Saturday, March 10, 2007

Corporate Welfare & Corporate Greed

Corporate Welfare

World's Biggest Corporation is a Welfare Queen - Wal-Mart Has Received More Than $1 Billion in Economic Development Subsidies: Wal-Mart presents itself as an entrepreneurial success story, yet it has made extensive use of tax breaks, free land, cash grants and other forms of public assistance," said Philip Mattera, research director of Good Jobs First and principal author of the study. Visit "The Shame Page" and find out 'What is New' plus 'Old Links,' and 'Corporate Welfare Classics' and you can take a quiz, plus more to check out! Toronto Star: Corporate welfare alive and well by Carol Goar
Canada: Read the article in Macleans, March 26th, 2007, page 42. 'Slush' Money? Critics say Ottawa is back in the business of corporate welfare by Jason Kirby. In case you can't find the article, I'll include a few quotes from it, as follows:
... "Corporate welfare is a failed policy both in terms of job creation and economic growth," says Adam Taylor, national research director of the Canadian Taxpayers Federation in Ottawa. "All the programs in the past have proved that point, and any new program will prove that point again." Set up in 1996, TPC's stated goal was to help companies in research-heavy industries compete by offering them repayable loans. Plenty of cash rushed out the door, but not much has made it back. By the federation's count, more than $3 billion has flowed through TPC, yet the federal government has recouped barely $170 million to date, a far cry from Ottawa's initial promise that each investment dollar would yield $1.74 in repayments.
Over the years, the program's biggest beneficiary by far has been Quebec's aerospace sector. Of the five largest recipients of TPC loans, four are located in that province-Pratt & Whitney, Bombardier, Bell Helicopter, and flight-simulator maker CAE. Ottawa has forked out $1.8 billion to P&W alone, according to Taylor ... [end of quote]
Anyhow, you get the idea. Those are big numbers behind the dollar sign. Corporations get welfare, like free money, and they don't create jobs or benefit the economy. Did you ever wonder why the government gives away such huge sums of money to corporations when we have homeless on our streets, poverty amongst children, suffering social programs aimed at being "our brother's keeper," etc?
Here is another issue: Eliminate student debt, free tuition, education for the masses! What the ....? What would happen with an educated populace? The only reason why we have the incompetent, nincompoops that we do have in power is that the general public are disengaged from politics. How many people are caught up with Texas Hold 'Em, sports, Anne Nicole Smith or some other monthly issue of little merit, or anything else as a distraction from the realities in the real world? Should World War III concern us? What would happen if Bush attacks Iran? Should we read, listen, discuss, or write about world events? Should we become informed? Or should we bury our heads in the sand and pretend all is well in the world? I know what I'm going to do. What are you going to do?

Corporate Greed
Ponzi Schemes: The Haul Gets Bigger, but the Fraud Never ChangesBy Eduardo Porter
December 27, 2008
One hears anguished commentary about how Bernard Madoff’s gargantuan fraud epitomizes the self-defeating excess of high-tech finance — his fall the embodiment of the fall of modern capitalism. But while $50 billion is a lot of money to defraud, there’s nothing particularly modern about Mr. Madoff’s ethics or technique.
Ponzi schemes are among the oldest in the books, long preceding the stamp arbitrage scam engineered in the 1920s by Charles Ponzi, who gave the fraud its name. They have been practiced by hundreds of scammers across the world. And they usually end badly.
The oldest documented case dates back to 1719, when John Law, a Scot, offered investors stock in a French company trading up the Mississippi River, promising returns of more than 40 percent a year.
More recently, from Romania to Russia, Ponzi schemes became de rigeur as former Communist countries embraced capitalism. In Albania, half the population invested an amount equivalent to the nation’s entire gross domestic product in an enormous Ponzi scheme before it collapsed.
In April last year, authorities in Wazirabad, Pakistan, arrested a former high school teacher who reportedly took nearly $1 billion from starry-eyed investors. And a few weeks ago, the Colombian government declared a state of emergency because of rioting over some closed Ponzi funds.
Some say that Mr. Madoff’s fraud is a harbinger of the downfall of the 21st-century’s frenetic variant of capitalism. I would suggest that it underscores how stable the strategies and the institutions of finance truly are. What changes are the scale and the technology. The ethical shortcomings remain.
And Mr. Madoff’s strategy doesn’t just recall that of snake-oil peddlers of yore. It is strikingly similar to that of the brokers and the financiers who built lucrative legal businesses convincing investors that something — Internet stocks, American homes, Dutch tulips — would appreciate forever for some superspecial reason.
What’s a Ponzi scheme but an illegal ruse to entice the gullible with the promise of too-good-to-be-true returns in arcane investments using an intimidating cloud of abstruse financial lingo? Ponzi frauds have the defining characteristic that returns to the first batch of innocents are paid from the money invested by the second batch. That sounds a lot like today’s American real estate market.
And Ponzi frauds often have similar ends to our increasingly frequent bubbles. Not only do they both usually collapse, but so many rich and influential French investors were taken by John Law’s fraud in the 18th century that the government felt compelled to bail them out. According to Utpal Bhattacharya, a professor of finance at Indiana University, it exchanged the investors’ worthless stock for bonds secured by Paris’s municipal revenues.
There are, of course, important differences between fraud and standard financial practice. Crucially, bubbles are powered by fools of increasing gullibility, who are willing to pay an even greater price to buy an asset from the fool that bought it in the preceding round. Ponzi schemes only require that their investors be foolish.
Yet these details do not negate the larger paradigm of finance, old or new: getting investors’ money requires a story. It doesn’t have to be true.

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