Corrupt and inept: Trump's Softbank deal sold American consumers to a Saudi-Japanese fund for free
The media is fawning over what Donald Trump's corrupt PR team (I mean his Twitter team) has successfully conveyed as some kind of panacea for investment in American companies and jobs: Japanese multinational corporate behemoth Softbank, Trump and Softbank CEO Masayoshi Son announced that Softbank will make a $50 Billion investment in the United States, creating 50,000 jobs.
Setting aside for a minute that this amounts to a million dollars per job (it'd be a lot more beneficial for the economy to just pick 50,000 people and give them $1 million each), there's no evidence that this corrupt corporate cronyism will bring even a single dollar of new investment to the US, or creating a single new job (more on this soon). Donald Trump is planning to sell American consumers like cheap bootlegged copies of the newest Harry Potter movie, and the media is gobbling it up wholesale.
The day this theater was announced, the stocks of two US mobile carriers shot up: Fourth largest carrier Sprint, and third largest T-Mobile. Softbank owns 80% of Sprint, so it's normal that Sprint stocks would go up. But why T-Mobile's?
Sprint - that is to say, Softbank - attempted to acquire T-Mobile in 2014 for no less a good chunk of cash. While there wasn't a lot of public celebration, T-Mobile's CEO John Legere made no secret of the fact that his company would very much like to be so acquired. The merger never materialized, however, because the Obama administration made it very clear that such a deal could not muster support from anti-trust regulators.
So you can see why Sprint and T-Mobile stocks are performing well, don't you? The incoming corrupt Trump administration is making it clear that they plan to throw American consumers to the wolves and run roughshots over anti-trust laws. Masayoshi Son held out hope for consolidation as recently as this August waiting just for a possible Trump presidency. Suddenly now that such unmitigated disaster has come to pass, Son shows up at Trump tower. I am shocked, shocked I tell you.
And what do the American people get in return for this new era of the old corrupt practices of corporate consolidation and deregulation? Other than having fully a third of the US mobile industry controlled by a foreign conglomerate, probably nothing.
But Trump told us Son was going to invest $50 billion dollars. B-I-L-L-I-O-N! And create 50,000 jobs. Fifty. Thousand!
It's money Softbank already tried to spend two years ago.
Anyone want to guess how much it was going to cost Softbank/Sprint if the 2014 merger had come to pass? $40 billion plus. In other words, Son's entire pledge of $50 billion can be spent on one merger, and American consumers will be worse off for it. All this is to say nothing of the fact that the money will come from a fund in which the government of Saudi Arabia is more invested ($45 billion) than Softbank itself ($25 billion), much of which was slated to come to the US anyway. It's a sweet deal for Son, to be certain. He gets to use Saudi cash to consolidate and reduce competition in the American market, and the American public is none the wiser.
What about them 50,000 jobs? PC Magazine notes that not only would a T-Mobile acquisition plus a little bit of cash invested in building out the new carrier's 5G network be sufficient to meet Trump and Son's deceptive marketing around the big $50 billion number, the same deal would also account for 50,000 jobs, roughly the number of people who work for T-Mobile in the US already.
As an aside, 5G networks are going to built out first in large urban centers that voted for Clinton, not the rural neverlands that came out for Trump in the hopes of the great white revival. I'd be lying if I said I don't take some perverse pleasure in the fact that whatever little economic benefit Son may bring as part of this, it will leave Trump's most loyal supporters out in the cold.
Let's review. Trump brought a foreign investor to his gold tower to basically announce that he was planning to sell out American consumers, your phone bills, and do it for practically nothing at the behest of a Japanese holding company and the Kingdom of Saudi Arabia.
But hey, the tweet sounded good.
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