Trump Transition Co-Chair is Longtime Davos Man

The man charged with identifying key leaders in a new Trump administration is a billionaire, longtime attendee of the World Economic Forum in Davos, Switzerland, and a proponent of ESG business practices.  The average Trump voter might be surprised by two of those three facts.

Trump followers boo loudly when ESG and DEI efforts are mentioned.  Lutnick's firm is big on ESG and highlights its diversity and inclusion efforts.

This is not some historical artifact.  The Board of Directors updated their ESG Committee documentation in July 2024.

Billionaire political donations are over $2 billion with more money flowing in daily.  The Red Team received 75% while the Blues got 25%.  That's another clue for voters.

Anyone believing Lutnick somehow snuck into this role (like that Madison Square Garden comedian) should know:

“There’s nobody more loyal and capable than Howard, which is why my father picked him to help put together the greatest collection of talent to ever serve in the United States government,” Donald Trump Jr. said in a statement to POLITICO. “The great thing about having someone as trustworthy as Howard is we can totally focus on winning and know that things will be ready when the time comes.”

I expect the Trump cabinet to look similar to his first one and President Joe Biden's, chockfull of private equity underwriters (PEU).  The greed and leverage boys learned long ago to hedge their political bets.  That way, regardless of who wins, they retain access to the White House and Uncle Sam's fat wallet.

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

Update 11-6-24:  Jim Chanos wrote on X:

The greatest trick the Devil ever performed is convincing pundits like this that a ticket with a Wharton-educated RE developer who lives in Palm Beach, and a Yale Law-educated venture capitalist, both advised by Wall St/Silicon Valley billionaires, is not the elite Establishment!

Billionaires Funding U.S. Election also Hang with Monarchs

Common Dreams reported:

A new analysis out Tuesday shows that 150 of the nation's wealthiest families have poured nearly $2 billion into this year's U.S. election—the latest evidence bolstering calls for new taxes on the super rich and an end to unlimited campaign spending.

The political Red Team garnered 75% of billionaire funding while the Blues snagged 25%.  

The "policy making billionaire" class is in high attendance at Saudi Crown Prince's Future Investment Initiative, the eighth edition.  A combination of legendary PEU founders and "live forever" Tech Gods want to vault the Saudi economy into its 2030 future.  That means forgiving sins of the past, even those not confessed.  Politico reported a Saudi ambassador's words six years after the Jamal Khashoggi murder:

“We may not have as much transparency [as] other nations but we have due process. Our system is changing and evolving. This is one event among many that made us look at how we do things in Saudi and revisit how things happen.”

The Saudi future confab is hosted by the Riyadh Ritz Carlton for the sixth time.  Between sessions #1 and #2 the Ritz served as a prison and torture chamber for the Crown Prince's monetary shakedown of royal family members and Saudi high society.  

Today is commitment day at the Saudi Future Investment Initiative.  I hope the Crown Prince lets this group of super wealthy Ritz attendees go without the physical shakedown experienced by Saudi Prince Alwaleed bin Talal in November 2017.  

Bin Talal was freed during the January 2018 World Economic Forum meeting in Davos, Switzerland, a sign for the West to please forget about the Khashoggi execution.  

Prince Alwaleed bin Talal just invested in Elon Musk's AI venture, alongside Sean "P Diddy" Combs.

Andreessen Horowitz's Horowitz was at FII8.  Not long ago their affiliate Synapse imploded:

...a missing "up to $96 million" from a fintech company that represented itself as an insured bank to customers. Synapse, backed by Andreessen Horowitz, exists outside of any regulatory authority leaving customers without access to their funds and no legal recourse.

You can't make this stuff up.   PEU legend and Tech God billionaires sponsor U.S. politicians and in turn get to make public policy, that is when they are not hanging with Monarchs (not the butterfly version).  

Politicians Red and Blue love PEU and increasingly, more are one.  That's what elections today are all about.  

Update 11-3-24:  A press release on the first day of FII8 included a panel of change makers:

Carlye Chairman and FII Institute Secretary of the Board, David Rubenstein

Yes, the FII misspelled Carlyle. 

