The Inequity Of Private-Equity Hustlers

My Comments: How many of you have been to SeaWorld in Orlando? For some unknown reason, I’ve never been there but I know my kids have and they loved it.

The only reason I’m talking about SeaWorld now is because last year the company that owns it generated so much revenue they had a net profit of $380 million. And managed to pay zero taxes on that $380 million. How come? Loopholes and lobbying.

These same folks have spent $7.3 million lobbying the current Congress to help them preserve the rules that allow them to avoid taxes on that kind of net income. Those are the same folks who killed the move in the Senate yesterday to keep student loan interest rates from jumping from 3.4% to 6.8%. And they gave $173,000 to Mitt Romney since he’s a “private equity” kind of guy and will surely help the cause if he gets elected President.

April 25th, 2012 12:00 am Jim Hightower

What are these phantasmagoric money machines that they call “private-equity firms?” They’re much in the news these days, because a fellow who was a private-equity magnate is presently running for president. Mitt Romney piled up a quarter-billion-dollar personal fortune through his Wall Street equity outfit, Bain Capital, and he now claims that, because of his success in that business, he knows how to “fix” our economy.

Before you cheer that, note that private equity whizzes are all about The Fix — not necessarily a good thing. They operate by borrowing big piles of cash at high interest rates from rich speculators to buy out XYZ Corp. Then, to meet the interest payments owed to the speculators (and to siphon off a financial killing for themselves), the fixers do two things: One, they plunder XYZ’s assets, selling the profitable chunks of the corporation; and two, they severely downsize the XYZ workforce, firing as many workers as possible and demanding deep wage cuts and benefit givebacks from the employees they keep.

It’s a raw redistribution-of-wealth scheme, shifting XYZ’s wage payments from its many workers to a handful of wealthy high rollers. The process downsizes America’s middle class, while creating no real economic value. Nothing equitable about it.