Get a load of this, from Lisa Graves at The Nation:
Fix the Debt financier Peter G. Peterson knows a thing or two about debt: he’s an expert at creating it. Peterson founded the private equity firm Blackstone Group in 1985 with Stephen Schwarzman (who compared raising taxes to “when Hitler invad- ed Poland”). Private equity firms don’t contribute much to the economy; they don’t make cars or milk the cows. Too frequently, they buy firms to loot them. After a leveraged buyout, they can leave companies so loaded up with debt they are forced to imme- diately slash their workforce or employees’ retirement security.
In 2006, Blackstone ransacked Travelport, a travel reservation conglomerate, piling on $4.3 billion in new debt, then pocketing $1.7 billion to pay shareholders and itself.
Travelport promptly fired 841 workers to meet its new debt obligations. It was a great deal for Blackstone but “a horrible one for Travelport,” according to one investment adviser, who described Blackstone as trading in “poisoned waters.”
Now Peterson wants to loot Social Security. For decades he has warned of a “Pearl Harbor scenario” in which spending on Social Security and Medicare causes an epic economic meltdown. Fix the Debt is only his latest project pushing the message that the deficit poses a “catastrophic threat,” and the media have been content to echo his warnings. But people should know better than to be frightened by this chorus of calamity. Peterson is no master of prediction when it comes to economic crises. When an actual threat to the economy—the $8 trillion housing bubble— loomed ominously overhead, Peterson said nothing, even as credit markets froze, subprime lenders filed for bankruptcy and economists like Dean Baker shouted from the rooftops.
The housing crisis provides a good window into the way Peterson operates. In 2007, Blackstone owned the Financial Guaranty Insurance Company, the world’s fourth-largest insurer, which had branched out from municipal bonds into home-equity securities and subprime mortgage debt. FGIC went belly up in 2010, but by that time Peterson had sold most of his shares in a Blackstone IPO that netted $4 billion. Again, Peterson left oth- ers holding the bag. The AFL-CIO had warned the Securities and Exchange Commission that the Blackstone IPO was riddled with problems: the firm was structuring itself to avoid regulation and its real assets and values were unknown. Perhaps Chris Cox, George W. Bush’s man at the SEC, should have listened. A year later, Blackstone’s value had dropped 40 percent. Today, it is trading at $18 a share, showing no signs of the recovery that other Wall Street firms have enjoyed.
Blackstone shareholders may have been miffed, but Peterson walked away with $2 billion (on top of the fortune he already made from the carried interest tax loophole, which allows fund managers to be taxed at 15 percent rather than the standard 35 percent)—and pledged to spend half of that to convince Americans they have to take a harsher route to prosperity.
Yes, Mr Prudent himself, the man who “worries” for your grand kids, has been looting his shareholders for decades. I guess he knows a thing or two about debt, but not in the way you think.
I knew he was a phony, of course, by the fact that he didn’t say a peep when the budget was in surplus and the Democrats wanted to use it to shore up Social Security. (I guess he was too busy counting his billions during the tech boom to take the time.) But the minute President Bush pushed through his tax cuts (it’s yer muneee!) Peterson jumped back into the fray screaming that the sky is falling, we must cut Social Security.
Peterson is the guy who said two decades ago that he didn’t think America could afford to pay anymore for Americans’ “vacations”. He was, of course, referring to retirement. He literally thinks people should keep working until they drop dead. After all, he’s busy working well into his 80s — ripping off companies, laying off workers, scamming his shareholders and subsidizing projects to ensure that America’s already meager social insurance programs whither away and die. Why shouldn’t waitresses and travelling salesmen keep working too?
He is, in short, a horrible person of Dickensian proportions.
His most recent creation, Fix the Debt, is a scam. And the Center for Media and Democracy have done what the Village media should have done a long time ago if they wren’t so in thrall to Peterson and his plans for ritual human sacrifice: put together a dossier on the man:
Today, CMD is pleased to unveil — in partnership with The Nation — a new resource on the Campaign to Fix the Debt for the public and the media, that exposes the leaders, the Peterson-funded partners, the phony state chapters, the lobbyists and the stunt men (who convinced Alan Simpson to dance Gangnam Style) behind this massive PR effort.
This package includes:
Lisa Graves, Pete Peterson’s Long History of Deficit Scaremongering, The Nation.
John Nichols, The Austerity Agenda: An Electoral Loser, The Nation.
Dean Baker, Fix the Debt’s Fuzzy Math, The Nation.
Mary Bottari, Pete Peterson’s Puppet Populists, The Nation.
This is a great resource. I urge you to use it by sending the link and some notes to every media parrot who screeches that the sky is falling if we don’t “deal with the deficit” immediately. We’ve got almost 8% unemployment in this country and it’s not getting any better. And our grandchildren really are under a looming threat that none of these people could give a damn about — climate change. This entire conversation is an absurd misdirection by disaster capitalists who are determined to re-order our society to their advantage — and the wealthy elites who want so badly to believe them.