Wednesday, October 1, 2008

The Collapse of Capitalism and Free Market

1. USD1.2Trillion was wiped off from the US stock market 2 days ago. Main street was furious about the proposed USD 700B bail out plan and the plan was voted out by both Republicans and Democrats. This is the sign of the collapse in America's capitalism and free market built by the super class and untouchable hedge fund managers controlling trillions of dollars worldwide.

2. Unfortunately, the fall will be cushioned by tax payers money eventually because of the Fed's intention to help save the market and avoid another major recession. The super class continues to enjoy their martinis on a 100-ft yatch in Spain.

3. The top 250 companies in the world makes roughly USD14Trillion, more than the US GDP of USD13.2Trillion and EU at USD13.7T. Policies and trade agreements will continue to be dictated by major corporations and congolomerates, not governments. Unlike governments whose authority has boundaries, corporations can pack and leave in this borderless world.

4. Rockefeller, the famous US oil mogul, built an enormous oil monopoly in the form of Standard Oil which was broken up to several companies including Exxon, Mobil, Chevron and others after the US courts charged him for violating the Anti-Trust Laws. The major oil companies were then identified as part of the Seven Sisters. Because of the enormous influence in the cartel, the Arabs decided to form OPEC in 1961 to curb that influence. Now Exxon has 'merged' with Mobil 10 years ago and is raking in almost USD400B of revenue. Lee Raymond retired with a golden handshake of USD357M. Chevron merged with Texaco in 2001.

3. The top 5 oil companies have spent almost USD200M lobbying between 1998 and 2005. Exxon has ties with powerful people in Washington including Former speaker of the house, Illinois rep Dennis Hastert, who later pushed for drilling in the Arctic. Now Sarah Palin, the governor from Alaska and Senator McCain's running mate for the VP race, also is pushing for drilling in the sacred Arctic National Wildlife Refuge.

4. In the months prior to 9/11, Dick Cheney was tasked to re-evaluate the US energy policy. Roughly 300 meetings were held between him and reps from Exxon, BP, Duke Energy, other industry groups including Enron Chairman, who happens to be a strong Bush supporter (Enron filed for bankruptcy in 2001). Cheney then became Halliburton CEO and Halliburton was awarded multi-billion dollar contracts in Iraq for logistics and military supplies. Condolezza Rice was director at Chevron for 10 years before becoming the US Secretary of State.

5. The top 7 companies with more than USD500k political contribution are Goldman Sachs, Citi, UBS, Meryll, Morgan Stan, Lehman, Bear Stearns. We saw earlier the collapse of Bear Stearns and Lehman Brothers. Warren Buffet pumped in capital into Goldman Sachs.

6. Goldman Sach has been a world renowned investment bank since 1889. Its revenue was close to the US70B mark and the average employee salary was USD600k a year. Its CEO has been taking pay checks worth USD 54M and the top 20 executives have been withdrawing close to half of that each. At Lehman Brothers, the average employee salary was close to USD 300k/year.

7. Because of the recent subprime mortgage crisis, Wall Street greed, unregulated hedge funds playing up the market and manipulating oil price, over-compensated CEOs and top executives and other political and business interests, we are seeing the collapse of an intricate global network of investment banks, military-industrial complex, oil companies and politicians (who have background in the same companies involved whether in the board or as CEO).

8. Senator Obama wants to regulate the market if he becomes POTUS and does not believe in the invisible hands that 'correct' the market.

9. We are also seeing a shopping spree by Middle Eastern and Asian funds which are cash-rich. Singapore's Temasek pumped in US5B into Meryll Lynch to keep her afloat. China invested US 3B into Blackstone, a renowned private equity firm in the US and the second biggest in the country.

10. The US and IMF criticized Malaysia for its pegging initiative and strict forex control in 1998. Now they are replicating exactly what Tun Dr Mahathir did by regulating hedge funds (a bill was passed in Congress a few months ago to control the oil price due to speculations) and bailing out drowning companies.

11. It will be interesting to observe how this chain of events will affect us all.

2 comments:

joe said...

For No. 9, it's interesting (for a more complete picture) to note that both investments, which was made much earlier, have lost a lot of value since then.

bats said...

good post. keep it up man.

i think you'll find that these average employee salary figures tend to be a little skewed because they often include executive employees as well.

if the incoming US gomen adopts a hardline approach (unlikely, but who knows) then the ripple effect on the world market will be long and sustained. as i type this, there's a re-vote on the bailout package, albeit a slightly modified one.

your lee raymond golden handshake line blew me off my chair.... just staggered back on to it.