Carlyle AUM Hits $351 Billion via Fortitude Re

The Carlyle Group will earn an additional $50 million a year for managing $50 billion for affiliate Fortitude Re. 

Carlyle "will earn a recurring fee based on all of Fortitude Re's assets for assisting the reinsurer with acquisitions and identifying new growth opportunities." 

Under the agreement, the fee Fortitude will pay Carlyle will be based on the reinsurer's overall profitability; other investors putting more money into Fortitude will also make a minority investment in the adviser entity that Carlyle is forming. 

When your 96.5% owners (Carlyle and T&D Holdings) wants more fees what can you do?  Comply. 

Update 4-1-22:  Fortitude Re bought $31 billion of in-force variable annuity account values from Prudential Annuities.  Carlyle will be in your retirement.  Pensions, IRAs and annuities. Oh my!

Bloomberg on Inflation

Philadelphia Fed Chief Patrick Harker cited rising golf club fees as a sign of inflation.  The St.Louis Fed tracks this measure.

Recently Bloomberg ran an opinion column with four recommendations for dealing with rising prices.

I added the fifth based on a Golf Digest piece on stretching your golf dollar.  They actually suggested sneaking onto a course to get in a few free holes.  

OK, we’re not advocating committing a crime, or try to get away with not paying. But if you’re a regular on the putting green, there’s nothing wrong with going out at sunset to sneak in two or three holes. Just be respectful about it.

How does the golf club world apply to someone struggling to feed or house their family?  It likely doesn't.  Those stealing food or trespassing could be arrested.  While jail provides a roof and three square meals it is an unsavory place to be.  

Nobody said this or golf is fun.

Update 4-2-22:  A BlackRock executive complained about entitled young people.  

“For the first time, this generation is going to go into a store and not be able to get what they want.  And we have a very entitled generation that has never had to sacrifice.”

Lots of insensitive super rich people opining about the struggles of regular folk.  All those executives and government policy makers assured globalization (sending jobs overseas) would result in plentiful cheap goods.  For no raises over two decades we were told our dollar would go further.  That promise is dead and gone.

Being scolded for expecting items to be on the shelf in a grocery store is just the latest abuse. 

Update 4-4-22:  Fortune reported:

While CEOs salaries rose 19% in 2021, the average hourly wage in the U.S. rose just 4.7% last year.

Update 6-10-22:  Insider Larry Summers said “The Fed’s forecasts from March, saying that inflation would be coming down to the 2s by the end of the year was, frankly, delusional when issued, and looks even more ridiculous today.”  Inflation was a hot 8.6% for May.  Summers urged the Fed to investigate why officials’ forecasts were “so dramatically” and repeatedly wrong.

Carlyle Group/PAI to Buy Women's Health Pharma

 

Theramex, the leading global specialty pharmaceuticals company focused on women’s health, will go from private equity underwriter (PEU) ownership under CVC Capital to a consortium comprised of The Carlyle Group and PAI Partners.

The company now serves more than six million women in 57 countries across EMEA, APAC and South America, and employs approximately 480 people (~60% of whom are women).

Three of the four PEUs in the announcement are male.  That's 75%.  How will Theramex fare under a new set of greed and leverage boys?

Carlyle's two representatives include Phillipp Meyer.  His Carlyle bio mentions Edscha, which ended up in bankruptcy.  The U.S. portion defaulted on its pension obligations.  The Pension Benefit Guaranty Corporation received nearly $700,000 to take on a roughly $12 million pension obligation.  

Carlyle normally siphons enough cash from affiliates to cover their initial equity investment before sending them into bankruptcy.  It did so with nursing home giant ManorCare.  I'm sure Mr. Meyer knows very well how much his PEU made on Edscha before passing it's remains to creditors and Uncle Sam.

Biden Proposes Billionaires Pay "Carried Interest" Tax Rate

The public has long simmered over preferred taxation for private equity underwriters (PEU), known as carried interest.  Barron's reported last summer.

...carried interest is taxed at the 20% capital-gains rate rather than ordinary income rates up to 37%, thus investment managers pay lower rates than many wage earners. That galls observers.

President Biden floated a new tax on America's billionaire class and it is the exact same amount as PEU preferred taxation, 20%.  The tax would be applied to unrealized capital gains.   It has special provisions for assets held in private companies, i.e private equity underwriter wealth.

Many billionaires and wealthy Congress persons make use of trusts, which shelter gains from taxes. America's richest Senator Rick Scott has much of his ample wealth stashed in various trusts.

Cue Carlyle co-founder David Rubenstein to call the amount raised by the move "not serious money."

The Biden plan would treat increases in billionaire wealth as capital gains/carried interest for tax purposes.  That galls this observer. 

PEUs behind Medicare Direct Contracting

A new grievous healthcare abuse has been introduced by private equity backed companies.  Simply confirming one's primary care provider could get a patient enrolled in an "at risk" Medicare plan without their knowledge.  The program is called Medicare Direct Contracting.

