Are Our Governments Slipping into the Role of Subprime Borrowers?

William Krehm

My computer is a glutton. Particularly when I have completed the draft of an article already woefully behind schedule, it develops an appetite for swallowing what I have written without so much as a burp. So that after wasting hours trying recover the fruit of my labour, I finally resign myself to rewriting my vanished efforts even a third time. Too often the stint will be preceded by my wrestling with security pop-ups on my screen that drive me to hitting buttons, that I am invariably told would better have been left alone.

Yet not infrequently in this maddening rewriting of vanished efforts, a point is reached where my curses of Bill Gates give way to blessings. For it is of the nature of the ever more complicated relationships of this globalized, deregulated world, that no country is more immune to foreign takeovers than my computer screen is to security pop-ups that won’t go away. And occasionally in the process of struggling with such problems, I gradually become aware of deeper implications than what I had grasped in those earlier drafts. And thus those unrelenting pop-up screens may turn out to have been perceptive editors forcing me to a more comprehensive job on relating international privatizations and takeovers that are reworking the world economic patterns and capitalism, itself – rarely for the better.

The latest such revelation involves astounding plans for the privatization of key urban blocks of downtown real estate in Canada. Thus The Globe and Mail (11/01, "Ottawa set to sell $1.5 billion in federal buildings" by Elizabeth Church, Toronto, and Daniel Leblanc, Ottawa): "Ottawa is preparing to sell $1.5 billion worth of office properties across the country as part of the first phase of a plan that will see dozens of federal buildings go to the private sector with the government as long-term tenant, sources say.

"The deal could hit the market within weeks and would be among the largest offerings of the government’s office properties.

"Public Works Minister Michael Fortier refused to comment on the status of the plan, but made clear that the government’s real estate portfolio is in for a shakeup.

"‘As we speak, does the state need 372 buildings to offer its services to citizen through its employees? I think that is the most objective way of presenting the issue,’ he said in an interview.

"The government is expected to use a process known as sale-leaseback" by which it sells the buildings to the private sector and then rents them back. As though ceding sovereignty over the economy to the financial sector that it has periodically bailed out at great cost to the land has not been enough, it now feels obliged to step into the role of the tenant of the same financial interests,

"The government is expected to use 25-year leases. Sources say. Mr. Fortier argued the government doesn’t have the $4 billion needed to maintain adequately its portfolio of 6.8 million square meters of office space.

"Under the planned ‘partnerships,’ sources said, the private-sector companies would renovate the buildings at their cost and make money by renting them to the government."

We love the word "partnership." Try it on your private landlord when you are a couple of months behind in your rent.

"The government’s 241,000 employees could thus work in better, more energy-efficient buildings."

The Cheeky Nonsense of Our Government not Being Able to Afford Maintaining Its Real Estate

Note how the virtuous "energy-efficiency" issue is dragged into the discussion by a forelock though it has nothing to do with the privatization being rammed through. Energy-efficiency is something that only the government can impose by making it the law of the land. And such legal standards once made law, would be carried out by private contractors, under government inspection, not by the prime minister. What then has this to do with selling key government real estate, that it would never ever afford to buy back as their value soared with further government infrastructural spending in the area?

As for our government being unable to finance such maintenance standards, note the following: since the Bank of Canada was nationalized by a Liberal government in 1938, our federal government has been able to borrow money from its own bank to finance far larger projects. For example 16% of the cost to it of World War II, and thereafter the transformation of Canada from a semi-rural country just come out of sixteen years of depression and war. What turned the trick was that the interest it paid its own bank, the Bank of Canada, for such loans, with the exception of minor overhead costs, came back to it as the Bank’s sole owner in the form of dividends. Dividends are not "funny money," but a basic capitalist institution. It is odd that we should have to remind a Conservative government of so elemental a fact.

To suggest for a moment that the government can’t afford to maintain its buildings, whereas the private speculators that have repeatedly been bailed out from their gambling losses in fields incompatible with banking can, is cheeky nonsense. And the fact that government spokesman can utter it without contradiction by the opposition parties or the media, indicates that not only has the financial system passed to the control of speculators and the banks, but as a result so has political power.

Two memorable writers – one undoubtedly the leading French economist of his day, and the other an economic historian in the US – have dealt with this phenomenon.

