Sunday, May 10, 2009

Business Investors Set to Win

CSPAN reported White House economic adviser Christina Romer wants a U.S. recovery based on business investment. Who best represents the investment class? Private equity underwriters (PEU's). PEU's include Pete Peterson of the Blackstone Group, Tim Geithner's sponsor, and David Rubenstein of the Carlyle Group, the recipient of his own Congressional bill (signed by President Obama this week).

Private equity looks to avoid regulatory oversight, even while nesting under Treasury's emergency rescue umbrella. President Obama's plans leverage private investment. Financial services has PPIP and infrastructure the National Infrastructure Bank. The PEU boys have billions designated for both areas.

How can the Obama team lever private investment? First, Uncle Sam becomes the bank, the lender for public private partnerships. Then it implements tax policy that helps the business investment class. The Obama stimulus plan included a $25 billion break for firms buying back debt on the cheap. Blackstone and Carlyle benefit mightily.

How can the President talk populist tough, but deliver powder puff regulations and tax changes benefiting the PEU boys? His advisers are quite chummy with the Wall Street corporate class, Tim Geithner, Rahm Emanuel, Larry Summers, and David Axelrod.

Tough talk may get a threat or two in response. The PEU boys often threaten to take their money to a more tax friendly environment. Where are they going? Geneva, Gibraltar, Zurich, Monaco, Hong Kong and Singapore. Don't forget Dubai or Mumbai! The big money boys don't want to pay.

The race to the lowest global common denominator on worker pay/benefits and taxes continues. Obama carries the baton for the business class. Who's looking after you? It's not a corporate controlled Congress.