Private equity underwriters (PEU) behind Iora Health (Fortis, F Prime, Flare Capital) and One Medical (The Carlyle Group)  joined the two companies in September 2021.   Executives spoke to Wall Street analysts last summer about the deal.

One Medical announced its intention to acquire Iora Health. In combination, we will transform healthcare and deliver a human-centered and technology powered care across every stage of life. Iora Health is a leading member-centric, value-based primary care organization with built-for-purpose technology, salary providers, service-oriented dedicated locations and virtual care services. Iora Health primarily serves seniors in full risk contracting relationships such as Medicare Advantage and Medicare Direct Contracting in 10 markets across the US.  

What's exciting is, it allows us to serve about 40 million Medicare members who are not in Medicare Advantage plans, and nothing stops us from doing this anywhere in the country. We don't need permission, we just simply need to register to do it.

Like One Medical, our bet is that we're going to actually change how actual people get actual care by building, built-for-purpose practices that engage people digitally, that build team base models, that have a fundamentally different clinical model, and we're going to take full-risk content through their contracting program and that leads to great experience and outcomes for the patient and leads to really spending economics as well, as we take this waste in the healthcare system and rationalize it and then because it's full risk we get to keep that difference and invest it into better primary care. 

There's tremendous opportunities as we noted to expand the TAM from about $170 million in the commercial segment to $870 billion in the combined commercial and Medicare, Medicare Advantage, and now with direct contracting really getting to original Medicare patients as well even before or without needing to get into Medicare Advantage relationships. 

So this is just a tremendous built-in growth opportunity.   We're very excited about direct contracting, 

As you know, in direct contracting there's a great channel called voluntary alignment where we simply ask our patients to report that you are our patients [indiscernible] (01:03:14) we are your patient, and then they flip into the full-risk model, and that's what we continue to intend to do.

And we are rapidly putting our patients and signing them up for direct contracting that's what we will continue to do. 

Direct contracting began in April 2021.  Iora converted over half of their original Medicare patients to at risk contracts by the end of April.

Iora estimates that as of April 30, 2021, approximately 57% of its Original Medicare patients have been aligned to the Direct Contracting Program under Iora’s DCE. 

In PEU healthcare people get aligned to an risk healthcare plan.  Imaging clicking on a link that confirms you are a patient of OneMedical or Iora and you are automatically enrolled in a plan that will make life and death decisions on your behalf.  

Iora has shown a 27% point improvement over four years on their medical expense ratio.

Both companies use technology to cut costs.

Iora Health had 19 engagements per member per year for a senior population and One Medical had 10 engagements per member per year, and across both of those models that's largely digital.

I don't want to be touched 19 times by my primary care provider and don't consider anything digital as touching.

The greed and leverage boys are re-defining healthcare on their terms.  You are but a pawn in their profit plans.

Hillary Advisor Haun Launches PEU Digital Greed

Former Hillary Clinton Advisor Katie Haun launched Haun Ventures, a $1.5 billion fund focused on web3 and crypto.  The launch consists of an article by Haun on Mirror and a floating fractal webpage.

Curious about the venture I did a search.  It produced:

Katie Haun’s New Fund Joins $10M Round for Polkadot Lending Protocol Moonwell 

The project will enable users to take out over-collateralized loans on Polkadot’s EVM-compatible Moonbeam parachain.

Former political hacks trying to make their next million via PEU greed is now digital.  That's a disturbing pattern.  Cheers to fake money in a fake world.  Can it really be over-collateralized?

Carlyle Co-founder to Chair U. of Chicago Board of Trustees

Hyde Park Herald reported Carlyle Group co-founder David Rubenstein will serve as Chairman of the Board of Trustees for the University of Chicago.  Their story on Rubenstein stated:

In a 2020 interview with The New York Times, he acknowledged that the contemporary wealth gap is higher than at any point since the 1920s and said he is surprised more people are not marching in the streets. He noted that there is a lack of social mobility in addition to income inequality.

It's two years later and things have only gotten worse for the common person.  The greed and leverage boys are swimming in green.  Elected officials readily take their calls. 

Politicians Red and Blue love PEU and increasingly, many are one. 

PEU Rick Scott Wants IRS Cut in Half

Why would Senator Rick Scott want the IRS budget reduced 50%?  Scott is the richest U.S. Senator and once had his own investment company.   Below are various Scott family corporations on record with the SEC.

The men who manage his ample wealth once worked for Richard L. Scott Investments.

Greg Scott runs G. Scott Capital whose logo is just Scott Capital.  Greg shares the same last name as the Senator but is not related. 

Greg's years of working for Senator Scott's former PEU means he knows well Scott's investment style.