Update 11-6-24:  Jim Chanos wrote on X:

The greatest trick the Devil ever performed is convincing pundits like this that a ticket with a Wharton-educated RE developer who lives in Palm Beach, and a Yale Law-educated venture capitalist, both advised by Wall St/Silicon Valley billionaires, is not the elite Establishment!

FII8: Back at the Riyadh Ritz

The Future Investment Initiative began its eighth iteration in earnest today.  Two of the eight occurred during the pandemic and were not held at the Ritz Carlton in Riyadh.  The first FII occurred in October 2017.  Within weeks Crown Prince Mohammed bin Salman turned the Ritz into a torture chamber for Saudi elite.

Early reporting noted how Saudi royals had five star accommodations for a deep exploration of their finances.  Three years later the sequestration became "the Night of the Beatings." 

“On the first night, everyone was blindfolded and nearly everyone was subjected to what Egyptian intelligence calls the ‘night of the beating’”, said a source with intimate knowledge of what took place. “People were asked if they knew why they were there. No one did. Most were beaten, some of them badly. There were people tied to the walls, in stress positions. It went on for hours, and all of those doing the torturing were Saudis. “It was designed to soften them up. And then the next day, the interrogators arrived.”

The history of the event can be seen through its various themes:

PEU legends were the first to look away from the Saudi killing of Jamal Khashoggi in their Turkish consulate on October 2, 2018.  It's a Big Shift to kill a foreign journalist in another country.   

Blackstone legend Stephen Schwarzman was one of the first to return and has been there ever since.   

The speaker list reads a who's who of PEU legends and Tech Gods:

These are the people driving U.S. policy for both the Red and Blue political teams.  Despite their love for Uncle Sam's wallet they absolutely hate paying taxes.  

The FII is a window into the world of greed, power and influence.  It stopped making sense for the little people long ago.  

AI Future Worrisome

Two AI stories struck me recently.  The first regards filmmaker James Cameron, who sits on the board of StabilityAI.  Its latest funding round included:

Greycroft, Coatue Management, Sound Ventures, Lightspeed Venture Partners, Sean Parker, Eric Schmidt and Prem Akkaraju

Cameron recently shared his concerns about artificial general intelligence (AGI)

"It will emerge from one of the tech giants currently funding this multibillion-dollar research," he said.

Those billions are not being spent on acquiring intellectual property rights, trademarks or copyrights.  Big tech is usurping those in China like fashion.  Eric Schmidt spoke to Stanford students about the AI intellectual property grab.

“What you would do if you were a Silicon Valley entrepreneur…is if it took off, then you’d hire a whole bunch of lawyers to go clean the mess up”…”if nobody uses your product it doesn’t matter that you stole all the content and do not quote me”

And this guy has the ears of elected officials.  Schmidt's a recent investor in Stability AI.

One year ago FBI Director Chris Wray spoke of the threat from China, but neglected BigTech's usurping of intellectual property.

"We worry about AI as an amplifier for all sorts of misconduct," Wray said, accusing China of stealing more personal and corporate data than any other nation by orders of magnitude. 

"If you think about what AI can do to help leverage that data to take what's already the largest hacking program in the world by a country mile, and make it that much more effective - that's what we're worried about," he said.

Cameron added to his concerns about AGI:

"Then you'll be living in a world that you didn't agree to, didn't vote for, that you are co-inhabiting with a super-intelligent alien species that answers to the goals and rules of a corporation," Cameron said. "An entity which has access to the comms, beliefs, everything you ever said, and the whereabouts of every person in the country via your personal data."

Cameron said surveillance capitalism, where corporations collect consumer data and sell it for profit, can "toggle pretty quickly" into digital totalitarianism. 

"At best, these tech giants become the self-appointed arbiters of human good, which is the fox guarding the hen house," he said.

The second story addressed AI transcription of medical encounters and its frequent generation of fictional content.  I have enough trouble seeing past problems listed as current diagnoses so the hospital can be paid at a higher rate for a more complex patient.  During my last primary care visit my doctor showed me an AI generated summary for our interaction.  It looked fine and the doctor seemed happy with the summary.  

I saw enough "garbage in -garbage out" in electronic health records to not have confidence in AI.  People with human level intelligence gamed portions of the record for time saving and other reasons.  

