The sub-prime mess, the huge risks taken by hedge funds, and the conflicts of interest that led to Enron are all the consequences of serial bouts of financial deregulation. Will we reverse field in time to prevent another 1929?
Private Equity
Posted inEconomic Policy
Equity Funds Hire Prominent Minorities to Protect Tax Break
That should have been the headline of a Wall Street Journal article on a new group sponsored in part by the Private Equity Council (an industry trade group for private equity funds), rather than “Minority Group Fights Carry Tax Increase.” Just to reorient folks after their summer vacations, the basic story here is that the […]
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The Perfect Economic Storm
The speculative binge in hedge funds, private equity, derivatives, and subprime mortgages is pushing the larger economy into a general downward spiral.
Posted inArticle
Public V. Private
I meant to link to this Harold Meyerson column on the lax accountability measures applied to government contractors when it came out, but I didn’t. So I’ll do it now. The most telling bit comes at the end, when Harold points to legislation from Rep. Carolyn Maloney, who wants to “create a central database that […]
Posted inEconomic Policy
Private Equity Fund Managers’ Profits?
The Washington Post reported on the emergency mobilization of the nation’s leading lobbyists to thwart bills that would tax the compensation of equity and hedge fund managers at the same rates as the wages of school teachers and firefighters. Currently, these managers get to defer taxes on their compensation by rolling it back into the […]
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Hedges, Private Equity, and the Little Guy
What happens to corporate and government pension plans when the bottom falls out on hedge funds?
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THE WRONG LOOPHOLE.
THE WRONG LOOPHOLE. Robert Reich makes a good case that Congress should close the tax loophole under which the compensation of partners in private equity firms is treated as capital gains (15 percent tax) rather than labor income. But the particular treatment of private-equity is not the loophole. It’s the differential rate for capital gains […]
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The Private-Equity Scam
Private-equity firms enjoy a tax loophole worth billions of dollars. It’s time to close it.
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Hedging Disaster
This past week, even jaded observers of Wall Street were startled to learn that last year’s top hedge fund manager, James Simons of Renaissance Technologies, made $1.7 billion in 2006. Alpha Magazine reported that the top 25 hedge fund earners garnered an average of $570 million in 2006, up from $362 million in 2005. The […]
Posted inEconomic Policy
Debt: The Secret of Private Equity
Floyd Norris has a good piece for people like me who were wondering how so many public companies could suddenly become hugely profitable when they are taken private. The answer is debt. The private equity funds borrow to the hilt against the companies’ assets and then pay out huge “dividends” to themselves. This gives the […]
