This also happens with business takeovers. When a major corporation buys out another and takes over the business. The money (vast amounts) borrowed to finance the take over is loaded onto the victim company as debt. The company is asset stripped then files for bankruptcy. The debts stay with the victim company not the take over company that makes huge sums in profit and illuminates a competitor. This is why so many high street names producers and retailers are disappearing.
Well interest only mortgages are like that. The idea that loan against the assest can be paid off with equity from the value of the asset increasing. When the house of cards fell down in 2008 the government had to prop everything up, like they're now going to have to bail out leveraged buyouts and debt recapitalisation
@@uniteddreamer the assets of public utilities are still in place. They don't have to sell assets to strip it of value, that's what 'dividend recapitalisation' does. Unless Thames Water are digging pipes up a weighing them in as I wouldn't put it past them
I worked for Thames Water from 1979 until 2017. In 2005 the Macquarie led private equity led buyout was everything we had feared PE would be. We can now all clearly see the the results.
Privatisation is a scam. We’ve had Thatcherism since 1979 which serves the interests of the wealthy. The problem with Thatcherism is that you eventually run out of assets like Thames Water to sell to foreign investors so that they can rip off British consumers.
The UK and Norway had a similar resource bounty from North Sea oil, and look what our short termism approach got us compared to there 1.7 trillion sovereign wealth fund.
I totally agree with this. Asset strippers it seems are now trying to seize assets public and smaller private interests. The result will be dystopia. Everyone will be poor eventually.
Remember watching a program about german company that was bought by investors , first they closed R&D department , fired lots of people, lower standards and postponed maintenance. Once profits skyrocketed and shares went up they sold it making massive profit, it was at the time when intrests were close to 0 so cost them nothing to borrow.
My employers sold out to PE 6 years ago. They walked away with nice bonus. My salary has decreased 20% in real terms in that time. This year I took a 6% cut in absolute terms whilst the company leveraged a $250m loan to pay a dividend to investors.
Yes just old fashioned asset strippers. Buy a company load it with debt and use the loan to pay bonuses and dividends or just steal the money. Sell off any assets, downsize and either sell it or let it go bust. Simples ! Bad news for employees and banks.
@@uniteddreamer And don't undertake maintenance, just let the asset decline, and absolutely don't improve the business. How many reservoirs have been built since 1989? Apparently, all the waste discharges into public lakes and waterways was unknown until water companies kindly fitted sensors. Really?
@BillDavies-ej6ye media based governance. Don't do anything until even the right wing media are churning out images of rivers of sh*t! But you're right about reservoirs which is why even the occasional deluge doesn't stave off water shortages within a few short months.
The LP has systematically abandoned every element of its ideology that opposes capital. It used to offer the working class improved conditions of life; now it promises improved conditions for private profit
the gov is a beggar now. Until they get up and stand up to the financial piracy they are doomed. Capital can only be defeated when brought to heel and kept there tightly, made servant and treated like the worst dog. Let it rise it head and it will eventually defeat you. Labour has no future is it can't show it can stands for working class. As things stand they might collapse within a year and be completely wiped out at the next election. You can't win fight capitalists that print their own money to buy your assets, they have to e subjugated with laws.
Debenhams crashed due to poor management and lack of education of its staff, imho. An example of turn-around is M&S who have restored their business to profitability and made their shops pleasant places to visit. No I don't own any shares in M&S but I do buy food from there.
@visby2548 did I? Personally I prefer not to shop online. However, I live in the middle of nowhere, there are no buses, car parking in town is expensive and so is the petrol to get there. Still I prefer not to shop online, but there's nothing for me to make the effort to go into town. It's just charity shops and pound shops. Hardly worth the expense of going.
I'm now waiting for Rachel Reeves to announce that she has met this charming guy who is going to help give the UK a massive boost to infrastructure by building us a monorail.