I worry the Eric Schmidts of the world won't follow ethical norms, like not stealing or not harming patients, and "just hire a whole bunch of lawyers to go clean the mess up."  

Many members of Congress are lawyers and increasingly, more are PEUs (above scrutiny).  In other words, the people who should be protecting us, won't.

Update: Schmidt is at Crown Prince bin Salman's Future Investment Initiative where he said:

“If you’re a roboticist, the fastest path to robots is in fact drone warfare, I’m sorry to say,” Eric Schmidt, the former Google CEO and proponent of AI-heavy fighting, said at FII today in Riyadh.

Source:  Semafor Business 

Miller Comical in His Hypocrisy

Creep Stephen Miller whipped up a Madison Square Garden crowd with the multi-decade move of U.S. jobs to China.  He neglected to identify the job looters, which includes Virginia Governor Glenn Youngkin.  During Youngkin's years as a big chief for The Carlyle Group he oversaw the movement of US. manufacturing jobs to China.  

Consider United Components (UCI) which Carlyle owned from 2004 to 2010. 

When Carlyle purchased UCI it had no Chinese subsidiaries. By 2010 UCI had thirteen subsidiaries in China or Hong Kong. The number of employees fell from 6,900 to 4,350. Carlyle pulled $35.3 million from UCI via a special dividend in 2007. Add their $2 million annual management fee and the total rises to $47.3 million. 

UCI's is but one story of Carlyle sending American jobs overseas. 

Nature's Bounty had no Chinese facilities when The Carlyle Group bought the company in 2010. The company took a $35 million jobs package from Long Island to relocate jobs from China and other U.S. facilities. 

 China. -- As of September 30, 2013, our subsidiary, Ultimate Biopharma (Zhongshan) Corporation ("Ultimate") owned in Zhongshan, China: a 50,000 square foot facility for manufacturing softgel capsules and for administrative offices, a recently built 75,000 square foot warehouse facility with packaging capabilities and 18.5 acres of vacant land adjacent to the manufacturing facility. In addition, Ultimate leased 11,300 square feet of dormitory space and 4,800 square feet of warehouse space in Zhongshan City. Also, one of our subsidiaries leased 84,800 square feet of warehouse space in Beijing. 

Note: Nature's Bounty had no manufacturing facilities in China in its final 10-K filing before Carlyle's 2010 buyout. 

At the 2012 World Economic Forum in Davos, Carlyle co-founder David Rubenstein expressed his preference for the Chinese totalitarian model of central planning. Rubenstein offered a dark vision for those not adhering to his advice. 

"Our children are going to have and our grandchildren are going to have" a lower quality of life and a less affluent lifestyle than we enjoy today." 

In many ways PEU Rubenstein made his vision a reality with help from his Co-CEO Glenn Youngkin. The greed and leverage boys once hired former politicians.  They now grow them.

Carlyle et al's innovation is to send PEUs into the political arena and pretend they didn't ship millions of jobs overseas.

"America is for America and Americans only"-Stephen Miller

Miller knows Red Team scions exported jobs oversees by the yacht-load.  And that's what makes him so "IT," as in an extremely dangerous clown.

With all the "savior talk" I remain confused as to how the Trump team conned Christians into jettisoning the Gospels and rebrand themselves as King Davidians.  Christ said:

"'You shall love the Lord your God with all your heart, and with all your soul, and with all your mind. ' This is the greatest and first commandment. And the second is like it: 'You shall love your neighbor as yourself."

I can't wait for this election to be over so we can rediscover Christ.  When that happens Trump/Caesar and his minions will fade away.

God's love is for all his children, even Stephen Miller.

Rubenstein vs. Popovich

It's late in the clock for the U.S. Presidential race, down to nine days.  Red Team candidate former President Donald Trump declared his candidacy in November 2022.  

Carlyle Group co-founder David Rubenstein offered his thoughts on the election.  He shared charts and graphs showing the closeness of the contest and how it may be some time before a winner is declared.  The politically connected private equity underwriter (PEU) closed with six priorities for a new administration.  Three directly impact his multiple pocketbooks.  The Trump tax break for the wealthy and corporations will sunset and the PEU boys don't want to give up their golden goose.  

