SiSU: - Homeland - Cory Doctorow

Chapter 10.
Homeland
Zyz wasn't always called Zyz. It was once called Fireguard Security, and it was founded
by an exec at Halliburton, a giant military contractor that sucked a bazillion dollars out of
America's bank accounts selling pricey, underperforming military services to our troops all
over the world, then followed up by helping to build a couple of semi-defective, way-overbudget
oil wells, including one that may yet be responsible for the sterilization of the Gulf
of Mexico.
Halliburton had a “dynamic, thrusting young VP” (seriously, that's what Fortune magazine
called him) named Chambers Martin who quit the company in 2008 to found Fireguard,
which immediately began to make major bank by taking U.S. Army contracts to guard
Halliburton supply convoys in Iraq and Afghanistan.
So far, so normal. There are plenty of companies who bled out the taxpayer by providing
bloodthirsty mercs. They guarded truckloads of Twinkies around Kandahar Province and
Fallujah to restock the Forward Operating Bases that were a cross between an armed
fortress and a mini-mall. The Army paid them enormous fees to have soldiers' clothes
laundered and to supply Internet access and Pizza Hut.
But Fireguard had bigger plans. Rather than simply sucking up tax dollars for substandard
services, they decided to become...a bank. Specifically, they began to issue bonds based
on their anticipated future U.S. government contracts. The simplest bonds are basically
loans: I sell you a bond for $100 with a five percent return and then I pay you $5 a year
over the term of the bond (say, five years), and when the bond runs out its term, say, five
years, we're done. Of course, if I go broke before the bond runs out, I go bankrupt and
you're screwed.
Fireguard was selling its debt left, right, and center, paying top interest rates, telling everyone
that the gravy train could never end, because every year they were taking in bigger
military contracts, which meant that every year, they'd have more money on hand to make
their bonds' payouts. It worked great, until the military drawdowns started to reduce their
annual revenues, and they needed to branch out.
So they started trading bonds, instead of just issuing them, beginning with bonds issued on
student loan debt. It turned out that every dollar I borrowed to go to Berkeley got turned into
a bond -- someone with money bought the right to get paid every time I made a payment
on my debt. This made big bucks for Berkeley and for other universities and companies
that “gave” students the loans they needed to get their magic diploma paper. Student
debt bonds are even better than skeezy military contractor debt bonds because a skeezy
military contractor can go bankrupt, but students can't.
Bet you didn't know that, huh? If you borrowed money to go to college and you someday
find yourself so flat broke that you have to go bankrupt, all your debts will be wiped off the
books -- credit cards, car notes -- but your student debts are immortal. And whenever you
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