Who Serves Who in our PEU World?

Two hearings shed light into the proverbial darkness of outsized political influence.  The first involved the U.S. Senate where Caritas Christi/Steward Healthcare CEO Ralph de la Torre, MD was a no show for his subpoenaed testimony.  

Flashback to 2016 when private equity owner Cerberus had a giant profitgasm.  NYPost reported:

Cerberus received $719 million of the dividend while the remaining $71 million was paid to the Steward management team headed by CEO Dr. Ralph de la Torre.

Private equity underwriters (PEU) spawned the term "policy making billionaire" back in 2011.  

...the new philanthropists share a disdain for established politics and an impatience with the slow churn of old-fashioned policy making.

And how have PEU political donations changed since 2011?   They're way up:

I am not surprised that a PEU might skip an uncomfortable hearing with the people who repeatedly saved their highly unpopular, preferred "carried interest" taxation for the last decade and a half.  

Heck, at least two members of the committee, Red Team Senators Mitt Romney and Tommy Tuberville are former PEUs.

What else changed in healthcare since 2011?  Accountable Care Organizations came into being.  PEU Cerberus cited forming an integrated accountable care organization in its rationale for buying Caritas Christi and forming Steward.

Another change is the mass migration of U.S. healthcare companies to private equity ownership.

Let that sink in...50% of the healthcare industry is owned by private equity.  That means lots of deals.  Oddly, one man behind the Affordable Care Act, Peter Orszag, is now head of Lazard.  Their website states:

Lazard is one of the world's leading advisors on mergers, acquisitions, divestitures and related strategic matters.

Orszag changed his tune on healthcare antitrust after joining Lazard.  Consider his shift:

So Peter wanted healthcare to be overrun by private equity underwriters?  That's quite the admission.  Fortunately, a judge came to the PEU rescue and stemmed any antitrust overreach.  Peter can get back to wheeler-dealing PEU style.  His brother Jonathon can advise groups involved in both sides of an antitrust fight.

Let's tackle the second hearing.

Billionaires can "buy a Congressman" and make their problems go away.  

Who serves who in our PEU world?  Politicians Red and Blue love PEU and increasingly, more are one.  Nearly every former Medicare Chief is a PEU.  

It's no wonder people feel the healthcare system is not serving them.  An accountability mechanism does not exist.  Right Dr. Ralph de la Torre?  

Right Tom Scully?  Scully is the former Medicare Chief who refused to testify before Congress and went on to General Partner with PEU Welsh Carson Anderson and Stowe.  WCAS just benefited from that recent antitrust ruling.

Update 10-2-24:  Lazard's Peter Orszag was on CNBC this morning bemoaning the FTC's antitrust focus on vertical intergration (PEU buyouts).

The Great PEU Acquiescence

MSN reported:

Something has changed this election season. The perennial hot button issue of carried interest, which offers sweetheart tax rates to wealthy private equity and hedge fund executives—and costs the U.S. Treasury billions of dollars—is getting a pass.

The Great Acquiescence has arrived. 

...an Oxford study in June revealed that the largest private equity firms have avoided paying income taxes on more than $1 trillion of incentive fees since 2000—a line that seems tailor made for a campaign commercial—barely got any notice. 

Now, any momentum to change the carried interest rate seems to have fizzled altogether. Just last week, former president Trump verbally sparred with Kamala Harris, the Democratic nominee for president and current VP, in a much watched 90-minute debate. Neither side mentioned carried interest or even taxes. 

Politicians Red and Blue love private equity underwriters (PEU) and increasingly, more are one.   How did this come to pass?

PEU legend Carlyle Group co-founder David Rubenstein covered the history in a recent Bloomberg Audio interview and had a number of startling admissions.  First, this non-lobbyist regularly meets with elected officials.

 ...let’s get members of Congress to come and sit with each other from different parties in different houses, which they rarely get a chance to do. No press. Nobody can see ’em talking to somebody who’s a different member of a different party. And that’s been going over 10 years. 