The economy is working for the super wealthy as asset prices have soared.  Rubenstein and his PEU brethren need valuations to remain elevated to support affiliate debt refinancing and investment exits.

Rubenstein cites the need to reduce the large level of the federal deficit, which grew in part due to massive tax breaks he and his fellow billionaires have enjoyed, some for decades.  Eliminating his preferred "carried interest" taxation is a never-enacted campaign promise.  Not this year.  Neither team is even trying to ditch this wildly unpopular billionaire tax break.

The richest man on our planet Elon Musk stumps for the Red Team, while billionaire Mark Cuban does likewise for the Blues.  Both want crypto.  Both want gambling.  The predatory nature of crypto can be seen in the vast number of criminal charges against crypto firms and their founders.  Addiction destroys lives and high tech gambling can do so quickly.

Rubenstein's election newsletter is for those who wish to be mired in the details.  San Antonio Spurs Coach Greg Popovich gave his thoughts on the election while answering questions after a game.

It's nice to hear from a "leader of people" and not a soul-selling politician or conflicted policy-making billionaire.  

Update 12-15-24:  From David's Desk published "Trump's Second Act." Rubenstein adjusted his historical mandate down from his CNBC interview:

Trump won the popular vote (though narrowly– 49.8% to 48.3%)

Carlyle International: Two Stories

The Carlyle Group sold a Shanghai high-rise office building for half what it paid for "The Crest" in 2015.  I do not know how much money Carlyle pulled out of The Crest in management fees, deal fees and special dividends.  Possibly very little.  

Flashback to 2011 when a major business reporter wrote:

There is no way that the Chinese government would let American firms come in and strip cash out of Chinese companies the way they've been allowed to in the US! I imagine the Chinese welcome the PE guys because they see it as another way (through PE orchestrated mergers) to get hold of more American technology and companies and jobs.

The next story involves oil and natural gas off the coast of Northern Israel/Southern Lebanon.  

Energean is Carlyle's new oil/gas play headed by BP oil spew's Tony Hayward.  Reuters reported:

Energean has added a second oil production unit to a floating production vessel off Israel which is set to boost its crude output by up to two-thirds in the coming months.

Production at Karish, which is close to Israel's maritime border with Lebanon, has been largely uninterrupted since the start of the Middle East conflict on Oct. 7. In July, the Israeli military said it had shot down a drone launched from Lebanon which it said was heading to the Energean FPSO.

Carlyle's international energy platform is Energean's parent

Equity for the transaction will come from the Carlyle International Energy Partners (CIEP) platform, a private equity fund that invests in energy opportunities in Europe, Africa, Latin America, and Asia.

Carlyle lost a Philadelphia refinery after failing to replace a 45 year old section of pipe.  Imagine what Carlyle and Tony Hayward can do together to injure workers and spoil coastlines.  

I hope international governments have more backbone than ours (US).  Politicians Red and Blue love PEU and increasingly, more are one.

Update 12-8-24:  Tony Hayward met with Egypt's oil minister   Egypt is offering a range of investment incentives and Carlyle knows how to mine those.

Carlyle's Vision Came True

It's not often a Harvard Law and Economics professor sounds an alarm but John Coates did just that in a Harvard Business School video.  He noted private equity controls larger amounts of the U.S economy and its political system.  

The promo for his new book "The Problem of Twelve:  When a Few Financial Institutions Control Everything" states:

...there’s the rise of private equity funds, such as the Big Four of Apollo, Blackstone, Carlyle, and KKR, which have amassed $2.7 trillion of assets, and are eroding the legitimacy and accountability of American capitalism—not by controlling public companies, but by taking them over entirely, and removing them from public disclosure and scrutiny. 

 This quiet accumulation in the last few decades represents a dramatic transformation in how the American economy operates—a sea change that few of us have noticed and all of us need to consider.

PEUReport spent the last seventeen years documenting and commenting on Coates' sea change, where private equity underwriters (PEU) have "become their own capital universe."

We once had company towns where one large employer often took extra steps to ensure workers had a place to live, shop, receive healthcare and have some quality of life.  The large employer, if still around, is now private equity owned.  It shed jobs to cover increased interest expenses, deal and annual management fees and special distributions (often debt funded).