Rick Scott's unethical background as head of Columbia/HCA is well documented in a $1.7 billion Justice Department fine.

The Senator's background includes corporate raiding as a private equity underwriter (PEU).

On July 22, 2005, a dissident shareholder group comprised of Crescendo Partners II, L.P., Series R, Crescendo Investments II, LLC, Eric Rosenfeld, F. Annette Scott Florida Trust, Richard L. Scott Florida Trust, Scott Family Florida Partnership Trust, Richard L. Scott and Stephen T. Braun, calling themselves The Computer Horizons Full Value Committee (together, the "Dissident Group"), filed a Statement on Schedule 13D (the "Schedule 13D") disclosing a combined ownership of CHC common stock equal to 10.3% of the issued and outstanding CHC common stock. The Dissident Group's Schedule 13D further disclosed the Dissident Group's opposition to CHC's previously announced proposed merger with Analysts International Corporation ("Analysts") and the Dissident Group's intentions to solicit proxies in opposition to the proposed merger and, eventually, to call a special meeting of the shareholders of CHC for the purpose of removing all of the existing members of the CHC board of directors, without cause, and replacing them with the Dissident Group's own slate of director nominees. Ironically, despite the Dissident Group's criticism of CHC's proposed merger with Analysts, most of the Dissident Group's holdings in CHC were acquired beginning on May 31, 2005, subsequent to CHC's first public announcement concerning the proposed merger which occurred almost 6 weeks earlier on April 13, 2005

The.Scott family and its various trusts raided Computer Horizons Corporation.  That required coordination amongst entities:

...each of F. Annette Scott Florida Trust and Richard L. Scott having sole voting and dispositive power over 333,996 shares of CHC common stock; Richard L. Scott Florida Trust having sole voting and dispositive power over 305,481 shares of CHC common stock; Scott Family Florida Partnership Trust having sole voting and dispositive power over 185,523 shares of CHC common stock...

The greed and leverage boys hate paying taxes and retained their preferred carried interest taxation thanks to sponsored politicians.   As a U.S Senator Rick Scott can help his former peers by nixing any tax increases.  Cutting the IRS budget in half would be another feather in his PEU cap.  They don't like to share.

Update 3-19-22:  Regarding Rick Scott's coordinated use of trusts for corporate raiding purposes:

For all practical purposes, the trust is invisible to the Internal Revenue Service (IRS). As long as the assets are sold at fair market value, there will be no reportable gain, loss or gift tax assessed on the sale. There will also be no income tax on any payments paid to the grantor from a sale.

State of Florida corporation records indicate Richard L. Scott Investments changed names in 2013 to Columbia Collier Management with manager Frances Annette Scott, his wife.

A multipart policy plan released by Sen. Rick Scott on Feb. 22 says “all Americans” should have to pay “income tax,” while saying that “over half of Americans” currently do not.

In an interview later that day the Florida senator falsely claimed that he had not suggested increasing federal income taxes for that many people.  Yes he did.

Update 3-27-22:  Fox News John Roberts held Senator Scott's plan up as a mirror and Scott accused him of using Democrat talking points.  Roberts said "It's in your plan."  

Update 3-28-22:  Another story on Scott's bizarre deflection mentions his unethical background as hospital chain CEO.

Carlyle Group has Russian Money via Concord

NYT reported that Russian oligarch money went to Concord Management LLC for investment in U.S. private equity underwriters (PEU) and hedge funds.

Concord Management, whose representatives declined to comment, appears to be devoted almost entirely to managing the money of a small handful of ultrawealthy Russians.

The unregistered investment firm has been operating since 1999 with a staff of about two dozen. It specializes in investing in hedge funds and real estate funds run by private equity firms, according to online profiles of current and former Concord employees.

Concord has steered its clients’ money into marquee financial institutions: global money manager BlackRock, private equity firm Carlyle Group and a fund run by John Paulson, who famously anticipated the collapse of the US housing market. Concord also invested with Bernard Madoff, who died in prison after being convicted of a vast Ponzi scheme.

“But when these lucrative contracts are out there, it gets to be too much for some people, and they can turn a blind eye to any atrocity.”

“The implication of sanctions being imposed on Russia and its oligarchs is just rippling through the private fund community.”

Carlyle co-founder David Rubenstein can dial up the White House and get his phone call answered.  Will he PEU of Ukrainian descent non-lobby on behalf of his Russian L.P.'s?   The greed and leverage boys are known for pursuing profits regardless of societal cost.  I expect the ripple to be a relatively silent one in our PEU world. 

Politicians Red and Blue love PEU and increasingly, many are one.

Update 3-22-22:  Russian oligarchs used shell companies to invest in Western hedge funds and PEUs.

Energy Trader Fallout to Lead to Bailout?

ZeroHedge reported:

European Federation of Energy Traders, a trade body that counts BP, Shell and commodity traders Vitol and the margin-call stricken Trafigura as members, said the industry needed “time-limited emergency liquidity support to ensure that wholesale gas and power markets continued to function”.

