West Nile virus is marching its way across the U.S. Honey bees are dropping like flies. The terrorists want to kill me and that’s why we have to stay in Iraq. I’m not too worried about all that. What am I worried about? Well, thanks for asking.
I’ve been watching a disturbing trend on Wall Street. It’s not the bulls or the bears who’ve got me all atwitter. It’s the fat cats.
The stock market isn’t perfect. Insider trading is par for the course no matter how many Chinese walls a firm builds. The fees that most mutual fund managers charge are ridiculous. Given all this, the average person with aspirations of eating better than their cat in their old age can feel like they’re participating and maybe make some cash in the long run. I’ve heard pundits describe the stock market as a wealth-generation engine for the middle class. I wonder how many giant, Class A motorhomes have been bought with stock-market spoils? Recently, the common classes are simply being shut out. We’re not even invited to the party.
Investment groups and private equity firms made up of folks with a lot of cash are stepping in to take companies private. Take, for example, Cerberus Capital Management buying Chrysler off of Daimler’s hands for $7.4 billion. Why would they want to do this? They paid $36 billion for it just nine years ago. It has hundreds of thousands of cars sitting around unsold. It’s weighed down by healthcare and pension commitments.
I think it’s been well established that if you have enough money, you really don’t have to play by the rules that everyone else has to follow. There are so many advantages for the company and investors. The pool of investors is usually smaller and less heterogeneous, which allows the company a little leeway. No quarterly earnings reports need to be scrutinized by the public market. Most importantly, you don’t have the SEC breathing down your neck and poking their nose into your business. You don’t have the onerous mass of Sarbanes-Oxley weighing you down. You’ve got nothing but relatively unfettered capitalism generating more billions of dollars for you and your billionaire pals.
That’s why they’re doing it. The Cerberus folks see a bargain with a lot of upside.
I think that folks with large piles of cash should be able to shift it around to their advantage. So what has my knickers so twisted? I find it a little sad that these folks acting in their best interests only emphasize the continuing consolidation and stratification that is dividing so many nations. Russia looked hopeful for a bit there, but Mr. Putin has killed that potential with polonium-210 or high-velocity lead. Hugo Chavez’s Bolivarian Revolution gives voice to some important issues, but only the very rich and very poor are benefiting.
So what’s a solidly middle-class American to do? I guess I should tow the boat to the lake with my Ford Excursion, catch some rays, drink some beers, and listen to some tunes. Dood.