The French economist, François Perroux (1903-1987), developed the most crushing rebuttal of the official fiction that has taken over our government and our universities today: that market economies are self-balancing. With a naive faith in differential calculus as a guarantee of scientific method, official economists have overlooked that differential calculus can be used to find the equilibrium points of a problem, only if all the actors – the variables in the mathematical equations summing it up – are of such vanishingly tiny size, that nothing they do or don’t do individually can possibly affect the market and its prices. And mathematics in themselves can help find equilibrium points only if the empirical evidence gathered beforehand shows that they exist. Thus Newton developed differential calculus and with its powerful help deduced the laws of gravity, only because Kepler, using the astronomical observations of Tycho Brahe had ascertained that the planets circulated around the sun in closed orbits. Calculus alone – one of the countless tools of mathematics – could never have led them to the law of gravity.

Until the middle and latter parts of the 19th century when the working class was largely illiterate, economists, above all in Britain that had a near-monopoly of industrial development, were concerned mostly with the steep tariffs against food imports that kept wages higher (and hence industrial profits lower) than they otherwise would have been. To make the point economists like David Ricardo and his friend the clergyman Thomas Malthus, took it as a fact that wages would always be only enough to keep the workers’ body and soul together. For they were convinced that any increase in wages beyond that would merely result in larger families, given the workers’ incontinence. Such delicate matters economists felt free to discuss with little fear that the largely illiterate working class would pick up so unflattering a view of their future.

The Growing Literacy of Labour Forces Economists to Reverse Their Theory

And the fact that a stockbroker such as Ricardo had adopted the labour theory of value was of immense importance to Karl Marx and other socialists. For they considered the espousal by a stockbroker of the view that the value of a commodity was determined by the amount of average labour needed for its production, was a dramatic confirmation of their socialist goal. As for the largely illiterate working class, there was little danger of their picking up the anti-capitalist implications of such doctrines, for the workers were too illiterate to follow the debates. It was rather like parents discussing racy gossip unfitting for children’s ears only after the youngsters had been put to bed. But the mechanics’ institutes that had begun spreading literacy to the lower orders, changed all that. Rather than the kids having been put to bed, they were, on the contrary, awakening from their slumber.

And the disturbance on the continent between the revolutions of 1848 and the Paris Commune of 1871, gave the measure of the social perils latent in the labour theory of value. Therefore the need arose for a theory of value that would shift the determination of value from the sphere of production to that of consumption. Responding to that need marginal value theory arose almost at the same time in three different countries: Britain, France and Austria. Price came to be seen determined by the satisfaction given the consumer of the last unit purchased, rather than by the effort put into its production.

The Decisive Action Shifts from the Production to Consumption

Once the market rather than the factories became the decisive focus of economic theory, the stage was set for booms to be blown up to ever more fantastic proportions, punctuated with ever more shattering busts. Gambling with ever more dubious investments inevitably took precedence over less glamorous real production. The trend reached its climax in the Depression of the 1930s. Within months of the stock market collapse of October 1929, the breadlines three and four abreast circled entire Manhattan city blocks. And by the time Franklin Roosevelt was inaugurated president early in 1933, many hundred US banks had shut their doors and stockbrokers were jumping out of skyscraper windows.

That rerouting of economic analysis from the sphere of production to consumption haunts us to this day. For there is an explosive physical limit to assessing aggregate value of the economic product if you tie it to marketing and consumption as do all these statistical pyrotechnics. Your very accountancy ends up subservient to the effort to distribute goods and services many of which are not useful. Thus much of the recent oil crunch had little to do with actual trading in barrels of oil, but rather with speculators playing a card game with the cards marked "thousands of barrels of oil." In some of those games little oil actually changed hands. But the price of oil was affected by the extent of the winnings and losses. Left to their own devices and not brainwashed with seductive advertisement, people would not dream that they needed the countless items that keep the economy grinding. Nor can the planet support them. This does not stop with junky goods and services. It goes on to take in international property and political rights, and power positions ranging from parliaments to battlefields as the "virtual economy" takes over. In the latter 1990s high-tech firms that had still to earn their first dollar in profit were accorded stock market valuations higher than that of General Motors – in its relatively more prosperous days. The logic on which such evaluations were based was "market shares" – i.e., by the time the "market share" on which current market valuations were based would approach a monopolist market position, obviously real profit positions would rise for the victorious surviving corporation. However, such an eventual justification of marginalist economic doctrine only reduces the entire effort to absurdity. By no means the least harmful by-product of this development was the purging of our universities and libraries of the literature of the great economists, and of history itself. That strips society of the capacity to learn from its errors.

