by Eric Zeusse for the Saker Blog
Just as the corrupt U.S. Government is bailing out owners of U.S. corporations while the American public experiences a recession that is heading into a depression, the corrupt German Government likewise is bailing out investors. It’s not illegal for the Government to do that — not even when the corporation that they might bail out next is the nation’s flag-carrying airline, which already receives unfair advantages in competing against other airlines in that country.
The German Government has offered to bail out even the wealthy investors who control the already governmentally favored but privately investor-owned airline Lufthansa, but those super-rich investors demand that it be an unconditional bailout, and negotiations are continuing. On May 5th, the “Flight Global” site bannered “Lufthansa reluctant to accept state aid with conditions attached”, and reported that “Lufthansa Group is holding ‘intensive talks’ with governments in Germany, Austria and Belgium about the provision of state aid.”
The very idea that the general public, the nation’s taxpayers, should ever absorb any losses of any private stock-investors, constitutes the very essence of “socialism for the rich, and capitalism for everybody else.” That is the essential core of fascism, or as Benito Mussolini sometimes called his economic and political system, “corporationism” (control of the government by the owners of corporations), but it is antithetical to any democracy, which is ruled only by its public, not by only the richest of them, who, in any country, own almost all of the corporate stock.
Any corporation that (like Lufthansa is now doing) threatens the government with going out of business or otherwise laying off employees en-masse during what has become a general financial collapse, should instead be promptly and automatically nationalized — taken over completely, at its then-prevailing stock-value — and the stock in it subsequently become sold by the government after the crisis is over, but, at first, then, made available only to its employees (and with low-interest loans being made available to them by the government, in order to enable any and all of them to participate in owning the corporation that employs them), and only subsequently made available to the general public, as a mere investment-gamble.
The only justification for anyone’s owning corporate stock, ever, is that the stockholders agree to take on all of the financial risk that the corporation’s bondholders have not taken on. (Bondholders get paid interest before stockholders get paid dividends.) If, instead, the general public, including all of the taxpayers, are taking on this financial risk, then it is only fair that the public (as represented by the government) will also be appointing, during the economic crisis, all of the corporation’s directors: the corporation will be promptly nationalized. After the economic emergency is over, the corporation will then be re-privatized, first to its employees, and then to the public. No corporation ever should be bailed-out by the government, on any other terms than to nationalize it, on this temporary basis. Either a corporation’s stockholders will fulfill the function that stockholders are supposed to fulfill (as being a sump for the corporation’s financial losses), or else their corporation will be promptly but temporarily nationalized, on this basis. Then, the stockholders will get paid fair market value for their stock, which is far more than they will receive if the corporation simply goes bankrupt — declares itself unable to fulfill its contractual obligations to its bondholders.
That is the way things would function in any democracy.
On April 9th, the Zero Hedge financial site explained in detail why even bailing out the airlines would hurt the economy more than help the economy. It quoted an extraordinarily honest investor, Chalmath Palihaptiya,
“This is a lie that’s been propagated by Wall Street. When a company fails, it does not fire its employees…it goes through a packaged bankruptcy…if anything, what happens is the employees end up owning more of the company. The people who get wiped out are the people who own the unsecured debt and the equity…but the employees don’t get wiped out and the pensions don’t get wiped out.”
[…]
“And if a bunch of hedge funds get wiped out — what’s the big deal? Let them fail. So they don’t get the summer in the Hamptons — who cares.”
But do we have a democracy?
Bailing out the public (workers and consumers) so that they can afford to continue living — and buying, and working — is the right thing to do in an economic crash, but not bailing out investors. What do investors get their incomes from? It’s not from their work, it’s only from the investment risks that they take on, the financial risks that they have agreed to accept. If the government transfers any of those risks onto the public, then the government must nationalize the corporation, because the ONLY value that investors provide in the economy is as a sump for financial risks. That’s it, and that’s all.
Any nation which transfers any of those risks onto the public is criminal — it is taking from the poor and middle class in order to keep the rich rich. It is retroactively dictating to the public: Here is now the deal: heads the investors win, tails you the public lose. That wasn’t supposed to have been the deal. If it retroactively becomes the deal when investors overall are losing money instead of making money, then the government is simply crooked; it is just a bunch of con-artists.
