Friday, October 31, 2014

Carlyle's PEU Dividend Recapitlizations


The Carlyle Group held its Q3 earnings call.  Items of note included:

We took advantage of access to cheap credit to complete over $700 million in dividend recaps from the third quarter in companies such as PPD in the United States; Emeos [ph], Twin Set and Marle in Europe; 7 Days Group in China; and Tsubaki Nakashima in Japan.

In addition to Booz Allen (over $60 million dividend payment to Carlyle) and excluding the aforementioned recaps, we realized approximately $300 million in additional proceeds from dividends and operating proceeds across the portfolio.  

Sometimes when we do a recap, we don't actually think of that as a realization.
That's the recap on recaps.  Overall Carlyle is set to win in whatever world its sponsored officials create:

It is important to note, however, that our business model allows us to take advantage in any economic environment. If the equity markets appreciate, we will continue to exit. But if the equity markets fall, we will find more compelling investment opportunities, and we are under no obligation to sell.
Imploding debt markets pose the biggest threat to Carlyle and their bloated ex-affiliates.  The Fall 2008 financial crisis saw Carlyle making capital calls, over $650 million alone to CalPERS.  A financial meltdown, where the big money boys no longer trust one another to make good on their debts or bets, can happen again, it will.  The question is when.

Sunday, October 26, 2014

Behemoth Carlyle Loses Taste for Public Water


While our Goliath federal government caters to private equity underwriters (PEU's) at numerous turns, two small municipalities have taken on The Carlyle Group's Park Water.  Missoula, Montana and Apple Valley, California loaded an eminent domain stone in their sling. 

Missoula's stone has considerable velocity and is ready to launch at Carlyle's three eyed monster, which has an eye for each Carlyle Group co-founder.  The Missoulian reported:
The city of Missoula can afford to bond for as much as $102.63 million to buy Mountain Water Co. based on current rates, according to Barclays Capital. 
Note that $103 million is what Carlyle paid for Park Water and its three divisions in 2011.  Barclays suggests that Carlyle get its money back from the sale of one division, Mountain Water.  Rest assured, Carlyle had four years to pull management fees and dividends from Park and its three subsidiaries.  From numbers released in the Mountain Water case this will amount to $15 million, $10 million in management fees and $5 million in dividends by year end.

One of the other two divisions of Park Water appears ready to give Carlyle another headache. Victorville, California's Daily Press wrote:

A study commissioned to explore various financing options for the town’s purchase of Apple Valley Ranchos Water Company was released last week. 

The Apple Valley Town Council authorized the release of its “Financial Feasibility Analysis for the Acquisition of the Apple Valley Ranchos Water System. 

The town is pursuing the purchase of AVR in order to gain local control over the town’s water resource and stabilize the ever-rising rates the town has experienced over the last decade, according to a news release.
Here's a hint as to how complex Park Water's corporate structure actually is.  This comes from the Apple Valley press release:

The Carlyle Group, an investment firm based in Washington, D.C. and the current owner of AVR, has said Park Water Company, of which AVR is a part, is on the market and for sale. An announcement of a potential sale came in late September from Algonquin Power & Utilities Corp., a Canadian company, which said its regulated utility business, Liberty Utilities, agreed to acquire Western Water Holdings LLC — the holding company of Park Water under the Carlyle Group. Park Water Company also includes the Mountain Water Company in Missoula, Montana and Park Water Company in southeast Los Angeles. 
Two of Park Water's three divisions are challenging The Carlyle Group.

Carlyle is used to being catered to by local, state and the federal government.  Each is to bring government business for affiliates, preferred taxation for PEU profits or millions in economic development incentives.  How dare they try to buy Carlyle assets for less than a three, four or five bagger!



The Carlyle Group found this so distasteful it will exit public infrastructure.  WaPo reported:

Seemingly tired of the back and forth, Carlyle is exiting business of bridges, water and highway stops after eight years. It’s going into energy infrastructure instead.
I hope a stone lands in at least one the Carlyle monster's three eyes before it packs up its weapons and moves to territory where it's easier to crush local opposition.  Energy fits the PEU bill.

Saturday, October 25, 2014

Conan's Loss & Albright's Argentine Burn


ABC News reported on the Twitter interchange between Conan O"Brien and former Secretary of State Madeline Albright.


