Saturday, October 11, 2008

Big Money Boys Perpetual Hand Out

Uncle Sam stocked the financial rescue buffet with more goodies for big money men. Wall Street requested stock purchases, guarantees of interbank lending, insuring exchange trades, and tax cuts.

Private equity underwriters joined their commercial bank counterparts in demanding lower taxes. PEU managers already benefit from preferred taxation on their "carried interest" income.

Pete Peterson, a founder of Blackstone Group, wants to cut entitlement spending without having PEU boys pay a fair share of their ample income. His foundation barnstormer, David Walker, wouldn't give on this point in yesterday's CNBC interview, even under the huge tax weight of the bailout.

To garner their 20-25% annual returns, private equity seeks firms with growing chunks of government business. But they hate paying taxes. Apparently emptying the federal coffers is O.K., but it's a sin to fill them with PEU managers' tax money.

Yes, our nation faces hard and difficult choices. Supplanting the old system of greed that undermined the foundation of storied Wall Street firms, with a newer, private, SuperReturn version doesn't change underlying causes. Greed remains.

The projected change may look impressive, but it's not radical. Wait to see the impact of steroids on PEU's. George Bush wants to "pump them up." The American taxpayer's wallet is clearing the deck for that to happen. SuperReturns for the new financial Supermen...