GET GRECTHEN'S NEW BOOK "These Are the Plunderers: How Private Equity Runs―and Wrecks―America" here: www.amazon.com/These-Are-Plunderers-Runs_and-Wrecks_America/dp/1982191287/ref=asc_df_1982191287/?tag=hyprod-20&linkCode=df0&hvadid=647241143410&hvpos=&hvnetw=g&hvrand=4572894538893394556&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032360&hvtargid=pla-1957941102131&psc=1&gclid=Cj0KCQjwz8emBhDrARIsANNJjS5iqHKdMb1rDoQ8Ygnvoodw_LjOlRhQsCoaPqLcBYDy2_7EkkNXqJMaAmp5EALw_wcB
I looked and saw something like a lion being roused, roaring out of the forest. I heard how he spoke in a human voice and said to the eagle, 38 “Listen, you, and I will speak to you. The Most High says to you, 39 ‘Aren’t you the last of the four beasts that I made to rule in my world so that I might bring about the end of my times through them? 40 You, the fourth that has come, conquered all the beasts that came before you, ruling over the world with much terror and over the whole world with harsh oppression. You have lived in the world with deceit for so long! 41 You judged the earth, but not in truth, 42 for you have oppressed the meek and injured those who caused no unrest. You hated those who spoke the truth and loved liars. You destroyed the dwellings of those who bore fruit and tore down the walls of those who had done you no harm. 43 Your insolence has ascended to the Most High and your pride to the mighty one. 44 The Most High has reviewed his times. Look! They are finished, and his ages are complete. 45 Therefore, eagle, you must utterly vanish, you and your terrifying wings, your dreadful little wings and your evil heads, and your dreadful talons and all your worthless body. 46 Then the whole earth will be refreshed and restored, set free from your violence, and will hope for the judgment and mercy of him who made it.’”
When Gretchen was talking about landlords not cutting the lawns, it occurred to me that an analysis of lost value to consumers, employees, and little-guy investors should be incorporated in evaluating antitrust action, and some metrics of the extraction need to be formalized in law. This would require some research to put some numbers on the losses and to establish some patterns that can be plugged into an analytical model. Extraction needs to be fleshed out and given some precision as a theoretical construct and elevated into an important and common element of the antitrust conversation.
What an eye opening topic. Thank you for bringing her in, she has so much amazing information. It’s unbelievable how these practices are not illegal because they are definitely immoral.
Before listening to Adam's interview, I read Gretchen's book. She does a great job of stating her case why PE firms should not be allowed to continue to acquire healthcare entities, especially hospitals. I get the anti-Klaus Schwab comments about stakeholders, but all these PE firms are pushing financial metrics, not patient metrics. I will never invest in one of these PE firms or their spinoffs.
Well if government regulations around medicine weren't so insane we'd have a lot more competition and it wouldn't be a problem❤. The FDA has failed to protect us from food poison and 40% of medicines become black labeled after being approved❤❤ This is a typical the government creates the problem and now people want more government to solve the problem, mental trap Government regulations always just create more Pirates not less of them
We can’t continue to allow business to use the excuse that they exist to create profit. No, you exist to create goods and services. This is crucially important wrt healthcare.
@@jimbopeebles8210 I add another component, a morale part, whereby it is also the 'right' thing to due. If you put profits above humanity, then we will continue to see society stripped of wealth for a small group of individuals that have no Morales.
The WEF line on "stakeholders" is an Orwellian scam, and unfortunately, they have co-opted the word and tainted the concept. Klaus Schwab's "stakeholders" are the elites at the top.
Wall Street is still buying lots of houses where I live. Locals are priced out of the market. They also buy large tracks of raw land because they were allowed to carry borrowing costs at very very low rates. Investment property should be taxed much higher then people actually living in the home.
What a great guest! I learned so much about Private Equity and how it has evolved in this economic environment. That these entities are permitted to throw so much of the working class under the bus is concerning.
My co-worker was telling me how his house more than doubled in value over the last few years and I was thinking to myself. My savings has more than half over the last few years, it's ridiculous what the fed is done. I'm surprised there's not more people who are outraged by all this, but I think the majority of the people have houses so they think everything's great
The primary reason for the general inflation is asset price inflation caused by the Fed's ZIRP, QE, and of course general money printing. Every house owner in the USA got $200k to $500k or more in house inflation money given to them absolutely free by the Fed. They are tapping that fake equity and spending it -- and that is the general inflation.
And if your co-worker sells that house, what then? Where will he live? Is he going to buy another house? Because he'll pay an inflated price for his new residence.
LOL. His house hasn't doubled, his US$ buying power has been halved. This is what the average person doesn't understand. Hopefully, his income has doubled too.
Halved for the moment wrt housing. I would never buy one at these prices. There are other ways to get a house than buying a pre-existing one. Every new house in the USA has at least a $200k price premium attached to it right now. Build your own for 25% of the current cost, and get a better built house too. @@MichaelHarrington17
They're flipping I'm just like they're flipping houses. I've been looking for property and if you look in the records it shows it was bought two years ago and now they're turning around and trying to sell it for double. It's just so ridiculous what's happening to our economy, the whole thing's out of control.