In seeking to understand the troubled politics of our times, the American economic historian Duncan North developed an idea very akin to those of François Perroux, in a later period and without obvious influence from the French economist. In any massive redistribution of the national revenue a shift of political power to enforce and preserve it will ensue. One of the most striking instances of this was the case of Mexico. From the overthrow of the dictator Porfirio Diaz in 1910 to about 1928 civil wars took over, and the assassination rate of presidential aspirants reached dramatic levels. This was a period when US exploitation of the mineral wealth led to the invasion of the country by land and sea. But with the assassination President Obregon in 1928, all this came to an abrupt end, as though someone had stepped on a brake. The distraction of Mexico’s northern neighbour by the Depression certainly made its contribution, but from 1928 to the introduction of the North American Free Trade Alliance (NAFTA) the assassination of presidents and presidential candidates did stop.

The broad political alliance of peasant organizations (ejidos), trade unions and national industrialists that had preserved the peace then collapsed. The banks that had just been privatized from a previous nationalization that restored their solvency had to be nationalized once again. The domination of the economy passed to a new stock market group that even looked after the distribution of government bond offerings through TV auctions; and in no time flat, as though on schedule to confirm the Duncan North model, two presidential candidates were assassinated. The Mexican paradigm from Pancho Villa to Salinas in turn is not irrelevant to the Muslim terrorist response to the redistribution of the wealth of the planet in the interest of speculative finance. Or to the Globalization and Deregulation that bestride the planet today.

But in order not to wander too far afield from what is relevant to the subject of this note – the speculators’ grab of irreplaceable national real estate – we must refer briefly to how our banks were bailed out from the disastrous adventures that the first wave of Globalization and Deregulation that launched them on their present financial and military adventures.

The Open-mindedness of Democratic Governments in the 1930s

[Elsewhere in this issue (page 3) we tell of] the Bank Act passed under President Roosevelt in 1933. Hundreds upon hundreds of American banks had shut their doors when the new president took over, and one of the first things he did was declare a bank moratorium. The Bank Act that was brought in shortly afterward became a model for much of the non-Communist world. Ceilings were placed on the interest rate banks could pay or charge. An alternative was provided for the use of the benchmark interest rate that could be used to stimulate or restrain economic activity as might be necessary. [We suggest the reader read those pages before proceeding with this article.] They provide evidence of the ridiculous claim of our government that it has no way of financing the adequate maintenance of the irreplaceable buildings on key downtown sites that are being put up for sale. Canada used the Bank of Canada in 1938 and thus was able to finance 16% of its cost of fighting the war. After the war it was able to catch up with 16 years of neglect of maintaining its infrastructures, introduce new technologies, assimilate a vast and mostly penniless immigration from Europe, and still reduce its federal debt from about 160% of the Gross National product to less than 25%. It did this by financing its infrastructures substantially through the Bank of Canada. There is no reason why it cannot do so today since the Act is still on the books intact, but unused.

"The goal is to ‘stop the bleeding and to manage the portfolio so that in five, 10, years, we are not faced with an even greater figure [to renovate the buildings] than we are facing now,’ Public Works Minister Fortier said.

‘"The plans still have to be approved by the Treasury Board and the cabinet, which will have to decide among a number of options being put forward by Public Works. That decisions will be made next week (sic), but others argue that an announcement is farther away,’ some sources say.

"The recommendations have been made to the government, but no decisions have been made,’ said Jean-Luc Benoit, the director for communications for Mr. Fortier.

"The process started last fall, when the government hired experts of BMO Capital Markets and RBC Capital Markets Real Estate Group to come up with recommendations for a sample of 40 federal buildings. [Note well that two of our large banks have served as advisers in planning the coup.]

"The study included properties such as the Lester B. Pearson building in Ottawa, the Sinclair Centre in Vancouver, and an office complex in the north end of Toronto.

"Individuals familiar with the 35 federal properties put their combined value at about $5 billion. They say the quality of the sites varies greatly, with some in need of vast amounts of work. The government’s best sites – the ones that will attract most interest from investors – will likely be included in the first phase.

"Buyer interest in the properties is expected to be high, especially since they come with long-term government leases.

"Over the past five years, interest in the Canadian real estate market has grown dramatically, helped by a huge influx of cash from domestic and foreign pension plans that like the steady flow of income that the sector provides.

"The federal government has been wrestling for several years with a way to finance the repairs its property requires. For years Public Works has tried to gain funds for such investments, but sources say it has been difficult to drum up interest in building maintenance when other issues such as health care, have topped the political agenda.

