U.S. IPO! Nation to Offer Equity, Merge
Medicare & SSI with IRA Accounts

By Paul Springer
While the United States has long been the biggest player in the global market for debt, the idea of offering equity shares wasn't taken at all seriously until recently. Led by New York Attorney General Eliot Spitzer, critics advanced a number of objections to the plan, including valuation difficulties and conflicts of interest. In the wake of Spitzer's disappearance, however, more optimistic minds have prevailed.

According to the red herring, the president and his cabinet will receive four million shares each, along with stock options vested over the course of his term of office. Arguments over vesting provisions posed one of the biggest hurdles. Many opponents of the offering suggested that options should vest in the years following a given president's tenure, which would enforce some long-term assessment of a given administrations long-term effects. These opponents also disappeared.

Other high ranking members of the government, including Congress and the Supreme Court, will receive large numbers of shares and options, totaling thirty billion shares, the largest "float" ever by orders of magnitude. Ordinary citizens will receive three-fifths of a share each. "We feel this guarantees equity between the electorate and the government," explained a jubilant president Bush. "This way we'll feel our responsibility to the shareholders, so to speak."

The underwriting for this issue was the largest and most complex to date, and the SEC had to grant temporary stays to experts who had been previously barred from involvement in the securities industry, such as Mike Milken and Ivan Boesky. The government made sure to oversee the dealings of the finance experts, and former Senator Tom Delay was put in charge of oversight as the Overseer of Equity Equity (OEE). "Formulating the balance sheet was quite an ordeal," commented the new OEE. "I can assure you there's quite a large number on the "goodwill" line."

As the Wednesday IPO date approaches, Wall Street is abuzz with pent up demand, and other nations' markets are at least as eager to participate. Rumor has it that the issue is oversubscribed, thanks to the zealous efforts of analysts and syndicate managers at all the major investment banks. Many figures who had been impugned with wrongdoing after the dot-com bust found an opportunity to redeem themselves, including many of the analysts who placed a strong buy rating on the stock. The NYSE is also offering exchange traded shares to the public under the name Presidential Long-term Option Plan, or PLOPs.

The world's first issue of equity in a nation is inevitably leading to the securitizing of derivatives. It's now possible to take a bearish or bullish stand on the U.S. or assume complex positions with strips, straps, straddles, and spreads. As individual states proceed with their own underwritings, it will eventually become possible to put on the classic long/short hedge: long the nation and short the states, or vice versa. Once other nations follow suit worldwide, all the strategies of corporate M&A will undoubtedly come into play, including leveraged buy-outs, hostile takeovers, shareholder suits, and poison pill strategies. As the world leader in corporate finance, the U.S. can only stand to profit from these developments.

One of the biggest difficulties facing corporate accounting has been the uncertainty of future pension obligations, and the imminent issue had two such situations to deal with: Social Security and Medicare. In order to overcome these obstacles, the underwriters merged both entitlement programs into citizens' existing IRA and 401k plans. The new accounts will be offered through discount brokerages, and taxpayer/clients will receive a merit-based infusion of trading capital at the beginning of each year.

Individuals with unusually costly post-retirement medical needs will have two avenues of redress. While derivatives trading has generally been prohibited in retirement accounts, the lone exception has been the selling of covered calls, and now retirees will be able to sell options against functioning internal organs. At the same time, retirement accounts are now allowed to trade on margin to meet medical expenses. Critics, many of whom said they did not want to disappear, downplayed the possibility of having to donate a live organ in order to meet a margin call. As one government spokesman put it, "What could possibly go wrong?"

About
Email Subscribe
Staff
Disclaimer
Contact