May God Bless Gretchen Morgenson for writing on this topic! We can do much better in this country. And I am a free-market conservative; borderline Libertarian. I am all about making money; albeit in a way that lifts all boats. And please don't make the BS argument that private equity is doing the economy a service by making capital more efficient. Please!
So Giorgia Meloni of Italy just imposed a surprise 40% windfall tax on Italy's banks for '23 for excessive earnings, while keeping their savings rates paid to depositors lower. Meloni's Govt. disagrees with the European Central Bank continuing to raise interest rates. This money will go directly to average regular Italians to help offest high energy costs, inflation, and some people with adjustable mortgages. I think this is a very Good move by her. Yet, 'some' in the Media seem to be 'upset' by this. So why would They be? Good guest, btw.
We are getting poorer precisely because a narrow elite has organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.
Was not that the raison d'etre for the Democratic Party versus the supposedly 'pro-business' Republican Party? Or does it not wash these days and every thing is about the dollar at any chance?
Private Equity? They are executing Klaus Schwabs concept of the great reset "you will own nothing and you will be happy." In case of nursing homes it's more "you will be dead and you will be happy." Much thanks for your enlightening work!!!
I wonder how many of these private equity firms short the companies they’re “flipping” like Manor Care. It’d be a great way to avoid paying any taxes from profits resulting from those shorts.
Gretchen's assessment of P/E firms is entirely NON-controversial to anyone familiar with the situation. Much of Wall Street's activities these days are in no way involved in national economic development, but rather "asset stripping". The effect of their activities predictably degrades the standard of living of typical Americans. A few examples: -Offshoring of Middle Class Jobs (to our strategic competitor, the PRC) -Merger activity, creating effective oligopolies or monopsonies in virtually every important industry -Leveraging up companies to fund divd payments & buybacks which the business could not otherwise afford to fund. -Disrupting the residential housing market helping to perpetuate grossly unaffordable housing. Welcome to "Pottersville, USA" (remember "It's a Wonderful Life"?) I am for competitive and open markets. We no longer have that. We have crony capitalism, which in many ways is similar to China's version of 'capitalism' -- the well-connected get all the benefits. Everyone else gets lowered standards of living. We need a radical undoing of the crony capitalism. A wealth tax would be a part of that. Trust-busting (aka Teddy Roosevelt) needs to be another part. Dis-incenting corporate ownership of single family homes would be another -- perhaps by disallowing tax-deductability of mortgage costs, property taxes, and depreciation. Owner-occupied homes would still be permitted to deduct these costs -- for ONE home per household.
Never give up Alan. You will play an increasingly important role in both the Fourth and First Turnings. Your legacy will be one of being a significant catalyst to the birthing of the age of sustainability. Late-Stage predatory capitalism will transform to something life affirming thanks to the truth tellers like you. 🙏🏻💪🏻
Fantastic guest. Very enlightening and people like her give us hope for a better future! Humanity is not doomed yet. The PE firms that she criticizes reminds me of the movie 'Goodfellas' where the mobster goes into business with a legitimate businessman, only to drive the company into bankruptcy by running up debt on the company by buying excessive goods, only to walk those goods out the back door, theft, and then resell in the black market, until the company was out of business. It is sad that these bad people are allowed to sellout and run with big profits through the IPO market. Buyer beware. It looks criminal to me and the criminals should be sued.
At the same time Gretschen is so true that the social contract (accountability and equality to the law) was broken in the times of the GFC by the financial and political elites. And that pathology has survived and even got petrified. This looks like the end of the republic and the dawn of oligarchy in the US. Very depressing, indeed.
Before we erect the scaffolds for the public execution of the private equity funds, it is important to remember that ZIRP and all its pernicious antecedents (Fed activism, the Fed “put”, outrageous federal budget deficits, the abandonment of the Gold Standard) created the environment called the Financialization of the US economy. Remember that households have also played a part through house flipping, mortgage-equity extraction and sheer debt accumulation. Did I forget to mention stock market speculation of all kinds? And if they didn’t do as much damage as the big boys, it’s not because they didn’t want to. As Walt Kelly used to say, “We have met the enemy and it is us”.
Summary and timestamps: 0:07: 📚 The speaker discusses the use of heavy debt loads by large private equity firms to acquire and sell companies within a short timeframe, arguing that this strategy puts pressure on the acquired companies and can harm stakeholders. 13:26: 😬 The private equity business model is being severely tested as they struggle to find deals and buyers, and face pressure from the IPO market. 26:29: 📉 The speaker expresses their disillusionment with the transformation of Silicon Valley and private equity from generators of innovation to profit-driven entities. 39:10: 💰 The bankruptcy of a company had negative consequences for the town, including school children not having books and teachers losing insurance. 51:30: ⚠️ The speaker discusses an academic study that shows higher mortality rates in nursing homes owned by private equity firms compared to other companies, highlighting the negative impact of efficiency claims without considering the cost. Recap by Tammy AI
This has been most informative. My view though is that it seems public companies sell stock prices in lieu of products or services. In other words, public companies main focus is the price of the stock. So Wall Street is simply all about higher stock prices, so stock is the primary product. Example are the numerous buy backs or pump and dump mentality. If you are skeptical of PE, you should be just as skeptical of Public traded companies as well.
