The Private Equity Bubble Continues To Implode
We said these private debt, er I mean private equity firms were going to take it in the shorts while the media fawned over their brilliance. I can remember Maria Bartiromo on CNBC almost bowing before some of these private equity partners. Using cheap debt with no recourse and shitty loan covenants to buy out companies and then saddle them with debt so you can pay yourself insanely astronomical fees for financial fraud has nothing to do with brilliance. The amount of losses in private equity are staggering. The future losses will also be staggering. As I said before, I would not be surprised to see the private equity business effectively disappear. A wildly out of bounds statement. But one with some plausibility. It will be a near certainty that private equity disappears if the U.S. ends up with a different banking structure as an outcome to this crisis. Private equity is nothing more than crony capitalism. It's based on cozy relationships to gain access to cheap credit that adds no value to society.
Have you ever wondered why unemployment rates amongst many minority groups have been 20+% for ages yet completely stupid dumbasses can get all of the money they want to destroy the economy? Case in point - private equity? It sure as hell isn't because capital was allocated democratically or to those most able, ie a meritocracy. I know plenty of people that could intellectually role Steve Schwarzman and they are either unemployed, underemployed or working average jobs. When we see 20+% unemployment, corruption is in play. This data point highlights very clearly that a segment of the population is and has been starved for capital. We really cannot make any intelligent assessment on what impact these minds would make on society other than we are marginalizing tremendous economic dynamism. The next Albert Einstein or Ludwig van Beethoven or great entrepreneur may be lost in that figure. Maybe even our next President. I referenced this dynamic some time ago and maybe one day I'll post a white paper I put together on access to capital and how it impacts economic opportunity and social belief systems. I'll need to condense it for here and that will take substantial time. But this is really one of the least understood tragedies of our current economic ideology.
One of the private equity buyouts that caught my eye was Freescale. A business I am reasonably familiar with. Look at the write down. Blackstone's $1.2 billion investment written down to $180 million. These guys were even dumber than the mortgage backed securities clowns.
Don't worry. You are paying for all of this whether you realize it or not. Either through unemployment, underemployment, jeopardized retirement funds or whatever. The banks eating any debt write downs are passing the losses along to us. Or they probably securitized much of this and your grandmother is eating it in the higher living expenses criminally foisted upon her. Does this mad hattery mean private equity will give all of their billions in fees back? Fees made by killing the economy? Are you kidding? They are too busy throwing $4 million birthday parties.
Have you ever wondered why unemployment rates amongst many minority groups have been 20+% for ages yet completely stupid dumbasses can get all of the money they want to destroy the economy? Case in point - private equity? It sure as hell isn't because capital was allocated democratically or to those most able, ie a meritocracy. I know plenty of people that could intellectually role Steve Schwarzman and they are either unemployed, underemployed or working average jobs. When we see 20+% unemployment, corruption is in play. This data point highlights very clearly that a segment of the population is and has been starved for capital. We really cannot make any intelligent assessment on what impact these minds would make on society other than we are marginalizing tremendous economic dynamism. The next Albert Einstein or Ludwig van Beethoven or great entrepreneur may be lost in that figure. Maybe even our next President. I referenced this dynamic some time ago and maybe one day I'll post a white paper I put together on access to capital and how it impacts economic opportunity and social belief systems. I'll need to condense it for here and that will take substantial time. But this is really one of the least understood tragedies of our current economic ideology.
One of the private equity buyouts that caught my eye was Freescale. A business I am reasonably familiar with. Look at the write down. Blackstone's $1.2 billion investment written down to $180 million. These guys were even dumber than the mortgage backed securities clowns.
Don't worry. You are paying for all of this whether you realize it or not. Either through unemployment, underemployment, jeopardized retirement funds or whatever. The banks eating any debt write downs are passing the losses along to us. Or they probably securitized much of this and your grandmother is eating it in the higher living expenses criminally foisted upon her. Does this mad hattery mean private equity will give all of their billions in fees back? Fees made by killing the economy? Are you kidding? They are too busy throwing $4 million birthday parties.
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