Madeleine Albright proved to be a good sport when Conan O'Brien cracked a joke on Twitter that name-checked the former U.S. secretary of state. 

On Thursday afternoon, the TBS late-night host quipped, "I picked out my Halloween costume. I’m going as 'Slutty Madeleine Albright."

Albright, 77, rose up to the challenge and tweeted a joke of her own, at O'Brien's expense, saying: "I'm considering going as hunky Conan O'Brien - but that might be too far fetched." 

O'Brien got a kick out of Albright's response. He responded, "YES - My first twitter war with a former Secretary of State! You're next, George P. Shultz!"

Albright then made it clear that she's not one to be messed with: "Never get into a word war with a diplomat," she warned. "We talk even more than comedians."
Another reason not to war with Madeline is her propensity for threatening others with a five point plan.  Albright shared a hedge fund's plan for destabilizing Argentina in her role as lobbyist for the firm.  I'm not sure which Madeline Albright is scarier, Conan's Halloween outfit or the international arm twister on behalf of the greed and leverage boys. 

Madeline is all about power.  Disrespect her and a price will be paid. I hope it's not another 500,000 Iraqi children.

Carlyle, JP Morgan, China & Corruption


WSJ reported:

After years of expansion (in China), some are scaling back. Carlyle Group , the alternative asset management company, is laying off about 10 people working on its China growth fund, according to people familiar with the matter. It closed the growth fund’s Chengdu office last year and is going to trim the growth-fund team in its Shanghai office and consolidate it with the Beijing team.  A spokesman at Carlyle declined to comment.

Almost half of the American firms surveyed believe foreign companies have been singled out in a string of pricing or anticorruption campaigns that have hit pharmaceutical, tech and auto companies recently, according to the American chamber. 
The Chinese told a different anti-corruption story.  Xinghau reported:


Since the 18th National Congress of the CPC in late 2012, the CPC Central Committee has been strictly governing the party, and improving the party's style of work, building a clean government and combating corruption, he said.
"All these efforts have gained the support of the general public," Wang said.
"This is just the beginning," he said, adding that the party's anti-graft campaign requires consistency, intensified supervision, discipline and accountability.
A clean government and a healthy and fair market offers the best soft environment for investment, he said.
Wang called for the overseas advisors to integrate international resources to give guidance for Tsinghua University's School of Economics and Management, and contribute to the development of China's education cause.
Advisors, including David Rubenstein, chairman of the Advisory Board and co-founder and co-CEO of the Carlyle Group, said they would continue to make positive efforts for China's economic and educational development.

Mass layoffs are prohibited in China, unless the firm has lost money for three straight years or been unable to pay employees for eight months.  I'll venture Carlyle's elimination of ten jobs isn't considered a mass layoff. 

One has to love that Carlyle is helping China with anti-corruption, which it's tainted ethical history.  Carlyle's gaffes include Synagro (bribes), Semgroup (bad energy bets), LifeCare (blaming doctors and FEMA for 25 patient deaths post Hurricane Katrina), Connecticut and New York pension fund (pay to play settlements in the tens of millions of dollars), Brintons (dumping pension onto public) and ARINC (banned from World Bank for bribery).

Add that J.P. Morgan CEO Jamie Dimon wants a safe harbor for influence purchasing and things get more interesting.  

I can envision Carlyle, J.P. Morgan and China holding hands in anti-corruption.  Can they ignore the facilitating payment or the employed ex-government official or well connected offspring.  They're staring everyone in the face. 

Monday, October 20, 2014

Carlyle's Global Jet Capital


AIN Online reported:

Global Jet Capital (GJC), a new source of leasing and lending options for business jet transactions, starts operations this week. The company has been launched with an initial $2 billion fund with the backing of three investment firms: GSO Capital Partners, The Carlyle Group and AE Industrial Partners.

The new venture’s backers have been evaluating the market for around the past 36 months. “We see an opportunity in the market because the traditional sources of financing, such as the banks, took a step back and others have placed significant hurdles in the lending process so that the provision of lease financing or debt financing has proved to be challenging,” he (Shawn Vick) said.

