Private equity sounds like just another source of investment capital, like venture capital or hedge funds, but while these can be incredibly destructive and toxic, private equity has perfected destroying the real economy, ruining lives and making rich people richer.
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PE is fundamentally about destroying real value and converting it to wealth for already-rich people.
Here's the core play: buy a company, load it up with debt, fire employees, cut wages and squeeze suppliers.
Value is transferred from productive businesses and workers to partners, bankers and lawyers in coastal cities. New monies flow in through lobbying, litigation, price-hikes and pension fund looting, paid out as dividends and consulting fees.
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Companies acquired by PE funds see sharp debt hikes, slowed revenue growth, and plummeting capex.
PE is behind so much of what's wrong in the world today, from looting Canada's beloved Mountain Equipment Co-Op:
The US Government kicked off an incredible debt bonanza when it announced that it would buy corporate bonds, no matter how crappy the company's fundamentals were, leaving the largest firms awash in effectively free cash.
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Naturally, PE - which never met a debt it didn't like - hopped on board. The latest PE craze is dividend recapitalisations ("divi recaps"), AKA "borrowing crazy amounts of money on behalf of a company and then just sticking it in your pocket."
ONE QUARTER of all US debt raised in September went to divi recaps (it was 4% over the past two years). That's FOUR BILLION DOLLARS THIS MONTH.
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Oh, then there's this: "investors express concern over loose documentation underpinning the loans, offering little protection to investors should a company end up in trouble." -@JARennison, @FT
What could possibly go wrong?
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This is the true heart of the "zombie economy" - an economy that "improves" whenever sociopaths destroy its productive capacity:
In other words, the world we're living in is the best possible world, and the fact that you got contact burns from collapsing on the scorching sidewalk outside of the grocery store where you couldn't afford your weekly shopping is unfortunate, but unavoidable.
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*Corporate Bullshit: Exposing the Lies and Half-Truths That Protect Profit, Power, and Wealth in America* is @NickHanauer, @joanwalsh and @donaldrcohen12's 2023 book on the history of corporate apologetics; it's great:
I found out about this book last fall when @ddayen reviewed it for the @TheProspect; Dayen did a great job of breaking down its thesis, and I picked it up for my newsletter.
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Last weekend, I was at @Defcon 32, where I had the privilege of giving a talk: "Disenshittify or die! How hackers can seize the means of computation and build a new, good internet that is hardened against our asshole bosses' insatiable horniness for enshittification."
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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on , my surveillance-free, ad-free, tracker-free blog:
This was a followup to last year's talk, "An Audacious Plan to Halt the Internet's Enshittification," a talk that kicked off a lot of international interest in my analysis of platform decay ("enshittification"):
Once you learn about the "collective action problem," you see it everywhere. Democrats - including elected officials - wanted Biden to step down, but no one wanted to be the first one to take a firm stand, so for months, his campaign limped on: a collective action problem.
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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on , my surveillance-free, ad-free, tracker-free blog:
Patent trolls use bullshit patents to shake down small businesses, demanding "license fees" that are high, but much lower than the cost of challenging the patent and getting it revoked.
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Every performer and creator on Patreon is about to get screwed out of 30% of their gross earnings, which will be diverted to Apple, the most valuable company on Earth. Apple contributes nothing to their work, but it can steal a third of their wages:
Enshittification starts with companies being good to end users. In this case, Apple made a quality product - Iphones - and carefully tended its App Store.
Walmart didn't just *happen*. The rise of Walmart - and Amazon, its online successor - was the result of a specific policy choice, the decision by the Reagan administration not to enforce a key antitrust law.
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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on , my surveillance-free, ad-free, tracker-free blog: