Sunday, June 3, 2007

One Word...

"Plastic."

OK, let me try to figure this out. A Saudi company - Sabic - is going to buy a plastics division from General Electric. In order to fund this purchase, they are going to borrow 9 billion dollars from four banks. One of these banks is GE Capital. So, GE will give Sabic several billion dollars; Sabic will give this money back to GE, plus interest.

How will Sabic pay this money back? Selling plastics. And to whom? You can be sure that China will buy a whole lot. How will China pay for all that plastic? Using the money they earn selling plastic to the U.S., over and above what they spend buying our bonds.

What does the U.S. do with the liquidity they gain from selling debt? Among other things, they buy petroleum from the Saudis. The U.S. will use this petroleum in several ways. One use is to power our machinery in the Middle East, better to help those struggling nations to create free market economies so that they sell us their plentiful supplies of petroleum. Lots of those machines are made by ... GE! And why do we need so much petroleum? So we can have plenty of gas to drive to Wal-Mart and buy lots of cheap plastic things made in China. How do we buy all those plastic things? We charge it to our plastic!! How are we going to pay it off? Our growth economy, so-called, as long as we can keep the petroleum flowing.

Does anyone else suspect that something is amiss here? My suggestion of the day: don't buy things made out of plastic. Wash dishes. Bring your own bags to the supermarket. Fix things that are broken. Don't throw the stuff out - it never goes away. If there is another civilization millions of years from now, they might find fossil fuels, but maybe they'll think the better of using it when they also exavate a solid worldwide layer of plastic from the I.E. (Idiot Era).

Thinking about this cozy alliance of nations and corporations, I can't begin to grasp all the connections. Looks like what used to be quaintly called money-laundering - a legal and global version, if no less corrupt and corrupting.

3 comments:

Clark said...

But I want my cheap crap.

Patrick Deneen said...

Hey Clark - no problem! Eat some fish and look what's floating in the toilet the next day. There's sure to be some cheap plastic crap in there.

Unknown said...

Patrick, you do well to take business news seriously. And by having a good sense of humor in response to clark!

Thomas Frank (Baffler, What's the Matter with Kansas) asks why business news isn't generally considered newsworthy. he goes on to posit that cultural issues in politics ought to be displaced/replaced by economic ones. That's for another topic.

I enjoyed browsing through the somewhat serious men's magazine "Best Life." The plastics article was depressing indeed. I did my senior science project in high school about the degradability of corn-based plastic polymers. Somehow bio-degradable isn't as common as a term as in 1991. There's an interesting story in the promotion and failure of environmental solutions.

McDonough quoted in the article is an exciting and active figure and asks, like you,"What kind of society would build things such as these?" Humbling.