Rubenstein chronicled Carlyle's early history after locating in Washington, DC.

Later I went out and recruited big names who had been in government, people like former Secretary of State, Jim Bakker, former Secretary of Defense, Frank Carlucci. And that gave us a certain allure because people were wondering what are they doing in an investment firm?

What were they doing?  Steering huge chunks of the federal budget to Carlyle Group affiliates through their non-lobbying political connections, reading the government tea leaves to direct Carlyle leveraged buyouts, and recruiting more government insiders to the secretive private equity underwriter.  That almost sounds villainous.

Blue Team Senator Kyrsten Sinema's massive payday awaits.  She heroically saved PEU preferred "carried interest" taxation.  Legislators will watch closely her next career move.  It could be theirs.

The AI History Post that Won't Go Viral

2015:  Flashback to a time global elites saw the power of artificial intelligence: 

In 2015, Henry Kissinger was at the Bilderberg conference in Austria, listening to the head of Google DeepMind, Demis Hassabis, give a presentation on artificial intelligence....

2016:  Two stories previewed Bilderberg attendees:

Alex Karp, CEO of the data analysis firm Palantir Technologies, will be there this year as usual.

AI expert Demis Hassabis, the director of Google’s DeepMind project, as well as the co-chairman of OpenAI, Sam Altman. 

With Reid Hoffman, the founder of LinkedIn, back at the buffet this year, it seems that Bilderberg’s love affair with Silicon Valley is flourishing. And with cybersecurity high on the conference agenda, we have to spare a mention for Alex Karp, the CEO of the surveillance and data-mining giant Palantir.

The Tech Gods put their money where their Bilderberg lay.

The list above is a mix of TechGods and billionaire PEUs (KKR, Carlyle).  Both groups rely on political connections to pilfer Uncle Sam's wallet and ensure safe harbors for their schemes.

2019:  Three years later:

In addition to Schmidt and Thiel, California billionaires Alex Karp and Reid Hoffman also attended the Bilderberg meeting in Switzerland. Karp is the CEO of the data analytics firm Palantir, which he co-founded with Thiel. Hoffman is a co-founder and former CEO of LinkedIn. 

The four tech billionaires have ties to the U.S. Defense Department and/or intelligence community. Schmidt chairs the Pentagon’s Defense Innovation Board, of which Hoffman is also a member. Palantir’s clients include multiple branches of the U.S. military and multiple intelligence agencies.

Even back then these guys were not camera shy.  Which brings us to today. 

Eric Schmidt recently spoke at Stanford University.  His comments were eye opening.

As shocking as Schmidt's statements were on intellectual property theft and insider political influence, the video had a dark comedy ring to it.  

Which brings us to Alex Karp's recent guest appearance on Real Time with Bill Maher.  I wrote my wise friend, sharing an expletive about the man who protected evil Bilderbergers getting softball questions from Bill Maher.  

Maher closed with "Nice to meet you." A song popped into my mind with the chorus "Pleased to meet you, can you guess my name?"

Politicians Red and Blue love both the TechGods and PEU.  It turns out comedians do too.

What are the odds of a post on Eric Schmidt. Peter Thiel and Alex Karp going viral?  Miniscule.  One wave of a TechGod's hand and pooof....

Update 9-18-24:  Yesterday CNBC's Jim Cramer asked how many rights will be eliminated by AI.  He said something like we'll be down to six out of ten.  Taking, it's the nature of their game (TechGods and PEU Legends).

Jesse's Cafe Americana ran the following quote:

"We can never be gods, after all.  But we can become something less than human with frightening ease."