The mafia did the same thing - it’s called busting out a business it has finagled its way into. Methodologies may differ in sophistication but results are the same, bleeding it dry as depicted in the 90’s movie, “Goodfella’s”.
I'm glad she's saying something about it. It's obvious that private equity groups are locusts. Just ask anyone in a mid management or hourly rate position who has worked for a business owned by private equity.
Private equity are often vultures that do asset stripping. Many load the balance sheet of companies they buy with debt while the private equity partners strip the best assets. Toys R Us was asset stripped and loaded with way too much debt along with many other firms. The Fed helped finance this with around 15 years of ZIRP and QE. Congress also helped too with the carried interest expense exemption. Many of the higher up Democrats in Congress are good friends with big-name private equity partners and their firms. Mittens Romney ran a private equity firm too. Although he did actually turn around Office Depot decades ago
AMEN to Gretchen and her thesis/analysis. She's spot on. If Biden were dynamic and smart he would have her in the WH for discussions and run on this, but sadly he isn't and he won't.
LOL. Biden has been in front of the line to capitalize on all this. He learned from the Clintons that one should get rich in public service. (Republicans are not innocents either.)
Private equity / venture capitalists have always been bad news for companies…they asset strip and do little for the business they get involved in frequently staff lose their jobs as they window dress the business for sale… I liked her expression, flipped them for a turn just like secondhand car salesman.. these investors offering management expertise for monitoring fees don’t really know anything more than the business trying to establish real growth. The cancer they introduce is debt….
Great interview. One can extrapolate the "Our Economy is Being Plundered" theme to globalism, the Green Agenda, and other aspects of the growth in the financialization of the US economy. If the country ever goes deeper into socialism, predatory capitalism will be one of the causes.Watching the icons of capitalism sing the praises of China's system reminds me of how a number of America's great companies were wooing Germany prior to WWII.
Our politicians as usual are the ones to blame. Carried interest loophole, lack of transparency, regulation and no accountability allows these vultures to continue. No wonder the younger generation s are anti capitalist. I can't think of a major industry that doesn't have similar issues but PE may be the worst!
I’m confused; did anyone force shareholders of buyout targets to sell to PE firms? Why didn’t management and staff make a higher bid? Should the state have stepped in to buy?
I would like to name them "Parasites". Plunderers sounds a little bit to familiar. Been working in companies that has been "incorporated". The same tune everytime... Very nice interview. Thank You!
Wow🎉🎉🎉 Great interview and exposure of the Truth to Financial Corporate Power! Can we get this Taught in High Schools and Universities????? Is there a reason Financial Knowledge is Not taught in USA demo-socialist Public Schools????
Adam, the KEY problem is much too much money the LPs (pension funds, endowments, etc) have been allocating to the PE funds due to this frantic monetary policy for the last decade. The pension funds have been desparately looking for any coupon on their capital when they were offered zero (Europe) or very little (US) interest on the public bonds. In result the PE started having big oversubscribtions from the investors seeking returns, followed with all the agency problems related to the moral hazard on the PE side. We need to curb state budget deficits, stop ZIRP and let the savers / lenders have more options to invest capital. Normalizing monetary policy would automatically curb leverage PE use to buy-out companies. All evil starts from the top which is free / cheap money.
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive "Don't you hate it when someone answers their own questions? I do."
Good conversation apart from her repeating of “stakeholders”. However, I was severely disappointed by the lack of any mention of the high-level political connections that these firms, notably Carlyle, employ; and their role in tilting the playing field. Seems like a serious oversight. Hopefully, it’s in the book.
I laughed a little when she told Adam he was "too young to remember". It's good to hear some perspective from someone with as much experience as Gretchen.
Thank you for the insights, I love this channel! I notice the lingo and verbiage of “extraction” and “hollowing out” sounds very similar to how a parasite works
Sorry to be repetitive over several videos but please get someone on to talk about government spending in as much detail as possible. We desperately need the public to be more educated on this. A lot of people, even professionals don't know a) how laws make it through congress; b) how the money is supposed to be allocated and c) how the money is actually "allocated". The same goes for regulations and how they're implemented or not, but that is another story. Run the gamut: defense, housing, infrastructure and so on. I think it would probably be one of your most shocking shows.
