Do Wall Street Wheeler-Dealers Ever Create Jobs?

[marmar]

from Too Much: A Commentary on Excess and Inequality:



Do Wall Street
Wheeler-Dealers
Ever Create Jobs?
A landmark new study, released last week at the annual Davos high-finance summit, scrutinizes the high-flying private equity industry — and complicates life for our global greedy.
January 28, 2008

By Sam Pizzigati

Before last spring, few Americans knew much of anything about private equity, that murky high-finance world where high-powered partnerships — bankrolled by the super-rich and institutional investors — borrow billions to take over companies they then make over and sell, at a significant profit.

As private partnerships, these private equity groups operate under the radar screen. They don’t have to declare, in publicly available annual reports, basic information about how they do business.

One example: Companies that trade their shares publicly on Wall Street must disclose how much they pay their top executives. Private equity companies, by contrast, can keep that information secret, so long as they don’t sell their stock to the general public.

Last June, the biggest player on the private equity block, the Blackstone Group, opted to go that public stock route. The Blackstone boys offered the general investing public a chance to buy a minority stake in their wheeling-and-dealing operation. In the process, Blackstone’s top five executives had to divulge how many dollars that operation was stuffing into their pockets.

The answer: $770 million over the previous year, a colossal sum that almost immediately thrust the private equity phenomenon onto America’s front pages.

The private equity industry has been playing public relations catch-up ever since. Industry flacks have been working feverishly to rebut charges that private equity kingpins owe their astounding windfalls to job, benefit, and pension cuts at the companies they take over.

How feverishly? In 2007, private equity groups started breaking Capitol Hill records for spending on lobbyists.

Two weeks ago, the industry trade association, the Private Equity Council, released a flashy new study designed to show that private equity groups deserve credit, not censure, for their impact on employment. Private equity ownership, the report contended, is creating jobs by the bucketful..

The industry released this report, not so coincidentally, right on the eve of the annual World Economic Forum, the five-day bash that draws the world’s financial elite to the Swiss ski resort of Davos. Organizers billed this year’s forum, held last week, “as a platform to enrich dialogue and decision-making on public policy governing private equity.” .......(more)

The complete piece is at: http://www.cipa-apex.org/toomuch/articlenew2008/Jan28a.html

[Demeter]

1. For Close Relatives--Nepotism, Anyone?

or fellow neo-cons--Wolfowitz, Baker, you know who they are.

[supernova]

2. I think they create churn

in the workplace by buying compaines, then driving down costs (read: laying people off) to make them more attractive to potential buyers, then sell them, then hire people again (at a reduced labor cost), etc. and so on.

[HowHasItComeToThis]

3. PARASITES ALL

[Tierra_y_Libertad]

4. Only for prison guards and orange jump suit makers. After they get caught.

[Sal Minella]

5. And more and more bank tellers in the Caymans, Abu Dhabi, etc.

[NashVegas]

6. $770 Million Between 5 Men, or Between 250k Stockholders With 5k Shares

Making about $3000 each.

That's what it comes down to, about.

And those 5 guys don't have to worry about politically active stockholders agitating to sell off and break-up certain assets. Anyone recall Knight-Ridder?

The problem isn't that Private Equity funds are bad, the problem is they aren't sharing the profits with the other fleas.

[Selatius]

7. It's not that they make a shitload of money. It's that they use the money to buy off politicians.

That is where the rubber meets the road. When the fox guards the henhouse, you're in trouble.