PEUs staked out residential rental housing, healthcare, dining, retail, insurance and professional sports teams.  In many cases quality deteriorated while prices soared, the result of PEU crapification.  

No regulatory body stepped into the public disclosure void.  No laws were enacted to ensure PEU founding legends paid a fair tax rate on their Midas level riches.  Coates noted "private equity is (operates) completely in the dark" and the industry views that as "a useful thing."

Politicians Red and Blue love PEU and increasingly, more are one.  And that is the product of shadowy private equity concentration in our economy and political system.

The U in Trump: Usurp

When I hear former President Donald Trump he is either flattering himself or steamrolling others, usurping their very being.  His violent language reflects his tyrant nature.  Whatever "it is" is never enough and rules do not apply to Trump.

Trump courted the "live forever" Tech Gods with his VP appointment of JD Vance.  Vance holds residual stakes in two private equity underwriters (PEU), Narya Capital and Rise of the Rest Fund.  It remains to be seen what Vance does with his PEU holdings if the Red Team wins back the White House.

Elon Musk is the richest man in the world with assets of $250 billion.  That's 1,000 times greater than former Exxon CEO Rex Tillerson, Trump's first Secretary of State.  Tillerson received a $72 million tax break for properly complying with conflict of interest regulations.  

The Lever reported:

Elon Musk could reap one of the largest personalized tax breaks in American history if former President Donald Trump wins the 2024 election and fulfills his pledge to appoint Musk to a top government post, according to tax and ethics experts’ review of long-standing statutes. 

Jacobin provided more insight:

A provision inserted into the tax code thirty-five years ago allows government officials to indefinitely defer all capital gains taxes on such divestment — a tax benefit worth potentially tens of billions of dollars to Musk if he is appointed by Trump to a top government post.

Using Tillerson's experience as a guide, Elon could save $72 billion.  The problem:  When has Elon complied with anything?  

These guys make the game board.  The rules are whatever pops into their head.  

I can picture something like:  Trump appoints Musk as Secretary of MAGTechlandia.  Musk lasts maybe a year in the role.  In the middle of that year Musk's X buys out Trump's TruthSocial for a ridiculous amount.  SpaceX buys DJT Aerospace for an absurd price.

Ridiculous, absurd ... that's the state of our PEU world.  Citizens should expect to be usurped under Trump White House 2025.

Update 10-29-24:  

Ridiculous, absurd....

Apollo's Rigor: PEU Vigor

CNBC interviewed a partner with Apollo, a private equity underwriter founded by Leon Black, Josh Harris and Marc Rowan.  The Apollo partner referenced her firm's "thirty years of investment rigor and intelligence."  That rigor and intelligence paid Jeffrey Epstein $158 million from 2012 to 2018.  Founder Leon Black left the firm in 2021 after an outside investigation.

These guys have done well, according to the Forbes billionaire list.  

They are investing in elected officials.

Elected officials, at least some, invest in PEUs.

PEU love is bipartisan.  It's not apparent to most people, but that love has decades of vigor.

Can Congress Get PEU-ier?

Jacobin reported on Congressional conflicts of interest given their investments in private equity underwriter (PEU) fund offerings.  The story noted:

Top of mind for these (PEU) companies is preserving the carried-interest loophole — a favorite tax break on Wall Street, which allows private equity executives to pay an abnormally low tax rate on income.

Also:

...private equity is already gearing up for a fight to keep the tax cuts and ensure that whatever tax policy might be handed down after the elections favors the industry.

They do want it all.  Given the "never enough" nature of PEU land it's important to control the rules and the rule makers.

As long as Uncle Sam's wallet can be picked ad infinitum, the PEU boys don't want to pay any taxes, much less their fair share.  

Check to see if any of your political races involve PEUs.  Vote against them.  Politicians Red and Blue love PEU and increasingly, more are one.

PEUs Need Tony Bennett: Is Feeling Mutual?

