Dear Friends,
It seems to me, the true value of political favor can be seen today, in that the worst corporate executives are given the biggest bailouts, at cost to the workers they are laying off. Great deal, that the poor are paying off the liabilities, as well as subsidizing the educations… of the rich. Yet, political favor pays dividends in spades, so it can be considered an asset. Examples abound of companies that have been poorly run, while the executives got rich, as they produced ever more defective products, that are being sustained by the magic of bailouts. Such zombies will continue to walk the Earth as long as they are fed the elixir of life… free government money. Heavens to Betsy, they must be sustained because if they are not, the employees they laid off might not have a job!
Boeing is just such a company. For years they have driven down the quality of their crucial products, while using leverage, (debt) to buy back shares, thus enhancing the bonuses of the executives. (Since their bonuses are largely dependent on the stock price). In the epic failures and cost overruns of that company’s flagship products, the 737 max, SLS and Starliner, and the subsequent awarding Boeing of more government contracts, shows unambiguously, the deep and lasting value of the asset of political favor. That political favor has allowed them to stay in the running for government contracts despite their horrible track record of actually completing them. Cost plus is a sweet deal, but only available to those with political favor… you know, like Boeing has.
I read the other day that there are hedge funds that returned over 3000 % profits the first quarter of 2020. Others are being bailed out as we speak. Making it clear that their profits are private but their losses are public. I would love to get such a deal! Every time I make a mistake and invest in a company that drops in value, buy precious metal and the price is manipulated lower by the big banks, have the value of my home gutted by a recession or made a bad bet on the ponies, the government would step in and bail me out. That would be too expensive though, my losses might exceed a few thousand dollars, while the hedge funds have been drinking at the bar for the last few months, to the tune of billions of dollars a month printed, to pay the tab. Political favor at work.
https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htmApparently the Federal Reserve is printing upwards of 20 billion a month now to keep the system above water, while the US government is passing trillion dollar spending packages, like a drunk throws darts in a pub… with the same accuracy. The pittance we are getting is, as Thrasymachus would say, to keep us silent at the raiding of our bank accounts, the theft of our Constitution and the ravaging of our Rights… to protect the wealth of those with political favor. Put another way, to make us think there is justice… as we are being treated unjustly. Every dollar they print takes a small piece from every dollar you have in your pocket, bank account, your paycheck and in your future. They are all taken from you in the darkness and given to those with political favor. Very progressive indeed!
Now, some will argue that the jobs at Boeing will be lost of they are allowed to fail, the failure of some hedge funds might be systemic and the economy needs that stimulus, else we might loose millions of jobs. All of which are reason to be concerned. The millions of jobs though, that has already happened. As to the hedge funds being a systemic risk, I say that is sufficient reason for their elimination in the first place, not reason to privatize their profits and make their losses public. Companies that are essentially zombies should not be sustained. If they are allowed to fail, the jobs will not be lost, except for the executives that ran it into the ground. The reason they are given bailouts, is to keep the inept, corrupt, psychopathic executives in power… based on political favor.
Sincerely,
John Pepin
