Sunday, October 11, 2015

Carlyle's Rubenstein Talks Recession with Bloomberg

Carlyle Group co-founder David Rubenstein spoke with Bloomberg reporters:

"You expect some slowdown after pretty good growth we've had the last couple years,"

"We're always a buyer and seller in our business.  It's been very difficult to buy things the last couple years around the world in our business as price has been relatively high.  The average cash flow multiple for deals done in the United States has been almost 10x cash flow the last couple years.  Now it's going down a little bit.  It's going to be better to buy things in the next year than it has been and be little bit tougher to sell at the prices you want to get."

Private equity underwriters love market dislocations, financial earthquakes they've predicted, prepared for. and even helped create.  They hate economic black swans they haven't anticipated.  This is important as PEUs provided a much greater share of commercial lending than banks post 2008 financial crisis/2009 recession.  Investopedia reported:
Most private equity firms are also heavily involved in corporate lending as they move into fill a hole in the loan markets left by banks derisking their balance sheets.
Also, highly leveraged PEU affiliates will get into financial trouble first in any recession.  Watch what Carlyle does with theirs.  They let a number sink in and around the last recession.

As for Bloomberg I see they continue catering to the PEU class with smiles and softball questions. Offscreen did they ask about President Obama's dinner at Mrs. Rubenstein's Alaskan palace or Michelle's recent talk at the "PEUs Love Veterans" event?

Did they ask how many WWII, Korean and Vietnam War veterans were harmed by PEU greed over the last decade?  If not, one of their former peers commented four years ago:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out.
We have insatiable greed intertwined with the permanent political campaign and a compliant business media. How much longer can they yuk it up amongst each other?