Blair staer done when gets out , Blair big connections with Rwanda death cult who southport monster,s father was child soldier with ! Funny how he turned full dictator after riots ! All scripted by Blair an stalin 😮
Bottom line is that their effective marketing attracts state investment. An ethos of yearly profits for the shareholder. Huge loans are taken then paid out to themselves and shareholders. Services provided are poor. Value for money is poor. Problems in health or home building or water provision continue to impact on us the customer. Some of these Corporations attempt to demand tax payer money to keep operating this poor service. Some successfully, E.g . rail Company, service provider goes bust due to their huge loans, already distributed to themselves. Equals= no service. We needing service go without. Government poorer. More austerity.
An example of the harm that is done by this is in the veterinary sector. Independents being bought up by companies ultimately owned by private equity. Vet Partners being just one example. It is covered in a lot more detail by the BVU
Sounds exactly like a parasite, one which kills its host and moves onto another one. Capitalism at it's s worst. Scary. Labour under Starmer are worse than the Tories.
Sorry, but that's bot talk, and catastrophizing curtesy of the Daily Wail talk. The idea that Labour are worse than the Tories is just wrong by any metric you care to use. What metric do you choose?
I don't know how old you are, but I'm old enough to have been around to see generational changes in politicians. The Labour Party has changed because of money, and that's why Reform UK and the Conservatives are no better either. I don't know what will follow this period of populist, entrepreneurial politics; that largely depends on our shared values, which wax and wane over time. We need fresh blood and an electoral system that doesn't deliver Horseshoe Politics. Whether the people will stop looking at their phones for answers and start talking to each other about what they value, and be prepared to work with one another, even if they don't agree on every point, will be decisive. Right now, they are content to try everything else except the right things to do. Thus, they get Horseshoe Politics. We should be pushing for proportional representation.
capitalism at its worst is called cannibalism, yup, it exists in the financial system, dog eats dog there too ... We are living in a system called cannibalism, capitalism is just a less suspected name for it.
I always say, don't worry about the people who arrive in rubber dinghies but I would be really worried about the people who arrive in superyatchs and private jets...
The dinghies are symptomatic of a bigger problem. You only see the tip of the iceberg sticking out of the water…. But this is not the place for this discussion
The other aspect is that private equity typically don't actually "invest". They borrow money (on the basis of some level of capital) and then typically put those debts as much as possible into the company they take control of. So using private equity is like PFI (borrowing on the credit card to hide the debt from the mortgage), but many times worse
I would have thought, that Thames Water - who's primary object is to deliver profit to its share holders, secondly to supply water to consumers and there to add PFI's, that built - now crumbling - hospitals was a prime example of the way's and means of privet equity; thus one would think that any rational thinking government - especially seen in the light, that they have a whole repertoire of financing tools at their disposal - would say faraway from private equity. Why are Labour leader so interest in private equity? well private equity made Tony Blair into multi millionaire. And Labour's leaders of today are no less Blair-ite.
I'm usually on the pro-business side of most arguments. But after I finished my finance masters, it was really clear to me that PE is basically the bad guy. I wish it were more complex. I don't think it is.
The hard truth on what Labour has become and now is. Nothing more to say except that I can't recall voices claiming to be still "on the left" making much noise about private equity practices.
When someone says "private equity" I see a vulture over a carcass. If Private Equity (PE) aka Leveraged Buyout (LBO) is coming to the UK in masses that means we are in deep structural trouble.
private equity is the fastest way for money to leave the country and bankrupt the UK for shareholders the other side of the planet , Public owned and the money stays in circulation in the country ,
@@user-xu5vl5th9n The difference is that the Norwegian government states that the raw material found in the earth belong to the populace and not to those individuals, that own the land. Thus the Norweigen Populace has a mega fund at it disposal. However, they still have high taxation. Their wealth fund invests, in all number of initiatives.
@@michaelmayo3127 I read somewhere that the Norwegians benefit from investments in UK energy. In other words, they profit from UK subjects paying higher energy prices.
