Stances on the Barbarian Establishment of Private-Equity - by much needed financial reform
The Economist’s issue October 22nd – 28th, 2016 discusses how the Private-Equity industry has prospered, while almost every other approach to financial business has stumbled. Its 4-four page article sums up a. o. the competitive advantages of Private-Equity Funds (abbreviated “P-E Funds”) in an era of low-interest levels and structural changes partout. The article highlights an almost stealth growth. For the low profile of P-E Funds there are good reasons. The business approach is simple: Acquire a stake big enough to exercise full influence over a business to change leadership, add debt, minimize cost and taxes – while charging substantial fees. A part of the income “trickles down” to limited partners in search of high yields. Therefore they condone the extraordinary successes of their principals; namely,the managers of P-E Funds, who apply Other People’s Money. Cf. the writing of Louis Brandeis (1913) in the context of historic bankers. By means of Other People’s Money today's managers of P-E funds Have BECOME extremely powerful and rich. So-called “Creative destruction” is their slogan. Recent research shows that although they do not live up to characteristics of real creativity, their destruction still benefit them...
AN Assertion: The barbarian establishment of Private equity can be met by real financial innovation with social impact that can be achieved by the prey of P-E Funds; namely, Small- and Mid-Sized Enterprises (SMEs) with- and without a NAME in Media and Markets - As well as regional Basic Infrastructure activities, which may be put in play. Together* SMES can require fair play reforms of taxation and financial markets. they can protest against malpractices of the financial industry - for example cross-selling strategies stimulated by internal bonus schemes - as well as insane compensation schemes for corporate leadership and fund management - including so-Called "Carried Interest" as a Tax Advantage. *) together they can assemble, spread risk and build capacities to facilitate effective pro-Active restructuring by collaborative value networks. They can search for- and access alternative, affordable niche value workshops for independent expertise - and they can demand role-divided financial value chains. Look to THE Menu for MUTUAL INFORMATION.
THERE is a Widening GAP between The financial- anD THE REAL Economy to rock the boats of today's corporate regimes and their growing financial economies is long overdue. The health of any SME and Regional Basic infrastructure are inter-linked. In other Words - a poor basic infrastructure is Like A hole in an immune system AND CAN cause MISERY FOR ANY SME. Therefore owners/Enterprisers and investors - assisted by altruistic legislators - should DEMAND THAT the Financial structure also serves the real economy. In that context They should also take stances - e.g. on the Barbarian Establishment of Private Equity and cross-selling strategies stimulated by internal bonus schemes resulting in collusion and Network Corruption. however, the financial economy has been- and still IS embraced by influential macro-economists. Thereby they can exercise so-called "Financial Stability" according to their narrow criteria based on their historic data. it is no wonder that they are surprised by financial Crises - over and over again… The Economist magazine has shed light on the Barbarians in their caves. Now it is up to others to bring them out in daylight. Remember an old Norse myth: A troll will burst in daylight.