"Selling buildings and becoming a tenant is seen as a way to make maintenance someone else’s problem."

(Be it noted that the RBC and BMO banks would gain no advisers’ fees for the government using its own central bank to finance whatever repairs may be needed for its real estate.)

"The previous Liberal government has considered privatizing the government’s real estate holdings, but it explored solutions that could be applied to all buildings at once. The Conservative government has opted to approach the issue much more slowly."

(Until it is returned as a majority government, it appears the general policy to resort to gradualism to bring in its extreme rightist policies.)

The difference is not a moral one. They are both based on bad accountancy that hides what is really involved. The law distinguishes between grand and petty larceny. Petty larceny is the easier to get away with. It is one that our Conservative minority government favours, and will help raise enough funds to win majority status in the imminent election. For that victory Canadians will pay through the nose for allowing their government, the sole owner of the Bank of Canada to be degraded to a subprime borrower status to pay the rent for properties whose value will continue to climb steeply because of government and private investments in infrastructures around most of these buildings. You would have to have two glass eyes in real estate matters to overlook this. And that is why the take-over artists are huddling around the Harper government in anticipation of deals unheard of up to now.

Significantly, The Globe and Mail article cited carries a photo of a block-long imposing classical building on the south-side of Front Street to the east of Union Station and smack across the road from some of the most dazzling modern architecture not only in the city, but in the world – the TD Tower and the BCE Tower.

That is not even alluded to by our politicians in the government or in the opposition. Such plunder of the public treasury is so monumental and shameless that it calls for a Royal Commission to examine the background of suppressed history – of banking, of economic theory – that has brought the public interest to this plight.

The Greatest Conquest of the Normanic Nobles was London Ground Rent

Let me trace the major turns of this road.

Norman feudalism organized their English conquest for a centralized permanency that simply had no equivalent in the France they came from. The centralized taxation that was their strength and glory was based in large part on their eye for strategic infrastructure and the growing increase in value of the Roman roads that could no longer be reproduced, let alone maintained. That is why sites in centres like London were rarely if ever sold or exchanged. If leased out it would be on century-long leases after which the site would revert to the lessor. None of the piddling 25 years stuff that our government is proposing with the leases in fact going the wrong way. The notion of improvements in the area enhancing the value of the lease was a powerful factor in this custom. Strange then that it should have escaped the attention of our government with its 25-year lease-back scheme that there is no protection against an increase in the rents to be paid by the government-reduced-to-tenant. Even when Highway 407 encircling the greater Toronto area on the north was leased to a Spanish toll-road-leasing conglomerate after it was completely built and financed by a NDP provincial government it had no restriction on the increase in road-toll rates.

Introducing the Semi-underground Bunker

This subject of unearned rents extracted from anything that can be sold or leased is the pinnacle of achievement in the new economy. Hence it was quick to catch on in the US – particular in large Eastern cities like New York. From his close observations, Henry George wrote his Progress and Poverty (1879), and on the strength of the enthusiasm it aroused, it led to its author almost becoming elected mayor of New York in 1880. Today the notion of unearned income is being generalized by reformers to take in all unearned rents – patents under such plans would be purchased by governments and well paid for to their inventors, but would belong to the public domain. Patents stuck onto ideas commonly known and due to appropriation rather than invention would not be protected. The contribution for patents that have been stuck onto ideas or designs already known would be discontinued. J.W. Smith of Arizona and Michael Hudson of the University of Missouri have published epoch-making studies done independently along these lines.

It is clear that the world scheme for selling off government was prepared at the Bank for International Settlements (BIS). BIS itself requires more than a routine introduction. Set up to handle the syndication of the German reparations from World War I into hard currencies, its liquidation at the first opportunities had been called for at the Bretton Woods Conference of the Allies in 1944 under Resolution Five had been brought in by the Norwegian government in exile, and unanimously adopted. The unpopularity of BIS stemmed from the speed with which BIS had surrendered the gold reserve entrusted to it by the Czechoslovak government the moment the Nazi army entered Prague in 1938. Still other favours to the Nazis were alleged against it.

Because of Resolution 5, BIS cultivated the lowest possible profile, and that in turn qualified it for the comeback that the world’s banks – restored to health by the strict regime to which they had been subjected in the Western Allied lands, had straightened out their affairs, and with that came to long after the glory days of their unrestricted speculative adventures before the 1929 Crash.

