Private Equity Wants in on the Bailout? Spare Me • Hacker News Board

Re: Private Equity Wants in on the Bailout? Spare Me

#91

Post by SpicyLemonZest » Fri, Apr 03, 2020, 9:38 PM UTC

danharaj wrote: post #84

SpicyLemonZest wrote: post #78

Earlier quoted context omitted.

I'm just not sure what it means to talk about "the class of people who own capital". It seems to presume a country that's strictly divided between owners and workers, which hasn't been true for decades at this point; most Americans own at least a little capital.

The capital that most Americans "own" is managed by a very small class of capital managers at elite financial institutions. The point is, who controls the levers of power, and whose interest are they operating them in? The distinction you're making isn't much more than pedantry. It should be considered remarkable that Marx's observations need only minor adaptations after one hundred fifty fucking years .

Marx's observations need incredibly severe adaptations. By Marx's original standards, Uber drivers should be some of the least exploited workers in the world - they own the means of production!

Re: Private Equity Wants in on the Bailout? Spare Me

#92

Post by nopzor » Fri, Apr 03, 2020, 9:38 PM UTC

RHSeeger wrote: post #85

LatteLazy wrote: post #81

I feel like this whole thing is a sideshow. We should "bailout" based on just 2 criteria: * would the business be viable if it weren't for corona and will it be viable after coronavirus? * what's in it for us? We want equity, or juicy interest on the loan or you're industry needs to be a big net contributor of tax revenue. We made a profit on the TARP activities. Let's do that again, then we can cut taxes and expand…

I would add * Is the business important to society as a whole In my opinion, bailouts aren't about if a company "deserves" to survive, they are about if it's "important to us, as a society" that it survives. If so, we group together and save it (with out taxes).

who is the judge of what businesses are important to society?

Re: Private Equity Wants in on the Bailout? Spare Me

#93

Post by cmrdporcupine » Fri, Apr 03, 2020, 9:39 PM UTC

SpicyLemonZest wrote: post #86

cmrdporcupine wrote: post #82

Earlier quoted context omitted.

Americans, maybe. Worldwide, unlikely. But even saying that, having a mortgage and owning and having a few shares in your 401k ... you'd really call that owning capital? The depth of degree of difference between that and even the most minor members of a board of corporation is pretty huge. Not to mention it's very easy for us in the technical class to not even notice that the vast majority of the country isn't like u…

I certainly wouldn't dispute that rich people have more power and influence than your average Joe, or that they lead very different lives than him. I just disagree that there's such a thing as a homogenous class of capital owners, who would have or could have "created" the state as a conspiracy to "continue to own and profit from their ownership of capital".

I never claimed any "conspiracy"; there's no meeting or discussion (well, I guess there is stuff like Davos or whatever, but let's put that aside, that's mostly theatre).

The formal mechanisms of the modern nation state were the outcome of a 200 year process, a development over time. The nation state _emerged_ along with the capitalist market system. Before that we had feudal autocracies. What we call a government now is a product of push and pull, trial and error, experimentation. And the dominant force shaping it has been the need for those with wealth to preserve a market of private ownership that keeps them wealthy, and to keep the simultaneously emergent forces of popular democracy from threatening that.

The Marx quote might make it sound conspirational, but in the context of all the text around it, that's certainly not what he meant.

For what it's worth, you don't have to go looking in Marx for this kind of analysis. Classical liberalism would also admit this role for the state -- just with a positive spin.

Re: Private Equity Wants in on the Bailout? Spare Me

#94

Post by sailfast » Fri, Apr 03, 2020, 9:41 PM UTC

Havoc wrote: post #4

>But do they really deserve any part in a bailout? Do any of these companies? The whole concept of bailouts create bad incentives - to me that's more the crux of the issue. But if you're gonna do them anyway then I see little justification for including/excl some just because they're listed vs private. Plus it makes way more sense to "save" the economy at grass roots level anyway. I'd prefer more of a suddenly expand…

> Do any of these companies?

I'd argue yes, to a certain extent. The government has ordered suspension of businesses for the good of public safety and welfare. Yes, they deserve some sort of compensation for that, I would suggest.

If you're going to tell me I cannot open my business to pay my employees under threat of arrest, then it would be fair to provide some compensation during the time I am ordered to not work so I can pay my staff and keep my existing obligations paid (or forbearance, etc)

This depression is not the result of a lack of demand, but a government-ordered stoppage of work.

That said, there are secondary and tertiary effects on businesses and the economy here beyond wages and paying rents that will be detrimental to share value and equity values (or ability to pay debts used for other purposes like share buybacks). Equity holders should not be bailed out. As an equity holder you're an owner. You're the last to be paid.