[In recent years] many businesses and individuals who have a requirement for large cabin and long-range aircraft have had to use their own capital to buy these, and then find financing [after the purchase],” explained Vick. He believes that GJC has a “significant opportunity” to help clients finance their aircraft in a more flexible way and free up capital for their own businesses.
How many Carlyle sponsored jets will be at the Republican and Democratic National Conventions in 2016?  It's our PEU world, where politicians Red and Blue love PEU.

Sunday, October 19, 2014

Carlyle's Investors Pay for Collusion Settlement


The epic shamelessness of private equity underwriters (PEU's) can be seen in The Carlyle Group's passing on the cost to investors for settling its role in illegal collusion with other PEU's on club deals.

Carlyle agreed to pay $115 million in the settlement. But the firm didn’t shoulder those costs. Nor did Carlyle executives or shareholders.

Instead, investors in Carlyle Partners IV, a $7.8 billion buyout fund started in 2004, will bear the settlement costs that are not covered by insurance. Those investors include retired state and city employees in California, Illinois, Louisiana, Ohio, Texas and 10 other states. Five New York City and state pensions are among them.

I've written about private equity for seven years and found numerous other fees and costs PEU's charged affiliates and investors.  Investors didn't collude.  Carlyle's management did.  NYT reported under Retirement (not DealBook):

Also blacked out in the Carlyle V agreement is a section on who will pay legal costs associated with fund operations. First on the hook are companies bought by the fund and held in its portfolio, the unredacted agreement says. That essentially makes investors pay, because money taken from portfolio companies is ultimately extracted from the funds’ investors.

But if for some reason those portfolio companies cannot pay, the Carlyle V document says, investors will be asked to cover the remaining expenses.
I wish the following were true:

“Fees are not trade secrets,” he said. “It’s entirely reasonable for us to know what we’re paying.”

Not in today's PEU world where politicians Red and Blue love PEU.

Saturday, October 18, 2014

Wake Up Vietnam!

Toi Tre News, a Vietnamese news source, reported:

The Ministry of Finance has proposed that the government increase the proportion of investment by foreign investors in the Vietnamese stock exchange, Deputy Minister of Finance Truong Chi Trung said at his meeting with David Marchick, the managing director of the U.S.’s Carlyle Group on Friday.
Will Vietnam openly welcome private equity underwriters (PEU's). like Carlyle? 

French colonization of Vietnam had the goal of economic profitThe Vietnamese either collaborated with the French or remained poorly paid laborers. Collaborators joined the lower levels of the French bureaucracy, made a decent wage, and benefited from the partnership.
The PEU-ization of Vietnam has a similar aim.

Friday, October 17, 2014

Carlyle to Siphon RAC Debt for Dividend

Bloomberg reported:

RAC Ltd.’s planned 1.2 billion-pound ($2 billion) loan is the biggest deal to be offered in the U.K. currency with limited lender protections, according to data compiled by Bloomberg

The roadside assistance company is seeking to raise the money through covenant-light loans, which don’t curb the ratio of debt the borrower can have compared with earnings and cash on its balance sheet and lack testing requirements on other performance metrics

RAC's PEU owner Carlyle Group plans to take a chunk of the $2 billion in dividends.
(T)he new debt will refinance existing facilities and pay a dividend to the private equity firm. 

Ka-ching!    RAC offers automotive breakdown protection.  Their paying customers need protection but not the company's debt holders.

Carlyle announced the sale of 50% of RAC a month ago.  It will now siphon off a significant portion of RAC's new $2 billion in debt.  Add management and deal fees and Carlyle is likely way beyond free shares. Let the PEU Times roll!

VP Cleanup Guy Now Ebola Czar


Recently a government representative went on and on about how the Obama team needs to get ahead of images on the Ebola story.  Rather than ask why someone was on the tarmack in sleeves while everyone else wore full hazmat suits, this official said such images needed to be kept from the public.

President Obama shared his willingness to appoint an Ebola Czar.

"The truth is, is that up until this point the individuals here have been running point and doing an outstanding job in dealing with what is a very complicated and fluid situation."

Obama will appoint Ron Klain, former chief of staff for Vice Presidents Al Gore and Joe Biden.  Klain is currently president of Case Holdings and general counsel at Revolution LLC, a technology-oriented venture capital firm.  Let's consider the outstanding job of running point to date:

Sept. 26, 2014 - Duncan goes to Texas Presbyterian Health Hospital in Dallas with a fever and tells a nurse he has been to Liberia. But he is sent home with antibiotics and Tylenol.