N. K. Jemisin, The Hundred Thousand Kingdoms

The head of Google Cloud told Goldman Sachs attendees last week:

...for 11 years now, Google has built world-leading AI systems. We are in our sixth generation of accelerated technology,

Youth, College and Pro PEU Sports

This summer I saw numerous stories about the greed and leverage boys targeting sports, professional, college and youth sports.  Youth sports?  Is nothing safe from the clutches of private equity underwriters (PEU)?  Apparently not.

Two PEUs are behind youth oriented Unrivaled Sports, Josh Harris of Apollo Global and David Blitzer of Blackstone.  They used their personal wealth accumulated from their respective firms to fund the venture.

College sports is high on the list for new PEU investment.  A legal settlement on top of Name, Image and Likeness (NIL) deals for players will have many college teams looking for a PEU partner.  

The greed and leverage boys love secure revenue streams and price inelastic environments.  Remember these guys graduated from at least one institution of higher learning.  Many have buildings in their name from funding big capital projects.  

It will be interesting to see how they split up the sports industry without encouraging real competition for prime assets.  It used to be club deals, then it was speaking code and sending messages through the media.  

Who might approach your alma mater for a cut of their ticket/box seat revenue or a slice of a student's NIL money?

Also, the NFL just approved allowing PEUs to own up to 10% of any team.  Other leagues invited the barbarians in years ago.

What happens when billionaire owners add billionaire PEU founders to their ownership groups?  How fast will politicians funnel public money to team infrastructure?  

Remember in PEU land, everything is a secret, from fees to the calculation of returns to whether they have an undisclosed stake in the failure of an affiliate.  It's all proprietary information, protected by non-disclosure agreements.

I hate to see these shuckers wreck yet another industry.  They can't help it.  It's the way they compete.  Tilt the playing field, then fee, fee, fee.

Greed is not a role model.  Ask the parents who had their workplace decimated by PEU ownership.  Unfortunately, so many have grown up in a world dominated by PEUs (the last two decades).  That may explain this: 

Just because politicians Red and Blue love PEU does not mean I have to.  I vote no and no and no again.  

Monetizing Public Service: The AI Way

Vanderbilt University announced the launch of the Institute of National Security in May 2024. Their press release stated:

The founding director and leader of the institute will be retired General Paul M. Nakasone, who has served as commander of U.S. Cyber Command, director of the National Security Agency, and chief of the Central Security Service.

The institute will address:

...the pressing need to address emerging threats from a wide perspective—encompassing not only battlefield innovations but also disruptions to society, such as election meddling, pandemics and ransomware attacks—during unprecedented times.

The institute, expected to launch in fall 2024, will draw on Vanderbilt’s expertise in fields such as engineering, artificial intelligence, cybersecurity, neuroscience, the humanities, biological sciences, emergency medicine, nursing, law and policy.

May to September... I'd say the General's plate is full.  It got fuller in June with an appointment to the OpenAI board of directors.  It overflowed in August with his joining Ballistic Ventures as a strategic advisor.  

General Nakasone is the latest to garner multiple, high paying full time positions.  At least two of the groups are buying influence.

Polticians Red and Blue love PEU and increasingly, more are one.  Public service is now private enrichment.

Update 9-11-24:  Techbro God Eric Schmidt, one of many (Peter Thiel. Elon Musk), revealed the extent that AI plans to appropriate intellectual property (a la China) and the huge sums required for a bunch of connected machines to think (within boundaries).  That money is needed to buy the equipment, stash them in data centers, train them and provide the gobs of electricity needed.  

He revealed techbro gods were behind the CHIPS Act because even though they hate paying taxes, they love Uncle Sam's wallet.    

Schmidt has been a regular at annual meetings of global tamperers, (Davos, Bilderberg, Milken).  These people are shameless.  I can't wait to find out how taxpayers are subsidizing AI's Garbage in-Garbage out.  "We can't prevent the hallucination (within AI).  We can only minimize it." 

This citizen suggests we not waste the money or our energy resources so Techbro Gods can remake the earth in their distorted, disturbing image.