Apparently, the German Government (like many others) is corrupt — it’s transferring risks off of investors and onto consumers and workers. That’s Robin Hood in reverse — exactly the type of situation that governments are supposed to outlaw, and to label as being “theft.” Is it not “theft” when the richest do it? It is transferring onto workers and consumers the ONLY value-added, the only real service, that investors are supposed to be supplying, which is their serving as a sump for risks. If any of that risk-burden is removed from investors and transferred onto the public, then all of their property should automatically become property of the state. No decent government bails out investors — ever. Only criminal ones do, such as the U.S. Government.
If a government legalizes what is authentically (one might even say “in natural law”) criminal to do — such as to take from workers and consumers and give that to investors (and this is what is now commonly but deceptively called ‘democracy’) — then the ultimate criminal has become the state itself, and a revolution is needed. That’s practically the definition of what a revolution is for. Things are that bad in the United States, but in how many other countries is it likewise the case?
Perhaps we are about to find out.
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Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.
It is very strange to see the very same western governments and corporations do the exact same thing that they did in 2007-2008, in just about the very same way, with just about the same arguements and quasi-justifications, due to exacly the same underlying cause.
Again.
Still.
Weird, right?
Not really. Most just call it “the plan.” Not even discrete about it anymore, are they? Then again, why would they need to be?
One could be forgiven for suggesting this all looks to be orchestrated. We don’t want to be accused of spreading conspiracy theories, do we?
I would say, it was not centrally planned ahead, so it is no conspiracy in the strict sense. But of cause everybody uses the chances they see, and with 20-30 years of practice this works quite effective.
One thing we do know is that after the employees take stock in a company, it keeps the company alive but is likely to make a profit and ans such continues to go thru bankruptcy’s so as to restructure its debt. The need to use short cuts or rely on military adventures rarely brings it the status it once had. Sucker investors are usually the victim of choice.
Absolutely agree.
One minor correction – it is the German tax payers that are bailing out the corporations. The German government is the corporate’s middle man.
Anonymous
Yes, that is correct. Almost the same thing in the US, the difference being that a heap of freshly printed dollars are also thrown in.
Eric, you may be right at the very concept level. Chamath may be right as long as we see what he’s doing with S+C and how much he walks the talk.
However, its’ not that simple. Every country has champions, like it or not. Just like Ike said “What’s good for GM is good for USA”, it may apply to LH too. It employs too many, and it’s Germany’s soft power. Not Becks, not Siemens, not Bosch, not BMW/Mercedes/Audi.
However, LH reaching for give me money and leave me alone is like putting a gun to your own head and threatening to pull trigger.
Bankrupcies are not that simple as Chamath says, and it comes down to who’s senior in debt, etc… Employees will get screwed and may have to loose a lot like pension, perks for a long time to come to keep their job.
However, LH asking for give me money and leave me alone is unheard of. Probably they hold better cards than we think.
BTW, they may see the same happening to AAL, DAL, UAL where $50B has been pumped in and the govt has not asked for a single share. All it wants them to do is keep flying to all destinations they did pre covid, atleast once a day to keep the money.
Just to chime in on LH and soft power. In previous crises, Canada’s airline, Air Canada, was bailed out on the grounds that having a national airline is a national security concern, for better or worse, or some such reasoning. Can’t have out-of-country airlines providing all the service for obvious geopolitical reasons?
I have a simple answer for you. Delta Airline will NEVER fly to Bathurst New Brunswick or Wabush Labrador, ect ect. Not the most profitable routes I admit, but they are needed as we are a vast land.
There is a minimum service requirement that would be impossible to have with an out of country carrier. Its easier to legislate a crown corporation is it not?
No surprises here. JMafia vassal state Germany redirects German folks’ tax money to its JMafia assets – Lufthansa, Siemens, Volkswagen, Deutsche Bank, Mercedes, and so on …
Good argument above. I do think we are about to find out. However, successful revolution as opposed to riot requires organization. Where will the organization for revolution come from? Who will stand with the revolutionaries when push comes to shove?
