Im gonna speculate they were referring to the part of private equity where you buy businesses to load them up with debt to buy more businesses ad nauseum
You can't load someone else with debt. That's obviously illegal. When you buy a company it isn't "them" anymore. And the new owners have exactly the same rights to borrow money as the old ones.
That's true when the debt is taken it is taken by the company (at the direction of the acquiring firm)... and maybe the bigger issue is that banks should be a whole lot more judicious in extending that debt. But some firms have found a heck of a loophole in buying a company, running an extremely high debt line, paying the acquiring firm (themselves) handsomely and then innocently whistling when the business collapses and a bunch of real economic value is erased.
Doing that to a company isn't an activity that should be rewarded since you're destroying, rather than creating, economic value. It is absolutely an exploit or flaw in our system and no more than one person should have been able to get away with it.
It isn't rewarded. If a business you buy collapses, you lose money. You seem to be falling for the conspiracy theory that private equity wants to collapse businesses.
I have no idea why leveraged buyouts are legal. What a bizarre mechanism for acquisition that feels so easy to just shut down with a relatively simple rule.
Restricting a previously purchased business from taking out debt feels harder to regulate, but someone smart could probably figure out a few good rules to stop the majority of abuses.
Do you think non-recourse mortgage (the dominant type in USA) also should be banned? VC finds a bank that borrows them money to buy X, with X as collateral. It is exactly the same.
The mass selloff of assets and absurd cost-cutting is caused by new owners not giving a damn about the future of acquired company, its workers nor clients - it has nothing to do with leveraged buyout itself.
Yes you are right. This is Marx 101 and has been understood for 170 years. It's called the increasing organic composition of capital and drives the declining rate of profit that in turn drives imperialism, the declassing of the western industrial proletariat, and the march to world war.
There's some kind of missing link here between p2p and "I write for a living" that I don't think is going to be bridged any time soon. Funding and p2p / independent might not be compatible organisms in today's social and economic environment. We've had the tools for this for decades and it's never been achieved at scale and sustainably. I don't think it ever will.
True. I don’t think it was ever successful, because it requires a strong ideological point of view from the people who are supposed to support this idea. With so much distraction in the digital world today, this seems close to impossible.
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