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#2[dead]
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#3Its a broad strokes overview but id love to see a deeper documentary exploring how this works. If the companies are taking on all this debt, which makes them subsequently implode, who is taking the losses on the loans and why are they still making those loans?
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#4This doesn’t explain anything.
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#5Its a broad strokes overview but id love to see a deeper documentary exploring how this works. If the companies are taking on all this debt, which makes them subsequently implode, who is taking the losses on the loans and why are they still making those loans?
selection bias is why
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#6Its a broad strokes overview but id love to see a deeper documentary exploring how this works. If the companies are taking on all this debt, which makes them subsequently implode, who is taking the losses on the loans and why are they still making those loans?
The lenders are taking the losses.
Because most businesses take out loans for legitimate reasons. Banks usually charged PE owned companies significantly higher rates for their loans to address the risk(used to work at a PE owned company and we paid 4x prevailing market rate) so PE firms go to great lengths to hide their ownership.
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#7The flip side is: efficient capital allocation is better for our economy as a whole than trying to save certain jobs for emotional reasons.
Struggling businesses that can’t operate effectively and provide a poor return on capital should be shuttered - the only way to deal with the mountains of paperwork involved is to incentivize very smart people to work at very bad companies. smart people don’t like to work at failing companies. how to reconcile this and ensure efficient capital allocation? huge monetary compensation.
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#8Its a broad strokes overview but id love to see a deeper documentary exploring how this works. If the companies are taking on all this debt, which makes them subsequently implode, who is taking the losses on the loans and why are they still making those loans?
The lenders are taking the losses. Because most businesses take out loans for legitimate reasons. Banks usually charged PE owned companies significantly higher rates for their loans to address the risk(used to work at a PE owned company and we paid 4x prevailing market rate) so PE firms go to great lengths to hide their ownership.
It seems like a lot of lenders should be sued for irresponsible investing then. How much interest can you charge when you get so little of the actual capital back? Is it 100% or more?
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#9The flip side is: efficient capital allocation is better for our economy as a whole than trying to save certain jobs for emotional reasons. Struggling businesses that can’t operate effectively and provide a poor return on capital should be shuttered - the only way to deal with the mountains of paperwork involved is to incentivize very smart people to work at very bad companies. smart people don’t like to work at fail…
... job displacememt by budgetary cuts or by competition/progress. It seems you conflate PE with the latter (for emotional reasons).
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#10Earlier quoted context omitted.
The lenders are taking the losses. Because most businesses take out loans for legitimate reasons. Banks usually charged PE owned companies significantly higher rates for their loans to address the risk(used to work at a PE owned company and we paid 4x prevailing market rate) so PE firms go to great lengths to hide their ownership.
It seems like a lot of lenders should be sued for irresponsible investing then. How much interest can you charge when you get so little of the actual capital back? Is it 100% or more?
Banks are not taking huge losses because a huge fraction of loans to PE work out.
Imagine believing PEs are just constantly scamming banks out of their money. Yeah sure.
Its just that people have this carricature of PE in their head plus we are on HN where there are a huge fraction of Dunning-Krugers when it comes to topics about economy. Thats why you get these internally inconsistent arguments