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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#211

Post by wavefunction »

Galanwe wrote: post #207
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.

I don't believe that's ironic. Harvard and other "elite institutions" are the places with massive endowments, not state colleges or anything. Frankly the more I think about it the more it's nothing particularly interesting, just a fractal representation of the privilege of wealth as far as you want to drill down.

Re: Private equity bought America's essential services

#212

Post by [deleted] »

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…

[deleted]

Re: Private equity bought America's essential services

#213

Post by pjc50 »

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?

They do (and will generally track the index themselves), but PE offers a higher risk/return profile and diversification.

Re: Private equity bought America's essential services

#214

Post by tavavex »

WarmWash wrote: post #197
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…

These mega-strong players always kill themselves and collapse. We can see this on the global geopolitical scale (which fundamentally acts as a true free market), where all the empires have always fallen. The stressing part is when they are at their peak, so people would like to use regulation to short-cut right to the collapse part. The only example we have a true free market victor that hasn't collapsed is humans, w…

But does that collapse happen because of some universal axiom about controlling humans, or were those empires merely limited by what was possible in their era? This is the first time in history we have so much military power, ways to exert influence that's truly world-spanning, the most sophisticated technology and the most thorough surveillance ever - all at the same time. Whatever barrier there might be, who's to say that today's megacorporations won't be able to push past it?

Re: Private equity bought America's essential services

#215

Post by DanielHB »

dapperdrake wrote: post #30
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…

Does "the bank" know that it is unviable?

Check the other comment, apparently these loans don't come from banks, but rather from private debt markets. And most likely they don't know these loans aren't viable.

Re: Private equity bought America's essential services

#216

Post by Aurornis »

sega_sai wrote: post #3

I simply don't understand why leveraged buy-out(LBO) is allowed in the first place. It is like paying for the company with the money from the company you are buying.

Private parties are allowed to make bad business decisions: Lenders can give loans that might not pay back. Businesses can take on a lot of debt and cash out the owners if allowed under the terms of the loan. A PE buyout isn’t even necessary to do this. The owners could load the company up with debt and pay themselves a lot of money if they negotiated the right loan terms. One of the suppliers I used for a while did exactly this, enriching the owner and then collapsing.

One correction is that it’s not like paying for the company with money from the company you’re buying, because that obviously wouldn’t benefit the sellers. The money comes from a lender and they get terms to take the business if the loan terms aren’t meant. The lenders are the effective new largest owners of the company with the PE firm being a smaller owner but the expected primary operator.

Re: Private equity bought America's essential services

#217

Post by pjc50 »

Brushfire wrote: post #5

Why is there so much attention paid to the buyer (private equity) and no attention paid to the folks who sold the businesses to them?

The buyer generally runs the service in a much worse way, so it's their management which comes under attack.

Re: Private equity bought America's essential services

#218

Post by randallsquared »

nyeah wrote: post #71
cj wrote: post #24

Earlier quoted context omitted.

LBO's are like buying a rental property where the mortgage is approved based on expected future rental income from the property. That's why the parent is saying "It is like paying for the company with the money from the company you are buying.".

LBOs are much worse than that. It's like buying a rental property where the mortgage is owed by the a shell corporation that owns the property. The shell corporation, not the purchaser, owes the debt. It's like taking out a mortgage on a house, but letting the house owe the debt.

When you put it like that, you make it sound reasonable! The house being collateral for the debt seems in a blurry way to be "the house owes the debt".

Re: Private equity bought America's essential services

#219

Post by nekusar »

protonbob wrote: post #201
nekusar wrote: post #196

Earlier quoted context omitted.

> 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]

Exactly. IN cases of national or world-level event, governments and government related bodies (WHO) will do whatever they can as not to cause a widespread panic. And if that means lying, they will absolutely do that.

And because the capitalists run the show in a lot of countries, https://ruinmyweek.com/wp-content/uploads/2020/07/live-laugh... is a good image that explains why lots of things kept going on as usual.

A world-level 6 week pause would have burned covid and a whole lot of other diseases out. But no. Poor capitalists need their 3rd yacht, 13th vacation home, etc etc etc.

As for me, my SO worked in health care. And Covid is a SARS. We have decades of effects and response. The shit's airborne. WHO knew that. CDC knew that. But they lied and lied and lied.

We take our healthcare in our own hands. I'll critically listen to the "experts" and deal with med doctors for prescription drugs. And Im definitely interested in my own manufacture of pharms https://fourthievesvinegar.org/ . But yeah, the wider and general the message, the more propaganda it likely is.

And we also have a good stock of PPE now, including a few tyvek suits. And everclear is 95% alcohol and $30 here for a handle. Best sanitizer you can easily acquire and food safe to boot.

EDIT as comment to WarmWash:

No. The WHO and CDC lied about Covid being an airborne infection. They refused and refused, up to then redefining what an "airborne infection" is.

https://www.bmj.com/content/385/bmj.q985

Covid is a SARS. Airborne. SARS requires BSL3 to handle properly. https://en.wikipedia.org/wiki/Biosafety_level#Biosafety_leve... "Biosafety level 3 is appropriate for work involving microbes which can cause serious and potentially lethal disease via the inhalation route."

I dont need international experts to tell me a stream of bullshit, when I can look at the type of disease and go "wellll fuck, airborne. time to wear masks outside the home and no parties or events. and go to store when its not busy."

Was Covid as bad as SARS? No. But is SARS response something that can be compared to what we should have did for Covid? Hell yeah.

Re: Private equity bought America's essential services

#220

Post by WarmWash »

protonbob wrote: post #201
nekusar wrote: post #196

Earlier quoted context omitted.

> 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]

Everyday I am infinitely grateful I have the ability to understand nuance, and the mental firepower to be able to comprehend data coming from sources rather than tiktoks, twitter, and hyper-partisan news orgs.

No one ever said the vaccine would prevent transmission. What they said was that it !could! prevent transmission. But no one would know before studies were done. What they did say is that it would lower mortality rates. Which it did in fact do. But the factors of transmission and spread were dice rolls. And everyone with first hand knowledge knew that from day one.

But, you are in fact correct, you were lied to. But not by anyone with knowledge of the vaccines, but by the grifters you hold up has being "a beacon of truth". The grifters who read "Vaccine has a chance it could slow or stop transmission" and turn around and say "They are promising it will stop transmission!" just so they can tear it down later as "another victory for TRUTH!".

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