Sept. 28, 2014 - Duncan returns to the hospital in an ambulance and is isolated.

Sept. 30, 2014 - The CDC confirms that a the first patient -- who would later be identified as Duncan -- has been diagnosed with Ebola on U.S. soil.

Oct. 8, 2014 - Duncan dies at Texas Health Presbyterian Hospital.

Texas' experience with Ebola reveals how much public health is now a paper exercise, with little real capability.  The CDC looks just as bad.   The first case of Ebola in the United States resulted in error after error after error.

1)  The case was not recognized in the Emergency Room.  This gave the patient two days to potentially infect more people.

2)  Nurses did the best they could without appropriate personal protective equipment and with no training on how to function, much less provide proper care and treatment of Ebola, even if it's strictly supportive care.

3)  New cases of Ebola arose, not from family or friends, but from health care workers not on the list of people being monitored by the CDC.

4)  Several ill or potentially exposed health care workers traveled on planes or a cruise ship.  One called the CDC to share they had a slight fever and should they take their return flight home to Dallas from Cleveland.  The CDC said it was okay to fly, while the public heard CDC Chief say it was appropriate for the nurse to have taken a trip.  A hospital lab worker is in voluntary quarantine aboard a cruise ship off the coast of Belize.

What does Ron Klain bring to the table?  Image management, not substance.  He lacks any background in public health, infectious disease management, or epidemiology. He has not managed the response to any outbreak of disease in any part of the world.

As President of Case Holdings and general counsel for Revolution LLC Klain is a corporate executive.  American management, with it's incessant call to do more with less, resulted in the gutting of our public health resources, reducing them to paper exercises.  It brings to mind FEMA's Hurricane Pam disaster drill for New Orleans.  The drill occurred a year before Hurricane Katrina struck.

Ronald Klain's Revolution LLC shows major holdings in two companies, Everyday Health and GAIAM.

Everyday Health, Inc. (the “Company”) operates a portfolio of health and wellness websites and mobile applications that provides consumers, healthcare professionals, advertisers and partners with content and advertising-based services.

Gaiam Inc. -  We are a leader in the design, creation, and marketing of products and media for consumers who are interested in yoga, fitness, and wellbeing. Additionally, we operate a subscription video on-demand service, Gaiam TV, which is dedicated to creating, acquiring, and delivering conscious media. Through our business activities, we seek to position our brand as a trusted source for information and products that are relevant to our consumers’ active lifestyles and transformational journeys. Our broad distribution network includes retail, online, and digital channels. At the end of 2013, our brands were carried by over 38,000 retail stores worldwide. Our business is vertically integrated from product design and content creation through product development and sourcing, to customer service and distribution. This efficient supply chain enables us to provide quality products at competitive prices for all of our channels. We intend to build upon our authenticity and heritage in the yoga, fitness, wellbeing, and conscious media sectors. We believe that the size of our end markets is growing as a result of growth in yoga participation, greater awareness of health and wellness, and the success of our retail and online partners. We intend to leverage our product development, supply chain, and retail relationships to continue to expand and innovate our brand’s offerings enabling us to capitalize on the growth in our end markets.

Klain will be able to draw on Everyday Health's expertise in advertising and image management.  Gaiam products can be an Ebola stress reliever. 

Klain's appointment symbolizes what's happened to public health in our country.  Obama appointed someone to get ahead of the story. It would've been preferable to have someone with subject knowledge, experience in epidemic disease management and character.  Instead we get the man who cleaned up after Joe Biden's and Al Gore's gaffes.

Update 10-24-14:  Texas’ top health official said Thursday that most hospitals can’t handle Ebola patients and that they should instead be treated at specialized care centers.  “Not to throw stones, but the overall response from Centers for Disease Control and Prevention has been slow,” said William Sutker, infectious disease chief for Baylor University Medical Center at Dallas.

Update 10-25-14:  An Ebola vaccine never got off the group due to low incidence of the disease in mostly poor countries.

Update 11-8-14:  The mainstream media agreed not to report suspected cases of Ebola in the U.S. and the Pentagon, which studied weaponizing Ebola for nearly fifty years and may have had a role in the latest African outbreak, is now going to save the world by finding a flaw in the disease they likely made flawless.