Sheehy Gets Double Blackstone Sponorship

Politicians Red and Blue love PEU (private equity underwriters) and increasingly more are one.  The latest greed and leverage boy to run for office is Tim Sheehy.    Fresh off a massive base wealth injection Sheehy is ready to join the U.S. Senate for the Red team.

Tim Sheehy founded Bridger Aerospace in 2014.  It merged with Jack Creek Investment Corporation, a blank check Cayman Islands exempted company.  

Stephen Schwarzman's Blackstone Group took a 20% stake in the merged company and received two board seats.

PEU legend Schwarzman went from sponsoring Bridger Aerospace to sponsoring its CEO for the U.S. Senate.  Sheehy's main clients are federal and state government agencies.  Schwarzman's $400,000 political donation is nearly Sheehy's 2021 CEO salary ($450,000).  Once Blackstone got involved Sheehy's pay exploded.

Fellow Blackstone co-founder Pete Peterson shifted from PEU religion to reducing government and balancing the federal budget.  Peterson's fellow PEUs hate paying taxes.  Both political parties promised to eliminate the widely hated preferred "carried interest" taxation, yet they failed to get together to do so under the last three US Presidents.  That's alot of Congresses.

Schwarzman and fellow Carlyle Group co-founder David Rubenstein emerge from their glass towers and light around Capital Hill when a serious challenge is made at taking away their tax dodge.  Keeping carried interest is not enough.  The PEU boys always want more.   

My wise friend (who wanted me to note that he is not an expert) stated:

I was wondering if the taxes on non-realized gains was a wake up call for the guys borrowing against their portfolios hyper-inflated valuations in the debt markets to avoid taxes. We have seen this go on in the real estate market, the private equity market, the VC market, and who knows what else in the wealth management business. Our tax policy allows tax avoidance through this and these means. This also creates the wealth inequality and inflation in the system. None of these would be possible without a complicit federal reserve system. No one talks about this stuff though. If we are going to promote asset valuations as the economy then they should basically be willing to take a tax hit for the whole economy to sustain the fiscal budget to run the country. Otherwise they are using a subsidy guaranteed by all of us for their narrow interests. 

My friend can see the 3D chess game PEU billionaires are playing.  The board is invisible to most of us.  

The wake up call might have prompted Blackstone to reach into its CEO pool for a Senate candidate.  The PEU boys need more of their kind on the inside to craft billionaire advantaged tax policy.   

Peter Thiel sponsored J.D. Vance twice and is going for the trifecta.  Stephen Schwarzman is going for the double with Tim Sheehy.  I hope they both strike out.

Update 9-8-24:  My wise friend recently said this about Blackstone:

Don't you get a renewed sense of hope when the Blackstone Global Real Estate Co-head can get on CNBC and tell you how she is investing in the real estate data center market after walking away from hundreds of billions of dollars and obligations in the commercial real estate market.? The education all of us get from those that return the keys and kept the fees it's just so inspiring. The ability to bounce back after locking up investors in a falling market with false marks and yet still have the fortitude and their capital to reinvest in other ideas.

The PEU boys (and girls) are truly shameless.

Update 10-9-24:  Sheehy referred to women under 25 who want the right to control their own reproductive systems as "indoctrinated."  Projection?  Patriarchy?  Both?

Update 10-22-24:  Near the end of his Hedgeye interview Marc Cohodes said:

"Hopefully, Sheehy gets his ass handed to him in Montana."..."This guy is bad news."

The Guardian ran a story on Sheehy's use of public bond funding as CEO.  It stated:

Sheehy’s Bridger Aerospace, a company he founded in 2013, negotiated a deal with Gallatin county in eastern Montana to use its pristine credit rating to raise $160m in bonds. The county was meant to benefit from Bridger’s plans to hire more workers and build two new aircraft hangers. 

But the company used most of the money, or $134m, from the 2022 bond issue to pay back previous investment from Blackstone, a New York-based investment giant.