Excellent interview explaining - with fantastic examples - something that I think my generation (millennials) has instinctively known since starting in the labor market. I think we are in for some major shakeups over the next few years as the economy plummets. What will be interesting is that I think the labor shortages will continue, meaning companies will still have to compete for skilled labor. Yet this will be difficult as their costs rise - the stealholders have taken so much from the companies that despite drastic downsizing (even pre-recession) they will struggle to remain profitable while having to pay higher wages to keep the talent needed to keep operations going. It will be a really rough ride, but I'm optimistic we might see a reversal of the flow of money from the employee to the investor. Maybe - just maybe - the investors will take the hit and the employees actually keeping the company running will be rewarded, for once in my working career.
Actually, employees should be investors and shareholders in public equities - that's how to share in capitalism's successes. It means assuming risks and managing them. The labor model of distribution is a product of the industrial age.
My personal feeling is that normalized MARKET set interest rates would correct almost ALL the bad behavior and excesses of the greedy private equity firms and Wall Street. Just ONE correction back to real capitalism would equal a mountain of regulations that really never fix the problem anyway. Greedy people will just find a new clever method to extract wealth from functioning companies if we don’t return to true market driven interest rates.
If the ultimate goal is money, it leads to problems and destruction. It doesn't matter if you subscribe to capitalism or socialism, because that's just how life works. We compete to survive and live better, but in a civilized society we don't kill each other, so we compete for money. People with more sophistication win the competition. So sad.
No, we should just stop giving them free money. Clawbacks are justified as well, but only criminality faces legal judgment. Stopping the free money would help, so we'll see where the Fed pivots.
A lot of these companies she described sound like ones that were going to go out of business regardless of who was running it. At least get the useful assets out. The pension managers are the "unions guy." Not a fiduciary.
This interview is really interesting. It talks about how private equity, which is a way of investing, can affect our economy. It reminds me of things I've seen in real estate. Thanks for sharing this!
“Cost cuts” are great for shareholders but awful for regular shmegular people. It takes money from the poor and gives it to the rich in hopes of a supposed trickle down effect.
Does fiat money contribute to the leveraged buyout (aka private equity) industry? Would an asset based currency make their predatory practices less lucrative?
Would upcoming probable bankruptcies provide easy targets for PE firms? Specially if the interests rates come down to 3% in a couple of years ? The word in consulting industry is that there is about 5 trillion in cash raised by PE firms waiting for such opportunities.
I am not so sure about the health of the banking system. Through QE the banks have been on life support for a decade and a half. We are the most indebted we have ever been. Banks are only as healthy as the borrowers ability to repay. I don't think that it is looking so good!
The book is a great but an infuriating read! I remember learning of the Noranda disaster (I'm in Missouri) but have to take a break halfway through the book before Morgenson and Rosner get into the details. Argh.
The residential real estate private equity issue is not as what she makes it seem. Get someone that actually directly works in this industry to talk about both sides. Many homes being bought by the private equity groups are not in very good condition, and the majority of people who rent I. Their homes can not own because of their own heavy debt and they would live in a better area than they otherwise could.
GET GRECTHEN'S NEW BOOK "These Are the Plunderers: How Private Equity Runs―and Wrecks―America" here: www.amazon.com/These-Are-Plunderers-Runs_and-Wrecks_America/dp/1982191287/ref=asc_df_1982191287/?tag=hyprod-20&linkCode=df0&hvadid=647241143410&hvpos=&hvnetw=g&hvrand=4572894538893394556&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032360&hvtargid=pla-1957941102131&psc=1&gclid=Cj0KCQjwz8emBhDrARIsANNJjS5iqHKdMb1rDoQ8Ygnvoodw_LjOlRhQsCoaPqLcBYDy2_7EkkNXqJMaAmp5EALw_wcB
I looked and saw something like a lion being roused, roaring out of the forest. I heard how he spoke in a human voice and said to the eagle, 38 “Listen, you, and I will speak to you. The Most High says to you, 39 ‘Aren’t you the last of the four beasts that I made to rule in my world so that I might bring about the end of my times through them? 40 You, the fourth that has come, conquered all the beasts that came before you, ruling over the world with much terror and over the whole world with harsh oppression. You have lived in the world with deceit for so long! 41 You judged the earth, but not in truth, 42 for you have oppressed the meek and injured those who caused no unrest. You hated those who spoke the truth and loved liars. You destroyed the dwellings of those who bore fruit and tore down the walls of those who had done you no harm. 43 Your insolence has ascended to the Most High and your pride to the mighty one. 44 The Most High has reviewed his times. Look! They are finished, and his ages are complete. 45 Therefore, eagle, you must utterly vanish, you and your terrifying wings, your dreadful little wings and your evil heads, and your dreadful talons and all your worthless body. 46 Then the whole earth will be refreshed and restored, set free from your violence, and will hope for the judgment and mercy of him who made it.’”
When Gretchen was talking about landlords not cutting the lawns, it occurred to me that an analysis of lost value to consumers, employees, and little-guy investors should be incorporated in evaluating antitrust action, and some metrics of the extraction need to be formalized in law. This would require some research to put some numbers on the losses and to establish some patterns that can be plugged into an analytical model. Extraction needs to be fleshed out and given some precision as a theoretical construct and elevated into an important and common element of the antitrust conversation.
