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Tuesday, November 24, 2009
The Private Equity Shuffle
A nice illustration of how under the rules of financial capitalism, endless games are played with companies.
But rarely does the private equity shuffle create value of any significance.
See the problem with an economy run by beancounters shuffling companies like they were trading cards?
It's simple.
If private equity investors could actually create value by shuffling companies, the same companies wouldn't keep being shuffled ad infinitum. They'd improve to the point that they wouldn't need further restructuring. Conversely, the fact that companies are flipped like pancakes is a dead giveaway that the entire asset class is rent-seeking writ large.
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