SYNOPSIS:

So here's my theory: Michael Oxley, Harvey Pitt and George W. Bush are all Communist moles who have worked their way into the center of the capitalist system in order to destroy it. How else can you make sense of their actions?

It's true that in July they grudgingly agreed to a corporate reform bill, which briefly calmed the growing investor panic. That was because it's essential for them to control Congress — they need maximum leeway to wreck the U.S. economy. But then they found a better answer. Saber-rattling over Iraq does double duty. It distracts the media: on Wednesday the Dow fell 215 points, hitting a nearly five-year low, while consumer confidence fell to levels not seen since 1996, yet neither story was treated as front-page news. And war talk itself helps depress stocks and consumer confidence, and further undermines the economy.

The master stroke came last week. Even as evidence mounted that the wheels are coming off our so-called recovery, the conspirators carefully destroyed the credibility of July's corporate reforms. The Financial Times reports that it wasn't just Congressional Republicans and the accounting industry that blocked the appointment of John Biggs to head a crucial new accounting oversight board; the White House was "concerned at labor union backing for Mr. Biggs."

Now that the best candidate has been humiliated and betrayed, nobody of stature will take the post. That means corporate reform is dead in the water. And if the conspirators hold the House and regain the Senate, they can proceed with their wrecking program — driving the budget even deeper into long-term deficit, scaring small investors and blocking any actions that might pull the economy out of its deepening funk.

O.K., I'm not quite sure about this theory. There is another theory that might explain what these guys are doing. They may simply be constitutionally incapable (actually, given the presence of John Ashcroft, make that unconstitutionally incapable) of doing what has to be done.

What we've learned over the past year is the extent to which the modern business game is rigged in favor of insiders. Self-dealing has become pervasive: incredibly generous executive compensation, sweet-deal loans and preferential access to I.P.O.'s were standard practice in many companies that have not yet become targets of S.E.C. investigation.

And deceptive accounting, which lured the public into buying stock even as insiders were bailing out, must have been very widespread indeed. In the last three years of the bubble reported corporate profits soared, but the overall measure of profits calculated by the U.S. Commerce Department, which is unaffected by the maneuvers companies use to cook their books, hardly grew at all.

In short, the fix was in. If we're to have a real recovery, it's urgent that ordinary investors be reassured that those days are over. Yet it may be hard for our current leaders to understand that urgency: all their lives, the fix has been in on their behalf.

Wednesday's Wall Street Journal reported another piece of the Harken Energy story, one that provides even more evidence of how family connections smoothed Mr. Bush's business career. The key defense against charges that his sale of his Harken stock amounted to insider trading has always been the fact that while that stock's price plunged soon after he sold his shares, it then recovered, albeit temporarily.

Now we know why it recovered. It wasn't just the mysterious invitation to drill for oil off Bahrain. Harken also pulled a trick that would be emulated on a larger scale by Enron: In effect it borrowed money to pay its bills, while using loopholes in accounting rules to conceal the resulting debt.

What made the trick possible was Harken's guardian angel, a powerful institution controlled by an oil man, Robert Stone, who was a strong political supporter of Mr. Bush's father. This institution acquired a large stake in Harken as soon as Mr. Bush became a board member, and subsequently showed itself willing to do whatever it took to keep the hapless company afloat. This included taking much of the company's debt off its books in return for assets of doubtful value, and giving Harken a share in their partnership almost twice as large as its contribution to the partnership's capital.

The name of the guardian angel? The Harvard University endowment. Don't be surprised; professors don't run the university's money.

Originally published in The New York Times, 10.11.02