I know of two revolutions which created more death and sorrow for little people ,French and Bolshevik’s revolution. Naive people were lead to believe in new gospel of freedom. Both revolutions coming from establishment (Kabbalist )smooth operators. For the mystery of iniquity does already work, and works to deceive many who will not believe the Truth. Eric, looks like you are testing waters here on this platform. Make the stand , go out, start the revolution. That book of yours CHRIST’S VENTRILOQUISTS is the real iniquity at work, trying to take away faith from seekers of truth. You are very aware that one is able to kill with words, but Christ’s word will prevail. God bless all.
Why the harping on *temporary* nationalisation, Eric? Large swathes of the economy of any – genuinely – democratic state need to be public service utilities, strictly separate from all commercial considerations, publicly owned, run only for the general public good, and offering the greater efficiency, cost-saving and genuine, *principled* public service which such arrangements always make possible, compared to the mafioso extortions of gangster-capitalism.
Efficiency and cost-saving has been the excuse, of course, for all the neo-liberal privatisation of everything that’s been pushed onto us this past forty years. But that was always a smokescreen of deceit, blown at us to cover the theft of our public commons and public utilities, by the gangsters and their bought politicians. An arrangement which lead inevitably to greater inefficiency, and higher costs, to cover the non-productive parasitism of the rentiers/investors.
Moderate democratic socialism, with some moderate-scale free-market enterprise permitted to a strictly limited extent, is simply a superior way to run a country, compared to gangster-capitalism, which always seems to lead in the end to the sort of crypto-fascist oligarchy which now runs the US; and which is now running the US republic into the ground, and into the decline and fall of its empire: a catastrophe of corruption, criminality and utter gibbering incompetence.
Moreover, even those permitted free-market enterprises in a socialist state will be pretty nearly bound to do best if they are fully worker-owned cooperatives, with outside funding coming when needed from nationalised, worker-owned banks constitutionally obliged to serve only the legitimate investment needs of the citizens’ commonly-owned enterprises.
And before anyone starts scoffing about the impossibility of such an arrangement, take a long, educative look at the astonishing effectiveness of the interlocking cooperatives – public banks included – of the Mondragon phenomenon, in Euskadi, the small nation between Spain, France, Galicia and Catalonia, in the Iberian peninsula. That offers all the on-the-ground, fully-functional, and *thriving* proof that anyone needs that such ideas are eminently practical.
Just about any economic system would be better than the omni-shambles which is currently destroying the Anglozionist empire. Moderate, mixed, democratic socialism, with worker-owned enterprises as preached constantly by Richard Wolff, and as proven magnificently in practice by the people of Euskadi, is simply in a different, inherently superior league.
Indeed, I think we are about to find out how many other countries are run by crime gangs! I think the answer is going to be most! The Federal Reserve is not just the central bank for the U.S. It is a major arm of the international banking cabal and they are funneling huge amounts of money to various governments around the world, consolidating what they intend to own. I’m afraid the moment of truth is going to come even for Russia who also has a central bank controlled by this cabal or cartel. Will they fold to the will of the cartel or set course for different world order?
I basically agree with the author, but i was thinking of another possibility to make sure not to subsidize profits:
It would be enough that every big company has to prove that itself and none of it’s owning companies pays out any profits in order to qualify for subsidies of any kind. This should not only apply to bailouts, but to any subsidies. I think if you pay out profits, that proofs that you don’t need help from the state. No tax cuts, no cheaper energy, no scrapping bonus (Abwrackprämie), no agricultural subsidies, just nothing. Lufthansa is for example one of the biggest receivers of agricultural subsidies in Germany.
If a company can not prove that no profits are payed out because of a holding in a tax heaven, tax heavens are a bad idea and loose a lot of their advantages. And so there is no need for a list of official tax heavens that could be manipulated or unfair to usual companies residing there, as the only question is if the owning structure is transparent and provable.
Xlnt post, sums it all up. To me, it seems big business is more a racket than a business these days – unless they get a special deal from the host Gov. They will bail or fail. Governments have also failed their people, as they seem to just provide an accepted ‘legal’ framework to tax, pass oppressive laws and run protection for the corporations. Cynically, maybe this is the whole ‘democratic’ charade purpose.