almost serves them right - guitar center was always pretty scummy themselvesâŚ
Oh stop it. The point isnât Guitar Center in particular, the point is this can and does happen to all sorts of businesses (and also how the larger economy is parasitized in general). This is another facet of neoliberalism: if it earns money for a big player, its good, regardless of its real world consequences â people losing jobs, solidly profitable companies gutted for short term profit, leverage used to purchase companies on credit and then loot them (the looting itself looks very much like what the mob does to businesses it takes over).
Anyone interested in this subject should check Yves Smithâs nakedcapitalism.com blog. Sheâs been analyzing the PE world for years now, and it ainât pretty. One of the things they do to lure investors is shroud their operations in secrecy and pump up the appearance of profit. So now we have the perverse situation where pension funds designed to support retired workers invest in PE schemes that hurt other workers, and then the funds themselves get shortchanged on their investments anyway. This comes down to the perverse and corrupt incentives of pension fund managers as well as the lies of the PE industry.
One of the things that I see somewhat lacking from these discussions are SPECIFIC CALLS TO ACTION in terms of legislation and policy change that should be pushed through the political system, coupled with social action people who are concerned can take part in. This is one of my complaints about Occupy â it identified problems, but didnât have a few clear, cohesive, easy-to-communicate action items.
âPrivate equityâ is also a pretty big umbrella term. It means people with wealth using that capital to acquire or fund companies. Thatâs preeeettty broad, and I donât think thereâs evidence that all of âprivate equityâ is bad, not by a long shot. But clearly itâs being abused. So, what laws should be passed to fix the problems?
The problem with all this financial engineering is that it doesnât create anything truly useful. It only serves to enrich the lawyers and accountants. Sometimes itâs about the fees, sometimes itâs a tax strategy, sometimes itâs about protecting assets(or protecting yourself from other lawyers) but in the end itâs all about making life good for an accountant or lawyer.
Congress enables this mentality by fostering an overly complex tax, legal and regulatory system. The more complex something is, the less likely people are to question it and the more likely someone will profit from itâŚwithout actually helping society.
yeah thanks, i know all about bain and their stupid dirty tricks. just saying they deserve each other, not saying itâs okay.
At the end of this article, he addresses this:
P.S. One commenter at Hacker News complained, âWell, he says we need to do something else in the economy, but he isnât saying what.â Well, the Guitar Center thing is easy â donât give your money to pay back somebodyâs junk bonds. But for everything else, I donât have all the answers. But I am having a bunch of my smart friends come to St Louis and talk about what to do to take back our economy and make life fun again: Transition Economics. Oh, and weâre talking about how to keep arts in the next economy. So come to St. Louis and meet some fun people, or get your own friends together â face to face â to ask these deeper questions and take action.
Hereâs a place you can start: push for Land Value Taxation.
Buy local, buy small. âs all Iâm sayinâ.
Oh yeah - know who youâre buying from.
How is this in any way something that is âeating the worldâ?
The author states âYou see, Guitar Center used to be a musical instrument company, but now it is just one more imperial outpost for the spare financial capital of the top 0.1% of the population. For the people now supplying GC with liquidity, risk is a tool for cash flow, not a concern for survival.â
SoâŚitâs a company being kept afloat by rich people taking a gamble on subprime debt - who cares what their corporate structure is, or if the company lives or dies? Youâre not logging onto your eTrade account with 10 grand and buying GC bonds that youâve been duped into thinking are rock solid for some reason. Youâll still be able to buy a guitar from, oh, a jillion other places that will sell you a guitar.
At this point everyone has had fair warning to do their due diligence on investments, and if you canât understand it, then walk away. If some clowns with too much loot havenât learned that lesson, who cares if some of their money evaporates in the eventual bankruptcy?
There is lots thatâs wrong with global finance but this seems like quite a stupid example to call out.
Talk about completely missing the point.
Interesting. Iâd also suggest 100% inheritance tax on wealth above a million or two million bucks.
Sounds like a challenge! Iâll have my âaccountantsâ figure out a way around that by next Tuesday.
It would have to be global, or close to global.
100% inheritance tax on wealth above $1M or $2M - so anyone who inherits a family farm will be forced to sell it to pay the tax. Rural people in general have always tended to be land-rich and cash-poor, and a lot of the consolidation into agribusiness has resulted from tax regimes that require the landowners come up with cash that they donât have. Thatâs been going on since feudalism.
I think certain kinds of exceptions could be tolerable, but in general, anything that allows people to be born into the wealth of others and have claim over the vast majority if that wealth would not be tolerated.
Tony Soprano would call this a Bust out.
Bain is also doing this to Clear Channel, home to Rush Limbaugh and other conservative voices. Theyâve have lost money every year since they were bought and have been loaded with impossible-to-pay debt due in 2016.
So sometimes the destruction of a business for profit is funny.
I think there should be 100% inheritance tax, period. The ideal of America is that it is supposed to be a meritocracy where you succeed or fail on your own merits, not on what your parents did. Nobody should inherit money or property.
