How can a movement bankrupt Monsanto?

Wrong report on Monsanto purchase: Bundesbank finances your Mudda

The magazine “Telepolis” from “heise.de” claims that the Bayer Group received tax subsidies for the Monsanto purchase. This is wrong.

Financial fiasco Monsanto purchase: Bayer headquarters in Leverkusen Photo: Reuters

BERLINtaz | The US company Monsanto was seen by many as a figment of evil. He sold genetically modified seeds, drove farmers to suicide, and earned a lot from the environmental toxin glyphosate. When the Leverkusen chemical company Bayer took over Monsanto last year for $ 63.5 billion, environmentalists warned of the risks.

Well want Telepolis, an online magazine from heise.de, have revealed: "Purchase of Monsanto financed with taxpayers' money." What a story. Have the federal, state or local governments squandered the fruits of our work for this horror deal? Many shared the text on Twitter, including the Green politician Renate Künast. The author also names one culprit, the head of the Bundesbank: "It was Jens Weidmann who financed the purchase of Monsanto."

The taz always criticized Bayer's takeover of Monsanto and revealed how Bayer cheated with studies on glyphosate. In this case, however, not: Neither the federal, state, nor local government financed the Monsanto deal with even one cent. The one that has been clicked a lot Telepolis-Article is subject to two mistakes: First, the Bundesbank has taxpayers' money. And secondly, that the monetary policy of central banks is something like subsidization. Is not it.

What happened is that Bayer partially financed the purchase of Monsanto with new debt - and sold bonds in exchange. You, who are reading this, could also have made the Monsanto takeover possible by buying bonds on the Luxembourg stock exchange, for example with a term of 4.5 years and an annual interest rate of 0.625 percent from the Dutch Bayer Capital Corporation BV

Area bombardment with money

In Europe, Bayer raised five billion euros in this way, and in the USA 15 billion US dollars. And that's where the Bundesbank comes into play: It bought some of the bonds issued in Europe at the same interest rate as private market participants. National central banks have been doing this more often, and have done so since 2016. They have been commissioned to do this by the European Central Bank. Since then, bonds have been bought by 274 companies or their subsidiaries for a total of 177 billion euros. But you don't have to think of it as a deal in the background that Bayer boss and Bundesbank boss are concocting together in the peony breeders' association.

Rather, the purchase is based on a monetary policy program called CSPP, which in turn is part of a process known as quantitative easing: a kind of bombardment of land with money (around 2.5 trillion euros). It has existed since the 2008 financial crisis and because of weak growth. The flood of money is expected to drive inflation up to 2 percent, which the ECB believes is good for growth.

The central bank mainly buys government bonds, but also corporate bonds such as those from Bayer. However, it does not have to judge what the companies are doing with the money. Just like the central bank issues banknotes, regardless of whether they are issued by the mafia or your mudda afterwards. These are the rules that the central banks of the euro area have set for themselves. The only condition is that the companies do not fall below a certain rating (“BBB Minus”).

Central banks do not have tax money. You do monetary policy

Mind you, there is a lot of justified criticism of the whole quantitative easing: It inflates the markets, reduces interest on the savings account, causes house prices to skyrocket - and many complain why the ECB is buying bonds from companies that make ecological messes. Like Bayer now.

Money out of nowhere

In any case, the Bundesbank loans are not taxpayers' money. When the Bundesbank buys the bonds, it creates money out of nothing. Click. What central banks do. The taxpayers do not invest a tired cent in Bayer. Should the group go bankrupt because of the many lawsuits against Monsanto and not be able to pay off the debt, then only the Bundesbank's profit, which it transfers to the Treasury every year, would be slightly smaller. If Bayer does not go bankrupt, the finance minister earns from the interest.

Let us come to the last point: How many bonds for the Monsanto purchase did the Bundesbank buy from Bayer? The Bundesbank only provides information on this in the background. A maximum of 3.5 billion euros would have been possible according to the ECB rules. Bayer says it is only a small fraction of the possible 3.5 billion. You don't have to believe that, but it's plausible: the demand for the bonds to finance the Monsanto deal was four times as high as the supply in both the US and Europe.

The decisive factor is that even without the Bundesbank, Bayer would have been able to collect € 20 billion in Europe and $ 60 billion in the US. Above all, this shows that investors are sometimes rather careless: So far, the acquisition of Monsanto has been a financial fiasco for Bayer. The bond buyers will only make losses if Bayer goes bankrupt on the deal.