What an eye opening topic. Thank you for bringing her in, she has so much amazing information. It’s unbelievable how these practices are not illegal because they are definitely immoral.
Before listening to Adam's interview, I read Gretchen's book. She does a great job of stating her case why PE firms should not be allowed to continue to acquire healthcare entities, especially hospitals. I get the anti-Klaus Schwab comments about stakeholders, but all these PE firms are pushing financial metrics, not patient metrics. I will never invest in one of these PE firms or their spinoffs.
Well if government regulations around medicine weren't so insane we'd have a lot more competition and it wouldn't be a problem❤.
The FDA has failed to protect us from food poison and 40% of medicines become black labeled after being approved❤❤
This is a typical the government creates the problem and now people want more government to solve the problem, mental trap
Government regulations always just create more Pirates not less of them
I work in health care & have no idea why any firm would buy a hospital. The cost of labor has skyrocketed since Covid.
We can’t continue to allow business to use the excuse that they exist to create profit. No, you exist to create goods and services. This is crucially important wrt healthcare.
@@jimbopeebles8210 I add another component, a morale part, whereby it is also the 'right' thing to due. If you put profits above humanity, then we will continue to see society stripped of wealth for a small group of individuals that have no Morales.
The WEF line on "stakeholders" is an Orwellian scam, and unfortunately, they have co-opted the word and tainted the concept. Klaus Schwab's "stakeholders" are the elites at the top.
Wall Street is still buying lots of houses where I live. Locals are priced out of the market. They also buy large tracks of raw land because they were allowed to carry borrowing costs at very very low rates. Investment property should be taxed much higher then people actually living in the home.
What a great guest! I learned so much about Private Equity and how it has evolved in this economic environment. That these entities are permitted to throw so much of the working class under the bus is concerning.
My co-worker was telling me how his house more than doubled in value over the last few years and I was thinking to myself. My savings has more than half over the last few years, it's ridiculous what the fed is done. I'm surprised there's not more people who are outraged by all this, but I think the majority of the people have houses so they think everything's great
The primary reason for the general inflation is asset price inflation caused by the Fed's ZIRP, QE, and of course general money printing. Every house owner in the USA got $200k to $500k or more in house inflation money given to them absolutely free by the Fed. They are tapping that fake equity and spending it -- and that is the general inflation.
And if your co-worker sells that house, what then? Where will he live? Is he going to buy another house? Because he'll pay an inflated price for his new residence.
LOL. His house hasn't doubled, his US$ buying power has been halved. This is what the average person doesn't understand. Hopefully, his income has doubled too.
@@MichaelHarrington17 That's a great way to summarize the situation. 90% of people are financially illiterate.
Halved for the moment wrt housing. I would never buy one at these prices. There are other ways to get a house than buying a pre-existing one. Every new house in the USA has at least a $200k price premium attached to it right now. Build your own for 25% of the current cost, and get a better built house too. @@MichaelHarrington17
They're flipping I'm just like they're flipping houses. I've been looking for property and if you look in the records it shows it was bought two years ago and now they're turning around and trying to sell it for double. It's just so ridiculous what's happening to our economy, the whole thing's out of control.
That's all the result of free money under ZIRP.
Gretchen wrote many prescient and insightful articles that show the investor needs to be aware how things really work
May God Bless Gretchen Morgenson for writing on this topic! We can do much better in this country. And I am a free-market conservative; borderline Libertarian. I am all about making money; albeit in a way that lifts all boats. And please don't make the BS argument that private equity is doing the economy a service by making capital more efficient. Please!
If you're truly libertarian then you know this country is completely statist.
Free Mkt blah, blah blah. LOL
Manor care example perfect! Gretchen is the best!!!
Adam I think you are a great asset to our Nation!!!
Thank you for the great educational work you do!!!
You are a True American Patriot!!!
So Giorgia Meloni of Italy just imposed a surprise 40% windfall tax on Italy's banks for '23 for excessive earnings, while keeping their savings rates paid to depositors lower. Meloni's Govt. disagrees with the European Central Bank continuing to raise interest rates. This money will go directly to average regular Italians to help offest high energy costs, inflation, and some people with adjustable mortgages. I think this is a very Good move by her. Yet, 'some' in the Media seem to be 'upset' by this. So why would They be? Good guest, btw.
I just want to say that Adam Taggert comes across like the kind of guy you can trust. Someone with integrity. It's not just about making money.
I love when Adam and his guests get in a compliment contest. I really do, as both of these folks deserve those compliments. Great interview.
Another great interview. Keep bringing the truth to the masses.
We are getting poorer precisely because a narrow elite has organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.
Yes this
Exactly correct and this has been going on since the 1970s, although much worse now than back then.
100%
Was not that the raison d'etre for the Democratic Party versus the supposedly 'pro-business' Republican Party?
