America - Andrew Stephen on turmoil in capitalism's heartland

In the heartland of capitalism, the captains of industry have now fallen below lawyers and even jour

It was pretty dramatic stuff, all right. A front-page headline in Tuesday's New York Times read: "Bush is to Propose New Powers in Domestic Security", and went on to detail "sweeping changes" in "a top-secret plan to protect the nation's critical infrastructure".

But this headline was buried in a one-column section at the bottom right-hand of the front page. Dominating the top of the page was a picture of an anxious stockbroker looking at a screen, and a large graph detailing the ups and downs of the previous day's Dow index. Before their very eyes, the heroic war against terrorism of President Bush and his team is disintegrating into stories of financial squalor and seediness - perhaps so much so, indeed, that only a full-blown war against Iraq can save them now.

I like to remind people who gloat over plunging stock markets (here or in the UK) that their personal financial well-being is almost certainly worsening as a result, whoever they are. Worst hit here are the 40-55 age group of baby-boomers, who thought they had put away enough for a pension but now see themselves working for a living until the end of their lives. The most astounding figure of all, to me, is that $7.7 trillion has disappeared out of the stock market since March 2000, much of it from wealthy investors, but a significant proportion from pension funds and small, humble investors.

What is potentially fatal for Bush and Dick Cheney is that they came to power purporting to be a bunch of know-how CEOs who were full of business acumen and who understood how the country worked financially. Every senior member of Bush's administration is a multimillionaire many times over; even the defence secretary, Donald Rumsfeld, according to financial disclosure forms, sold between $20.5m and $91m of investments last year to avoid conflicts of interest. But now, according to an opinion poll, the CEOs of large corporations rank below stockbrokers, lawyers, government officials and even journalists when it comes to public trust; more than seven out of ten Americans say simply that they don't trust CEOs of large corporations. In this, the land of capitalism, the number of Americans who see big business as a threat to the nation's future has nearly doubled - to 38 per cent of the population.

Cheney, as you read here first months ago, is already being seen as a lame duck vice-president. Aged 61, he has had at least four heart attacks. In his five years as CEO of Halliburton, an oil conglomerate, the company obtained $2.3bn in federal contracts, compared with $1.2bn in the preceding five years - which is what his presence there was all about, naturally. In August 2000, he sold 660,000 shares in the company for $35m, just before he left to pursue the vice-presidency and before the 83-year-old company plunged into increasing difficulties; following his departure, the company he ran made 18,000 people redundant. Last Monday, the shares he sold at $52 each were worth $13.10.

But that was not before Cheney made a promotional ad for Arthur Andersen, praising it for going "over and above the just-sort-of-normal, by-the-books audit arrangement". Quite, Dick. Now the Securities and Exchange Commission is investigating Halliburton for questionable accounting practises; and, despite Cheney's protestations of always having clean hands, the present Halliburton CEO says Cheney had precise knowledge of those accounting practices. We shall see. And to think that Kenneth Starr spent $75m investigating the Clintons over what turned out to be baseless allegations about a pathetically paltry (in comparison) land deal in Arkansas.

And Bush himself? The press, having barely touched the story in election year, is beginning to show an interest in how he sold 212,140 shares in a company called Harken on whose board he sat - at $4 a share - two months before Harken announced huge losses and the share price plunged. Dubya's father was president at the time - which can't have done him any harm - and the SEC found him not guilty of insider trading rather than innocent, in a delicate bureaucratic differentiation. Now Bush refuses to release the SEC findings, though the SEC itself says it will release them if Bush agrees.

So the vulnerabilities are beginning to show with George W Bush, MBA, too. According to a Zogby poll released last Monday, his personal approval rating is down to 62 per cent - still very high but evidence that his personal reputation is being tarnished in the face of financial scandals. The same poll showed that one in three Americans is not doing as well as a year ago; these same people, doubtless, are those unconvinced that the stock markets are suffering a mere "hangover" (in Bush's words) after what he called the "binge" of the Clinton years. A good war, unfortunately, is becoming the very obvious answer to all these pesky little domestic woes.