Tuesday, July 26, 2011

The Koch Empire and Venezuela

You may remember the Koch brothers from the recent outbreak of popular outrage over the liquidation of public employee bargaining rights by the current governor of Wisconsin, Scott Walker. The Koch brothers spent over $34 million dollars trying to undermine workers rights particularly of public employees seemingly in collusion with Walker. What you might not know about them is that last October they saw the fertilizer plants they owned in Venezuela nationalized by standing President Hugo Chavez.

You might think this would be a story ripe for Fox News or various rightwing pundits to pounce upon. Here's why they kept the nationalization hush hush, from eXiled:

"The Kochs made hundreds of millions on every end of this deal…and even more surprising, bond markets cheered the nationalization. In other words, the free markets championed by the Kochs gave a big thumbs-down to Kochs’ negative influence on the value of the business, while at the same time, the free-market Kochs earned huge windfalls doing business with socialists. No wonder this story hasn’t made the rounds.

Here’s what happened: When Chavez’s nationalization of the plant took Koch Industries out of the picture, bond investors responded by driving up the value of the company’s bond debt by a whopping 33 percent. That means they had a lot more confidence that the debts would be paid back AFTER the free-market Kochs were out of the picture. As every business school flunky knows, price fluctuations of bonds are very much like those of stocks: the more they cost, the higher the confidence in a given company. And that means investors had less faith in the ability of the Kochs to run a tight business operation than they did in a bunch of Venezuelan socialist bureaucrats.


So for all the enterprising Americans out there wondering “What’s the secret to the Kochs’ success?” The answer isn’t pretty—especially if you’re one of the gullible Tea Party libertarians who believe the Kochs practice the free-market libertarianism that they preach. Their ability to reap billions and billions in profits year after year isn’t about buying low and selling high, but about buying subsidized-by-the-state, and selling subsidized-by-the-state. Using taxpayer money to cover the costs and ensure profits every time—that’s the simple formula to the Kochs’ success."

What's more is now the Koch's appear to be taking Chavez's government to court over the nationalization, before a investment dispute body in the World Bank. Check out this article from the Latin American Herald Tribune for more.

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