Takeover

The Forecast: The Trans-Pacific Partnership is the big one. But Takeover is a trend line years in the making; it’s now fully embedded in the social, economic and political spheres that rule our lives. It drills deeper than the massive consolidations we see in banking, media, health care, retail, etc., on broad national and international scales. Look at your own communities. Look at local and regional consolidations and monopolies that now govern local services and products. Takeover is pervasive.

In its 70-page Consumers and Mobile Financial Services report, the Federal Reserve made no mention of regulation in the mobile-payments sector, or any potential threats techno non-banks could pose the public. No one on Capitol Hill seems to have noticed all the big tech companies acting like unregulated banks.

That’s because power and political influence are linked to corporate omnipresence. When a few companies quickly become politically forceful, they often use their power to reduce oversight and accountability. They build systemic risk.

We’ve seen large, politically influential firms implode and damage countless lives before. From Enron and the energy sector and WorldCom and the telecom sector in the early 2000s, to the recent banking-sector hit on the global economy, past performance is an ominous glimpse into future behavior. It is better to be wary of issues before a crisis than suffer in the aftermath. If the government is too enamored of its new friends to care about the pitfalls their dominance could bring, we must take up the vigilance mantle for ourselves.

Update: Record-low interest rates and tens of trillions in quantitative easing policies by the world’s largest central banks — the US, China, Japan and the European Union — are responsible for frothy equity markets that have made the rich richer and big businesses much bigger. Not only has the global wealth gap between the uber rich and common man greatly widened from the cheap-money policy, it has accelerated the Takeover trend.

Able to borrow money cheaply, merger and acquisition activity, nearing $2.5 trillion halfway through the year, is on track to break the $4.3 trillion record set in 2007. Driven in part by a “buy or get bought out” fear that rival firms making deals are becoming more efficient and gaining more market share, from media, to health care to high tech, boardrooms are buzzing with plans for deals.

Unlike past M&A activity in which private-equity firms were the big buyers, according to Dealogic, in the US, for example, some three-quarters of the takeover volume this year represent companies buying other companies. That means the big are getting bigger, controlling more market share.

And as evidenced by the terms of the recent Greek bailout deal demanded by the European Central Bank, the European Union and International Monetary Fund, the Takeover trend extends beyond the boardroom. Indeed, it crosses borders: “Greek crisis: surrender fiscal sovereignty in return for bailout,” The Guardian, 12 July 2015. For all practicality, under the terms of the deal, The Troika has been put in charge of the nation’s economic policymaking, not the elected Greek government.

Added to the Takeover trend are both the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership. Not only do these pacts expand and consolidate trade agreements among nations, they elevate multinationals’ interests above nations’ sovereign rights by permitting firms to enforce new rights and privileges provided by the pact. In addition, they challenge existing and/or new laws and regulations contrary to their corporate interests.