Or does it not wash these days and every thing is about the dollar at any chance?
@@linmal2242 Towards the end of an empire greed takes hold in both parties
Regarding pension bailouts…You got that right, very few of us have pensions. No taxpayer bailouts of pensions!!!
They will do it as the people all clamor politically to be protected from their follies. It's unjust all around.
Adam, you are the Best on you tube.
I love this channel
Private Equity? They are executing Klaus Schwabs concept of the great reset "you will own nothing and you will be happy."
In case of nursing homes it's more "you will be dead and you will be happy."
Much thanks for your enlightening work!!!
I wonder how many of these private equity firms short the companies they’re “flipping” like Manor Care. It’d be a great way to avoid paying any taxes from profits resulting from those shorts.
I loved this interview, thanks Gretchen, thanks Adam!
One smart lady. Glad you brought her on. Learned a ton.
Gretchen's assessment of P/E firms is entirely NON-controversial to anyone familiar with the situation.
Much of Wall Street's activities these days are in no way involved in national economic development, but rather "asset stripping". The effect of their activities predictably degrades the standard of living of typical Americans. A few examples:
-Offshoring of Middle Class Jobs (to our strategic competitor, the PRC)
-Merger activity, creating effective oligopolies or monopsonies in virtually every important industry
-Leveraging up companies to fund divd payments & buybacks which the business could not otherwise afford to fund.
-Disrupting the residential housing market helping to perpetuate grossly unaffordable housing. Welcome to "Pottersville, USA" (remember "It's a Wonderful Life"?)
I am for competitive and open markets. We no longer have that. We have crony capitalism, which in many ways is similar to China's version of 'capitalism' -- the well-connected get all the benefits. Everyone else gets lowered standards of living.
We need a radical undoing of the crony capitalism. A wealth tax would be a part of that. Trust-busting (aka Teddy Roosevelt) needs to be another part. Dis-incenting corporate ownership of single family homes would be another -- perhaps by disallowing tax-deductability of mortgage costs, property taxes, and depreciation. Owner-occupied homes would still be permitted to deduct these costs -- for ONE home per household.
Excellent analysis.
Never give up Alan. You will play an increasingly important role in both the Fourth and First Turnings. Your legacy will be one of being a significant catalyst to the birthing of the age of sustainability. Late-Stage predatory capitalism will transform to something life affirming thanks to the truth tellers like you. 🙏🏻💪🏻
What a great judgement by that NewYork Judge ! More power to his gavel ! Thanks to Gretchen .
Fantastic guest. Very enlightening and people like her give us hope for a better future! Humanity is not doomed yet. The PE firms that she criticizes reminds me of the movie 'Goodfellas' where the mobster goes into business with a legitimate businessman, only to drive the company into bankruptcy by running up debt on the company by buying excessive goods, only to walk those goods out the back door, theft, and then resell in the black market, until the company was out of business. It is sad that these bad people are allowed to sellout and run with big profits through the IPO market. Buyer beware. It looks criminal to me and the criminals should be sued.
That is one sharp lady! Enjoyed this!
Awesome interview. The system is rigged, and the most vulnerable are at risk.
Thank to Gretchen for exposing this story
At the same time Gretschen is so true that the social contract (accountability and equality to the law) was broken in the times of the GFC by the financial and political elites. And that pathology has survived and even got petrified. This looks like the end of the republic and the dawn of oligarchy in the US. Very depressing, indeed.
Fantastic interview! Thanks Gretchen and Adam
Before we erect the scaffolds for the public execution of the private equity funds, it is important to remember that ZIRP and all its pernicious antecedents (Fed activism, the Fed “put”, outrageous federal budget deficits, the abandonment of the Gold Standard) created the environment called the Financialization of the US economy. Remember that households have also played a part through house flipping, mortgage-equity extraction and sheer debt accumulation. Did I forget to mention stock market speculation of all kinds? And if they didn’t do as much damage as the big boys, it’s not because they didn’t want to. As Walt Kelly used to say, “We have met the enemy and it is us”.
Summary and timestamps:
0:07: 📚 The speaker discusses the use of heavy debt loads by large private equity firms to acquire and sell companies within a short timeframe, arguing that this strategy puts pressure on the acquired companies and can harm stakeholders.
13:26: 😬 The private equity business model is being severely tested as they struggle to find deals and buyers, and face pressure from the IPO market.
26:29: 📉 The speaker expresses their disillusionment with the transformation of Silicon Valley and private equity from generators of innovation to profit-driven entities.
39:10: 💰 The bankruptcy of a company had negative consequences for the town, including school children not having books and teachers losing insurance.
51:30: ⚠️ The speaker discusses an academic study that shows higher mortality rates in nursing homes owned by private equity firms compared to other companies, highlighting the negative impact of efficiency claims without considering the cost.
