The Bessent of Times

Background:  Recall the Treasury competition was between hedge funder Scott Bessent and Apollo's Marc Rowan, a private equity underwriter (PEU).  Just days ago Trump II, the digital Caligula, lied and lied and lied before both houses of Congress.  

CNBC interviewed Treasury Chief Bessent on Friday.  Bessent said China exported its economy to the U.S. which harmed many people.  He referred to it as the China Shock post 2004.  Private equity owners had offshoring as a key part of their playbook.  Investors, like hedge funds, pressured companies to cut costs to increase profitability, including labor.

The Journal of Corporation Law reported:

Even clearer is the evidence showing that the total number of employees declines at “surviving” firms that experience a hedge fund engagement.  

Bessent Capital's largest holding was Bristol Myers Squibb (BMS).  By 2010 Bristol Myers identified China as an emerging market on which to focus.  In 2022 China Daily reported:

BMS was the first Sino-US pharmaceutical joint venture after China began its reform and opening-up in the late 1970s. Over the past 40 years, the company has built up strong connections and a significant presence in China, and is committed to continuing prioritizing China as a key driver across all its development programs. 

The company said it aims to more than double their combined R&D and commercial headcount in China by 2025.

I'm sure at one point Scott Bessent was very familiar with Bristol Myers Squibb's strategy and production operations.  CPA reported on generic drug imports:

Last year, the U.S. recorded a $139.5 billion deficit in pharmaceuticals, up from a $102.3 billion deficit in 2023.

Turning China into a global manufacturing hub, which began with its ascension to the World Trade Organization in 2001, has made it an indispensable part of the American supply chain.

The article suggested "working together to overcome the price erosion, industry consolidation and manufacturing offshore dynamics."

U.S. companies exported jobs to China while elected officials offered the "cheap goods/dollar extender" rationale.  Bessent reversed that as well with his statement Thursday that access to cheap goods is “not the essence of the American dream.”   

That got a quick rebuke from former Vice President Mike Pence.  The Hill reported:

“Actually @SecScottBessent, it is. Tariffs are good as a means to bring nations like China to the table, but free trade lowers the costs of goods and improves the quality of life for every American. Let’s Pursue Free Trade with Free Nations and Revive the American Dream.”

Bessent told CNBC that freeing up "banks" to lend would grow private sector employment.  Banks have increasingly turned corporate lending over to the private credit side of major private equity firms.   

Last month Frost Brown Todd attorneys wrote:

....many at Goldman Sachs believe “a handful of private-credit firms and similar institutions will soon dominate the debt landscape.”[2] Accordingly, the combination of private equity and private credit with aligned investment strategies should spur more private capital into the M&A market.

Just to be clear former greed and leverage boy Scott Bessent hid the role his PEU brethren played in offshoring U.S. jobs to China.  Virginia's current Governor Glenn Youngkin sent thousands of auto parts jobs to China and later talked about monitoring Beijing rush hour traffic.  Youngkin did those things while an executive at The Carlyle Group, a politically connected PEU.

Bessent then was not clear about the likely source of lending for corporations adjusting strategy.  S&P Global estimated private equity's dry powder (investor cash on the sidelines) at $2.6 trillion in mid 2024.  

Bessent was right about a large percentage of Americans being killed financially.  That started back in his early hedge fund days and continued through consecutive Red and Blue U.S. Presidencies.  

Flashback to 2011, which might as well be 2025:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out. 

The Carlyle Group scares me more than anything I've ever seen on Wall Street. It seems to exist to corrupt politicians and it's hard to know who they even represent. 

I watched a video interview of (David) Rubenstein and his arrogance is really beyond tolerance. He was going on about the debt ceiling problem and how there would need to be cuts in services and higher taxes. When the reporter asked him about tax on carried interest he turned really disdainful and said that this "only" amounted to $22 billion over some number of years and this was not serious money. Boy, nothing like everybody doing their small part to save the country from oblivion!

It turns out the little people get to do a big part to save the wealthy......