Perry Glasser

Saving Goldman and Selling America

In Business, Economics, Finance, Wall Street on September 24, 2008 at 11:38 am

Maybe Warren Buffet with $5 billion really can rescue Goldman-Sachs. With Morgan Stanley reduced to the status of your corner bank, now able to accept deposit accounts and all the rules that go with taking shelter under the Fed’s depositor insurance umbrella, Wall Street is beginning to look like Dodge City in 1880—dusty, windblown and streets all but deserted.
Except for the piece Buffet may have saved.
The mechanisms of capitalism are being nationalized. If any entrepreneurs out there go to the markets for capital infusion, the crazy idea that selling shares in private enterprise to spread risk precipitates a healthy economic system by rewarding the bold and innovative with wealth, right now the only underwriter left on the Street is Uncle Sam.
Uncle Sam—that would be you and me.
Last we looked, government is a creature of the people, not its competitor. I have it on the word of Abe Lincoln. “Government by the people, for the people…” It was a hot day at Gettysburg that day, Lincoln kept his remarks brief.
So the nationalization of the mechanisms of capitalism is wonderful news, though probably not what Lincoln had in mind.
With capitalism now nationalized, we can look forward to an annual check from the Fed, your share of fees for underwriting, M&A activity, and interest from loans. Expect soon to be free of income taxes.
How Uncle Sam will manage mergers and acquisitions remains to be seen. Will we do so with the force of the state, or allow shareholders to vote their own interests? Are their synergies to be had by merging Ford and GM, for example? Can we by force of the state make shareholders vote in favor of that merger? How about returning to a single national phone service? Might the nationalization of capitalism be the mechanism to get the insurance business out of the healthcare business and at long last provide healthcare to American citizens in the same way we supply education police protection, and fire protection?
In much of the industrialized world, these services are rights, not purchases of privilege. Look,
when was the last time the fire department pulled up at a flaming address and before tackling a hazard checked the nature of the owner’s coverage? Why should healthcare providers do that if your body is burning with cancer?
Given the resemblance between the Federal Treasury and the Grand Canyon, two very large holes, bith National Wonders, Uncle Sam will soon discover some national advantage in encouraging spin-offs of lucrative US businesses to liquid investors. There are only so many Warren Buffets around, so we will have to look overseas.
The market for American notes is saturated, the dollar is shaky, so it may be time to sell off assets for the needed infusion of cash that will allow us to prosecute Georgie’s Wars. Dubai has money; China has money. They don’t want any more bonds; the poor bastards are already choking on American paper. They’ll want assets, this time. Performing assets.
So with Uncle Sam as the last underwriter, let’s sell them our infrastructure. Port management, for example. The Interstate highway system—they can build all the toll roads they want, assume maintenance costs, and look for revenue—say $.05 per mile of highway. If the Interstate goes for a cool trillion, Uncle Sam as underwriter takes 15 percent.
Lo! $150 billion into the Treasury!
Underwriting and M&A are lucrative businesses. With the market for initial offerings now a nationalized monopoly, I can’t wait to get in on the ground floor when International Widget goes public.
The Wizard of Omaha is no fool; if Goldman is the last man standing on Wall Street, Buffet has bought the last vestige of private enterprise for a song.

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