Saturday, October 1, 2011

Buy one, get nineteen billion free

It's interesting to watch where Wall Street puts its money in the American political process. The number one recipient of funding from Wall Street is Scott Brown, the Republican senator who replaced Ted Kennedy in Massachusetts. Forbes called him "Wall Street's Favourite Congressman."

Scott Brown is the senator who has received the most campaign money from the venture capital industry. Scott Brown is number two among all U.S. senators in receiving money from private equity and investment firms. He's also number two in money from the securities and investment industry. His top campaign contributors are FMR Corp., Goldman Sachs, Mass Mutual Life Insurance and Bank of New York Mellon.

But what possible Return On Investment value can tens of millions of dollars to a single senator get you? Surprisingly good value. When the Dodd-Frank Wall Street Reform & Consumer Protection Act was going through, the vote in the Senate was on a knife-edge. It all depended on a handful of swing votes, including, you've guessed it, Scott Brown. Within the bill was a once-off bank levy, to help pay
for regulatory reform.

This was a levy, solely on the biggest financial firms, not to punish them or raise government revenues, but to pay for the new financial regulatory structures that Wall Street itself had made necessary and to clean up the mess of failing financial institutions.

"Fine," said Brown, "I'll vote for the bill, but drop the bank levy."

So they did.

Saving to Wall Street? Nineteen billion dollars.

Onto 2012 and the presidential election. That Wall Street's money is on Mitt Romney is no secret, nor that his previous day job was in private equity, turning a buck
 asset-stripping companies. But what will they get for their money? The number one thing they'll get from it is the repeal of the Dodd-Frank financial regulatory overhaul bill. All of it. All 2,000 pages. He describes it as 'burdensome' to banks. I'm sure it is. That was kinda the point. If you're going to put the American taxpayer on the hook for billions of dollars - and that's what happens every time there's a Wall Street clusterfuck - then it might be an idea to take the wind out of the crazier sails, know who's doing what and proscribing legally what they can't do.

So if a future President Romney has his way...Wall Street is regulated for a few years (2010 - 2012) and then we're back to the kind of pre-Glass-Steagall Act financial wild-westery that's guaranteed to deliver yet another massive financial meltdown sooner rather than later and Wall Street is guaranteed (as long as they remain too big to fail) that the US taxpayer picks up the tab.

It turns out that what money buys you in the American political process is more money.

Thursday, May 12, 2011

Democracy, Thai style

I'm going to make a prediction a few months out from the event - which is always dangerous - but I'd put money on yet another judicial or military coup in Thailand before the summer's out. Prime Minister Abhisit - who went to Eton & Oxford - is in the process of winding up the parliament in advance of an early-ish (it was due in December) election in Thailand.

Here's a fact for you. No parliament in the history of the Thai state has run a full term. The occasional fall through scandal (the Democrat government of the 80s for example for a land zoning rumpus), a few snap elections as we'd get in the UK and more often than not a military coup. 18 so far, if memory serves me right.

Ever since Thaksin tapped into the unstoppable power of the rural vote, his parties (Thai Rak Thai, People's Power Party, Puea Thai) have won every election. The Thai judiciary, gently prompted by the palace, has outlawed the first two iterations, but chances are very much that the next government will have Puea Thai as the main government party again after the election.

So can the palace/judiciary/army just this once accept the will of the Thai electorate? Probably not. Favourite would be a judicial coup - outlawing either the Puea Thai party or its leaders (Thaksin's sister is on the ballot and would be a good bet to lead a Puea Thai administration). This would probably be backed up by a typical Thai state of emergency, which would entail shooting various people in red shirts. So just be careful with your wardrobe colour co-ordinating if you're going there on holiday.

The western powers are only too happy to do business with Thailand as a 'liberal democracy', despite the fact that it's neither liberal nor democratic. It has never let any government stand that the old establishment interests - the monarchy, the military and the judiciary - didn't like.

Sure the army shot a few of its own people last year, but that Abhisit chap seems awfully nice doesn't he? Friends with Boris, you know. What's not to like?