I was a member of the Labour Party but since Blair's stewardship I resigned in disgust and to hear that friend of the working class Mandleson boasting about how he helped bring down Corbyn makes me wish I wasn't a pacifist. To be a socialist in todays Labour Party is an endangered species. But at least Starmer can tell a joke when asked if he was a socialist he answered, "Yes ".
It’s Davos all the way baby. Westminster or Davos? No contest. Blackrock anyone? That’s who Starmer is - and the astonishing thing is that he says it out loud.
that's what they fear, that's why there is so much noise around marxists and leftists in the position of power. They do not want 90+% of tax as it took place in the early 20 century in the US. People were happy then, No the tables have turned again because politicians are so easily corrupted. They are so hungry that even a scrap will be enough to make them pass favourable laws and deregulation. That's why in countries like in the UK businesses are collapsing. The managers do not care, it is not their country. They will take their loot to America. America is a plagues that should never be allowed into Europe.
In around 2007 Macquarie issued several million pounds worth of Thames Water bonds. In the event of failure of the company those bonds would have precedence over every other debt, including the £200 million hole in the company pension fund.
You are being exceedingly generous in saying that the Labour Party has “fallen for the con”. I believe they know EXACTLY where the con lies - and it’s on the UK population.
He's also being generous in saying that the only plausible reason for getting into bed with PE is to enrich the Labour party. I suspect some of that may be true but there will also be some notable individuals within the party who leave politics having made some serious gravy out of this alliance.
We have the Bank of England you’ve said it yourself Richard, so why are we always constantly hearing about outside investment in this country instead of internal investment because we are just becoming a poorer and poorer country. The veneer is thin, very thin.
Well said Richard. I think this issue needs to be brought out into the open more and into the wider public consciousness. I think high street shops, Farming and Supermarkets are good examples of this practice.👍
Philip Green asset stripper ripped the guts out of many of the High Street icons. Maybe the days were numbered, but that is all Philip Green is the asset stripper so Richard you’re right
@@ranar1036 IMHO this would only influence those on the margin. Hard core Tories are blinded by their ideology, as are this Labour supporters who refuse to see Kid Starver for the shallow, mendacious liar that he is.
Here one pound in three of council tax goes to pay off PFI debt run up under the previous Labour Gov. There's about another 10 years of repayments left - and even then, the council don't own the assets (like schools) - they've got to negotiate a price with the PFI company. It doesn't bear thinking about how much more of tax payers' money will have been transferred to Labour's PFI pals before the next election.
Like PCP financing for a car with a final balloon payment. Creates the illusion of wealth because you can drive a car you could never realistically afford. Ultimately you pay much more than if you took out a car loan or saved to buy outright in the first instance.
Excellent as always Richard - clear and informative. Yep, just more money grabbing middle men. The billionaires are taking more and more of our wealth ultimately - continuing to drain money towards themselves and away from us. Labour so far are making a hellava lot of mistakes. Shared.
So Private Equity firms act in a parasitic way to take over a firm and make it serve the PE’s interests and not that of the original owners, employers or general public. The current Labour Party have history on this going back to Blair. Hospitals, schools etc are still paying off the huge loans to these PE firms. Costing much more than would have originally been the case if Government would have paid up front. It’s a way for government to shift spending off the official books and onto ‘private investment’.
It’s a way to guarantee themselves a well paid job after leaving politics by selling the country down the swanny to asset strippers who syphon billions of taxpayers funds into offshore bank accounts
Richard, you’re preaching to the congregation now we need actions we need to change what is happening. We need to tell them what we want. Not what they want. What the British public wants and how do we do that that we actually do what we want I’m talking about!!
Why do you think Richard or any Individual can tell what people want or think? Richard is offering a critique. So the first question is for us to answer, and that is, is what he says true? Then the next question is, if it is true, what should or can be done about it? Those are question we have to answer. Some people have leapt on Reform UK, and that's just wolves in sheep's clothing. New Labour are the sheep. No; the real question is what do you want? If you don't know, why are you asking someone else to tell what you *should* want? What are your priorities? They are the roots of whatever problems you have. And if you don't like your problems, then you have to look hard at your priorities. **You** might even have to change your priorities.
