So the government in Britain has asked the banks, including Goldman Sachs, to facilitate the prizatization of the Royal Mail. Apparently the banks involved gave the government a reduced fee rate in anticipation of further privatization of public properties.
Privatizing public services can mean that the public is no longer well served and prices may increase in order for profit to be achieved. As Michael Hudson says:
'Politics is being financialized while economies are being privatized. The financial strategy was to remove economic planning from democratically elected representatives, centralizing it in the hands of financial managers. What Benito Mussolini called “corporatism” in the 1920s (to give it its polite name) is now being achieved by Europe’s large banks and financial institutions – ironically (but I suppose inevitably) under the euphemism of “free market economics.”
'Language is adopting itself to reflect the economic and political transformation (surrender?) now underway. Central bank “independence” was euphemized as the “hallmark of democracy,” not the victory of financial oligarchy. The task of rhetoric is to divert attention from the fact that the financial sector aims not to “free” markets, but to place control in the hands of financial managers – whose logic is to subject economies to austerity and even depression, sell off public land and enterprises, suffer emigration and reduce living standards in the face of a sharply increasing concentration of wealth at the top of the economic pyramid. The idea is to slash government employment, lowering public-sector salaries to lead private sector wages downward, while cutting back social services.' (quoted from Michael Hudson's blog, EU: Politics Financialized, Economies Privatized)
Margareta Pagano: Goldman's role in the Royal Mail sell-off is a red rag to the unions
By Margareta Pagano - The Independent
If Michael Fallon, the business minister, had wanted to smooth things over with the unions, he might have been a little sharper and bypassed Goldman Sachs.
Apparently, Goldman Sachs was chosen because it gave the best presentation at the pitches which is no surprise since its team has been working on this for two years.
Sadly, the reality is that ministers don't have many banks to choose from as the big six investment banks – mainly US ones – have the syndication game sewn up between them.
In any other market, it would be called an oligopoly. Would JP Morgan, Citigroup or Morgan Stanley have gone down any better with the unions? Doubt it.
Read the article here
Read Michael Hudson's article here