Wednesday, January 24, 2018

Rubenstein Sees PEU World at Davos

Carlyle Group co-founder David Rubenstein spoke to a WSJ reporter at the World Economic Forum meeting in Davos, Switzerland.  Rubestein predicted workers will not get much from the Trump tax cuts.  Executives, investors and corporate raiders will be the big winners of the current sweet spot economy.  Rubenstein founded Carlyle, a private equity underwriter (PEU), in 1987.

Rubenstein served on a panel alongside former cousin-in-law Kenneth Rogoff.  Harvard Economics Professor Rogoff expressed his concern:

"If interest rates go up even modestly, halfway to their normal level, you will see a collapse in the stock market.”
There will be a spinoff impact on PEU affiliates:

Higher rates will also affect the $5 trillion burden of dollar-denominated debt held by emerging-market companies.
Carlyle lost ManorCare and Philadelphia Energy Solutions to bankruptcy.  How much of the predicted deal activity will be back door takeovers?

Update 1-27-2018:  AmericanConservative called out Davos for what it is, crony capitalism on steroids.

Update 1-29-18:  ZeroHedge reported the Davos' billionaire boys heard a voice crying "income inequality."  That's been a World Economic Forum meme.  For some reason they can do deals but can't make advances in this arena. Companies can take tax cut proceeds and not give a penny to workers. 80% plan to do just that.

Update 2-18-18:  Worker wages are up a penny an hour from last year. Stock buybacks for 2018 are set for a new record.

Update  2-22-18:  WSJ asks "how gargantuan can private equity get?"  In our PEU world politicians Red and Blue love PEU... 

Update 3-18-18:  WEF caters to CEOs whose pay continues to accelerate