You have confirmed my worst fears about PE and LIEBOUR I use a phrase Born Stupid and insist on practising! Thank for the confirmation of ongoing fleasing operations by LIEBOUR
@@CuriousCrow-mp4cx Weather is grey and over cast. No it was my company and I employed a great PA / Sec for all my external comms. Called disleptic at school colledge and Uni. Now 72 and don,t care You got the jist, so whats the real problem, purile ?
Our politics has gone like America, two versions of Tories. Old Labour aspired to public investment and wealth via the old clause 4 of its constitution, and as such was always the enemy of financial capitalists. New Labour succumbed to the pressure being applied to them to remove that aspiration and since then we have had two parties pandering to the demands of 'Neo Liberal' financial (casino) capitalism. Make the most of your declining standard of living, in a declining environment, and declining democracy 😬
Neither Labour or Tories treat either the state's remaining assets, or tax- income, as if it was our own. These so-called investments never return taxpayers a profit. As you rightly point out they only benefit monopolist, parasite-businesses, and speculators.
It's for kickbacks. Ostensibly for the benefit of the country but the services rendered are universally subpar and the people providing these low quality services live off benefits from the government for the rest of their lives.
yup and the real kick in the teeth is that these VC's are using monopoly money courtesy of the national centralbank, which equates to our, the peoples' money, to be gambled like in a high-stakes las vegas casino where the owners know they will always be winners. Such is the state of affairs where the illegal has now become legal.
Entirely agree, Richard. So, what can ordinary citizens DO about this given the non-representative and dysfunctional version of democracy we have in the uk?
Private equity doesn't work that way. Sorry. Asset stripping has nothing to do with the banks. In fact, private equity is trying to replace them. Why private equity is less regulated than banks, so they can to the global money markets and get loans for "dry powder funds" as offshore entities to finance acquisitions. Banks are only the conduit. They are not the pump.
*Excellent analysis, I have never seen an analysis as well structured as yours. Look, I have been investing in Bitcoin ETFs and other dividend income since 2020, I have a total of 734 thousand dollars, with my 83 thousand I am very grateful for all the knowledge and information you have given me.*
Thank you for this and sadly very true. Would only add that the current Labour set-up is filled with Blair era appointments who believed in the '3rd way' of governing.
I bet the recipient investortgat will buy these assets will be government-funded entities, and the final price will be inflated to maximise returns to private equity operators. I bet that's what's going to happen.
Richard much of what you say on your podcasts makes a lot of sense but at the same time like the majority of people whose aim is maximising channel subscribers and hence revenue you have appeared to refrain from stating your idea of what the government should do in terms of social well being and sustainability which I would suggest implies a trade off between growth and well being.
It has to do with the cost of debt making exit valuations of PE investment impossible to achieve, and the last bit of wealth in private pensions that can be accessed to bail them out (i.e. provide exit route at fake, overinflated valuation).
They are the vultures of the financial services market. They perform a useful function like vultures in nature, it's just something you wouldn't want to be associated with
Just as I suspected that Johnson would destroyThe Tories I suspected that Stamer was put into Labour to do the same. Just look at how heavy handed the State is now, Starmer is using Terrorism charges to deal with Journalists and peaceful protesters.
My locality was infested by one such in the 1980s. Without mentioning the companies they took over, I can tell you that they included ones that you would see on supermarket shelves everywhere, but have now disappeared totally. The factories closed. workers sacked, only remembered by the workers. In one case an upmarket housing estate now exists where once loads of people were employed (and you HAVE eaten their produce, I'll absolutely guarantee! Big name, gone forever.