Recap by Tammy AI
This has been most informative. My view though is that it seems public companies sell stock prices in lieu of products or services. In other words, public companies main focus is the price of the stock. So Wall Street is simply all about higher stock prices, so stock is the primary product. Example are the numerous buy backs or pump and dump mentality. If you are skeptical of PE, you should be just as skeptical of Public traded companies as well.
The mafia did the same thing - it’s called busting out a business it has finagled its way into. Methodologies may differ in sophistication but results are the same, bleeding it dry as depicted in the 90’s movie, “Goodfella’s”.
Good information 👏🏾👏🏾👏🏾
A brilliant interview!!
Thank you both so much!
I'm glad she's saying something about it. It's obvious that private equity groups are locusts. Just ask anyone in a mid management or hourly rate position who has worked for a business owned by private equity.
Private equity are often vultures that do asset stripping. Many load the balance sheet of companies they buy with debt while the private equity partners strip the best assets. Toys R Us was asset stripped and loaded with way too much debt along with many other firms. The Fed helped finance this with around 15 years of ZIRP and QE. Congress also helped too with the carried interest expense exemption. Many of the higher up Democrats in Congress are good friends with big-name private equity partners and their firms. Mittens Romney ran a private equity firm too. Although he did actually turn around Office Depot decades ago
Awesome, awesome, awesome interview!
AMEN to Gretchen and her thesis/analysis. She's spot on. If Biden were dynamic and smart he would have her in the WH for discussions and run on this, but sadly he isn't and he won't.
LOL. Biden has been in front of the line to capitalize on all this. He learned from the Clintons that one should get rich in public service. (Republicans are not innocents either.)
Private equity / venture capitalists have always been bad news for companies…they asset strip and do little for the business they get involved in frequently staff lose their jobs as they window dress the business for sale… I liked her expression, flipped them for a turn just like secondhand car salesman.. these investors offering management expertise for monitoring fees don’t really know anything more than the business trying to establish real growth. The cancer they introduce is debt….
Great interview. One can extrapolate the "Our Economy is Being Plundered" theme to globalism, the Green Agenda, and other aspects of the growth in the financialization of the US economy. If the country ever goes deeper into socialism, predatory capitalism will be one of the causes.Watching the icons of capitalism sing the praises of China's system reminds me of how a number of America's great companies were wooing Germany prior to WWII.
Our politicians as usual are the ones to blame. Carried interest loophole, lack of transparency, regulation and no accountability allows these vultures to continue. No wonder the younger generation s are anti capitalist. I can't think of a major industry that doesn't have similar issues but PE may be the worst!
One way to solve the politician problem is to vote ALL of the incumbents out.
Excellent episode!! Bravo!
really insightful interview, great job adam
Wow, what an informative interview. Eye opening😮
I’m confused; did anyone force shareholders of buyout targets to sell to PE firms? Why didn’t management and staff make a higher bid? Should the state have stepped in to buy?
Thank you Adam and Gretchen.. truly a cancer in our society
A belated HB, Adam
Happy Birthday Adam Taggart! We love you! Keep up the good work.
What happened to Toysrus is a perfect example of private equity behavior…
The thought is that Citadel also works with LBOs to force bankruptcy through public companies.
I would like to name them "Parasites". Plunderers sounds a little bit to familiar. Been working in companies that has been "incorporated". The same tune everytime... Very nice interview. Thank You!
What a fantastic interview, two really inspirational individuals.
Gretchen Morgenson is a wonderful woman
great video adam, and i'm buying the book!
Wow🎉🎉🎉 Great interview and exposure of the Truth to Financial Corporate Power!
Can we get this Taught in High Schools and Universities?????
Is there a reason Financial Knowledge is Not taught in USA demo-socialist Public Schools????
I totally agree Eric. Budgeting and finance should be taught in middle school and high school.
Wealthion 🥇🥇🥇
Great interview
Great insight!
My eyes are more open due to this podcast, thanks Adam
I'll call this the "vultures of wall street" smh!
Adam, the KEY problem is much too much money the LPs (pension funds, endowments, etc) have been allocating to the PE funds due to this frantic monetary policy for the last decade. The pension funds have been desparately looking for any coupon on their capital when they were offered zero (Europe) or very little (US) interest on the public bonds. In result the PE started having big oversubscribtions from the investors seeking returns, followed with all the agency problems related to the moral hazard on the PE side. We need to curb state budget deficits, stop ZIRP and let the savers / lenders have more options to invest capital. Normalizing monetary policy would automatically curb leverage PE use to buy-out companies. All evil starts from the top which is free / cheap money.
Exactly. (See my comment above.)
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive "Don't you hate it when someone answers their own questions? I do."
I think it's called putting lipstick on a pig. Baine Capital is a rinse repeat expert at this cycle....I've seen it first hand.
They're parasites.
Thank you for the content
Excellent interview.
Change the laws where buyer has to keep their debt on their balance sheet not the aquired company.
Good conversation apart from her repeating of “stakeholders”. However, I was severely disappointed by the lack of any mention of the high-level political connections that these firms, notably Carlyle, employ; and their role in tilting the playing field. Seems like a serious oversight. Hopefully, it’s in the book.
