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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#201

Post by protonbob »

nekusar wrote: post #196
halfcat wrote: post #170

Earlier quoted context omitted.

> we are transferring value from our current standard of living to pay for retirement checks Isn’t this just what happens when you have an inverted pyramid (older population is larger than the younger population)? > One can argue that PEs make the business more efficient I’ve never seen it (I agree with you). To improve something they’d have to understand the business and do a bunch of work. Mostly they show up at qu…

> How does one solve pensions? I was thinking that Covid and widespread antivaxxer mentality would have. But no. This will be the latest ladder-pull by the boomers and silents to extract the last bit of wealth from all the younger generations. And this will impoverish gen-x and all younger generations even more so than we already are.

[flagged]

Re: Private equity bought America's essential services

#202

Post by tavavex »

forshaper wrote: post #173
tavavex wrote: post #139

Earlier quoted context omitted.

Why is this downvoted? To me, it seems like a self-evident conclusion. Even the supporters of the current system would probably agree with it. When you have a system that encourages endless growth at absolutely all costs, while placing no limits at the amount of power a single entity can hold, what other outcome can there be but the biggest players absorbing everything into themselves and using their influence over p…

We haven't had a free market in the United States in awhile. It's public-private partnered market fixing. Which is good for the consumer, many times, though not all the time.

Is there a difference in terms of outcomes? In the final form of a complete 'free market' without a government, the biggest entity would simply replicate the same levers of power that a government has through private militias, issuing scrip, having their own private courts and so on. But, since the US has a powerful government, it's much cheaper, simpler and more stable for them to just buy out as much of it as possible and use the same power through a proxy. Admittedly, the US government is not completely controlled by them, so it could still get much worse.

Re: Private equity bought America's essential services

#203

Post by WarmWash »

fny wrote: post #179
spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

A 30-year treasury offers 5% and A-grade corporate bonds offer 6.5%. You don't need to exploit essential services for the other 50bps. [0]: https://fixedincome.fidelity.com/ftgw/fi/FIYieldTable?popupM...

Because treasury rates are rising, it now actually puts even more pressure on PE firms to burn furniture.

Re: Private equity bought America's essential services

#204

Post by darkwater »

bryanlarsen wrote: post #174
giraffe_lady wrote: post #117

Earlier quoted context omitted.

> Hard-working founders should be able to cash out Why? Operating a successful business should be remunerative on its own, or else it's not successful. Owners who don't want to do it anymore can let it become worker owned. If they don't want it, it can dissolve. What else do you need? The very concept that the end of a successful business is a big payday for its creator is itself the poison here. There is no end just…

When my parents started farming they had about a half dozen large loans for the base farm, land, equipment, buildings and an operating loan to purchase seeds and other inputs in the spring. When they retired they didn't have any money in the bank besides the proceeds from their final harvest, but all their loans were paid off. That's where the profits went -- paying off the loans. The farm was their retirement saving…

But that's how it is supposed to be. You "just" need to have a system that incentives banks and small entrepreneurs to take on that risk, and makes it not a good investment for PE.

Re: Private equity bought America's essential services

#205

Post by pjc50 »

FuriouslyAdrift wrote: post #186
spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

Pension funds still exist?

There's $32trn of them: https://fred.stlouisfed.org/series/BOGZ1FL594090005Q

Who do you think is buying .. everything? They're holding substantial fractions of both the whole stockmarket and national debt.

Re: Private equity bought America's essential services

#206

Post by CalRobert »

fredley wrote: post #13

The people behind these funds are playing Monopoly IRL, and this in particular makes me very angry. The UK high street has been a notable victim. Gradually, over the past couple of decades, company after company has been snapped up by PE. Not just shops, but restaurants too. Suddenly you realise that the 5 or 6 high street chains that were competing are now owned by the same fund. Quality collapses, prices rise, not…

You're well served if you want incredibly overpriced sweets at least.

Re: Private equity bought America's essential services

#207

Post by Galanwe »

spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

> The irony is that PEs exist largely because of pension funds.

The irony goes way deeper than that.

A large part of PE clients are university endowment funds.

Harvard for instance has close to $60B in its endowment fund, 40% of which is invested in PE. At this point, Harvard is more an investment fund, with a university as side business.

Re: Private equity bought America's essential services

#208

Post by DanielHB »

Ekaros wrote: post #35
DanielHB wrote: post #15

Earlier quoted context omitted.

What I don't understand is how the cost of banks repossessing these companies in case of default don't make the math unviable. Unless the company have a lot of fairly stable semi-liquid assets (like real estate) banks should be charging fairly high interest on these loans which would make most of these business unprofitable. Which would increase the rate of defaults (if they are authorized in the first place) and in…

Non-bank entities being in play is likely part of the problem. If you can sell the bad debt to some other entity say a fund that got investment from pension you win. For fund managers these things can look great on paper and that is everything that matters. Even if things do not workout they can on paper extend and pretend or take payment-in-kind. Meaning well you are short on interest payments so you just tack it on…

Ah so it is related to that whole private debt markets, the loans these PE companies take are not with banks. It is related to that whole thing with Trump opening those kind of loan investments to ordinary americans and pension funds.

Great another financial crisis.

Re: Private equity bought America's essential services

#210

Post by alistairSH »

nemomarx wrote: post #153
spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

Why don't pensions just invest in index funds generally? High required rate of returns or?

Yes, underfunded relative to future payout promises, so higher rates of return required to remain solvent.
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