Carlyle Group: Hot on Street

The Street.com could barely contain their enthusiasm for The Carlyle Group's use of proxy measures to predict key economic outcomes.

Who wouldn't want to invest with such smart financial managers?

Smart?  Correlation is not causation.  Proxy measures can fail miserably when key causal factors behave erratically or break altogether with historical patterns.

It is positive that Carlyle Group, which indirectly employs hundreds of thousands of workers and invests billions on behalf of public pension funds, feels it can play a role in mitigating the deleterious impact of the federal government's partial shutdown. 

Carlyle's endless marketing machine is led by co-founder David Rubenstein.  PEU's like economic dislocation as it enables them to bring on new affiliates at discounted prices.  But there's a deeper issue for Carlyle in the shutdown. 

Numerous Carlyle affiliates do the government's work in many arenas.   Carlyle needs access to trillions in federal juice to keep flipping companies for major multiples.

The surface image is Carlyle is cute and smart.  The subsurface base of the iceberg has Carlyle's profit machine reliant on market dislocations, ongoing federal funding and continuation of private equity's preferred tax status.

Boy, those Carlyle yams are hot.  Who wouldn't want a piece of that?  WaPo, which will become PEUPo, agreed with The Street about Carlyle's greatness.  Fawning over The Carlyle Group is a near universal phenomenon.  Who wouldn't love such smart financial managers? Carlyle Capital Corporation investors.

Obama Bundler Opens PEU

 

Bloomberg reported:

Barack Obama’s top individual fundraiser, a former technology executive who collected millions of dollars for the president, is seeking as much as $1 billion for a private-equity fund that will invest in infrastructure and renewable energy, according to a person with knowledge of the matter. 

Frank White Jr. has teamed up with two other Obama backers, Shomik Dutta and two-time Grammy Award-winning rapper Prakazrel Michel, to establish a Washington-based money-management firm called DuSable Capital Management LLC, according to a regulatory filing. DuSable plans to raise $500 million to $1 billion, said the person, who requested anonymity because the details are private.

Watch to see how the Obama team dishes out infrastructure and renewable energy franchises to friends.  It's the game in Washington, evidenced by DuSable's Senior Advisor fresh from a Chief of Staff job with the Department of Energy.

President George Bush had Robert L. Johnson, III.  President Barack Obama has Frank White, Jr.  I've said for years Red and Blue love PEU.  It's disturbing that they're proliferating in The Carlyle Group's backyard.  D.C. is a strategic place to tap Uncle Sam's largess.

Carlyle Group in Middle East-North Africa

WSJ ran an interview with The Carlyle Group's co-head for the Middle East-North Africa:

We feel very comfortable with the GCC (Gulf Cooperation Council states), with Turkey, Morocco and Jordan.

The GCC is comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

I take it Arab money is no longer mad at Carlyle. 

Carlyle to Bid on J&J Diagnostic Unit

Reuters reported:

Some of the world's largest private equity firms have made preliminary offers for Johnson & Johnson's Ortho Clinical Diagnostics unit, which makes blood screening equipment and laboratory blood tests and could fetch around $5 billion, several people familiar with the matter said on Monday.

Blackstone Group LP, KKR & Co LP, Bain Capital LLC, Carlyle Group LP and BC Partners Ltd are among the buyout firms that submitted first-round bids last week and are waiting to hear back this week on who made the shortlist, the sources said.

Recall how KKR's purchase of HCA added tens of billions in new health care costs.  Private equity underwriters are not the balm that heals unaffordable healthcare.  Their aim is to ride discontinuity, enabling them to buy health care assets on the cheap, bleed cash from affiliates via management fees and special distributions, then flip the company for a multiple of the original price.  The flip can be anywhere from 2 to 10 times their original equity.

As for quality I'll pass on any Blackstone, Bain or Carlyle Group blood test or transfusion.  Think Chinese infant formula or toxic kids' jewelry.  

