-thirds will get no help from our unemployment insurance system. Few will be able to sustain health insurance for their families. But Dick Armey dismissed bolstering unemployment insurance as against "the American spirit," and Treasury Secretary Paul O'Neill scorned it as part of a "spending package, not a stimulus package." Similarly, even as cities and states face a deepening fiscal crisis, the White House opposes any assistance to them in the stimulus bill.

War profiteering is as old as the Republic. But usually the corporations involved are producing something for the war effort, not simply raiding the Treasury. And usually Presidents try to curb the profiteers. Now Bush cheers them on, announcing that he is "very pleased" with the House bill.

The blatant plunder in the House bill finally sparked a reaction. AFL-CIO president John Sweeney, already enraged by the airline bailout, mobilized workers across the country to demand aid for the unemployed. Progressive Democrats revolted in the House caucus, stiffening resistance to the Republican bill. Focus groups and polling showed people angered by the corporate profiteering. This was tonic for the courage of Democrats setting up a battle over the bill in the Senate. At the same time, Senate Democrats faced down the Republican filibuster on judges. Lack of support deferred votes on fast-track trade authority in the House and on the energy bill in the Senate.

Bush seems intent on pushing his flawed stimulus bill and forcing a vote on fast track. The corporate wing of the Democratic Party is busy brokering a back-room deal. But the scoundrel patriots are disgracing the flag they drape themselves in. They can succeed only if the public remains distracted by anthrax and Afghanistan. If people of conscience in both parties stand up and the public gets a whiff of what's going on, Bush may find that even the leader of a nation at war can't sell these lemons.