Thursday, July 19, 2012

Carlyle's PEU Paper on Fiscal Cliff

The Carlyle Group issued a paper on America's fiscal conundrum.  It stated:

The paper says that the best outcome of the current fiscal debate
would be for a comprehensive deficit reduction agreement.

But it adds that it might take the expiration of the Bush era tax
cuts and the imposition of across-the-board spending cuts
to compel policymakers to reach a major deficit reduction agreement. 

“The best outcome, therefore, might be the expiration of current
fiscal policies to create real pressure for both parties to work
together and quickly reach a ‘Grand Bargain,’” it says. 

“While the fiscal cliff would be a near-term disaster, an extension
of 2012 fiscal policy that fails to address increasing indebtedness
could actually represent the worst long-run outcome,” it says.
Who makes money in near term disasters?  Those with $40 billion in dry powder, like Carlyle. Carlyle's latest investor presentation showed:

PEU's like to buy low in distressed markets, then flip firms in better times.

Carlyle co-founder David Rubenstein knows how to profit from every aspect of any Grand Bargain.  He also has nearly every politician's ear.