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Wednesday, September 2, 2009

Corporate Welfare for China

This article was interesting.

The Federal government has set up various taxpayer-backed investment funds comprised of "toxic" mortgage bonds. China's government is investing $2B of its dollar reserves in that fund. This is only a tiny slice of China's $200B "sovereign wealth fund".

These "sovereign wealth funds" are owned by China and oil-exporting countries stuck with huge dollar reserves. It's disturbing that the primary investor in US corporations is the US government and other governments. This is an example of corporations being literally branches of the State.

Both China's government and the US federal government are contributing money to that investment, but all of the profits will go to China's government. Also, a US investment firm will earn commissions on the transaction.

China is getting a slice of the bailout pie. It is necessary to give some bailout money to China, lest they complain they're getting ripped off on their dollar reserves.

These bailouts and corporate welfare arrangements aren't free. They're paid by everyone else as higher inflation or higher taxes.

1 comment:

Anonymous said...

Good post.

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