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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#521

Post by porknubbins »

freejazz wrote: post #395
throwforfeds wrote: post #388

Earlier quoted context omitted.

At least here in NYC, a large part of a NYPD officer's pension is calculated based on a 3-year look back from their retirement date, so there is a huge incentive to work as much overtime as possible in order to bump that number in your last few years of service. There are lots of stories of NYPD handing out easy overtime in massive numbers for each other, particularly when they are about to retire. Teachers are the e…

All seem trivial compared to the money sucked up by billionaires, who seem to do little good for society. I'm not going to get angry at a police officer trying to maximize their retirement when we live in a society that celebrates people like Elon Musk, Jeff Bezos and Mark Zuckerberg.

Those billionaires are not hoarding cash like a dragon in a lair, their wealth is mostly in stock in productive (FB is debatable at this point) companies many people use.

Boomers (only people I know receiving pensions) use pensions to fund lavish lifestyles without having build major companies.

Re: Private equity bought America's essential services

#522

Post by bombcar »

aidenn0 wrote: post #490
bombcar wrote: post #303

Earlier quoted context omitted.

Most (if not all) gov't pensions still have the defined benefit part as the "optimal" choice even when they offer defined contribution plans. They can also offer some really nice benefits like accessing your pension income at 55 which can be a substantial portion of your last year's salary, and you can keep working elsewhere if you want.

I have a close friend who absolutely would have taken a DC plan if it were offered, since he does not believe the city he works for will be able to meet its financial obligations. It was not offered. Granted I haven't talked retirement with him in about 10 years, so it's possible a DC plan is offered now.

I feel you have to watch your plans like a hawk, because as a pension crumbles there's often a window of opportunity where they offer to "buy you out" (basically turn your DB into a DC mid-stream) - and sometimes the deal should be taken.

Re: Private equity bought America's essential services

#523

Post by fsckboy »

airstrike wrote: post #96
lenerdenator wrote: post #66

Again, we have broken higher risk, higher reward. If you just keep gutting companies with leveraged buyouts, you're not taking on any real risk. If you're buying up firms that deliver "essential services", you're likely engaging a monopoly. Again, low risk, high reward. A direct violation of the rules of how investments should work. Regulate the monopoly and this goes away.

Do you think losing the equity portion of the investment means no risk? It's not fully debt financed. And that debt financing bears an interest proportional to the riskiness of the asset's cashflows. There are lots to hate about LBOs but they aren't entirely devoid of value

>LBOs but they aren't entirely devoid of value

LBOs are encouraged by tax law. Stop it by stop making interest on debt tax deductible. Equity is an investment and represents ownership interest, and so does debt. From the company's perspective, interest deductiblity increases profits when the company takes on debt.

Homeowner interest deductibility should also stop. Want to incentivize home ownership? Give people the money, leave the tax code alone. You know what would happen then? the rest of the people would rebel, "why are you giving these people money!?" Hiding it in the tax code is just that, hiding, and that's not healthy for an open society.

Re: Private equity bought America's essential services

#524

Post by jraby3 »

randusername wrote: post #98

Article doesn't really dig into the angle I personally find most horrifying, strip-mining social capital. In my area PE is gobbling up mom-and-pop apartment complexes, plumbing companies, restaurants, and generally making customers and employees alike pretty miserable. Hard-working founders should be able to cash out, but there has to be a better system than this one. Succession, maybe. Not that we should push an unm…

It used to be much easier to go public and cash out. These days the qualifications are much higher and the legal reporting requirements are incredibly expensive.

Re: Private equity bought America's essential services

#525

Post by hakfoo »

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…

I always fancied the idea of 'dedollarizing' retirement.

When you turn 65/70/whatever, your pension/IRA/401(k) isn't paid out as a monthly cheque, but instead as a lifetime lease to an apartment in a retirement complex with subsidized services, and a relatively tiny cash stipend.