Income Inequality Due to U.S. Policy: Concordia Kids to Rescue

Washington's Blog ran three posts on inequality recently:

1.  The Stunning Truth About Inequality in America. (click here)
2.  Bad Government Policy Has Created the Worst Inequality on Record...and It's Destroying Our Economy (click here)
3.  Who’s Who of Prominent Economists and Billionaire Investors Say that Runaway Inequality Harms the Economy(click here)

Fortunately, the two young founders of the Concordia Summit held a two day meeting on the topic.  These two pedigreed young men grew up on the prosperous side.  Family and blue blood school connections enabled them to throw together a surprise meeting where President George W. Bush attended in 2011.  President William Jefferson Clinton headlined their event in 2012.

HuffPo reported on the third Concordia Summit:

The next global financial crisis has already started, in the form of nearly 75 million unemployed young people around the world.  If this mass of jobless youth doesn't find work, the consequences will be dramatic, a group of politicians and economists at the Concordia Summit here Friday warned -- from increased violence in the Middle East to ever-higher rates of income inequality in the United States to increased political unrest in Europe.

The article does not mention U.S. policy, emanating from the White House and Capital, produced record income inequality.  It does not say private equity underwriters and their billionaire founders have long had their sights set on public-private partnerships (P3) and have billions in dry powder.

Concordia, a Red team version of the Clinton Global Initiative, plans to lever public money for private gain via P3 expansion.  Note the implied frame:  If the U.S. doesn't P3 for youth employment, even higher rates of income inequality will manifest.  More violence in the Middle East!  These aren't bold predictions, they're the current trajectory.

Might one expect a P3 Fellow to conduct a serious study on public-private partnerships and publish the results?  That wasn't the case when P3 Fellow Daniel Bressler summarized his stint at Concordia.  His fellowship was full of stimulating discussions.

It might be more important to be a jolly-good fellow, one who doesn't make waves or pull back the curtain on the Government-Corporate Monstrosity, Eisenhower's MIC on $ trillions in federal steroids.

At least two youths received serious investment from Concordia.  It remains to be seen how far their wealth grows.  I see a P3 beanstalk for these two Jacks.

CNBC Runs More Ads for Clinton Global Initiative

This looks like a "shhshhh", maybe over the Clinton Global Initiative's past conflicts of interest through overt influence peddling.  Bill Clinton seems able to talk himself out of almost anything.

Or is it into almost anything?

Did Maria buy into the Clinton presence?  Whether she did or did not, CNBC did their part to push the Clinton Global Initiative this week.

CGI is the Blue team's marquee event, held annually in conjunction with the United Nations confab.  The Red team launched The Concordia Summit two years ago, courtesy of two "well connected" young men.  Bill Clinton headlined the Concordia Kids meeting in 2012.

The NYSE took over promotion for the Kids.  Here's the Closing Bell on Thursday, September 26:

The kids are the two gentleman second from either direction, kind of "one off" bookends in the picture.  The NYSE clip showed the Concordia logo in front of a trader.  You can wager on the political Red or Blue team, but you can't buy one share of Concordia.

The NYSE event was the kickoff for the Concordia Summit.  It's clear a number of  global leaders made the trek from the Clinton Global Initiative to the NYSE.  All week long a number of international political leaders graced the Opening and Closing Bell.

Enjoy the spotlight boys.  Some day citizens will wake up to the shameless influence peddling both political parties employ.  It's absurd that two kids right out of college, no matter their esteemed family pedigree, can start a meeting and get a star studded Red Team to show up at short notice.

Leadership does not take ethics (Clinton), experience (Concordia Kids), much less theory/knowledge (both Red & Blue teams).  But they can do marketing/PR and hire their ethically challenged peers.  

CNBC Offers 5:00 CGI Commercial

CNBC ran a free five minute ad for President Clinton's foundation, the Clinton Global Initiative, when it interviewed Standard Chartered CEO Peter Sands.  There was nary a word about CGI 2013 or the foundation's conflict of interest concerns.