Which Carlyle Group Face is True?

Carlyle Group co-founder David Rubenstein was honored for his diplomacy through the arts at the New York Public Library's Stephen A. Schwarzman building.  Scharzman co-founded fellow private equity underwriter (PEU) The Blackstone Group.  While both billionaires contribute heavily to charitable causes, they can leave economic destruction in their wake.

Take this story from the Fort Worth Star Telegram:

Fort Worth businessman Louis Scoma describes Woodhaven Country Club as having been "left in a holding pattern" when he bought the 148-acre property two years ago from a Washington, D.C.-based private equity firm.

The previous owner had stopped investing in the club, closed the tennis courts and shut down the food service. There were plans to fill in the swimming pool, Scoma said.

A member for 40 years, Scoma couldn't continue to watch the club deteriorate and made an offer to The Carlyle Group, which had it on the block.

Few talk about the wreckage caused by PEU's and their ilk, whose greed manifested in two ways.  The rapid PEU rise occurred alongside the massive exporting of U.S. middle class jobs.

PEU ubiquitization contributed to America's long term tax deficit.  PEU's are happy for their affiliates to pay dramatically higher interest expenses and PEU management fees, These reduce profits, the basis for paying taxes.  PEU's have been known to cut benefits, freezing or dumping pensions,, evenstopping 401(k) contributions. Oddly, the source of profits for many PEU enterprises is Uncle Sam.

Recall the Fort Worth golf club as PEU's "solve" America's ills in education, infrastructure and health care.   Don't be surprised if Carlyle and company want to fill in your pool.

Mrs. Fields CEO Overdone After Year Under Carlyle

Nation's Restaurant News reported:

Famous Brands International chief executive Tim Casey has stepped down to “pursue the next chapter in his career,” the Broomfield, Colo.-based parent of the TCBY frozen yogurt and Mrs. Fields cookies concepts said Tuesday.

Casey also oversaw the company’s January 2012 recapitalization, after which private-equity firm Z Capital Partners LLC and global asset management firm The Carlyle Group took over as majority stakeholders.

After a year under PEU ownership, Casey is ready for the next chapter.  

Gordon Now Drives for PEUPONT

Sometimes a picture says it all.  Ubiquitous private equity underwriters (PEU's) should have race cars.  The richer the boy, the more expensive the toy.

World Economic Forum: Global Agenda 2013

Global leaders, I prefer tamperers, came to consensus on an agenda prior to gathering in Davos, Switzerland.  The top three urgent issues deal with financial instability.  The next two, income inequality and unemployment, directly impact the governed.

It seems leaders are incapable of addressing the deepest problems the people face  This hardly inspires confidence, must less followership.

The aim of the World Economic Forum purports to be:

Committed to Improving the State of the World

This is hard to believe when attendance costs over $40,000, enabling only a select few in the world attend.  Many are there to be seen, to cut deals.  That may improve oligarch's pocketbooks and ultimately benefit their preferred charities.

Secretaries of State Clinton and Kerry declared America's #1 foreign policy criteria to be a healthy U.S. economy.  That means opening up more markets to Western goods and ways.  It means selling more implements of war.  It means access to "our oil" wherever it may be on the planet.  It means America owning the global commons, seas, space and communications.

The World Economic Forum is about hegemony.  The problems we face, are in part, the problems Forum leaders created.  They freely admit they have little confidence in their ability to solve them.  Are they incapable or unwilling?

Update 1-20-24:  Oxfam chronicled a decade of failure by the World Economic Forum to impact income inequality.

Rubenstein to Speak at Credit Suisse

Equities.com reported:

Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) today announced that its Co-Chief Executive Officer and Co-Founder David Rubenstein, is scheduled to present at the Credit Suisse Financial Services Forum in Miami on Tuesday February 12, 2013 at approximately 12:15 PM EST.

This is the price The Carlyle Group pays for being public.  Rubenstein gets to travel to investment bank meetings, especially those that helped float Carlyle's stock.  Will ex-Credit Suisse PEU Christopher Freeze,  Nadim Barakat, Michael Arpey, Alok Gaur, Jessica Hoffman Brennan, Eric Zhang, Myunghoon Chung, Alan Su, or Seok-Dun Chu  be part of Rubenstein's entourage? 

Washington Works for Exits

Interactive Session (World Economic Forum Public Agenda - on page 40 of 55)

Will Washington Work?
What major policy changes are possible in a highly partisan political climate?

The World Economic Forum posted a summary of the session.  It is below (although I corrected the spelling of panelist in the piece):

Will Washington Work?

What major policy changes are possible in a highly partisan political climate?
Key Points

• Washington has stumbled before, but each time a strong leader, and one able to bridge the gap between the Democrats and Republicans, has righted it. 
• Government mistrust and bipartisan bickering are not going away. 
• Despite government dysfunction, the US remains the best place in the world in which to invest because of its human capital, laws, the ease of exiting and its stability. 

Synopsis
In the late 1920s, Americans despaired about the quality of their government until Franklin D. Roosevelt, who won a landslide victory in the 1932 presidential election, restored American optimism and led the country through the Great Depression.

