Fresh off sending poisonous animal food and toothpaste into international markets, China invested $3 billion in a U.S. private equity underwriter, Blackstone Group LP. PEU's buy undervalued or strategically placed companies, many of them publicly owned with the hopes of selling them off later for huge profits. America's hyper growth investment vehicle stays in the shadows away from the light of the Securities and Exchange Commission.
Recent court cases allege CEO's negotiate deals better for their long term compensation than for the shareholders by selling the company to the PEU on the cheap. While no decisions have been offered, a clear history of corporate executive malfeasance can be seen by widespread stock option cheating as nearly 30% or 2,000 companies backdated this form of executive incentive compensation. This came at the expense of shareholders. Why wouldn't that same third do likewise in negotiating with a PEU?
In the U.S. private equity firms are intertwined with political leaders of both parties. Almost any big name member of either party sits on a PEU board or is paid as an advisor, Bush, Snow, Carlucci, Baker, Rossotti, Scully, Daschle, Clinton, and Perry. Others buy influence as Bush Pioneers/Rangers or Clinton Bundlers.
As China reduces its purchases of U.S. debt, it aims to buy influence via private investments.
"They will use their money to gain influence, and this is a good example of this," said Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business. "Blackstone isn't just a fund, it's a very influential group in the United States. Basically, it's the Chinese government making a significant stake in a highly influencial Wall Street firm. And, in turn, that firm has an influence on U.S. policy."
What happens to interest rates at China lightens up on its U.S. debt purchases? We aren't the most popular country in the world at the moment. Might rates have to go up? And who pays interest on the debt? That would the American taxpayer. Recall Bush's capital gains tax cut from 20% to 15%? Well the PEU's want that lowered to 8%, the same as my local sales tax. Only I pay tax on the whole purchase price, they only pay on their gain.
Yes, something stinks and it smells like American political influence buying and corporate chief self aggrandizement. After they party hard ingesting the finest society has to offer, the average citizen will get to clean up their droppings. Recall the Bush inspired Savings & Loan disaster? There's a new round inspired by that same family name, the Bush PEU debacle. As Dr. Deming said "Will they ever learn?"
No comments:
Post a Comment