America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery • Hacker News Board

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#131

Post by UweSchmidt » Fri, May 03, 2019, 5:48 PM UTC

paganel wrote: post #36

> Because private-equity firms appear frequently as villains in the press, many people assume that they cater mostly to the superrich, earning high returns on investments for billionaire clients. They do. But by far the most important piece of their business — 48 percent, according to the data-analytics firm Preqin — is investing capital for American pension funds. This doesn't get mentioned often enough when talking…

So those pensions - representing a large chunk of everyone's lifetime earnings - are in the same order of magnitude as what the "1%" invest? That's pretty much how the "1-percenters" are defined: "this tiny number of people own as much as everyone else combined". If these pensions are used to create harm to the general populace, how does this not aggravate the whole situation?

Do you really think politicians have not focussed on the insane economic and social developments because they somehow failed to obtain those "real numbers"? Oops, we had no idea that people are crushed by student loans and lack of retirement arrangements?

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#132

Post by leesalminen » Fri, May 03, 2019, 5:50 PM UTC

_bxg1 wrote: post #77

"Financial engineers" aren't interested in building a sustainable business; they want to play a game cleverly, make a cash-grab, jump ship, and leave thousands dealing with the fallout. It's a similar short-term strategy to that taken by many SV founders who build a company only to sell it, though obviously the latter don't cause nearly the same degree of harm to society. But they still pass on opportunities to creat…

Alternatively, someone started a business that they wanted to create and build. At the same time, this founder didn’t want to spend their entire career on this one company. So they build it up and sell it off to PE. After a while they have a new idea and start again.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#133

Post by everdrive » Fri, May 03, 2019, 5:50 PM UTC

leesalminen wrote: post #128

mbesto wrote: post #39

Earlier quoted context omitted.

PS - the owners of these company's are also complicit as they let the PE shops come in in the first place.

Why is it _wrong_ for owners to do what’s best for them? Most people don’t own a business as a charity- they own it to make money. If a PE acquisition is the best path to a lucrative exit, why shouldn’t they do it?

Because selfish behavior is still wrong even if it's incentivized by a system.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#134

Post by leesalminen » Fri, May 03, 2019, 5:52 PM UTC

everdrive wrote: post #133

leesalminen wrote: post #128

Earlier quoted context omitted.

Why is it _wrong_ for owners to do what’s best for them? Most people don’t own a business as a charity- they own it to make money. If a PE acquisition is the best path to a lucrative exit, why shouldn’t they do it?

Because selfish behavior is still wrong even if it's incentivized by a system.

I don’t believe that looking out for one’s own interests (“selfish”) is wrong. My dad taught me a valuable lesson as a child- the world owes you nothing and as long as you understand that you'll be fine. I take that to mean that nobody else will look out for you so you have to do what's best for you.

In my situation, my employees profited nicely from a PE acquisition. They all got a sizeable transaction bonus. Not only that, they received additional job security with the backing of a large company.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#135

Post by pjc50 » Fri, May 03, 2019, 5:53 PM UTC

WillPostForFood wrote: post #97

godzillabrennus wrote: post #78

Earlier quoted context omitted.

I’ve been shocked to the extent politicians haven’t focused on the lost tax revenue from the gig economy. I’m certain it’s caused a drop in tax revenue from what would normally constitute middle class tax payers.

What lost tax revenue do you mean? Self-employed/temp/gig workers still pay the same taxes as full time employees.

Same rates, lower overall income, and in some places lower social security contributions.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#136

Post by krilly » Fri, May 03, 2019, 5:55 PM UTC

kevin_b_er wrote: post #16

Not a mystery: Private equity firm bought them out with borrowed money, raided their resources to enrich themselves, then left Remington to rot. It is a common story now. The private equity firm makes a bunch of money and people are jobless.

You say this as if it wasn't the message of the article. Did you even read it?

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#137

Post by mbesto » Fri, May 03, 2019, 5:58 PM UTC

leesalminen wrote: post #128

mbesto wrote: post #39

Earlier quoted context omitted.

PS - the owners of these company's are also complicit as they let the PE shops come in in the first place.

Why is it _wrong_ for owners to do what’s best for them? Most people don’t own a business as a charity- they own it to make money. If a PE acquisition is the best path to a lucrative exit, why shouldn’t they do it?

Did I ever say it was wrong? I'm just saying pointing at a single cause for a complex issue, is not a great way to address the problem.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#138

Post by krilly » Fri, May 03, 2019, 5:59 PM UTC

leesalminen wrote: post #128

mbesto wrote: post #39

Earlier quoted context omitted.

PS - the owners of these company's are also complicit as they let the PE shops come in in the first place.

Why is it _wrong_ for owners to do what’s best for them? Most people don’t own a business as a charity- they own it to make money. If a PE acquisition is the best path to a lucrative exit, why shouldn’t they do it?

Why is it wrong to hurt other people for your benefit?

If you are an alien learning about humans, you should start with some children's books. I think you're missing some pretty fundamental knowledge here

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#139

Post by lph » Fri, May 03, 2019, 5:59 PM UTC

These private equity scams seem to revolve around borrowing money, transferring the debt to a separate legal entity that then declares bankruptcy, and pocketing the money. If that’s true, then it would seem that creditors (and AL taxpayers in this case) end up holding the bag. How are savvy lenders falling for this?

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#140

Post by UweSchmidt » Fri, May 03, 2019, 6:02 PM UTC

ahupp wrote: post #118

dractori wrote: post #99

Earlier quoted context omitted.

The top 1% own 40% of the wealth and have realized 95% of the increase in wealth over the past decade: https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... "More recently, in 2017, an Oxfam study found that eight rich people, six of them Americans, own as much combined wealth as half the human race."

Both of these things can be true: that the top 1% own a large fraction of wealth, and that an even larger fraction is owned by the pensions and retirement plans of the non-wealthy. Wealth comparisons are tricky, e.g they'll show that Americans are some of the poorest people in the world because there's a large fraction with debt (e.g homes, credit cards, student loans). While technically true, that doesn't really mat…

Well then our intuition is wrong.

If your finances throughout your life are not in order, if you have high debt, regardless if it's because of medical bills, student loans or too big a car and house, you are in a weak position. What good does a nice car do if you worry about bills and if you try to avoid to look at the balance in your banking app?

You don't always know how rich some folks are, but for the most part it's easy to see if someone is living above their means, if you get a little anxienty on those people's behalf, then good!