“Since the end of February 2022, an already challenging situation has worsened and more [European] energy participants are in [a] position where their ability to source additional liquidity is severely reduced or, in some cases, exhausted,” EFET said in its letter, dated March 8 and sent to market participants and regulators.

It was "not infeasible to foresee . . . generally sound and healthy energy companies . . . unable to access cash", the letter warned, clearly ignoring that "generally sound" companies would have anticipated such a fat tailed scenario. 

The world's largest energy trader is Vitol, a partner with The Carlyle Group in Varo Energy.  

Some may remember the implosion of Carlyle affiliate SemGroup, a staid pipeline operation that lost over $3 billion in bad energy bets.  Energy betting was not mentioned in the company's SEC filings.  

Carlyle's credit arm might provide interim capital, but it too could be stressed.  Insider reported $12 billion in leased airplanes remain inside Russia.  Recent actions by the Russian government puts future lease payments in doubt and constrains the ability of foreign owners to get their planes back. 

Aircraft leasing has been a focus for private equity. 

According to aviation consultant IBA, the company with the most exposure to the war is Dublin-based AerCap, with 152 planes valued at nearly $2.4 billion that are flying, parked or stored in Russia or Ukraine.

Cerberus Capital once owned Aercap.  Carlyle has its own airplane leasing arm:

Carlyle Aviation Partners is the commercial aviation investment and servicing arm of Carlyle’s $66 billion Global Credit platform. It is a multi-strategy aviation investment manager that seeks to capitalize on its extensive technical knowledge, in-depth industry expertise and long-standing presence in the aviation sector. As of September 30, 2021, and excluding the planned acquisition of AMCK’s portfolio, it has total assets under management of $8.3 billion, owns, manages or is committed to purchase 311 aircraft with 106 airline lessees in 56 countries

Carlyle bought Fly Leasing in August 2021.  Fly leased one plane each to Russian airlines Nordavia (since renamed Smartavia) and Yakutia.  It leased another plane to Air Moldova, not far from the conflict.

As of 12-31-19 Fly Leasing shared the following risk to its operations:

The European Union and the United States have imposed sanctions on Russia and certain businesses, sectors and individuals in Russia, including the airline industry. The European Union and the United States have also suspended the granting of certain types of export licenses to Russia. Russia has imposed its own sanctions on certain individuals in the United States and may impose other sanctions on the United States and the European Union and/or certain businesses or individuals from these regions. We cannot assure you that the current sanctions or any further sanctions imposed by the European Union, the United States or other international interests will not materially adversely affect our business, financial condition and financial results. 

It remains to be seen what happens as markets continue to break.  The PEU boys have the clout to get direct government bailouts for losing affiliates while scooping up distressed assets with their ample dry powder.  In the midst of this the common citizen can't even be heard.

Broken markets include Texas electricity in February 2021, LME nickel trading and now energy traders.  The Texas consumer is paying for drastic ERCOT overcharges and will do so for years.  LME cancelled thousands of trades to benefit billionaires making bad nickel bets.  How will bad energy bets and failed derivatives be passed onto the little people?  

Update 3-18-22:  WallStreetonParade noted a number of broken markets.  JessesCafeAmericain noted the same with "both parties in Washington were united in a belief that the markets would take care of themselves."

Update 3-24-22:  Aircraft leasing companies are filing insurance claims for planes taken by Russia.   Carlyle has both an airplane leasing affiliate and a reinsurer.   Will they settle with themselves?   The report indicated "Lessors with asset-backed securities exposed to Russia include Carlyle Aviation Management."

Update 11-5-22:  FT reported:

Carlyle Aviation Partners, one of the world’s biggest aircraft leasing operators, is seeking $700mn from more than 30 insurers and reinsurers after they failed to pay out over jet seizures by Russian airlines.

The Carlyle case involves 16 Boeing and seven Airbus aircraft leased to 12 different airlines, according to the court filing. The single biggest group of aircraft is five Boeing aircraft leased to Utair, a regional airline based in western Siberia. Most of the aircraft are in Russia, although one Boeing aircraft operated by Azur Airlines has been detained in Egypt. 

Public Turns into Self Service

Who knew public service would be so profitable?  Unusual_whales did.

Youngkin Turns Back on Diversity

How did a former private equity chief come to hate the word "equity"?  Virginia Governor Glenn Youngkin was once a diversity loving executive at The Carlyle Group, a politically connected private equity underwriter (PEU).  

Carlyle supported CEOAction in June 2017.  Youngkin was named co-CEO in October of that year.  

...more than two out of three employees are currently uncomfortable discussing race relations, and 29 percent feel it is never acceptable at their company to speak about experiences of race-based bias. 

