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Masters of the Universe

Businessman pocketing cashThis week the New York Times reports that the Japanese conglomerate SoftBank will buy an American private equity firm, Fortress Investment Group, that oversees $70 billion in assets. Fortress specialises in dealing with ‘distressed assets’ – i.e. assets procured cheaply because of forced sales, bankruptcies or other misfortunes. As the NYT explains, Fortress is “an entity that is regulated – if relatively lightly compared with, say a bank.”

As a result of this purchase, SoftBank will oversee assets under management of $170 billion, “making it one of the largest private investors in the world after the Blackstone Group, which manages about $330 billion”. The paper goes on to explain that while “private equity firms have performed poorly as publicly traded stocks, they are attractive in part because of their ability to lock up money for multiple years and charge high fees.” In other words, they are attractive because like parasites they are able to gouge rent from ‘distressed assets’ over many years. 

In the meantime, in another of the global financial system’s galaxies, Stephen A. Schwarzman, chairman of both the Blackstone Group and Donald Trump’s economic advisory team, celebrated his 60th birthday in style. David Koch, the billionaire Republican that funds attacks on Democrats, sat on one side of the birthday boy, and Ivanka Trump sat on his right. The cost was estimated by the New York Times at between $7 million and $9 million. There were camels, gondoliers, fireworks and trapeze artists. Readers will recollect that the Blackstone Group is where Britain’s ex-chancellor of the exchequer, George Osborne MP is now housed as an adviser on a modest fee of £200,000.

The party took place just after Mr. Schwarzman’s firm “had completed its $39 billion purchase of Equity Office Properties in what was the largest leveraged buyout ever.”  A leveraged buyout is the purchase of a company with a combination of equity and debt. The purchased company’s future cash flow (rent) is used as collateral to secure and repay the borrowed money. Borrowed money benefits from tax breaks.

These are the Masters of the global financial Universe. They have captured the great public good that is the monetary system and now control it in their own immensely greedy, vested interests. They are able to do so because they have corrupted and ‘captured’ democratically elected politicians. For modest fees, these politicians are prepared to sell out the publicly created, and taxpayer-backed monetary system, and subordinate it to the interests of a tiny, arrogant elite.

All the while, society turns a blind eye, and focuses instead on immigrants.

Just saying……

This post first appeared on Prime Economics

8 Comments

  1. David Pavett says:

    The extent of the private domination of social, economic and political affairs illustrated here by Ann Pettifor isboth shocking and extremely dangerous. What is missing from this account, however, is an sort of economic and political analysis that would show how public interest can be reasserted. Ann Pettifor is (last time I heard) a member of John McDonnell’s advisory panel and therefore presumably has his ear. What a pity therefore that this article was not seen as an opportunity to tell us where Labour thinking is on these issues.

    1. John Penney says:

      This article is simply pitiful, and insulting to us readers.

      A disconnected list of “nasty/worrying things that are happening in the rapacious financial sector”, in most cases in the USA – where we can have no impact (though we could add an attack on the US financial sector to the next “anti Trump demo in central London ?) .. and then …..?

      Perhaps a demand for selective nationalisations of key financial institutions in the UK ? A suggestion for a raft of new legislation by a future Labour government in the UK to constrain the speculative frenzy and continuing damaging financialisation of our economy by this parasitic sector ?

      No…None of the above. Ann Pettifor, member of John McDonnell’s “Advisory Panel” , concludes with the profoundly helpfuland insightful … “Just saying…”

      This type of article is known as “empty posturing faux Leftism”. This is the level of analysis and theorising within John’s inner circle ?

      And this article is deemed to be worthy publishing on Left Futures ?

      1. Mervyn Hyde says:

        John, I went to a John McDonnell Bristol event where Ann Pettifor and Simon Wren-Lewis were the economists, Simon has since left the team and since I get his weekly blog think that he has nothing of substance to offer.

        Whilst Ann was more forthright I agree overall that she goes just so far but falls short on real commitment.

        Having spoken to both of them, Ann does have some merits, in that she recognises the failings of the financial sector, where Simon tripped around the edges offering no real direction or anything to remember him by.

        Ann did though say, that John McDonnell did not always listen to them, she appeared to me to be a little jaded by his independent stance, but unlike Simon Wren-Lewis has at least not abandoned ship.

        We do all have our own perspective on how to manage the economy. I personally would favour the traditional nationalisation agenda, including nationalising the banking system, the City can of course from my point of view rot on the vine. That said I believe that for the sake of unity, my aspirations may not fall favour and so look to the most feasible means of control, which is, if you don’t control how money enters the economy, you can’t control the economy.

        It also opens up the Neo-Liberal myth as to how the economy actually works, and that a Fiat money system like ours does not have to raise tax before it spends.

        Once people understand that, the whole Neo-Liberal platform disintegrates.

      2. John Walsh says:

        Please, keep up at the back David Pavett and John Penney. There’s a link at the bottom of the article – This post first appeared on Prime Economics. On there you’ll see that Pettifor’s post is intended to be a display item in here consultancy shop window: i.e. it’s not intended to be a conversation piece on here. Which begs the question – why has it been re-posted here?

        1. John Penney says:

          I did see the “Prime Economics” link , but I assumed, as I imagine David did, I think quite fairly, that Ann Pettifor had something directly to do with the posting of her decidedly uninformative little article on Left Futures.

          However it got here, why on earth was this irrelevant stuff seen as worthy of placement on Left Futures ?

        2. David Pavett says:

          You agree with both John and me that republishing the article on Left Futures is inappropriate. It contributes nothing to the debate about economic policy.

  2. Mervyn Hyde says:

    The question we ordinary people need to ask ourselves, is, the government creates all money out of thin air, it then gives it to us as debt, if we can get it through debt, why can’t the government pay off its own debt.

    The answer is as above, our politicians have been captured by none other than the Koch brothers who fund bogus institutes that that preach a false doctrine and these politicians repeat it as though it were gospel.

    We don’t need to sit around waiting for the likes of the Koch brothers to decide they will invest their billions in us, they are like us, just users of our currency, our governments are the creators of money.

    So we can afford our NHS, we can afford our public services, we can invest in industries that are beneficial to society, it’s just we don’t yet have the politicians with the will to do it.

  3. Bazza says:

    These are not the Masters of the Universe, these are the true Little People of the Planet.
    We who create the wealth and make societies work will have our day.
    Only quantitative easing (massive state intervention) is keeping the right wing simpleton rich and powerful in power because they haven’t a clue what to do.
    They are the legal capitalist thieves who must CON the working billions daily and they know it.
    They even insult the Left by saying ours is the politics of envy – no it is the politics of economic justice capitalist legal thieves!
    But other commentators on here are right – no solutions offered!
    Public ownership of banks, land, public utilities etc, windfall taxes big business, financial transaction taxes, global living wages, state-led public investment, tax the rich & corporations, close tax loopholes, close offshore banking, curb upper class welfare state, end PFI, kick out private sector Govt contacts etc, end Neo-Liberal cheap labour practices.
    And all as a transition.
    Yours in peace as a left wing democratic socialist.

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