UVA basketball head coach Tony Bennett resigned his position saying he is "a square peg in a round hole."  His comments on the state of college athletics included:

"I think it's right for student-athletes to receive revenue. Please don't mistake me," he said Friday. "The game and college athletics is not in a healthy spot. It's not. And there needs to be change, and it's not going to go back. I think I was equipped to do the job here the old way. That's who I am. "

It's going to be closer to a professional model. There's got to be collective bargaining. There has to be a restriction on the salary pool. There has to be transfer regulation restrictions. There has to be some limits on the agent involvement to these young guys. ... And I worry a lot about the mental health of the student-athletes as all this stuff comes down."

Who's leading the change charge in college athletics?  Private equity underwriters (PEU).  The greed and leverage boys have invaded professional sports around the globe.  Most recent professional team sales involved a PEU or a storied founder.  PEU or PEU founder:  the management shenanigans are the same.    

Coach Bennett's principled retirement will be followed by something.  I hope it's not employment in one of the least principled businesses in our country.  The buying and selling of companies is bad enough.  The flipping of college kids athletic futures sounds downright sinister.  

Tony Bennett likely has heard much about private equity from wealthy alumni boosters.  One close supporter got in early with The Carlyle Group and unfortunately died from a Covid-19 infection in 2021.  In an article titled "A Faithful Fan" Bennett remembered his friend:

“Greg was one of the first people I had dinner with when I got the job 13 years ago,” remembered Bennett. “At the time, I remembered thinking, ‘Wow, this guy is passionate and knowledgeable about UVA Athletics.’ He knew more about my coaching career than I did! Over the years, he became a faithful supporter and friend to our program through the great years and the challenging years. That spoke volumes to me.” Bennett continued: “My wife Laurel and I loved him. He donated a well for the needy in Africa in Laurel's and my names, and to this day, it's one of the most remarkable things someone has done for us. We are all sad that Greg is no longer with us, but we are beyond grateful to have known him and will forever appreciate who he was and what he did for all of us.”

A dear friend's employer is not a predictor of Coach Bennett's next step career wise.  Nearly everything Tony Bennett has done has been principled, focused on doing the right things in the right way because that's who you are (intrinsic motivation).  

PEUs are all about incentives, do this to get that, money, power, political influence.  I can't think of a worse next job for Tony Bennett than employment with the greed and leverage boys.  However, that is the tidal wave getting ready to engulf college athletics.  They need someone like Tony.  The question is does Tony need them?

Voters Can Use Head to Examine Trump Financial Disclosure

Red Team Presidential nominee former President Donald Trump has business operations throughout the globe.  Some are under his name while others are under DTTM Operations LLC or another Trump corporate entity.  

Consider this when he proposes throwing 20% tariffs on everything.

Trumps filings are not searchable but a review showed his monthly pension of nearly $6,500 from the Screen Actors Guild.  

Flashback to early 2021:

Donald Trump has resigned from the Screen Actors Guild after the union threatened to expel him for his role in the Capitol riot in January.

“I no longer wish to be associated with your union,” wrote Trump in a letter shared by the actors guild. “As such, this letter is to inform you of my immediate resignation from SAG-AFTRA. You have done nothing for me.”

I wouldn't call a pension "nothing."  In 2022 Trump valued the pension benefit "as much as $1 million."  Two months ago he declared the value "not readily ascertainable."  

Trump declared a $300,000 royalty related to the Greenwood Bible.  That's a handsome sum.  And yes, the "God Bless the USA Bible" is manufactured in China.  

I suggest voters use their head to examine Trump's six part financial disclosure filing.  It may strike some as odd that a financial genius is not able to determine the value of so many of his holdings.

Is that the new way to toss aside conflict of interest concerns, pretend there is no real value?  

Is Trump Signaling PEU Love with Financial Disclosures?

 

A review of part three of former President Donald Trump's latest financial disclosure produced a number of private equity underwriters (PEU).  None were over $15,000 and several were less than $1,000.  That raises the question.

Is Trump virtue signaling the greed and leverage boys with his disclosure filings?

Today I heard a corporate executive describes Trump's 21% tax rate for corporations as their "fair share."  I did not realize taxes were like United Way donations.  

Long ago Trump's VP sidekick JD Vance showed he is a man of the PEUple.  Politicians Red and Blue love PEU and increasingly, more are one. 