The quality of life remains comparable, except we've removed the ceremony of passing most of the money through the hands of the pensioners on the way to landlords, medical providers, etc. But because the goods and services can be preplanned and bulk-contracted and managed long-term, the operation can get get more value out of $1000 than an individual buyer would get out of $1400. This reduces the pressure for high returns.

This also eliminates the risk of outliving your money. With a prepaid obligation to be fed/sheltered/taken care of, the risk is transferred back to the pension scheme, or society as a whole through a state-insurance-backstop fund, which is probably better resourced and capable of swallowing the risk than your typical individual 85-year-old in failing health.

Re: Private equity bought America's essential services

#526

Post by AuthAuth »

pizzafeelsright wrote: post #235
pelotron wrote: post #149

Earlier quoted context omitted.

I think it's totally appropriate to hold it against them if they knowingly sell out to scumbags. Society used to look down on selling out. We wrote songs about it. But in 2026 it is glorified.

You're 55, making $400k a year as a HVAC Repair Company, and while you love the business and your kids are in expensive colleges (not taking over the business) you are offered $8MM to sell. Instant retirement. A buy out isn't the same as selling out because people live off of cash and not principal.

It should be illegal to sell your business. You grow it and when you die its goes with you. You can sell off the assets if there are any.

Re: Private equity bought America's essential services

#527

Post by marcus_holmes »

throwforfeds wrote: post #388
iboisvert wrote: post #375

Earlier quoted context omitted.

> bloated pensions I find this characterization offensive. Who is to judge if the defined benefit pension if a primary school teacher or fireman, for example, is bloated? It's part of the negotiated pay package, nothing more or less.

At least here in NYC, a large part of a NYPD officer's pension is calculated based on a 3-year look back from their retirement date, so there is a huge incentive to work as much overtime as possible in order to bump that number in your last few years of service. There are lots of stories of NYPD handing out easy overtime in massive numbers for each other, particularly when they are about to retire. Teachers are the e…

Why are we mad at someone who has worked their whole life and is getting a decent retirement, when the article is talking about PE management fees being extracted from essential services at enormous rates?

And yes, pensions are a major part of the PE funding, but not all of it. There are a bunch of incredibly rich people who are also profiting from all of this at exorbitant rates. Can we be mad at them instead?

Re: Private equity bought America's essential services

#528

Post by toomuchtodo »

hakfoo wrote: post #525
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…

I always fancied the idea of 'dedollarizing' retirement. When you turn 65/70/whatever, your pension/IRA/401(k) isn't paid out as a monthly cheque, but instead as a lifetime lease to an apartment in a retirement complex with subsidized services, and a relatively tiny cash stipend. The quality of life remains comparable, except we've removed the ceremony of passing most of the money through the hands of the pensioners…

Medicare, social security, and a senior housing unit?

Re: Private equity bought America's essential services

#529

Post by missedthecue »

randusername wrote: post #98

Article doesn't really dig into the angle I personally find most horrifying, strip-mining social capital. In my area PE is gobbling up mom-and-pop apartment complexes, plumbing companies, restaurants, and generally making customers and employees alike pretty miserable. Hard-working founders should be able to cash out, but there has to be a better system than this one. Succession, maybe. Not that we should push an unm…

"Hard-working founders should be able to cash out, but there has to be a better system than this one."

The entire SBA loan program exists to solve this.

Re: Private equity bought America's essential services

#530

Post by Spooky23 »

alexpotato wrote: post #443
bell-cot wrote: post #441

Earlier quoted context omitted.

When it's an essential service for "everyone", and the economics make healthy competition unworkable, the traditional solutions have been municipal ownership and publicly regulated utilities. Those include Fire Departments, Water & Sewer Dept's, Electric & Gas companies, ...

> Those include Fire Departments I remember watching a discussion about privatizing the local fire department aka the town pays a private company to run the fire department. Opposition folks use the line: "You used to have a shield on your building that denoted you had paid for fire coverage. The old fire departments would drive past the unshielded buildings while fighting the fires." (this is, of course, no longer t…

That happens, bro. Pretty common in some places.
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