Dear Prof. Murphy, you seem to be confusing Private Equity with Vulture Funds. A vulture fund will "rescue" a badly run company which usually has cash-flow problems, perform the activities you have discussed and then spit out the bones. Such 'funds' are often private companies run by astute individuals with a vast amount of working capital. In contrast I have held shares in organisations such as Partners Group, Chrysalis VCT and Polar Capital Technology; these and similar should be thought of as private equity because they fund and encourage non-listed companies into the state of being a robust enterprise. Sometimes it can be difficult to discern vulture funds from true private equity, and VCTs are in decline due to adjustments in taxation by the previous government. I always enjoy your videos for their thought-provoking content. 👍
It's the perfect vehicle for people who believe in Neoliberal dogma. They believe that wealth is created not by labour (their prime delusion is that they "debunked " the labour theory of value) but by "transactions". As private equity companies literally do nothing but transactions, then logically, they must create nothing but wealth. Unfortunately, the institution which once represented the political interests of labour has completely bought into this drivel and is hell-bent on putting it into practice. Brexit has severely damaged the UK as an entity but the ideology that inspired it, Neoliberalism, has nowhere near finished.
@@swojnowski453 Brexit IS Neoliberalism! The likes of Rees-Mogg and Boris Johnson convinced a bunch of turkeys that Christmas was the answer to all their problems.
Oh my, the 2 political opportunists having this love affair with private equity isn’t entirely surprising. The goal is to keep stripping Britain and selling its used parts. I’m sorry I just can’t wait for Rachel and keir to leave, because they are the worst for labour at this point, maybe add in Wes streeting too, who’s also fine with the concept of privatized healthcare like in the US.
When Labour were last in power involving the private sector in hospitals, for example, resulted in huge debt for hospitals and poorly built hospitals, Repeating that is a bad idea. The government would do better listening to you, Richard, rather than advisors employed by private equity firms. Taking money off pensioners to give to provide cash for private equity funds is not something that a party even slightly left of centre should do.
Because they are tories who believe that income support, aka benefits, are a blight. Pe is essentially a hostile takeover without actually paing for it.
I love the way the debt remains with the company they buy, not with the private equity company. We would all love to take out that sort of loan !
This also happens with business takeovers. When a major corporation buys out another and takes over the business. The money (vast amounts) borrowed to finance the take over is loaded onto the victim company as debt. The company is asset stripped then files for bankruptcy. The debts stay with the victim company not the take over company that makes huge sums in profit and illuminates a competitor. This is why so many high street names producers and retailers are disappearing.
Well interest only mortgages are like that. The idea that loan against the assest can be paid off with equity from the value of the asset increasing. When the house of cards fell down in 2008 the government had to prop everything up, like they're now going to have to bail out leveraged buyouts and debt recapitalisation
@@JSmith19858 not really. The primary asset remains in place. Private equity strips out those assets as a rule.
@@uniteddreamer the assets of public utilities are still in place. They don't have to sell assets to strip it of value, that's what 'dividend recapitalisation' does. Unless Thames Water are digging pipes up a weighing them in as I wouldn't put it past them
@@JSmith19858 2008 was fraud. They were never prosecuted because the politicians were in on it.
I worked for Thames Water from 1979 until 2017. In 2005 the Macquarie led private equity led buyout was everything we had feared PE would be. We can now all clearly see the the results.
Privatisation is a scam. We’ve had Thatcherism since 1979 which serves the interests of the wealthy. The problem with Thatcherism is that you eventually run out of assets like Thames Water to sell to foreign investors so that they can rip off British consumers.
I'm glad you emphasise the short-termism of private equity. Short-termism has been the bane of the British economy for decades
The UK and Norway had a similar resource bounty from North Sea oil, and look what our short termism approach got us compared to there 1.7 trillion sovereign wealth fund.
I totally agree with this. Asset strippers it seems are now trying to seize assets public and smaller private interests. The result will be dystopia. Everyone will be poor eventually.
Is this part of the ‘You will be happy and own nothing’ crowd.
Now trying? They’ve been doing it for decades.
It's already been happening for 45 years. There only remain the bones to strip.
@@clovermark39 not sure I know what that means. how much does one need to own, when others own nothing?
Except for those coining it
Simple labour has abandoned what labour stood for to be more electable in the eyes of those in power. And that has never been the people.