Update 10-29-16:  Klain threw aside his former boss Joe Biden for Presidential hopeful Hillary Clinton according to Wikileaks  John Podesta e-mails.  What might be his reward?

Wednesday, October 15, 2014

CDC Worries: Carlyle Axes North Africa-Middle East Fund


(Persian) Gulf News reported:

Carlyle has shelved plans to market a second private equity fund targeting the Middle East and North Africa.

CDC Chief Tom Frieden said just days ago:

“I’ve spoken with business leaders who’ve emphasized to me that there’s so many misconceptions about Ebola that they’re already seeing things like a reduction in investment in parts of Africa that are not in any way, shape or form involved in the Ebola outbreak.” 
Timing of the cancellation is interesting in light of Carlyle's returns on its first Middle East North Africa fund.

Carlyle’s first $500m (Dh1.8 billion) private equity fund for the region was raised in 2007 and ran out of money earlier this year. It was generating a 35 per cent cumulative gain as of September, before fees, according to investors.
Carlyle's logic in targeting the region is:
 
We believe the MENA region is large, growing rapidly and ripe for private equity investing:
  • Economy has world’s fifth largest GDP (growth projections through 2010 are 55% higher than rest of the world and 76% greater than the U.S.)
  • Population is world’s third largest at 426 million
  • Capital markets are maturing and large enough to provide exit opportunities
  • Liberalizing state agendas creating opportunities for large scale transactions (increasing large scale privatizations)
  • Low private equity penetration
  • Carlyle’s regional presence provides opportunity for cross-country investments and M&A within the MENA region
Carlye stubbed its toe with the bankruptcy of Carlyle Capital Corporation.  Kuwaiti investors sued Carlyle for selling the highly leveraged mortgage backed security fund as virtually risk free.  That case is yet to be heard.  

It interesting the timing between Frieden's Ebola investment concern and Carlyle's cancellation.  Was there a White House intermediary?

Sunday, October 12, 2014

Political Campaign Donors of PEU Variety


CNBC reported the impact of shadow bankers on this years political elections.

A small group of ultra-wealthy private fund managers are dominating political spending this cycle, making up for declining involvement from banking executives. 

Private equity professionals also are giving in record amounts for the midterms, which historically attract far less cash than presidential election years. PE pros have donated $28.8 million this election cycle, up from $20.5 million in 2010, according to CRP. Like hedge funds, the industry gave equally to both parties in 2010 but now favors the GOP nearly 2 to 1. Top PE firm donors include J.W. Childs, Blackstone Group, BLS Investments, Bain Capital and Carlyle Group.

The rise of PE and hedge fund spending comes as bankers slow down.
PEU wankers replace banksters and this is somehow comforting?

It all adds up to a record for the financial community. "Wall Street has ramped up its giving this cycle, delivering more than $120 million and already exceeding what they spent throughout the entire last midterm."
I sense another free pass for preferred carried interest taxation.  That should be safe and sound for the sixth or seventh time. 

Saturday, October 11, 2014

CalPERS Targets PEU Big Three


Pensions & Investments reported:

CalPERS' investment committee has cleared the way for the pension fund's private equity staff to make more investments with its three largest private equity partners, Apollo Global Management, Carlyle Group and Blackstone Group, allowing billions of dollars more to go to the private equity giants.

The committee approved raising the limit on the amount of committed capital that can go to any one private equity firm to 15% from 10% of the pension fund's $31.4 billion private equity portfolio.
CalPERS invested in 7 Blackstone funds, 10 Apollo funds and 27 Carlyle funds.  Storied PEU's will garner more of CalPERS private equity investments.

While the disclosure does not name the managers, CalPERS statistics show that as of March 31, Blackstone was near the 10% cap with more than $2.5 billion in investments; Carlyle, with more than $3.5 billion, and Apollo, with more than $4.5 billion, exceeded 10%.

The move enables CalPERS to put another $2 billion in Blackstone and $1 billion in Carlyle, in which CalPERS once held an equity stake.   Ring the bell on Pennsylvania Avenue!

Friday, October 10, 2014

Carlyle Siphons Park Water for $5 million in Dividends


The Missoulian reported:

In April, Class A holders – meaning the parent company, The Carlyle Group – received a dividend of $2.5 million from Park Water Co., according to the document. Another $2.5 million dividend is scheduled to go to Carlyle on Dec. 31 of this year.