Re: Private Equity Wants in on the Bailout? Spare Me

#95

Post by bob33212 » Fri, Apr 03, 2020, 9:42 PM UTC

brenden2 wrote: post #29

What I learned in school growing up was that if I lose a bunch of money gambling at the casino with my credit card, I don't get a free bailout from the government. But maybe things have changed?

You are supposed to use another person's credit card after telling them that you have a system which can beat the casino

Re: Private Equity Wants in on the Bailout? Spare Me

#96

Post by marcusestes » Fri, Apr 03, 2020, 9:45 PM UTC

Y’all do realize that private equity portfolio companies include every single YC and venture-backed startup, right?

Re: Private Equity Wants in on the Bailout? Spare Me

#97

Post by SpicyLemonZest » Fri, Apr 03, 2020, 9:46 PM UTC

cmrdporcupine wrote: post #93

SpicyLemonZest wrote: post #86

Earlier quoted context omitted.

I certainly wouldn't dispute that rich people have more power and influence than your average Joe, or that they lead very different lives than him. I just disagree that there's such a thing as a homogenous class of capital owners, who would have or could have "created" the state as a conspiracy to "continue to own and profit from their ownership of capital".

I never claimed any "conspiracy"; there's no meeting or discussion (well, I guess there is stuff like Davos or whatever, but let's put that aside, that's mostly theatre). The formal mechanisms of the modern nation state were the outcome of a 200 year process, a development over time. The nation state _emerged_ along with the capitalist market system. Before that we had feudal autocracies. What we call a government no…

Sure, and I'm with you as far as that goes. But if that's what you meant it's a very strange response to the original comment. It's true that government bailouts wouldn't happen if the government were still run by a landed aristocracy that distrusts merchants, but I don't know if that's tremendously relevant to an analysis of actions in 2020.

Re: Private Equity Wants in on the Bailout? Spare Me

#98

Post by cmrdporcupine » Fri, Apr 03, 2020, 9:46 PM UTC

SpicyLemonZest wrote: post #91

danharaj wrote: post #84

Earlier quoted context omitted.

The capital that most Americans "own" is managed by a very small class of capital managers at elite financial institutions. The point is, who controls the levers of power, and whose interest are they operating them in? The distinction you're making isn't much more than pedantry. It should be considered remarkable that Marx's observations need only minor adaptations after one hundred fifty fucking years .

Marx's observations need incredibly severe adaptations. By Marx's original standards, Uber drivers should be some of the least exploited workers in the world - they own the means of production!

Only if you ignore that the Uber app, its customer base, its billing system, and everything else attached to the Uber system is owned by... Uber and its investors.

Are you saying because they (maybe barely, if at all) own the car, they are capitalists?

Anyways, Marx isn't scripture. Just a dude with some interesting writing some of us find cogent still. Marx himself would have bristled at being treated as some sort of biblical style authority. Of course it needs adaptations. But maybe not the ones you are suggesting.

Re: Private Equity Wants in on the Bailout? Spare Me

#99

Post by danharaj » Fri, Apr 03, 2020, 9:47 PM UTC

SpicyLemonZest wrote: post #91

danharaj wrote: post #84

Earlier quoted context omitted.

The capital that most Americans "own" is managed by a very small class of capital managers at elite financial institutions. The point is, who controls the levers of power, and whose interest are they operating them in? The distinction you're making isn't much more than pedantry. It should be considered remarkable that Marx's observations need only minor adaptations after one hundred fifty fucking years .

Marx's observations need incredibly severe adaptations. By Marx's original standards, Uber drivers should be some of the least exploited workers in the world - they own the means of production!

I know that you know this is a stupid point that can only be reached by reading Marx in the most obtuse way possible.

Re: Private Equity Wants in on the Bailout? Spare Me

#100

Post by dcolkitt » Fri, Apr 03, 2020, 9:48 PM UTC

Decathect wrote: post #88

dcolkitt wrote: post #71

Earlier quoted context omitted.

> Saddled with as much debt as possible, the business by design has been put in a position such that it cannot survive even a modest decline in revenue without raising significant additional capital. I agree, but I think it's important to qualify what you mean when you say the "business can't survive". Because this implies that if a company can't meet its debt obligations that it will cease operations. As long as ope…

I'm really curious what your point is, since the willingness of capital markets to extend financing seems like it'd be very related to a company's capital structure and leverage. Like, were the businesses in question not over leveraged, they'd find it much easier to find the capital to continue operations during a downturn.

> extend financing seems like it'd be very related to a company's capital structure and leverage

This seems intuitively appealing, but is misleading. The Nobel-prize winning work of the Modigliani-Miller Theorem[1] that a firm's capital or leverage ratio does not prima facie have any impact on its weighted-average cost of capital.

[1] https://en.wikipedia.org/wiki/Modigliani–Miller_theorem