The “liquidity event” is back. With stock markets around the world rising on a tide of printing-press money, IPOs, mergers and acquisitions are red-hot once again, turning corporate insiders into billionaires overnight. And — no surprise here — the companies that are most closely tied to the funny-money business itself are spawning billionaires the fastest of all – faster, even, than Forbes magazine can make room on its list of 500. Just one new, hitherto unheard of paper-pusher alone, Swiss commodity-trading firm Glencore, will likely add at least six billionaires to Forbes’ roster when it goes public. Its CEO, Ivan Glasenberg, who owns 15.8% of the company, could be worth $60 billion after the big day. Perhaps Facebook founder Mark Zuckerberg went into the wrong business? He’s only worth a measly $12 billion at the moment, and it seems unlikely he’ll surpass Glasenberg, since Facebook, which has yet to develop a solid revenue model, is expected to fetch only $50 billion when it goes public. In the meantime, poor cousins like General Motors continue to grind out profits the hard way – i.e., by selling their stake in financial subsidiaries that are making money hand-over-fist the new-fashioned way.
Fortunately, however, some of the lucre has begun to trickle down to the little guy. The Ackerman household, for one. We recently received a letter from Well Fargo bank informing us that they were “very pleased to bring [me] some good news!” I knew the news was going to be good indeed, since the opening sentence was in boldface – and with that exclamation mark!! Were they perhaps going to reward me for being a loyal customer for 30 years? Well, yes. But my heart sank with the next sentence: “We have lowered your annual percentage rate as noted in the table below. The lower rate applies to both your existing balance as well as any new transactions.” Hmmm? So it appears they won’t be sending me anything. But perhaps I’ll still come out of this with a winning deal, I thought. After all, hardly a day goes buy when I don’t receive a solicitation from some bank urging me to borrow money for a year or two at zero interest. Was Wells Fargo prepared to make me an even better offer? No such luck. As it happened, they had merely lowered my annual percentage rate for purchases and balance transfers to – are you sitting down for this – 20.25%!! Who said these guys don’t have a heart? This is sharing the wealth in the finest tradition of American capitalism. Now all I gotta do is find the next Glencore to invest in, so that borrowing $100k at 20% to do it will seem like a stroke of genius.
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Can anyone explain to me who will buy the gov’t bonds once the Federal Reserve stops its QE2 buying program when treasury rates are so low and inflation is supposedly all around?