The Cellar » Private Equity

xoxoxoBruce · 11/12/2023 3:49 am

“Not all private equity people are evil. Only some.” Paul Krugman
But could be enough to cause big trouble, as a large and growing portion of our economy is disappearing behind a veil…

When a private-equity fund buys a publicly traded company, it takes the company private—hence the name.
If the company has not yet gone public, the acquisition keeps that from happening. This gives the fund total control,
which in theory allows it to find ways to boost profits so that it can sell the company for a big payday a few years later.
In practice, going private can have more troubling consequences. The thing about public companies is that they’re, well, public.
By law, they have to disclose information about their finances, operations, business risks, and legal liabilities.
Taking a company private exempts it from those requirements.

That may not have been such a big deal when private equity was a niche industry. Today, however, it’s anything but.
In 2000, private-equity firms managed about 4 percent of total U.S. corporate equity.By 2021 closer to 20 percent.
In other words, private equity has been growing nearly five times faster than the U.S. economy as a whole.

from https://www.theatlantic.com/ideas/archive/2023/10/private-equity-publicly-traded-companies/675788/

Back when GM was sliding they split off Delco Remey which had been a division since 1918 and it's parts integral to GM products.
So when the government reorganized GM the tried to bring Delco back into the fold.
A private equity group including $1 million from Mitt Romney's wife, had control and the government offered them a handsome profit for it.
They said no they didn't want to sell which they are absolutely entitled to do, no question about that.
But then they moved everything offshore and put 25,000 Americans out of work, which they are also entitled to do. However I hope they burn in hell for that shit.

tw · 11/12/2023 8:56 am

There have always been two peoples. Those who make better products (innovate). And those whose only purpose in life is to enrich themselves at the expense of others.

Michael Milken demonstrates this. Since stock brokers mostly only want to make profits starting in the 1970s, then innovative companies could not get financing. Intel was a perfect example. Junk bonds made possible financing of innovations such as CNN and USA Today, Hedge funds are but another tool to provide financing to innovative up-starts.

However the same tool can also be used to enrich a few at the expense of others. As Martin Shkreli did to raise prices of cancer, insulin, and other drugs by 1000% and 5000%. Even manipulating companies from a secret phone in his jail cell. As Michael Milken demonstrated in his later years. Having been prosecuted for racketeering and other SEC crimes. Ironically, Milkin, after release from jail, actually channeled his talents back into doing good for many institution. As a result was pardoned both at the NY State level and at the Federal level.

Hedge funds, junk bonds, and futures are all tools that can make possible the advancement of mankind. But can also be corrupted only for personal gain. A wide brush should never target these financial tools. Instead, praise or blame should be cast upon the people running these institutions.

xoxoxoBruce · 11/14/2023 12:16 am

Most any system can be used or abused by an individual or group. There is usually a potential of people getting hurt financially to increase the wealth of the abuser. It's takes a very sick person to screw some old couple out of their $3000 retirement nest egg when the perp has millions.
The only way to slow this abuse down... it'll never be eliminated... is government.

As soon as I say that the hackles shoot up and butt holes clench. No more government, they chant.
I suspect the word government brings visions of Washington, Prez, Congress. The Supremes.
Maybe add in some government agency who you clashed with.
But the truth is the government is millions of people, most of whom are trying to do a good job.
Those people and the agencies the work at are covering your ass in more ways than you can imagine.
When you go to the store do you worry about salad dressing being poison?
No, you're too busy picking out a brand and flavor. Worry about your money in the bank? FDIC.
And a million other things you don't think about because you don't have to.

People bitch about the IRS but our tax system is largely voluntary. Granted if they catch someone intentionally cheating they make an example of them, if they can. But an honest mistake they're quite tolerant.
The group of people, each spending more money than you or I will ever see, to "persuade" congress critters to strangle and hobble the IRS are doing us and U.S. no favors.

The Billion$ that go uncollected could do lot of good. What, they'd just blow it on boondoggles, you say.
I guess the government is like having a dog, if you don't keep control it will shit everywhere.
If you say screw it, let somebody else do it, there's plenty of people who stand ready to do that.
I guarantee every one of them sees a buck or benefit for themselves.

Now excuse me while I put my soapbox away so nobody trips over it. See, I care about you.

xoxoxoBruce · 12/05/2023 12:44 am

The Tharinger company made White Pearl Pasta in Milwaukee from 1915 providing jobs and bringing wealth into the community.
Sold to V. La Rosa & Sons Inc. in 1959 still jobs and wealth to the community.
1983 sold to Archer Daniels Midland Co. which ended that shit, factory closed, jobs gone.
Archer Daniels Midland is a middleman between the farmer/food and the hungry/food-less.
Middleman? think pimp. Produce nothing just siphon off money from the community to a distant boardroom, or offshore accounts as a warchest to destroy other businesses and communities.
But don't worry, it'll trickle down.

I wonder where all these, "=13px" things are coming from?

Last edited by xoxoxoBruce (12/05/2023 12:47 am)

tw · 12/05/2023 7:59 am

xoxoxoBruce wrote:
But don't worry, it'll trickle down.

Is that called pissing in your pants?

xoxoxoBruce · 1/13/2024 4:44 pm

Hang on while I drag out my soapbox... skreeech scraaape.

OK, don't trip while I put it back...skreeech scraaape.

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xoxoxoBruce wrote:

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