RAPE OF RUSSIA, CONNECTICUT STYLE
Well, no sooner said, than done, if this article shared by Mr. B. is any indicator. No sooner said than done? Rape of Russia? Connecticut? Huh!?
Let's pause and back up a bit. During our last quarterly "wrap-up," Catherine Austin Fitts and I outlined what we think might be a possible scenario in play: the Rape of Russia, brought home to North America, and marketed to a credulous public in the name of "draining the swamp", "downsizing the government", "privatization", and "conservatism" and so on. The Rape of Russia, you'll recall, was a scheme - hatched at Harvard (another long story) - whereby the Soviet Union's state-run enterprises would be sold off as the economy was "privatized" and "made safe for democracy" and all the other cliches we heard bouncing around at the time. What they were not saying, however, is how those enterprises were auctioned off at pennies on the dollar, or I should say, kopeks on the ruble. Power began to be concentrated in private corporate hands - the so-called oligarchs - while the Russian state dwindled away. Caught in the crossfire, of course, were millions of poorer Russians, left out in the cold, literally. It was the literal rape of Russia...
...until a certain Mr. Putin put an end to the process. It is this fact alone which is sufficient to explain why the western kleptocracy hates him so.
Now imagine the same scenario, but not in Russia, but here. "Impossible!" you might say. Not so. Pay attention to the following story, and how it is being marketed:
The deal is simple enough, at least, on the surface: the city of Hartford and the State of Connecticut need money, and a private real estate developer has offered to buy some buildings from the city and state:
Given the precarious financial circumstances of Hartford, Conn. - not to mention the state as a whole - it's hardly surprising that private investors sense an opportunity to buy up valuable state- and city-owned properties at a good price.
And in the first of what we imagine could be a flood of offers, A Chicago-based private equity firm specializing in real-estate investment has sent letters to the city and to the state of Connecticut offering to spend $2 billion to purchase publicly owned office buildings, health-care facilities and trasit-related properties - and anything else the state and municipal governments might be willing to part with.
Problem-solution. It seems like a perfect deal: what better way to show up the incompetence of a bloated state government than to privatize its assets, right? Well, there's a teensy weensy catch to this sweetheart deal, and it's of a scale that only a Russian oligarch or a Goldman Sachs officer could scheme up:
However, there's one catch: The firm is insisting that it secures a 7.25% annual yield on its investment by raising rents and leasing the properties back to their former owners, according to Bloomberg.
For the record, that's nearly double the 3.43% yield Connecticut pays on 20-year general obligation bonds sold in January.
Yes, you read that correctly: the deal is (1) we will buy $2,000,000,000 worth of your properties, which (2) we will then rent back to you for a 7.25% return on our investment, thus (3) picking up state assets for pennies on the dollar when measured over years of occupancy (and rents) and (4) further indebting the state. In effect, what the "deal" is is a double whammy to the taxpayers of Connecticut, who first paid for those buildings, and who will be paying for them again (and again, and again) in the form of rents!
Oh, and by the way, notice one further marketing ploy: this is all being done to allow Connecticut to fund its underfunded pensions:
Still, the firm believes Connecticut might be interested in its offer, considering that the state and city could use the money to help balance out their badly underfunded pensions.
Now imagine the same scenario... on a national scale, as public assets are auctioned off (probably under similar conditions of "guaranteed returns" on investments in the form of rents): roads, bridges, tunnels, airports, parks, buildings, hospitals, schools, libraries, universities, armories (yes, even the military's weapons are just assets folks, which they'd be happy to have the military paying usage fees to use)... you name it, it's all up for sale...
...pennies on the dollar...
But don't worry, we'll rent it all back to you...
See you on the flip side...
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