Thursday, June 28, 2007

Peter Peterson's Felicitous Timing; China is HIS Friend

While we're quoting Tonelson, he brings to our attention a most curious co-incidence.

Or maybe it's not co-incidence.

No individual today launders more ideas than [Peter] Peterson, who is Chairman of both the Council on Foreign Relations and the recently renamed Peterson Institute for International Economics, and who not-so-incidentally runs the Blackstone group – Cerberus’s biggest peer in the private equity world.

Both organizations employ the typical think tank tactic of using an impressive-looking array of experts to churn out libraries worth of materials lauding the outsourcing-focused U.S. trade policies that fatten the profits of their Fortune 500 and other plutocratic benefactors. Their paeans to a borderless world, where megacorp[oration]s are free to organize a race to the bottom for domestic businesses and workers everywhere, no doubt has made life easier and more lucrative in countless ways for the Blackstones of the world. But the direct contributions of these institutes to the company’s bottom line were surely limited.

No more.

As resentment over China’s predatory trade practices and alarm over China’s growing miliary power reached new heights in Washington this spring, both organizations headed by Peterson released major reports aimed at reassuring policymakers and the media that U.S.-China relations were in fact proceeding just swimmingly, and urging elected politicians to resist public calls to rock the boat – especially on trade. And almost immediately after their release, Beijing made an investment in Blackstone big enough to make even a multimillionaire like Peterson much, much wealthier.

Just co-incidence.

In any event, the China policy status quo endorsements sponsored by Peterson’s institutes seem to have reaped a stunning reward for their boss. Scant days before the Strategic Economic Dialogue began, Blackstone and China announced that Beijing would pay $3 billion to acquire a 9.7 percent non-voting stake in the private equity group – just under the threshold that would trigger regulatory scrutiny in Washington. Blackstone sold the shares to China at a 4.5 percent discount to the planned price of Blackstone’s upcoming initial public offering, and China’s investment enabled the firm to boost the IPO float by 75 percent, to 7 million shares. In return, China agreed to hold the shares for four years, and not to sign similar deals with any of Blackstone’s private equity competitors for the same period unless Blackstone approves

The China deal will enable Peterson himself to gain $1.88 billion from the IPO while still holding a stake in Blackstone worth more than $1.3 billion.

And somehow the intrepid reporters of the Wall Street Journal missed it.

...the indifference to obvious signs of a wildly lucrative Peterson-China connection is more disturbing. It’s undoubtedly the latest sign that idea laundering, far from being exceptional in American politics and policy, is steadily becoming the norm.

MUCH more at the link--including John Snow's Cerberus/Chrysler/Japan situation.

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