Carlyle's multiple layer of chiefs will benefit from more than a series of final dividend bleedings.

“It is not uncommon for executives and senior employees in a limited liability company to receive profits interests or other equity interests designed to incent and align the management team with the owners to help increase the company’s value,” he explained. “Profits interests are akin to stock options in a corporation.” 
 Ah, stock options which proved how executives will cheat on a widespread basis to garner prizes.  Executives backdated nearly 30% of stock options to maximize their take home pay.  Optimizing executive pay actually decreased their company's value.  Those who forget the lessons of the past are doomed to repeat them.

Now who swung for the fences, packaging junk as investment gold?  This caused the fall 2008 financial meltdown.  Don't forget that Carlyle's Blue Wave Partners hedge fund and Carlyle Capital Corporation were two canaries in the financial coal mine.  Both imploded earlier in 2008.

Carlyle has been monetizing assets left and right recently.  It helps to have a cash cushion should another downturn arrive.  Missoula residents have done their part to enrich Carlyle.

Carlyle is ready to leave public infrastructure, like Park Water.  It aims to profit from energy infrastructure.  Carlyle cofounder David Rubenstein was coy with board members from the Alaskan Permanent Fund when asked about investing in energy infrastructure.  The story ran in Mrs. Rubenstein's Alaskan newspaper.

At a recent meeting of the Board of Trustees, outside investment adviser George Zinn questioned David Rubenstein, managing director of one of those private equity funds, The Carlyle Group, about the wisdom of investing in the Alaska natural gas pipeline.

The billionaire financier warned of the risks of  investing state money so close to home and said the politics of Alaska are even more complicated than those of Washington, D.C.

"I just don't know whether the economic upside is worth the political risk," Rubenstein said, but he cautioned that he wasn't familiar with the project's merits.


So why would he discourage the board from investing in a project when he is unaware of its merits?  Look for the Permanent Fund to partner with Carlyle on energy infrastructure.  Rubenstein is the consummate salesman.

I can hear the talk at 1001 Pennsylvania Avenue.  "Ready to cash in on Missoula water?"  Check.  "Line up the PEU sights for global energy infrastructure."  Sir, yes sir!  "PEU profit steam ahead!"

Thursday, October 9, 2014

CDC Concerned About African Investment


Dr. Tom Frieden of the Centers for Disease Control threw a nod to private equity underwriters (PEU's) targeting Africa when he expressed concern over cancelled investments.

“I’ve spoken with business leaders who’ve emphasized to me that there’s so many misconceptions about Ebola that they’re already seeing things like a reduction in investment in parts of Africa that are not in any way, shape or form involved in the Ebola outbreak.”

I found interesting his dodge on the question about care delays for the Dallas patient, also referred to as the Index patient.  Frieden said he could not comment on any individual patient.  The CDC is charged with evaluating every aspect of care for an index patient, as it could impact care down the line for later patients.  That includes their care in the emergency room or days later in the hospital.

As for Texas public health system it has been gutted the last fifteen years. It dropped access to primary care in the new millennium.  Our local health department shed its pediatric clinic, AIDS clinic, and social services.  It drastically reduced immunizations and sexually transmitted disease testing and treatment, which are the only services left.  If our community was overwhelmed by a syphilis outbreak, I shudder to think what would happen with a deadly virus spread in airborne fashion. 

Investment in West Texas is strong due to the oil boom.  So we don't have Africa's worries, unless imported workers are building new hotels, apartment complexes or working in the oil field.  Then we might share the same worries. 

PEU's should not worry about their planned African investments. Dr. Frieden said everything is going to be alright.

Update 10-12-14:  A Texas hospital worker contracted Ebola from the Index patient. The news report states:  There was no word yet how the health worker was infected, but the director of the Centers for Disease Control and Prevention (CDC) said it indicated a professional lapse that may have caused other health workers at the hospital to be infected as well.  "We don't know what occurred in the care of the index patient, the original patient, in Dallas, but at some point there was a breach in protocol, and that breach in protocol resulted in this infection," CDC director Dr. Thomas Frieden told a news conference.
Hospital officials said the worker had been wearing CDC-recommended protective gear during treatment, including gowns, gloves, masks and shields.  "We are evaluating other potential healthcare worker exposures because if this individual was exposed, which they were, it is possible that other individuals were exposed," Frieden said.

