Thursday, November 1, 2018

Rubenstein Rehabs Founder Milk 'em on Bloomberg

Carlyle Group co-founder David Rubenstein hosted convicted junk bond king Michael Milk 'em, the founder of "modern capital markets."

In April 1990, after four years of investigation and prosecution, Milken agreed to plead guilty to six charges of criminal violation of securities laws — technical violations, as opposed to the original 98-count indictment that charged him with conspiracy and insider trading — and to pay a $600 million fine. He paid an additional $500 million to Drexel's private investors who lost money when the firm was shuttered and then liquidated, also in 1990, in part as a result of Milken's wrongdoing. 

"You were willing to commit only crimes that were unlikely to be detected," U.S. District Judge Kimba Wood told him in November 1990 at his sentencing hearing. "When a man of your power in the financial world . . . repeatedly conspires to violate, and violates, securities and tax business in order to achieve more power and wealth for himself . . . a significant prison term is required." 
His ten year prison sentence was reduced to two years.  That was when financial criminals actually went to jail for short periods of time. 

On the Rubenstein show Milk 'em offered large doses of horse excrement.

"When things started coming from Japan in the 60's and 70's everyone said they were junk.  It's junk.  And all of a sudden we felt by the 80's the quality of their products and cars was better.  Everything coming out of China was junk.  The American public did not understand they were talking about themselves."  
Notice the "junk" frame which he used to distract from his junk bond crimes.  He then employed the classic move of blaming the victim, the self hating American people who might dare stand up to unethical billionaires like Rubenstein and himself.

Since the American people considered themselves junk, who came to the rescue?  Milk 'em could've cited the American hero who helped the Japanese manage for quality, Dr. W. Edwards Deming.  Nope.  Dr. Deming lambasted the corporate flippers of the world who used other people's money.  Corporate America turned to Dr. Deming in the 80's for lessons on quality.

The world's quality guru, Dr. W. Edwards Deming, spoke in 1984 about an economy without takeovers, without leveraged buyouts (LBO firms).  LBO morphed into private equity before exploding the last decade.  Greed is their constancy of purpose.
The Carlyle Group was established in 1984.  However, Milk 'em offered a different balm for the American people who rated themselves as junk.  It turns out he was their hero.

"60 million jobs have been created by non-investment grade companies  in the latter third of the twentieth century minus jobs being created by investment grade companies.
Why doesn't Milk 'em cite huge job creation for the first fifteen years of the twenty first century?  Because modern capital structure prioritized massive interest costs over worker pay/benefit increases in company income statements.  It also drove down company tax burdens.  The LBO/PEU boys are happy to pay interest but not raises or taxes.  

To restore hope to America Milk 'em is creating the Center for the American Dream.  This is but the latest move in the Milk 'em Pardon Game.  Greed is good and billionaire President Donald Trump is just the man to remove any lingering stench from Michael Milk 'em.  

Both the Red and Blue political teams sold their souls to the greed/leverage boys in the 1990's.  Members of both political squads endorse the rehabbing of Micheal Milk 'em.  It's one thing our horrific leaders can do on a bi-partisan basis.

I think the American Dream, which is so unique, is a chance to succeed based on your ability, your willing to work hard, your knowledge, your insight - which is one of the most valuable qualities. Now I can't tell you how depressed I am that 26% of Americans under 30 think they will live a better life than their parents.   A long time ago it was 90% of Americans.  Why do they feel that way?
Milk 'em is back to blaming the victims of an economy rigged to reward the rich and politically connected.  The twenty first century rewarded the Rubensteins and Milkens, not the average American worker.

LBO-PEU killed the American dream and loaded the U.S. economy with trillions in junk debt.  A downturn will bankrupt many highly leveraged firms.  Micheal Milken could look in the mirror and see what his creation wrought.  That's not part of the PEU plan.

Update 11-2-18:  Republican Senator Ben Sasse cited loneliness as the problem for Americans, a slight variation on Milken's junking of the average citizen.  Sasse once worked for consultant McKinsey.  Did McKinsey come up with the junk and loneliness frames for use against the average citizen?

Update 9-28-21:  Milken got mention as a bad guy in 2010 for rumor mongering and naked short selling.