mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

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.

Tags: bain capital, carcass, governor of texas, rick perry, tree limb

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10 Comments

  1. David Manners
    January 22, 2012 14:34

    Excellent point, Lefty, these PE guys are, as you say, the asset-strippers of the 80s re-branded. They should be hounded out of society or at least have their tax breaks removed.
    Edit | Reply David Manners Private Equity Issue Emerges In US Presidential Election.

  2. David Manners
    January 22, 2012 14:31

    FROM: Lefty Goldblatt: Yep, PE is a re-branding of the corporate raiding of the 1980s. In the UK we have retail chains falling over if their profit dips by even a few percent. Any cash-generative companies with minimal debt were targets – and were loaded up to their gills with debt by the PE maestros – to bankroll further takeovers – and so on… What clever a$$holes they were. Bravo! Have a Bonus! (1 reply)
    Edit | Reply Lefty Goldblatt Private Equity Issue Emerges In US Presidential Election.

  3. David Manners
    January 19, 2012 14:08

    Thanks, Typical Yank, that’s a shame, but at least those comments are now on the record – and constitute a stick with which to beat the PE guys

  4. Typical Yank
    January 19, 2012 12:49

    On this side of the pond, the PE issue has already been forgotten. Gingrich and Perry have dropped it after the blowback from the “stupid capitalism” bigwigs of the GOP. Maybe it’ll re-appear during the run-up to the general elections, but any hope of the Republicans changing their stance is gone.
    The problem du jour for Romney is his federal income tax, which was made at the lowest marginal rate of 15%. (Taxes are for the little people apparently.)

  5. The Baron
    January 19, 2012 09:39

    Oops. On hitting submit, I realised I should have said “…an historical…” in the previous post.
    I shall walk on my knees in black sack-cloth.

  6. The Baron
    January 19, 2012 09:38

    To Terry:
    I think the French and Americans have a bit of a historical ding-dong going on and the French refuse to be US lap-dogs like our spineless “masters are”.
    In fact, while trying to refresh my memory about the “freedom fries” incident, I’ve found there’s a whole wikipedia page about it!
    http://en.wikipedia.org/wiki/Anti-French_sentiment_in_the_United_States

  7. Anonymous
    January 19, 2012 08:51

    Would it be inappropriate to use the “goddamn cheese eating surrender monkeys” quote?

  8. Anon
    January 19, 2012 01:39

    I’m no fan of PE since I’m currently working for a US PE owned semi company. But, to be fair, PE doesn’t get explicit taxpayer bailouts as does the banking system. The problem seems to lie with the idiots who buy the tarted up companies that have undergone the PE treatment. Once it becomes common knowledge not to buy PE owned companies then it’s game over.

  9. David Manners
    January 18, 2012 16:11

    I know, I know, Terry the US Republican party seems to have lost its marbles. They also had a go at Romney for, 29 years ago, strapping his dog to the roof of his car for a journey to Canada. But these are the guys who are against raising taxes on billionaires while US workers’ wages haven’t grown in a decade.

  10. Terry
    January 18, 2012 16:05

    It’s bizarre that recently Romney’s opposition have criticised him for being able to speak French. (Previously Kerry was dissed for “looking a bit French”).
    The mind boggles twofold :- firstly at why being multilingual should be seen as a flaw, and secondly why they don’t concentrate on his real iniquity of having made a fortune from looting companies via PE.

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