That low profile commended it as the semi underground bunker needed from which to direct the comeback of the banks. For the Allied governments had promised their armies and civilians a better world after victory. And thus the comeback of the banks to where they had left off in 1929 had not only to be carried out outside governments, but to an extent against governments. Thus elected officials of governments were not invited to BIS meetings.

Burdening the government with interest rates that it had not had to pay its own central bank left the government saddled with a load of interest payments at the very time that BIS, undoubtedly shaken by the volume of legal tender base for the banks’ credit creation, set itself to pushing up interest rates to the skies to "lick inflation." And to guild the lily, the Canadian government – once more following the directives that the International Monetary Fund – was imposing on countries dependent on it for loans. A basic condition for granting such loans was that the recipient government do away with its statutory reserves. Canada had at no time been dependent on the IMF for its credit, but as a token of the servility to the IMF and the other Washington-run international bodies, the Mulroney government voluntarily complied with the treatment reserved for third-world debtor countries.

In 1991, with the decennial reexamination of the Bank Act, the provisions in it for the statutory reserves were phased out over a two-year period. These statutory reserves had required the redeposit with the Bank of Canada on a non-interest-bearing basis of anywhere between 8 and 12% of the deposits the banks had received from the public. Raising or lowering these statutory reserves had lessened dependence on moving interest rates up or down as the need was felt to fight perceived "inflation." The "interest-free" aspect of these reserves deposited with the central bank increased the leverage of the arrangement, and reduced the extent to which the mechanism had to be used. For the driving force was the net result of an increase or decrease in the revenues of the banks from the reserve being moved up or down. The phasing out of the statutory reserves over 1991-93 left interest – the basic revenue of money lenders and banks – as the sole mechanism of the central bank for directing the economy. Had the banks been crowned as monarchs of the realm the message could not have been clearer. They became living proof of the "dominant revenue" theory of François Perroux and of the reassignment of political powers that follows a basic redistribution of the national revenue.

Meanwhile, the very accretion of power that both Perroux and Duncan North have traced to such drastic revenue redistributions has meant ever further deregulation of our banks. And with this came an ever growing compulsion for the financial interest to embark on more sweeping adventures to earn the profits which rigged accounting has already incorporated into the exercising prices of the options granted their senior executives. The slightest failure to sustain their market growth rates would bring the whole jerry-built structure of unlimited greed to collapse.

Repeatedly, we have asked ourselves where BIS will find the resources for the next mega-bailout of the banks when the need for it arises. After all, the statutory reserves have already gone or, depending on the country, have become nearly meaningless. In the European Union for example the statutory reserves actually earn interest paid by the central banks, thus reducing the leverage of the statutory reserves – significantly called "bank seigniorage." Little relief can be expected from their abolition.

What BIS and the World’s Central Bankers Overlooked

Moreover in 1995, a dreadful oversight of BIS was revealed. To help bail out the banks from their crushing losses, they had been allowed to load up with government debt, and at the same time BIS had called for actual zero inflation – no mere reduction to 1% or 2% would do. And rates were raised heavenward to enforce this. But BIS overlooked that when interest rates are raised drastically, the market value of pre-existent bonds with far lower coupons drops drastically, bringing the market value of the banks’ 100% leveraged government bond hoards crashing. That would bring the banks into distress again. It became necessary for the Mexican government to nationalize the banks once more, though they had only recently been privatized from an earlier nationalization. The problem was solved after a manner when the US government introduced accrual accountancy, that it had resisted for years along with other governments throughout the world. Accrual accountancy – also known as "capital budgeting" – depreciates the cost of investments over the probable life of the capital asset involved – a bridge, a highway, a building, a battleship. Cash accountancy, on the other hand, that had been practised by all governments, with the exception of the Swedish for a limited period, had written such capital assets off in the year in which they were paid for. Their value was then carried at a token $1 to assure the auditor that the item had not been simply forgotten in a lapse of memory. But what has not been publicized is that this breach of double-entry bookkeeping noting the still unamortized amount of the mortgage for the acquisition of the asset, while listing the fully depreciated asset value of the same asset value, could only have a double purpose: (1) to create the appearance of a government deficit that was not necessarily there but served those in power as an argument for denying the most pressing social measures, investments in human capital, and environmental conservation; (2) to be in a position to sell the asset in question for a tiny fraction of its actual cost and real value to deserving bidders and thus provide a flow of take-over deals that have become so essential to our deregulated financial houses.

The incredible brass of what the government is proposing in selling off the government’s irreplaceable real estate in the downtowns of our great cities without a roar of protest from the press, tells us how thoroughly democracy in this land has been reduced to a farce.

