Tuesday, June 14, 2011

A Decade of Feeding the PEU Wolf

Flash back to March 2004.  The Carlyle Group had $17.5 billion under management and private equity underwriters (PEU's) were coming off a difficult 2002-2003.  But things were starting to look up.

March 2004 found Google hosting a thread on the origin of the Native American tale of the two wolves (dogs).

The parable was about a young Cherokee who is brought before the tribal elders, who are concerned about his aggressive tendencies. One of the elders takes the young man aside and tells him that his anger is understandable, since all humans have within them two wolves. One wolf is good and peaceable, and the other is evil and angry. The two wolves are in constant battle with one another, since neither is powerful enough to destroy the other. The young man asks the elder "But if they are of equal power, which wolf will win?" And the elder replies, "The one you feed the most."
Other versions elaborate on evil, adding anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.  For good they include joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion and faith.

The Carlyle Group now manages over $106.7 billion, fed by the policies of Presidents George W. Bush and Barack H. Obama.  Carlyle brags of 30% annual returns on equity.   Their co-founders are multi-billionaires, who will climax their greed-a-palooza with a looming IPO.  PEU's have insider access to America's hallowed halls of government, where political donations turn into government contracts and preferential treatment via laws, earmarks, taxes and regulations.  While happy to take Uncle Sam's money for products/services, PEU's hate paying taxes.  They load up affiliates with debt, while charging annual management fees.  They've sent jobs to China and low wage portions of the world, while off shoring funds and profits. 

For the last decade PEU's fed off Congress and the White House.  Private equity provides a "post public service" career for many politicians.  The PEU wolf is strong.  The pack is already in healthcare and spreading.  It has its eyes on infrastructure.  Greed addicts remake America in their image.  I fear for the good wolf's survival under the current plague..

That brings to mind another Native American story, the smallpox blanket.  Don't worry, a PEU has the antidote.  With whom will they share and at what price

Being good in a PEU world, that's the challenge.