Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Private equity bought America's essential services

rubbishtalk.com

Post reply on HN
Print view View original

291–300 of 584 posts

Re: Private equity bought America's essential services

#291

Post by hdndjsbbs »

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…

If the government guaranteed basic human needs are met for every person (food, shelter, healthcare) there would be less of a need for giant pools of public money (pensions, insurance) sloshing around.

Mass index fund investment is basically socialism but stupid. My retirement money is going to get invested in the SpaceX IPO against my will. The market is not efficiently allocating capital, it's structured to allow elites to skim off the top while forcing middle class people to subsidize them.

Re: Private equity bought America's essential services

#292

Post by genxy »

mikeyouse wrote: post #253
wavefunction wrote: post #211

Earlier quoted context omitted.

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.

Not entirely... U Mich's is ~$20 billion, UVA & OSU are both around $8 billion, UCLA's is ~$5 billion, the Texas + Texas A&M system have nearly $50 billion in AUM. https://en.wikipedia.org/wiki/List_of_colleges_and_universit...

I don't know why the University of Washington isn't on the list of public institutions, it should be number 6 with 9.4B in assets.

https://www.uwinco.uw.edu/

Re: Private equity bought America's essential services

#293

Post by bombcar »

triceratops wrote: post #258
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 S&P 500 already returns 7%. Why do pension funds need PE? And like FIRE devotees, maybe they should model a lower withdrawal rate.

Because if you're hired as pension manager, and you just shove all the money into VTI, you're going to feel like you're doing nothing, and eventually someone will notice your job is redundant, even if you're outperforming your peers.

Re: Private equity bought America's essential services

#294

Post by mint5 »

cameronh90 wrote: post #236
yardie wrote: post #195

Earlier quoted context omitted.

One of the tools we use was bought by PE last summer. When it was time to renew our support contract had tripled in price. I use it across 10 projects so our costs went from $200k to $500k. I let our account manager know this was unacceptable but even his hands were tied. Cancelled those contracts and let them know we were retooling with a competing tool and opensource to fill those gaps. The impression I got was we…

This is just the design of a PE fund. They run on a fixed cycle, so early on they heavily invest into their portfolio with the aim of resolving that risk and maximising the sale value by the end of the cycle. In principle, I don't think there's anything wrong with this. All investment expects a ROI over some time horizon. Public companies do the same thing. Anyone who founds a start-up is doing it too. The only real…

“ In principle, I don't think there's anything wrong with this. All investment expects a ROI over some time horizon”

Huh? Why is there nothing wrong? Yes they wouldn’t make the investment if they didn’t think they had a way to get ROI, but how does that entitle them to one at any cost or make it necessarily moral?

As an extreme example, If I invest to create a company that is clearly exploitive and addictive, nothing is wrong in principle and I’m entitled to my roi?

Re: Private equity bought America's essential services

#295

Post by bombcar »

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.

It goes beyond boomers (the boomerdoomer is already in full swing) - as they're dying off, most new employees do not have pensions (instead having defined contribution plans which have their own issues) - except for a few very large swaths, namely government and education.

Re: Private equity bought America's essential services

#296

Post by forshaper »

tavavex wrote: post #202
forshaper wrote: post #173

Earlier quoted context omitted.

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 possi…

I had the pleasure of growing up around gray markets (relatively free, bribes were predictable & reasonable enough for an average noodle seller) in Southeast Asia in the 90s. It's quite different from large corporations getting Federal agencies and municipalities to lock out any potential competition. The enforcement of the US govt is far stronger than the enforcement of a handful of corrupt cops, as each precinct is essentially its own feudal regime, and within the department you have individuals mostly loyal to their families. A corrupt cop in a corrupt system driven by loose associations of extended families & fictive kin groups, one of five in a neighborhood say, can be pressured by a group of aunties and uncles serving street food or pirated goods through a web of personal relationships. This was much easier for them than hiring a lobbyist here would be.

I'm not saying it's better, rule of law has many benefits, but it is an example of where there were markets which were more free, that did not have cyberpunk outcomes, and they were quite different.

Re: Private equity bought America's essential services

#298

Post by _DeadFred_ »

tw04 wrote: post #41
itake wrote: post #31

Earlier quoted context omitted.

One thing I don't see is the other side of this story: the sellers. I don't get why sellers are selling to PE. Can these services not "IPO"? Why do these companies need to sell? When PE takes over medical practices, my understanding is there just isn't enough capital available for a dentist to "cash out". The options are either they find another dentist to buy it, the close the practice, or they sell the private equi…

Out of the gate you need $27.5m in cash flow with $2.2m in profit. I doubt there are many single practice dentists doing that kind of volume. You can’t just IPO because you want out of the business. There’s lots of reporting and regulatory requirements to ensure you aren’t screwing investors.

In the past farmers needed COOPs in order to make their products/the local community's economy viable. Today we need something like COIVs (community owned investment vehicles). Kiva for the rest of us I guess.

Re: Private equity bought America's essential services

#299

Post by triceratops »

bombcar wrote: post #293
triceratops wrote: post #258

Earlier quoted context omitted.

The S&P 500 already returns 7%. Why do pension funds need PE? And like FIRE devotees, maybe they should model a lower withdrawal rate.

Because if you're hired as pension manager, and you just shove all the money into VTI, you're going to feel like you're doing nothing, and eventually someone will notice your job is redundant, even if you're outperforming your peers.

And the people who hire pension managers are too stupid to see that active pension management is redundant? They haven't read A Random Walk Down Wall Street?

Re: Private equity bought America's essential services

#300

Post by Balgair »

scary-size wrote: post #152

Huh, that somehow reminds me of Crassus from Rome [1] > The first ever Roman fire brigade was created by Crassus. Fires were almost a daily occurrence in Rome, and Crassus took advantage of the fact that Rome had no fire department, by creating his own brigade—500 men strong—which rushed to burning buildings at the first cry of alarm. Upon arriving at the scene, however, the firefighters did nothing while Crassus off…

https://en.wikipedia.org/wiki/Battle_of_Carrhae

For the curious, above is how Crassus died.

TLDR: Got over his skis and mad with power and money. Decides to invade Parthia. Gets wrecked by horse archers. That ends up being typical for Romans, but this was the first-ish time that happened. Some of those captured legionaries may have ended up in China, though it is unlikely.

https://en.wikipedia.org/wiki/Liqian#Lost_Romans_myth

Post reply on HN