In 2018 Carlyle hired a Chief Diversity Officer.  Their press release stated:

Carlyle Co-CEOs Kewsong Lee and Glenn Youngkin said, “A diverse and inclusive culture is a competitive advantage that enables us to attract strong talent across geographies, strategies and functions. Kara’s impressive track record leading diversity efforts within a range of industries will enable us to build on the solid foundation we have created, advancing our culture of inclusion and generating a new level of diverse thought.”

Carlyle’s Approach to Diversity

• Carlyle seeks diversity of experience, thought, culture, race, ethnicity, gender, sexual orientation and generations
• Carlyle takes a proactive approach to increasing diversity and inclusion; in 2013 Carlyle established a Diversity & Inclusion Council to drive policy and action

Select Achievements

• • 100% score on the Human Rights Campaign Corporate Equality Index (CEI)
  • Carlyle Board Members Janet Hill and Anthony Welters named to the “2017 Most Influential Black Corporate Directors list”

Diversity Statistics

• • U.S. Corporate Private Equity 2-Year Associate diversity (gender & race) has been more than 50% each of the last five years, with the 2019 class at 63%
  • U.S. Corporate Private Equity Senior Associate gender diversity is at 100% for the incoming post-MBA 2018 class (4 females hired)
  • Funds and Departments are required to have a diverse slate of candidates for every position
  • Stats:
    • 23% - women in Senior Positions (Principal - Partner) in US (20% globally)
    • 17% - female MDs/Partners in US and globally
    • 45% - overall hiring diversity (gender & race) in 2017 Analyst - Partner levels in U.S.
    • 40% - overall population diversity (gender & race) Analyst - Partner levels in U.S.

Carlyle's Diversity and Inclusion Council ensured at least half of the firm’s incoming classes have been diverse since 2013.  

Candidate Youngkin used public education to separate himself from his opponent.  School superintendents recently reacted to the Governor's "divisive concepts" hotline and stripping equity efforts from public schools.

The Virginia Association of School Superintendents said the recent report made “gross assumptions” about public education in Virginia and failed to solicit input from local school administrators. Members of the association, which represents the state’s 133 local school divisions, first read the report after it was picked by the media.

Carlyle seeks to profit from HireVue, an affiliate that facilitates diverse and inclusive hiring.

CEOAction's booklist, once endorsed by PEU Youngkin, might have questionable titles for the Governor Glenn version.

PwC Talks "Being Color Brave" suggests leaders need to be open, empathetic, courageous, and at times apologetic, but it doesn't mean avoidig the conversation entirely.  

..the school superintendents association considers the governor’s tipline “highly offensive” and still disagreed with many of the statements made by state leaders. Youngkin’s administration has refused to release details about messages sent to the email account associated initiative. 

“I don’t think it’s a surprise to anyone, but the use of ‘divisive content’ and how that applies to teaching history — there are many individuals, especially minority superintendents, who consider that to be racist rhetoric,” Kiser said. 

“So, you could imagine how our African American superintendents, who are terrific leaders, are trying to ascertain what the new administration means and what their overall intent is,” he added.

PEU boys are used to framing the world to their advantage and garnering nearly all the spoils.  Hearing and sharing are not their strengths.  

Update:  Youngkin swam in performance based compensation at Carlyle.  "Attempts to implement meritocracy leads to just the kinds of inequalities that it aims to eliminate. They suggest that this ‘paradox of meritocracy’ occurs because explicitly adopting meritocracy as a value convinces subjects of their own moral bona fides. Satisfied that they are just, they become less inclined to examine their own behavior for signs of prejudice."  

"Despite the moral assurance and personal flattery that meritocracy offers to the successful, it ought to be abandoned both as a belief about how the world works and as a general social ideal. It’s false, and believing in it encourages selfishness, discrimination and indifference to the plight of the unfortunate."

Update 3-24-22:    Youngkin's office refused to release hundreds of documents relative to public information requests.  Exceptional Glenn's office exercised "exemptions."  PEU boys are used to operating in secret whilst advantaging themselves.  That makes it easier to ignore a plea from the state association of school superintendents to get rid of his "rat phone line" for divisive concepts.   

Update 6-17-22:  WaPo found Youngkin's diversity roots.   Apparently they were just shallow roots for his PEU image.

Youngkin was recognized for diversity practices when he was co-chief executive of the Carlyle Group private equity firm, but has adopted a far more hard-line stance since running for office last year. 

Update 11-19-22:  Youngkin's ability to rewrite history as Carlyle Co-CEO has expressed in Virginia education standards for history.  A draft rewrite failed to include the word racism.  Youngkin whitewashed greed.  He knows history has been written by the winners and Youngkin won.  

Update 1-14-23:  It seems independent voters aren't buying Youngkin's brand of politics.

