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ORIGINAL: Phydeaux

Yep. Another unintended consequence of bernanke's efforts to keep the US afloat when we keep borrowing money.

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ORIGINAL: Edwynn
...jihad against regulation of any sort

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ORIGINAL: Termyn8or

The fact is they're causing their own demise. I couldn't get much more pleased.

T^T

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ORIGINAL: Phydeaux

Yep. Another unintended consequence of bernanke's efforts to keep the US afloat when we keep borrowing money.

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Let me break it down for you. What we are witness to is the very essence of today's maturation of real capitalism. The investor class turns stocks, futures, and other paper with names like derivatives whose underlying value is numbers on another piece of paper which has an underlying value of a matter of interest earnings or a spread in the prices for just about any two different...pieces of paper.

The capitalist defines these things as securities which shouldn't surprise anyone given that they have extremely varying degrees of security and really couldn't be defined as one without the remainder of wall street calling them or rating the underlying economic reliability (security) as B BBB A AA AAA etc. So they make great a great marriage.

When it is all said and done, capitalism is the risk of speculating in these values and often with borrowed money so if they don't pan out they owe and if their insurance (derivative) can't pay off...all parties are fucked. That's when society steps in making the investor class in fact greedy scum and the richest and ultimate socialists but rich ones, raking in profits as long as all goes well but deferring the risk to taxpayers...when things go wrong.

Bernanke has little he can do. He either lets the risky banks usually smaller, go out of business and this removes their lending from the economy or he has the fed buy their bad debts (MBS's or CDO's) so they can keep lending or resume lending again. I wonder how many people actually know that he really in fact...isn't printing up money ?


The fed during the big one in 1929 and 30's cut off all capital and it drastically extended the depression and for a purpose...to cause the remaining 15-16,000 private banks to fail and they did. Plus, [he] keeps mortgage and consumer interest rates low as we all know beyond all doubt now, borrowing is the only way for the US economy to create demand since at least 2/3 Americans are simply tapped out. We're still missing 2 million jobs in construction.

Wall street, the paper-trading in no way serves society at large and in fact use society to serve them. They are not to serve society with now a legal responsibility to serve only stake or shareholders. In a way, all corporations and banking corporations in particular, one could argue, have what's called a fiduciary responsibility to borrow, gamble, trade. sell any and all kinds of paper relying upon taxpayer socialized risk to bail them out when their greed exceeds their assets.

As for the OP, Icahn and those guys are like one-man equity bankers. One side-note though is that guys like Icahn are not like Warren Buffet. Buffet buys a property with intentions of hiring the right management and turning the company around for a greater return long term.

Ican and his ilk don't know how to do that. They simply leverage enough paper in a co. and start throwing their weight around. Icahn did something similar with XO Comm. where he took up offices in Reston, Va. their HDQ. but didn't do a thing to turn it around and I think has lost a bundle.

So the Carl Icahns of the world have lenders in their pocket and just try to buy paper to change it and resell some different paper.

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ORIGINAL: Marini
I think most people "understand" what is going on, it's just hard for many Americans to admit, that realistically this is how Capitalism operates in the United States.

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ORIGINAL: Edwynn

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ORIGINAL: Phydeaux

Yep. Another unintended consequence of bernanke's efforts to keep the US afloat when we keep borrowing money.

Which altogether is the intended consequence of the Republican and then later the Democrat's jihad against regulation of any sort, which when eventually bestowing such upon the financial industry, brought this all about.

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Nobody forced any of these companies to go public, they did it to gain capital. Translated that means to get money. So the fact is that when they went public, they sold out.

So when someone like Romney the Reaper comes along, he is only there collecting up what is his or his investors' rightful property. This is why the quarterly earnings are so important, the current crop of suits has to extract as much money out of the company as possible before the get put out on the street by those who previously sowed the company with investment capital come a reapin'.

So those who claim that this is a natural stage in the development of a capitalist system are correct.

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ORIGINAL: Edwynn


Carl Icahn wants Dell to incur a mountain of debt solely for purpose of max payout to shareholders. And that after all their cash, too.

http://www.reuters.com/article/2013/03/07/us-dell-specialcommittee-idUSBRE9250MU20130307


And then this:

http://online.wsj.com/article/SB10001424127887323420604578650350584438488.html

"Private-equity firms are adding debt to companies they own to fund payouts to themselves at a record pace, as fears mount that the window for these deals will close if interest rates rise.

So far this year, $47.4 billion of new loans and bonds have been sold by companies to pay dividends to the private-equity firms that own them, according to data provider S&P Capital IQ LCD. That is 62% more than the same period last year, which wound up being the biggest year on record, with $64.2 billion [of bonds openly for this purpose] sold to fund private-equity payouts."


Remember all that crap the media told us about all the problems of the financial industry and of the whole world, in fact the whole financial meltdown, was due solely to "people using their house like an ATM," with out mentioning the fact that real wages had declined 4.7 % from 2000-2007, so in actuality people were just trying to keep from slipping further behind?

Here's the latest reminder that the 'private equity' companies and solo privateers exist (and have always existed) only for purpose of using otherwise well-functioning companies and, if need be, the government "like an ATM," long before and long after the recent financial crisis.

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ORIGINAL: cloudboy

George clooney had some choice words for the hedge fund manager who was criticizing Sony.

Would you classify these practices as vulture capitalism?