A similar spirit of pessimism shook America in the 1960s and 1970s, from President Richard Nixon’s resignation to the presidency of Jimmy Carter, until the unlikely presidency of Ronald Reagan regained the country’s faith in their government. In 2013, a majority of Americans believe their country is in decline. As one participant opined, America no longer faces the existential threat of Russia, but the threat of turning into France and entering into a period of “elegant decline”.Can Americans snap out of it a third time? Or will the epitaph for this era be, in the words of one participant, “slightly above zero”?

People felt “there would be a real change” after the election, but instead it is the same as before, said one panelist, who cited Obama’s inauguration speech. Abraham Lincoln used the phrase “malice towards none” in his second inaugural.“Obama didn’t have that,” said one participant. “Instead, he said‘this is what I want and I’m going to fight for it.’” This is especially ironic, added one participant, because Obama catapulted himself to fame with a speech at the 2004 Democratic Convention where he argued there were no red states or blue states. Today, however, Washington is marked by polarization along party lines.

Members of the US House and Senate do not stay in Washington DC over the weekend, bemoaned one panelist. “They don’t work on big issues because big issues have been taken away.” Another panelist blamed the tone of the debate, and compared political attacks ads with business ads: Soft drink competitors do not do attack each other in ads; if they did, sales would go down and then, eventually, the market would shrink, hurting both companies. Because of bipartisan mistrust, that market has shrunk and Americans are less engaged with politics. 

While the gap between Democrats and Republicans is unlikely to shrink anytime soon, the US economy will likely regain its footing. “Obama seems like he might be more appreciative of business leaders during his second term,” said one panelist. 

Markets around the world do not worry about the US government. Japan, China and Saudi Arabia are willing to invest in 10-year treasury bills with yields of under 2%, therefore,the United States can afford to handle its debt until something gives.

Disclosures
This summary was written by Isaac Stone Fish. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum

New Rules of Global Leadership According to David & Fred

The Meridian Institute held a conference on Global Leadership.  Diplomatic Courier highlighted the aim of the session:

   to explore the importance of collaboration between businesses and governments in maintaining global competitiveness. The leaders also discussed positioning in key markets as a strategy for successfully competing in the global arena.

The Global Leadership conference closed with two iconic business leaders, Fed-Ex's Fred Smith and The Carlyle Group's David Rubenstein. Here's the host highlighting Carlyle's Rubensteiin:

Who not only has a global perspective, but has done so much for Washington, and through his leadership and philanthropy and his championing of the culture here

Culture could be viewed as the arts in Washington.  It could also be the insidious culture of money and power that D.C. represents.  Rubenstein established The Carlyle Group in 1987 with the intention of leveraging government business, power and relationships. Note that Carlyle grew from the "Great Eskimo Tax Scam."

The Meridian session started with Rubenstein acting as host, something he frequently did for the Economic Club of Washington.  Rubenstein mined Fed-Ex Chief Fred Smith early vision and struggles. The topic turned to philanthropy.  Fred highlighted Red-Ex's fire extinguisher role in assisting in major disasters. 

Disaster relief is the most important thing we do, because no one else can do it to the extent we can.

Somehow Rubenstein kept a straight face.  The Carlyle Group's LifeCare Hospitals lost 25 patients in the horrific aftermath of Hurricane Katrina.  This fact was omitted from George W. Bush's Lessons Learned report on Hurricane Katrina.

In speaking about the U.S. debt situation Rubenstein might've well been speaking about LifeCare.

"We have too much debt.  It's not sustainable."

LifeCare Hospitals declared bankruptcy in December 2012.  Rubenstein didn't suggest Uncle Sam do what Carlyle did with LifeCare. 

"Right now members of Congress won't vote for things their constituents don't want them to vote for.  I often say to members of Congress why are you so afraid if you violate what you think your constituents want you to do?"

First of all, Congressional representatives don't vote public will.  The majority of citizens disapproved of preferred carried interest taxation for private equity underwriters (PEU's).  Rubenstein visited Capital Hill numerous times to save carried interest taxation since 2007.

Rubenstein went on to implore Capital Hill incumbents:

"Life after Congress is not so bad."

That could've been a recruiting speech, given Rubenstein put many Red and Blue ex-public servants to work at Carlyle.  A "PEU principled" congressman would have incredible opportunities in D.C.'s parasitic greed and power world.  But back to Rubenstein's philanthropy.

"I give back to things in Washington because Washington was very good to me."

Washington kept preferred carried interest taxation, silently approved Carlyle's potentially contentious global deal, performed risk management on behalf of Carlyle post Hurricane Katrina and provides huge chunks of business for a number of Carlyle affiliates.

The sad state of leadership was punctuated when Fed-Ex's Fred Smith said under an early Fed-Ex failure:

"I would've become a private equity guy.  A lot more lucrative, I think."  

Even Smith picked up on PEU's outsized returns.  However, Smith and Rubenstein agreed on one critical strategy, business tax cuts.

President Obama is onboard for a cut to 28%.  The price for business cuts may be an increase in the individual tax rate.  Smith noted that 90% of businesses in America file as individuals.  Given this fact, business tax cuts are clearly for the 10%, many of them PEU owned.

This brings me back to Rubenstein's advice.  Which group does Congress not have the balls to offend?  Recent history favors PEU's..