Did PEU Directors Help Break Boeing Quality?

Much has been written about Boeing's series of stumbles.  The latest "fall" involves the company's credit rating.  My wise friend wrote:

Just to reiterate and solidify what a joke we are when it comes to credit. S&P placed Boeing on credit watch negative because of strike related financial risk?

Meanwhile, the financial engineering over the past two decades, the lack of real leadership, the reduction of quality control in their supply lines due to efficiency ratios for financial performance, among many other factors, never enter the credit rating. How is that for burying the real bodies of a crisis situation? Boeing is just a prime example of the blame shifting and lack of accountability throughout the financial sector.

Twelve years ago the majority of Boeing board members had direct private equity underwriter (PEU) affiliations (6 out of 11) while a seventh lobbied for the PEU association.   Board members are recruited for their specific skills and background.  Over half of the 2012 Boeing board knew PEU financial machinations which includes significant cost cutting.  

The public has seen Emergency Room care plummet quality wise under PEU ownership.  Vox reported:

When private equity comes for health care, though, the result is human suffering: Elderly and intellectually disabled people sitting in puddles of their own waste, sick patients not getting the care they need, worse outcomes for patients. 

Oddly enough, I recently flew next to a Medical Ambulance pilot.  His employer is private equity owned.  He'd recently reached out to friends, professionals in a variety of industries, and they all said the same thing.  "You can't believe what they (executives) are doing here!"   Across the board senior leaders were blowing through basic and longstanding practices.  

I'm sure some worked for PEU affiliates while others, like Boeing, had PEUs on their board.  The game will continue as long as capital can be had.

PEU Sports Interviews

CNBC interviewed the CEO of Sportscorp regarding private equity money flooding sports.

Yahoo Finance interviewed Carlyle co-founder David Rubenstein.  Asked about the impact of private equity investment in sports.  His answer:  "Well, drive up prices."  Just as they've done in housing, healthcare, pharmaceuticals and nearly everything they touch.

Rubenstein is the lead owner for the Baltimore Orioles and Carlyle holds a stake in the Seattle Reign.  A longtime Baltimore sports writer sent a letter to Mr. Rubenstein.  The author hopes for a better hand from lead owner Rubenstein relative to the prior team owner:

Over my three decades in dealing with the emissaries of Peter G. Angelos, this was not considered a bug but far more of a feature ­– pettiness, anger and retribution.

Private equity underwriters (PEU) typically take a steamroller to people expressing legitimate concerns.  Winning the game of financial profit maximization, obtaining public subsidies (direct and indirect) and cultivating political influence (which produced "policy making billionaires") usually requires a signature focus that excludes listening to real people.  

The Baltimore sports writer can appeal to other new Orioles owners, three of whom made their fortune with Ares Management.  However, the threesome may be busy as Ares is close to striking a deal to buy a portion of the Miami Dolphins.

 

The Sportscorp CEO noted the other announced deal for Tom Gores to buy a stake in the Los Angeles Charges is not a PEU deal.  It is however with a PEU founder.

Platinum Equity - A Global Private Equity Firm Founded by Tom Gores (on Forbes billionaire list)

So what can people expect?  Platinum Equity bought the NBA's Detroit Pistons in 2011.  The Pistons:

have been the league’s worst franchise for 15 years or so.

Gores bought out Platinum Equity's stake in the Pistons in 2015.   The City of Detroit provided $34.5 million in subsidy for the Pistons to move into a new facility.  Check out the name on the Pistons' home court.

Platinum Equity, another PEU arms length agreement.

Carlyle's Rubenstein located his firm in Washington, D.C. in 1987 to access Uncle Sam's wallet and intermittently non-lobby to keep his PEU preferred "carried interest" taxation.  He's predicting more tax cuts regardless of who wins the White House in November.

The PEU boys love a public subsidy but hate paying taxes.  So why is all this going on?  Because politicians Red and Blue love PEU and increasingly, more are one.  Professional sports is the newest PEU love and as Mr. Rubenstein said prices are going up.