Carlyle's Geopolitical Expert on CNN

CNN's Micheal Smerconish interviewed a Carlyle Group executive this morning.  Admiral James Stavridis is charged with finding profitable opportunities in the midst of global crises for Carlyle, a politically connected private equity underwriter (PEU).

Admiral James Stavridis is Vice Chair, Global Affairs and Managing Director, focused on advising Carlyle’s executive team and investment professionals on geopolitical and national security issues.

Neither Smerconish or Stavridis disclosed his Carlyle Group role.  Oddly, the CNN host went on to Russian oligarchs and their use of offshore companies to hide assets.  Carlyle SEC filings showed over 150 companies registered in The Cayman Islands.  Billionaire PEUs are known for their ability to make U.S. government policy while the voice of the common person is widely ignored.

Carlyle's crisis creds are well established.  With knowledge from its China presence the PEU built a solid COVID-19 pandemic portfolio.  Their first buy of a blood products software provider happened in February 2020.  Carlyle struck a deal to flip their substantial holdings in lab test provider Ortho Clinical Diagnostics to Quidel.  

Rest assurred Admiral Stavridis is working hard to make the greed and leverage boys wealthier in the midst of global upheaval.  That was not mentioned, much less explored.  Some things are purposely off topic. The Admiral is also on the board of directors of cybersecurity firm Fortinet.

How might crash helmets and biker's boots help citizens stuck in an urban invasion? 

Update 3-13-22:  The Admiral was on NBC's Meet the Press this morning.  No mention of Carlyle.

Update 4-3-23:  Responsible Statecraft reported:

A prominent regular columnist for Bloomberg Opinion, Ret. Adm. James Stavridis, has published multiple columns over the past year urging greater U.S. investments in cybersecurity and cyber-defenses while failing to disclose to readers potential conflicts of interest due to work in the defense industry. 

Declaring financial conflicts of interest is so passe in our PEU world....

Carlyle's Rubenstein on Carbon Chaos

Carlyle Group co-founder David Rubenstein told Fox Business News the world still relies heavily on carbon based energy.   Rubenstein's firm sank both a refinery and oil export project.

Carlyle blew up a Philadelphia refinery in June 2019.

The disaster at the Philadelphia Energy Solutions complex began with the early morning failure of an elbow section of pipe that had corroded to half the thickness of a credit card.

The failure of a section of pipe was similar to a 2012 accident at a Chevron refinery in Richmond, Calif., which prompted the CSB to recommend that refinery operators inspect all components of piping systems. That was not done at PES.

The Port of Corpus Christi announced Carlyle's role as lead developer of the Harbor Island deepwater oil terminal in March 2019.  The Port's press release stated

“This long-term commitment is testament to the significance of the Corpus Christi gateway for American energy exports, which are expected to triple in the next decade,”

...United States’ first and only onshore terminal capable of fully loading Suezmax vessels and nearly full loading Very Large Crude Carriers (VLCCs).

"This partnership is a great vote of confidence in Carlyle and our abilities to deliver generation changing infrastructure projects, and we take that responsibility seriously.”

Seven months later Carlyle backed out of Harbor Island, giving no reason for abandoning the project. Carlyle co-CEO Glenn Youngkin oversaw infrastructure efforts and never spoke to ditching Harbor Island in his run for Virginia governor.

Much changed over the last three years but not Carlyle's thirst for profits. One advantage is the increasing number of private equity underwriters (PEU) winning public office.  Virginia Governor Glenn Youngkin is now able to steer the state budget to his peers.

The greed and leverage boys are working overtime to discern how profitably navigate economic chaos while abandoning any responsibility for the current state of events.

Boca: Ground Zero for Derivatives Post Nickel Meltdown

Next week Boca Raton will host a gathering of financial bettors. 

The International Futures Industry Conference is FIA’s most powerful and prestigious event. Boca delivers an unparalleled opportunity to engage with the global cleared derivatives industry. Boca 2022 will be the reunion of the cleared derivatives industry, gathering together high-level executives from leading banks and brokers, exchanges and other service providers as well as global regulators after a two-year hiatus. It’s where conversations and handshakes lead to the next headline; where thought-leaders deliver inspiration; where global regulators connect with industry giants; and where you’ll have exceptional experiences that can take place only at Boca.

Date: Tuesday 15-Thursday 17 March 2022

Location: Boca Raton, USA

Event organiser: FIA

LME involvement: HKEX and LME representatives will be attending Boca, where Gay Huey Evans, LME Chairman, will be celebrating her induction into the FIA Hall of Fame. 

The meeting will occur after the London Metal Exchange (LME) halted Nickel trading.

Nickel trades at the London Metal Exchange will now be halted through the morning of March 11 at a minimum, as the 145-year-old global center of metals trading works to close the substantial short positions on its books and return stability to the market. 

The market exploded after the price of nickel more than doubled.  The exchange operated for 145 years with no breakdown.  A Chinese steel producer is facing an $8 billion paper loss and he wants to keep rolling the dice.  His losses could be less as the LME cancelled some trades after closing the exchange.

