Secondary Markets
The most unexpected things define our realities. We're cut
off from the truth, not because we can't handle it, but because "journalists"
won't compromise their access to the people who are lying to them. Then RSS
and blogging and Google come along
and
we're
surprisingly more connected to the nuances that have always been
under-reported by journalists.
Secondary markets could be an equally surprising contender
as the blogware of nation-building finance. "Secondary market" is the name
for
a capital
market for
investment instruments bundled into large offerings. When these instruments
are sold, they yield very large amounts for whatever purpose the underlying
debt serves.
Plain English:
- You get a $10,000 student loan by signing forms
that are exactly the same as a million other student loans
- Because they conform to its student loan standard, all the loans are guaranteed
by the US Government.
- Your bank sells the right to
your
payments to an intermediary, which means your bank can make far more
loans than it could by using its own depositors' capital.
- The intermediary sells shares
in its $15 billion± portfolio of federally-insured student
loans
to investors.
- This allows large
and small
investors
to provide the funds that the government and the banks otherwise
could not.
- College tuition rises because there's so much money available.
- Many more students
spend spring
break
in Ft. Lauderdale.
Well, the intent is good.
The Policy Engine
Government policies are expressed through money. As the Republicans
have been proving lately,
if you control the budget, you control policy.
Let's deconstruct the essence
of government, which fortunately turns out to be less complicated than
we might think. About 700 people in
Washington, working closely with about 20,000 lobbyists, create laws. (Otto
Von Bismark once said, "There are two
things you don’t want to see being made—sausage and legislation," a
variation of the caveat against visiting your favorite restaurant's kitchen.)
Out of that fetid swamp of special interests some imperatives arise, and
so our destiny is bent to the will of the couple dozen or so people who
manage the perceptions and careers of those 700 people.
Once this spending engine revs up, the spending rules are
interpreted by the people in the Executive branch to mean what most excites
them. This
is
how
an appropriation is parsed into a $25 million Halliburton bridge. Cynical?
You bet. Once you've seen sausage or laws being made, you're likely to become
a disillusioned vegetarian.
But what about the Second
Superpower? As the peace-loving
majority finds its voice and collective will, how might a stateless consortium
of like minds exert their force to bring about what Dwight Eisenhower envisioned
40 years ago:
I like to believe that people in the long run are going
to do more to promote peace than our governments. Indeed, I think that
people want peace so much that one of these days governments had better
get out of the way and let them have it.
Follow the Money
It doesn't take a government to spend money. Big government
hires big companies to spend big bucks, whether needed or not. That's why
we're spending like Americans in Iraq rather than spending like Iraqis, who
know how to build bridges much less expensively than Americans. They'd probably
employ more people, taking idle hands off the stocks of rifles. As I said
last time, why not create web applications that are, literally, loan applications?
And work reports combined with PayPal requests. All this assumes you're
interested in redevelopment and not in funneling gobs
of money into select
companies.
In order to hire Iraqi companies and people to do what
you want them to do, you'd have to pepper Iraq with WiFi and ATMs and debit
cards. With
those
in
place,
people
could do useful things
and be paid for it, like the list from last
time:
- Credibly commit to build a $25 million Halliburton bridge for $1 million
= $50,000
- Deliver engineering drawings for the bridge = $50,000
- Start, continue, finish bridge construction, etc., etc., etc.= $100,000,
$100,000, $100,000
- Send a child to a non-religious school for a month = $10 (?)
- Teach in a non-religious school for a month = $500 (?)
- Guard a pipeline within view of one of the 100,000 new webcams = $25/night
Most importantly, it would
let people on the street experience an actual benefit from the occupation,
and
to feel
invested
in
a civil society. This is not the kind of program a traditional government
would even consider.
But the Second Superpower is not a government, just a consortium
of like-minded peaceniks. Even though war is very profitable for some, peace
is profitable for many more, with myriad options for profiting off productivity
and the capitalization to support it. A web-based rebuild Iraq portal would
create agreements as standardized as
student or
mortgage
loans.
Once
bundled,
they
constitute a debt package large enough for the capital markets to pay
attention to.
And enough capital to rebuild a country without the messy
inconvenience of occupying it.
2:26:58 PM 
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