As we begin digesting the Obama Administration's financial industry bail-out plan, I am struck by the lack of debate concerning the relationship between government and private investors. Certainly there are discussions about the large guarantees and actual cash the Federal Government is contributing in order to lure private money (something like 9¢ on the dollar, in other words, the government is contributing 91¢) in buying the so-called "toxic assets" off the financial institution's books. But there is scant discussion about the new partnership that is created. In other words, the United States Government is now partners with private investors who will be eagerly trying to maximize their profits.
Aside from the distaste of how those profits are going to be maximized (assume that some of those toxic assets are mortgages which are "submarined" or that are secured by real estate worth far less than the face value of the promissory note) by foreclosing and selling people's homes, developer's half baked projects, and overly-leveraged businesses like Donald Trump. But there are real people behind those toxic assets, with real homes, kids in neighborhood schools, struggling to afford a loan sold to them on dreams and more than likely fraudulent practices.
In the middle of these discussions, about how do we want corporate America intwined with our government, we also should look at corporate "solutions" to other issues. For instance, in yesterday's
New York Times I noticed a full page ad from IBM. The ad gave a litany of food problems: mad cow,
salmonella, e. coli. And, IBM touted it's solution, of
tracing food from production to market as a way to trace and track problems. Of course, this tracking would require Federal legislation and regulation. Interestingly, many proponents of local foods, people in the slow food movement, oppose tracking system because, ah-ha, it benefits the conglomerates who can afford the IBM systems! It will, essentially, put the small producers out of the market.
And then we have the in vogue with transportation planners,
congestion pricing. IBM is running commercials, which have to be expensive, on the NCAA basketball championships, regaling viewers with how much time we waste stuck in traffic. How European countries have solved this problem (cut to happy Norwegians) with congestion pricing. Of course, IBM is all to happy to sell you lots of expensive technology to solve this "problem."
Let me tell you how IBM sales work. For years they sold main frames to Boeing. And they were so in bed with Boeing, that IBM sales force had offices in Boeing corporate offices. Same thing with Nordstrom, selling them point-of-sales machines. You just know IBM marketing folks are wining and dining transit planners, agriculture, food, and drug regulators, and of course, Congress, to legislate "solutions" to "problems."
We have to remember, these corporations have lobbyists. Lots of them. They are good at what they do. Many of these lobbyists used to be Congressmen, Democrats and Republicans. They are friends with the current Administration. When they yell "fire," everyone is conditioned to listen, even if there is no fire or a small flame easily extinguished.
So, we then must wonder...what are these toxic assets that we have to so urgently buy? What is the problem that corporate America is whispering to our "leaders?" And is it a good thing we are now partners with the very investors who were so eager to make a buck off of sub-prime mortgages? What, really, is this fire?
Since the pandemic issues are changing rapidly, I don't want to write much about it. But, I wanted to provide a link to a fabulous outline of the issues, essentially what we know what we don't know. Click here for the link.
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