Carlyle, Unison Target Strapped Homeowners

The Carlyle Group and new affiliate Unison want to be on both the debt and equity side of your home.  FT reported:

The company will buy as much as a 15 per cent interest in homes, spending between $30,000 and $500,000 per home. The homeowner will pay for an appraisal and Unison will invest at a 5 per cent discount to that appraised value. There is also a 3.9 per cent transaction fee.

At the end of the 10-year loan, Unison would, however, get its 1.5x appreciation share as well as the capitalized sum total of the 1.8 per cent initial cash interest rate savings (that’s the 7 per cent minus 5.2 per cent).

Carlyle plans to buy $300 million in Unison Equity Sharing Home Loans.  It would then market those to insurance companies (clients of Carlyle's Credit Strategic Solutions group).  

Unison said its typical customer has a Fico score over 700 and that typical use of proceeds are home improvements or paying down credit card debt.

Credit card debt raises red flags and calls into question someone being able to pay off a large loan, plus an outsized amount of the home's appreciation, plus making up for the interest rate break given on the loan.  

I expect a large number of Unison clients not being able to keep their home after the 10 year loan comes due.  

What happens when unsatisfied borrowers go to regulators and complain about Carlyle's Unison?  They might get, "Which Unison?"  Home equity Unison follows government procurement contractor Unison in the Carlyle family tree. 

Carlyle held government procurement contractor Unison from 2005 to 2010, then repurchased the firm in June 2020.  After a two year hold Carlyle flipped its majority stake to Madison Dearborn Partners but retained a minority investment (which it still holds).

Carlyle just wants their share of well, everything.  It's the PEU way.  Don't give it to them.

Home equity Unison's CEO Thomas Sponholtz said "We are trying to democratize the rich relative."  Carlyle's billionaire co-founders qualify as rich relatives.  

Sponholtz' worked for Bear Stearns, where he and the company were sued for negligence and negligent misrepresentation.  The parties settled for $130,000."   That was a long time ago in a world that no longer exists.  

Unfortunately, our current world has far more conflicted entanglements.  Sponholtz and Carlyle want you to bite on their sales pitch.  Read all the fine print before you sign, every blanking word.

Banks, PEUs Join Hands for Private Credit Offerings

Big banks and storied private equity underwriters (PEU) are joining to offer credit to private companies. The Federal Reserve Bank put out a "Fed Notes" on private credit in February 2024.  It states:

Private credit or private debt investments are debt-like, non-publicly traded instruments provided by non-bank entities, such as private credit funds or business development companies (BDCs), to fund private businesses.2 Private credit is typically extended to middle-market firms with annual revenues between $10 million and $1 billion, but has grown rapidly in recent years to fund larger companies that were traditionally funded by leveraged loans.

The Fed piece closes with a section on Interconnections with Banks:

While bank lending to private credit funds appears moderate, there are growing interconnections between these two types of lenders. First, banks are increasingly partnering with private credit funds to fund new deals. Second, banks are progressively selling complex debt instruments to private fund managers in so-called "synthetic risk transfers" in order to reduce regulatory capital charges on the loans they make. Such instruments have limited transparency and pose hidden risks to the financial system, especially as the industry has yet to endure a prolonged recession. Relatedly, there is growing concern that tighter regulations such as Basel III endgame could intensify migration of credit from banks to private credit lenders. Considering borrower risk profiles, such substitution is less likely to occur to bank-held loans, and more so with syndicated leveraged loans. In such cases, banks stand to lose underwriting fees to private credit funds. These developments suggest that private credit will become increasingly important to credit market functioning.

Yes, lets count more on instruments with limited transparency that pose hidden risks to the financial system.  More, please!

Thank heaven the PEU boys have found more ways to make fees.  Recognize any of these names?

 

  

It's a who's who of people who speak directly to elected officials without designating themselves as lobbyists.  It's also the list of people who hate paying taxes.

My wise friend wrote regarding the Fed and private credit:

It's kind of sad when a regulator puts out a note of the risks of private credit and stands by as the PEU conductors drive their train off the tracks. The fact that they recognize banks provide a higher form of regulatory framework to establish loans is the first red flag. As you read through the report there are so many factors they minimize.

Once a PEU boy, always a PEU boy.  Right Jay?   Residual PEU holdings, nobody declares those....