Update 10-15-14:  A second Texas hospital worker has Ebola.  Texas' depleted public health system combined with CDC incompetency (staff told the infected patient she could fly with a low grade fever) gives a Keystone Cops or Three Stooges impression to the general public.   Financial markets fell substantially, in part to the new Ebola case. 

Update 10-17-14:   The CDC's Keystone Cops routine continues.

Sunday, October 5, 2014

PEU Tank Cars


Toss a rock in any direction in today's economy and you're likely to hit a private equity underwriter (PEU).  That includes train cars.  .

Railway Age reported:


The railcar market continues to follow a trend of outrageous demand in some car types mixed with tepid demand in others. With a current backlog (as of the end of 1Q2014) of almost 82,000 cars, demand is strong for covered hoppers and tank cars with light to no building of other car types.  There are new operating lessors funded by a variety of monetary sources, private equity firms, and bank leasing companies—all competing for the same transactions in the marketplace.

All in all, the leasing marketplace for rail equipment is volatile, aggressive, and hungry.

Reuters reported:

Axeon Specialty Products, which leases about 1,200 tank cars to transport heavy crude south from Canada to East Coast asphalt plants, said it does use some AAR 211W tank cars, but it was as yet unclear how much it would be impacted.

"Some of them are the AAR cars and that is why we are working with the cars owners to determine what we can and cannot do," said Axeon spokeswoman Claire Riggs. She was unable to say how many AAR 211 cars the company leased.

Axeon, owned by New York private equity firm Lindsay Goldberg, was until this week known as NuStar Asphalt.
PEU money is behind a new crude-by-rail facility proposed for Colorado’s booming Niobrara field.

It costs $1,300 a month to lease a tank car, which requires only $20 a month in maintenance.  That car can hold between $1.5 and $3 million in oil.  A tank car ordered today will roll off the line in summer 2016.  There are 77,000 new tank cars produced a year.

Limited supply, huge operating margins, and massive demand from the oilfield as far as the eye can see.  This is a PEU's dream.  

Part of U.S. Commerce Secretary Penny Pritzker's massive fortune came from Union Tank Car.  She omitted a portion of it in her $80 million error in her federal financial disclosure.  

The Carlyle Group revealed it would shed public infrastructure in favor of the energy kind:  WaPo reported:

Carlyle is exiting business of bridges, water and highway stops after eight years. It’s going into energy infrastructure instead.

One has to wonder how multiple layers of massive profits works it way through to the price consumers ultimately pay.   Not to worry as long as the greed and leverage boys (and girls) get their grand returns.  Old McDonald had a farm, PEEEU.

Wednesday, October 1, 2014

Presidents & PEU's


The Carlyle Groups of the world formed in the 1980's but grew exponentially during the Bush and Obama years.  Clinton privatized government functions that have since been flipped multiple times by private equity underwriters (PEU's). 

PEU's are ubiquitous and interwoven with both Red and Blue political parties.  Government feeds them in multiple ways, preferred taxation, direct contracts with PEU affiliates (security, defense, health care, education, infrastructure, etc.), earmarks,

Many employees of PEU affiliates found their jobs eliminated and pensions frozen.  The picture above shows what happened to their wages.  It's no wonder consumer debt recently hit a new record $3.2 trillion.

Presidents like to take credit for anything good happening in the economy.  I believe all three deserve credit for enriching their peers, the greed and leverage boys.

It's a sick system, a disturbing cycle that repeats under a President who promised to take on these very interests.  Take them on he did, as full and present partners in his administration.  The other two worked for PEU's, Bush II for The Carlyle Group as a board member of CaterAir and Clinton for Yucaipa and Teneo.

"The Clinton, Bush and Obama administrations all could have prevented the financial meltdown...We have created the incentive structures that are going to produce a much larger disaster.”--William K. Black 

The picture is at the top of this post.  Both the quote and the graph came from JessesCafeAmericain.

It's a PEU world, where politicians Red and Blue love PEU...

Update 10-4-14:  The fact that the majority of households are losing so much wealth in a time of record-breaking overall wealth demonstrates how systemically corrupt the economy has become.  Washington's Blog