The price of everything is going up (okay, not really, I know inflation is actually quite low, but lets put that aside), but the price for buying politicians has stayed remarkably low and stable. In fact, it may even be declining.
Politicians can be bought remarkably cheaply, considering the return on the investment. Consider our unlamented former governor, John Rowland. He steered millions in state contracts to his bribers, and what did he get? Some free repairs to his house. But Rowland, inexpensive as he was, was enormously costly compared to Chris Christie's New Jersey government. First, let's take a look at the return on investment:
David Sirota has carved out a much-needed niche lately by poking around in the unseemly deals between public pension funds and Wall Street predators, and he brings yet another scoop, this time in New Jersey:
Gov. Chris Christie’s administration openly acknowledged that more New Jersey taxpayer dollars were going to land in the coffers of major financial institutions. It was 2010, and Christie had just installed a longtime private equity executive, Robert Grady, to manage the state’s pension money. Grady promoted a plan to put more of those funds into riskier investments managed by Wall Street firms. Though this would entail higher fees, Grady said the strategy would “maximize returns while appropriately managing risk.”
Four years later, New Jersey has secured only half the promised results. The state has sent more pension money to big-name Wall Street firms like Blackstone, Third Point, Omega Advisors, Elliott Associates and Grady’s old firm, The Carlyle Group. Additionally, the amount of fees the state pays financial managers has more than tripled since Christie assumed office. New Jersey is now one of America’s largest investors in hedge funds.
The “maximized returns” have yet to materialize… Had New Jersey’s pension system simply matched the median rate of return, the state would have reaped roughly $3.8 billion more than it did between fiscal years 2011 and 2014, says pension consultant Chris Tobe.
…
The above-average costs for New Jersey are a direct result of Christie administration officials moving more pension money to Wall Street firms. The management fees those firms charge are far more expensive than the fees for passive index funds and the costs associated with equities being managed by in-house pension staff. Investments with Wall Street managers comprise less than half of New Jersey’s pension portfolio — but those investments’ attendant fees account for 96 percent of the pension system’s total overhead expenses, according to State Investment Council documents […]
via naked capitalism citing International Business Times.
Well, we all know the whole point of Wall Street is to make sure the rest of us get less and they get more. But bear in mind, we're talking billions skimmed from taxpayers here, and guess what it costs to get in on the action:
This amounts to Christie funding his presidential ambitions with New Jerseyite’s taxpayer money. He funnels that money to Wall Street managers, and they recycle a chunk of it back to him and his causes. As Sirota points out, the donations line up with when the firms got the contracts to manage the pension money. In one case, a contract went to the venture capital firm General Catalyst Group right after one of their partners made a $10,000 donation to the state Republican Party.
$10,000.00? Even if we assume the General Catalyst Group has only been able to skim a million dollars (and that's probably a fraction of what it actually got), their investment in the Republican Party would have cost them only 1% of their eventual return. The money is getting recycled back to Christie, but all he's asking for is the chump change falling out of their pockets. Who says America isn't a great country?
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