Tuesday, January 24, 2012

WaPo: Toasting Mr. Rubenstein

WaPo followed Fareed Zakaria's GPS in fawning over Carlyle Group co-founder David Rubenstein.  The piece highlighted Rubenstein's upbringing, with his father a postal worker.  Mr. Rubenstein cited education as the key to his economic fortune.  Surely, other students graduated from Duke and got a law degree at the University of Chicago.  How many are multi-billionaires?  It it's not 100%, Rubenstein's theory is in need of modification.

Mr. Rubenstein's initial killing came from selling Alaskan Native American tax losses. This venture became known as the Great Eskimo Tax Scam.

“Look, I know capitalism has its problems; it’s not always fair,” Rubenstein said. “I helped to start a company with virtually no money, and now I have more than I ever anticipated.” 
Carlyle exploited, even help create structures advantageous to private equity.  One of those is tax structures, domestic and offshore.  The Carlyle Group's IPO filing shows the firm to be a virtual nonprofit, much like a charitable hospital.  There's nothing charitable about private equity underwriters (PEU's). 

That said, here's to you Mr. Rubenstein, the nation turns its lonely eyes to you...