Private Equity Issue Emerges In US Presidential Election.
Even Republicans are queuing up to slag off private equity in the US.
“Rich people figuring out clever ways to loot a company,” is how Republican Newt Gingrich, former Speaker of the House of Representatives, described the private equity industry.
“Vultures, sitting out there on the tree limb waiting for the company to get sick then they swoop in and eat the carcass,” is how another Republican, Rick Perry, Governor of Texas, describes private equity companies.
The reason, of course, is that the Republican front-runner for the nomination, Mitt Romney, ran the private equity company Bain Capital for 15 years.
It is pointed out that, between 1987 and 1995, Bain made more than half a billion dollars profit from five companies which subsequently went bankrupt.
In the UK we’ve seen the same thing, with the private equity company Blackstone making a $1 billion profit from the old peoples’ homes organisation, Southern Cross, leaving the company teetering on the brink of bankruptcy.
Private equity, claims a Republican TV documentary, caused the “greatest job losses since the second world war.”
While, in a decade which has seen no rise in wages for the average US worker, the private equity industry, which owns companies employing over eight million Americans, is seen as leading the charge to keep wages low.
The American faith in unfettered capitalism could be shaken if the Republicans explain the negative aspects of the private equity industry to the population at large.