Texas residents recall our electricity market breaking in February 2021.  The market based system imploded as operators tried to restore power in the midst of a brutal winter storm.  Governor Abbott instructed ERCOT's CEO to keep prices at the maximum so he wouldn't face another failure.  Texas homeowners get to pay losses incurred throughout the system via an electricity bill surcharge.

Also recall how China said it would not honor its derivative commitments in the Fall 2008 financial crisis.

Financial betters better hold on to their hats as greed and violence disrupt our world.  An exceptional experience could blow it and their heads clear off.

Update 3-16-22:   WallStreetonParade reported:

It is believed that at some point last Tuesday the banks came clean with the LME as to what their total derivative exposure was and to the massive losses they would experience if the trading that occurred last Tuesday was allowed to stand. What is not in dispute is that the LME suspended trading in nickel last Tuesday and cancelled all of the thousands of trades that had occurred last Tuesday prior to the suspension of trading.

Update 3-18-22:  WallStreetonParade noted a number of broken markets.  JessesCafeAmericain noted the same with "both parties in Washington were united in a belief that the markets would take care of themselves."

War Now a Battle of Economic Systems

Now that the primary means of war is economic all people stand to be impacted, not just those on the battlefield.  The conditions of war have long killed more citizens than direct combat.  The lack of sanitation (sewage and potable water), inability to access to healthcare (doctors, hospitals and pharmaceuticals), loss of shelter protecting people from the elements and exposure to war made toxins killed more people off the battlefield than on it.

If ESG was such a thing, war would disappear from this earth.  It is but a slogan for selfish leaders to wear on their lapels.  Former Carlyle Group co-CEO Glenn Youngkin ran from his ESG loving self as he campaigned for and became Virginia's Governor.  The man who once monitored rush hour traffic in Beijing must mobilize the state budget to benefit America's oligarchs, his former private equity peers.  

The greed and leverage boys fully intend to profit massively in the midst of major global disruptions.  They will get theirs.  The question is how many regular people will get monkey hammered by the new ESG, eviscerating society for greed.  As Russian President Vladimir Putin does not care about the direct or indirect loss of life neither do America's oligarchs.  Both want more and more and more.

Update 3-10-22:  Russia's greed and leverage boys are also in a "recalculating phase."

Rubenstein Suggests Putin Will Blink

 

Carlyle Group co-founder David Rubenstein spoke with Fox Business News Liz Claman regarding Russia's attack on Ukraine.  Joining him was daughter Elle of Mannatree, a private equity underwriter (PEU) focused on healthy food and living.  

Rubenstein called Vladimir Putin's invasion of Ukraine the most senseless war of his lifetime.  He believes Western financial pressure will cause a demotivated Russian army to seize up.  As a result Putin will need to blink giving the opportunity for negotiation.  

Clayman did not ask either PEU about their plans to profit from the current situation.  Consider this news:

Goldman Sachs and JPMorgan have been purchasing beaten-down corporate bonds tied to Russia in recent days, as hedge funds that specialize in buying cheap credit look to load up on the assets.

Carlyle has a credit arm that targets distressed assets.  They have acquired a number of affiliates using debt as a back door.  

Rubenstein and Carlyle have a sense of what is happening throughout the globe.  Claman did not ask David about his extensive knowledge of China's leadership and how they might react going forward.

Former IMF Chief Ken Rogoff has an eye on China.  David was married to Alice Rogoff and they have two daughters, Ellie of Mannatree and Alice of Declaration Partners, Rubenstein's family office.     

Asia Times reported:

China is looking for alternatives to the US dollar as a reserve currency after Western nations froze the foreign assets of Russia’s central bank last week, former IMF chief economist Kenneth Rogoff told media on March 1.

The seizure of Russian sovereign assets has no precedent in postwar history, and sets a precedent for similar action against China in the event of hostilities over Taiwan.

“It's an absolutely radical measure to try to freeze assets at a major central bank. It's a break-the-glass moment,” said Rogoff, now a professor at Harvard University.

“It's a major thing,” Rogoff added. “I mean, if you want to look at the long-run picture of dollar dominance in the global economy, believe me, China's looking at this. They have, I don't know, US$3 trillion in dollar reserves.

Rest assured David Rubenstein, daughter Ellie of Mannatree and daughter Alice of Rubenstein's family office Declaration Partners are scrambling to make big money from a world economy headed towards shock.  Did either daughter call Uncle Ken to discuss the changing order and how to best position their respective PEUs to profit from disruption?  Did David Rubenstein call his former brother-in-law to find opportunity in crisis?

Reading tea leaves and building enabling political systems are key factors in PEU profits.  Access to Uncle Sam's wallet and preferred taxation also helps.  