I laughed a little when she told Adam he was "too young to remember". It's good to hear some perspective from someone with as much experience as Gretchen.
Thank you for the insights, I love this channel! I notice the lingo and verbiage of “extraction” and “hollowing out” sounds very similar to how a parasite works
A very interesting interview. Adam: The lighting is a bit dark in your location. Hard to see you clearly.
great episode
While often a critic, I really enjoyed this interview with Gretchen, Middle Aged Ken Doll.
Thanks....I think?
I like her, have her on every 6-months.
Sorry to be repetitive over several videos but please get someone on to talk about government spending in as much detail as possible. We desperately need the public to be more educated on this. A lot of people, even professionals don't know a) how laws make it through congress; b) how the money is supposed to be allocated and c) how the money is actually "allocated". The same goes for regulations and how they're implemented or not, but that is another story. Run the gamut: defense, housing, infrastructure and so on. I think it would probably be one of your most shocking shows.
Excellent interview explaining - with fantastic examples - something that I think my generation (millennials) has instinctively known since starting in the labor market. I think we are in for some major shakeups over the next few years as the economy plummets.
What will be interesting is that I think the labor shortages will continue, meaning companies will still have to compete for skilled labor. Yet this will be difficult as their costs rise - the stealholders have taken so much from the companies that despite drastic downsizing (even pre-recession) they will struggle to remain profitable while having to pay higher wages to keep the talent needed to keep operations going.
It will be a really rough ride, but I'm optimistic we might see a reversal of the flow of money from the employee to the investor. Maybe - just maybe - the investors will take the hit and the employees actually keeping the company running will be rewarded, for once in my working career.
Actually, employees should be investors and shareholders in public equities - that's how to share in capitalism's successes. It means assuming risks and managing them. The labor model of distribution is a product of the industrial age.
My personal feeling is that normalized MARKET set interest rates would correct almost ALL the bad behavior and excesses of the greedy private equity firms and Wall Street. Just ONE correction back to real capitalism would equal a mountain of regulations that really never fix the problem anyway. Greedy people will just find a new clever method to extract wealth from functioning companies if we don’t return to true market driven interest rates.
If the ultimate goal is money, it leads to problems and destruction. It doesn't matter if you subscribe to capitalism or socialism, because that's just how life works. We compete to survive and live better, but in a civilized society we don't kill each other, so we compete for money. People with more sophistication win the competition. So sad.
Principals of PE firms should face serious punishments for these violations of the public trust
JAIL
No, we should just stop giving them free money. Clawbacks are justified as well, but only criminality faces legal judgment. Stopping the free money would help, so we'll see where the Fed pivots.
A lot of these companies she described sound like ones that were going to go out of business regardless of who was running it. At least get the useful assets out. The pension managers are the "unions guy." Not a fiduciary.
This interview is really interesting. It talks about how private equity, which is a way of investing, can affect our economy. It reminds me of things I've seen in real estate. Thanks for sharing this!
“Cost cuts” are great for shareholders but awful for regular shmegular people. It takes money from the poor and gives it to the rich in hopes of a supposed trickle down effect.
Does fiat money contribute to the leveraged buyout (aka private equity) industry? Would an asset based currency make their predatory practices less lucrative?
Citizen's United threw gas on the fire by allowing for total regulatory & congressional capture.
Financiers and government collude against best interest of nations economy for their own enrichment , would installing a new government help .
The fees charged are carried interest so taxed as capital gain not income.
Its ALL a Corrupt LOOTING Scheme that is Allowed!!
its just not wall street, its your banks as well.
Claim your trust back
A sound banking system? Aren't there bank being downgraded at this moment?
Would upcoming probable bankruptcies provide easy targets for PE firms? Specially if the interests rates come down to 3% in a couple of years ? The word in consulting industry is that there is about 5 trillion in cash raised by PE firms waiting for such opportunities.
I am not so sure about the health of the banking system. Through QE the banks have been on life support for a decade and a half. We are the most indebted we have ever been. Banks are only as healthy as the borrowers ability to repay. I don't think that it is looking so good!
The book is a great but an infuriating read! I remember learning of the Noranda disaster (I'm in Missouri) but have to take a break halfway through the book before Morgenson and Rosner get into the details. Argh.
This is fabulous
Love these interviews
didn't mr. pulitzer hang out at Jekyll Island. might as well call it the Rockefeller prize, or , what , 'illuminati recognizes'
The residential real estate private equity issue is not as what she makes it seem. Get someone that actually directly works in this industry to talk about both sides. Many homes being bought by the private equity groups are not in very good condition, and the majority of people who rent I. Their homes can not own because of their own heavy debt and they would live in a better area than they otherwise could.
💰💰💰@ it’s destructive worse !!! WoW !!!! Sobering .😔
she said 'stakeholders'. WEF?
The so-called regulators are from the same industry. The original sin is Fiat. Money from nothing. Contaminates everything.