Private Equity is PIRATE Equity! Also Known as Vulture Capitalism and Leveraged Buy-Out Company.

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I heard a caller on Thom's re-run Memeorial Day show say we should call Private Equity, "PIRATE EQUITY" which Thom loved. So I googled it and found that "Proveloper" posted this clever description on the Forum a week ago. So I thought It would get a bit more exposure here.

Pirate Equity-AAARRRGH!! by Proveloper

Cap'n Romney takes over the company ship and loots the treasurey while making the employees walk the plank! Then sells the leak ridden hull to others hopefull they can keep it afloat. But alas, in the end the Sea of Red Ink is too rough, the only choice left being to guide her into the Bay of Bankruptcy and scuttle her in the shallows.

Thom also stressed that it is NOT true capitalism like Fox is trying to sell.

The OLD name for Private Equity until a while ago was Leveraged Buyout companies until LBO's got a bad name. The other name is Vulture Capitalism which is NOT VENTURE Capitalism. People for some reason get those 2 mixed up. Vulture Capitalism -BAD, Venture Capitalism- GOOD.

Vulture Capitalism is buying existing companies and firing the employees and/or stealing their pensions when the company declares bankrutcy.

Venture Capitalism is investing in a START-UP venture with capital to get it going.

Erik300's picture
Erik300
Joined:
Apr. 2, 2010 9:44 am

Comments

So true. But, there is another facet to venture capital that needs a boost. My brother-in-law's nifty medical tech idea was a great boon for rural and remote medical care because it allowed vital tests to be done on site rather than sent away to the few big labs who once had to do it with all the time delay and cost involved. He was interested in the medical added value, not in making money. His venture capitalist was also dedicated to the idea and the mission more than to squeezing money out for an investor constituency. Because both were focussed on what they were doing and why it was important to do it, they made sure that the business culture of the firm was also about the mission and the added value for others rather than the chance to climb the corporate ladder. They made a lot of money, but only because they kept their focus on the value rather than all the money talk they encountered along the way.

I think we have to break the "profit motive' at the root and re-establish the value added for others vision for venture capital. Just seeing where money can be made turns out to be superficial and oblivious rather than deep investment smart. Nobody will ever forget about the money, but investing needs to be about using money to do something that matters, not just "increasing wealth" because the business of investing will sell itself out every time. Real venture capital looks for more than a return on the money.

drc2
Joined:
Apr. 26, 2012 11:15 am

I think the tax structure as it was during the period of 1945 to 1975 encouraged (essentially forced) investors (not the Wall St Casino) to invest in value. For one thing, if you took the profit out you paid 92% above a couple of million in today's dollars. If one invested it in R&D or new infrastruture, one avoided the huge tax.

chuckle8's picture
chuckle8
Joined:
Jul. 31, 2007 3:01 pm

One of Obama's national co-chairman , none other than ole Frederico Pena, is also a vulture capitalist. Talk about hypocracy.

http://www.fireandreamitchell.com/2012/05/24/meet-obamas-national-co-chair-federico-pena-private-equity-manager-like-mitt-romney-was-at-bain-capital/

camaroman's picture
camaroman
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May. 9, 2012 10:30 am

Mr Pena also sets on the board of Wells Fargo. hmmm

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camaroman
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May. 9, 2012 10:30 am

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