CEO Dan Price of Seattle wrote on Twitter:

Can anyone explain why a billionaire who takes advantage of the system to exploit other people is called an "oligarch" in Russia and a "job creator" in America?

Can anyone explain why private equity continues to have preferred carried interest taxation or why elected officials ignore the will of the people to pander to the obscenely wealthy?  

Putin may blink or he may do something more deranged.  In the meantime the greed and leverage boys plus their daughters have serious money to make from all this disruption.

Rubenstein Interviews Tik Tok CEO

Bloomberg podcast host and Carlyle Group founder David Rubenstein interviewed Tik Tok CEO Shou Zi Chew.  Tik Tok is owned by Chinese based ByteDance.  The Carlyle Group invested in ByteDance several years ago. A Carlyle press release stated: 

Carlyle’s Asia investments include ANE Logistics, Delhivery, Ant Group, ByteDance, China Literature, Tuhu, Spark Education, Du Xiaoman Financial, Nxtra Data, among others.

Tik Tok has become a source of misinformation on Russia's invasion of Ukraine.  News reports indicate China asked Russia to wait until after the Olympics before invading Ukraine.  That indicates China's leadership had some foreknowledge of Russia's plans. It has been supportive since Putin unleashed his military on Ukrainians.

As European and American officials press Facebook, Twitter, TikTok and other online platforms to clamp down on Russian disinformation, China has embraced Russia’s propaganda and lies about the war. China’s state-owned media outlets quoted their Russian counterparts’ coverage without verification, helping to magnify their disinformation on the Chinese internet.

Mr. Rubenstein's interview did not address the raging war, misinformation on Tik Tok or the West's financial sanctions against Russia.  It focused on how people can make themselves famous on Tik Tok, the "sunny corner of the internet."  

The Chinese government put Carlyle's huge profits from Ant Group on hold after Jack Ma got too big for his britches.  Their Ant Group payday will be smaller as a result of Ma's hubris.  

Rubenstein said in the podcast that he assumes Carlyle will make money from its ByteDance investment."

ByteDance Mission-- "Inspire creativity and enrich life"

Tik Tok Mission-- "Inspire creativity and bring joy."

The interviewed ended with Tik Tok's CEO saying he is focused on "trust building with the right stakeholders around the world."  War does not enrich life, bring joy or build trust.  It destroys.  The CEO did not say who the right stakeholders are in our highly divided world.  One would have to talk to their Chinese corporate owners to know for sure. 

Super League Returns as Carlyle Funds Bain Takeover of Atalanta

European football is the latest hope for leaders seeking to re-carve the world for greater power and profit.  News reports indicate the doomed Super League appears to be back.  

Either ten or six top clubs want to bring the widely panned idea back to life.  Initial reports had a number of EPL clubs in the mix but that has since been refuted.  

LaLiga president Javier Tebas has reportedly claimed the three Super League clubs "lie more than Putin. They think that all national leagues must be dumb. It's an insult."

Reports have not mentioned J.P. Morgan, the Wall Street firm that set up last year's disastrous effort.

Owners have a new way to tap the obscene amount of equity in their football clubs, private equity underwriters (PEU).  The greed and leverage boys can handle both sides of the deal, buyout and financing.  

Bain Capital is leading a PEU consortium taking a majority stake in Italian Football Club Atalanta B.C.  The Carlyle Group is providing the financing through its credit arm.  The PEU boys expect a big return on their money.  What will mean for ticket prices?  Expect them to soar.

State of the PEUnion

President Joe Biden gave his first State of the Union address.  The first two members of his cabinet to enter House chambers were former Pine Island Capital partners, Anthony Blinken and Lloyd Austin.

Biden cited three things in his speech that brought America's greed and leverage boys to mind.  First, he said he would target Russian oligarchs yachts and luxury villas.  He did not mention American oligarchs whose billions enable them to set government policy.  President Biden spent Thanksgiving at the Nantucket estate of Carlyle Group co-founder David Rubenstein.

Second, President Biden talked about billionaires paying a lower tax rate than secretaries.  He didn't say "carried interest", but that is the preferred taxation granted to private equity underwriters (PEU).  

Serious challenges to PEU preferred taxation failed multiple times over the last twelve years.  Carlyle's Rubenstein played a critical role as a lobbying non-lobbyist in saving lower tax rates.  The Trump tax cuts were an absolute bonus to billionaire PEU co-founders, as well as U.S. Congress persons.

The third thing he mentioned was cutting healthcare costs.  Private equity barbarians overran America's healthcare system long ago.  The Carlyle Group ran nursing home giant ManorCare into bankruptcy after selling the real estate and paying itself management fees and special dividends.  Carlyle profited from driving the company into the ground.  

Biden's cabinet is chock full of PEUs.  Politicians Red and Blue love PEU and increasingly, many are one.  Both parties believe in greed and leverage.  The rest is political theater.