Sunday, July 27, 2014

The Callous PEU Decade

NYT reported:

The typical American household has been getting poorer, too. The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline.

While the middle was dropping top earners soared.  A former business reporter made this observation three 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.

How did the greed boys do between 2003 and 2013?  The Carlyle Group grew from $17.5 billion in assets under management to $185 billion.

Median household down 36%
Carlyle Group up 960%
Private equity became ubiquitous during this decade, flipping companies for huge profits.  Not everyone in the business world is a fan.

The Carlyle Group scares me more than anything I've ever seen on Wall Street. It seems to exist to corrupt politicians and it's hard to know who they even represent.

I watched a video interview of (David) Rubenstein and his arrogance is really beyond tolerance. He was going on about the debt ceiling problem and how there would need to be cuts in services and higher taxes. When the reporter asked him about tax on carried interest he turned really disdainful and said that this "only" amounted to $22 billion over some number of years and this was not serious money. Boy, nothing like everybody doing their small part to save the country from oblivion!

However, Congress and the White House are fans.  It's a PEU world.  Politicians Red and Blue love PEU.  As :former Treasury Secretary Larry Summers said, the loyal get their reward from giving their sponsors their way.