The US government was taught the hard way that high interest rates are incompatible with bailing out the banks by allowing them to load up with 100% leveraged government bonds. As of January 1996, the Department of Commerce statistics on government savings were recalculated to accrual accountancy with the process carried back to 1959. This resulted in increased physical assets of some $1.3 trillion US. But these new statistics appeared under the heading of "Savings" rather than "Investments." But "savings" as used by economists refers to cash or first-class securities readily transformable into cash, whereas the physical assets "discovered" had long since been invested in steel, bricks, mortar, and concrete. Why the lack of frankness? It is true that a wink and a nudge to the bond-rating agencies was enough to convey the real fact and bring interest rates down. That saved the banks from another collapse. It also left unchallenged the carefully cultivated myth that governments are incapable of making investments. But there must have been a third consideration. The leading civil servants who tell elected politicians what must be done had obviously been asking themselves the same question as I had: how is the next bailout of our banks going to be arranged when their increasing load of subprime debt of every description continues collapsing. The reserves are gone; interest rates must be kept low if the banks are not to lose their capital once more.

When the Canadian Auditor General in 1999 refused to give unconditional approval of two successive government balance sheets until accrual accountancy was brought in, a row ensued with then Finance Minister Paul Martin. The AG actually used the words "cooking the books." But after weeks of wrangling a demeaning compromise was reached during which the AG agreed that since no new money had come into the treasury the leap in recognized assets would not justify further programs. It was merely necessarily to properly estimate the adequacy of the rental charges attributed to the space occupied by research projects of the government. Obviously the terms of the next bank bailout – in the form of sale lease-back of irreplaceable government real estate was already in the sights of the civil service. If ever there was a planned economy, this was it, but one that couldn’t bear the light of day.

Disinter the Work of Theodore Schultz to Expose the International Public Real Estate Scam

Whatever they are called, the unrecognized government investments include its ever growing stake in human capital that in the 1960s won Theodore Schultz the Bank of Sweden Nobel Prize for Economics for his reappraisal of the reasons for the astoundingly rapid reconstruction of both Japan and Germany from the immense physical destruction suffered in WWII. He was one of hundreds of young economists sent by Washington to estimate the likely lapse of time before the two defeated countries could reappear as formidable competitors on world markets. Schultz concluded that the predictions of the American economists, including his own at the time – were so wide of the mark because they concentrated on the physical destruction and vastly underestimated the importance of the human capital: the high degree of education, skills and discipline of the work forces that came out of the war essentially intact. His conclusion: the most productive investment a country can make is in human capital. I remember the late former Governor of the Bank of Canada telling me that the Bank of Canada was so impressed by Schultz’s conclusion that he was invited to Canada to enlighten the central bank further about it. That indeed was a different era. Today Theodore Schultz is a forgotten name amongst economists.

Whatever is not market-driven is likely to be dismissed by economists and governments as "externalities." Were it valued at its real worth – both the human and the physical investments – there is likely to be not only a balanced budget, but a surplus. But by the same logic, environmental conservation that should be but has not been made must be booked not as "fiscal prudence" but as a budgetary deficit. Accountancy tends to become the footstool of the economic interest in control of the government through the civil service.

We have often asked ourselves what form the next bailout of our deregulated and expansion-driven banks would take, now that the statutory reserves have been essentially exhausted on the previous bailout, and higher interest rates have shown their eventual destructive potential of the very banks. It is increasingly clear that the authors of government strategy in such matters – the high treasury civil servants – have asked the same question and decided that the wholesale despoliation of the public interest by corporative buccaneers is the answer.

Significantly The New York Times (01/12/06, "History for Sale: Needs Work France, Burdened by Upkeep, Puts Prime Properties on the Block" by Craig S. Smith) writes: "Paris – France is selling dozens of historic properties in Paris and in the provinces, using the proceeds to move the government bureaucrats into less expensive properties of Paris’s golden age. Foreigners, primarily American pension funds and private American firms, are the biggest buyers so far. For all their Gallic pride, the French seem happy to have anyone take the properties off the hands of the taxpayers."

The script could almost have been taken from the Toronto press, except that the government will not be staying as tenants because US corporations wish to occupy the properties. And there are more commissions and capital gains down the road to be earned with future tenancies of such properties left open. It would seem only a matter of time before the Louvre and arts contents is up for the highest bidder.

William Krehm

– from Economic Reform, March 2007