My favourite example of how value is destroyed in this way is what happened to Maplin Electronics. 😢
@@MrJohnRWells toysrus was a good one!
Don't forget Debenhams
Remember watching a program about german company that was bought by investors , first they closed R&D department , fired lots of people, lower standards and postponed maintenance. Once profits skyrocketed and shares went up they sold it making massive profit, it was at the time when intrests were close to 0 so cost them nothing to borrow.
My employers sold out to PE 6 years ago. They walked away with nice bonus.
My salary has decreased 20% in real terms in that time. This year I took a 6% cut in absolute terms whilst the company leveraged a $250m loan to pay a dividend to investors.
Yes just old fashioned asset strippers. Buy a company load it with debt and use the loan to pay bonuses and dividends or just steal the money. Sell off any assets, downsize and either sell it or let it go bust. Simples ! Bad news for employees and banks.
Remarkably like the water companies, ey?
That's what happened to Thames water. Even borrowing money just to bankroll share buybacks to pump up their bonuses.
@@uniteddreamer And don't undertake maintenance, just let the asset decline, and absolutely don't improve the business. How many reservoirs have been built since 1989? Apparently, all the waste discharges into public lakes and waterways was unknown until water companies kindly fitted sensors. Really?
@BillDavies-ej6ye media based governance. Don't do anything until even the right wing media are churning out images of rivers of sh*t! But you're right about reservoirs which is why even the occasional deluge doesn't stave off water shortages within a few short months.
The LP has systematically abandoned every element of its ideology that opposes capital. It used to offer the working class improved conditions of life; now it promises improved conditions for private profit
the gov is a beggar now. Until they get up and stand up to the financial piracy they are doomed. Capital can only be defeated when brought to heel and kept there tightly, made servant and treated like the worst dog. Let it rise it head and it will eventually defeat you. Labour has no future is it can't show it can stands for working class. As things stand they might collapse within a year and be completely wiped out at the next election. You can't win fight capitalists that print their own money to buy your assets, they have to e subjugated with laws.
Wasn't it private equity that destroyed many of our high street shops, such as Debenham?
@@julieknights1238 BHS, and Morrisons is the current target with assets being currently assessed for sell off.
Debenhams crashed due to poor management and lack of education of its staff, imho. An example of turn-around is M&S who have restored their business to profitability and made their shops pleasant places to visit. No I don't own any shares in M&S but I do buy food from there.
You destroyed your high street shops, you shopped on-line instead.
@visby2548 did I? Personally I prefer not to shop online. However, I live in the middle of nowhere, there are no buses, car parking in town is expensive and so is the petrol to get there. Still I prefer not to shop online, but there's nothing for me to make the effort to go into town. It's just charity shops and pound shops. Hardly worth the expense of going.
Private equity has ripped apart New Zealand. Well severely damaged.
The Uniparty believe in corporate power over the individual.
Neo-feudalism is the unspoken word
I'm now waiting for Rachel Reeves to announce that she has met this charming guy who is going to help give the UK a massive boost to infrastructure by building us a monorail.
Isn't this exactly what has happened to Thames Water? Value stripped out by private equity and the public left with the debt.
Tony Bellend Blair was the doyenne of this. To his benefit when he handed the reins over. He is now a multi millionaire.
Blair made his initial money during his gig as Middle East Envoy, after drenching himself in the blood of a million Iraqis.
@ which to any level person is quite ridiculous
Blair staer done when gets out , Blair big connections with Rwanda death cult who southport monster,s father was child soldier with ! Funny how he turned full dictator after riots ! All scripted by Blair an stalin 😮
Thatcher started it, Blair continued where she left off.
@@Ghengiskhansmum If I recall correctly, he did admire Thatcher.
Bottom line is that their effective marketing attracts state investment. An ethos of yearly profits for the shareholder. Huge loans are taken then paid out to themselves and shareholders. Services provided are poor. Value for money is poor. Problems in health or home building or water provision continue to impact on us the customer. Some of these Corporations attempt to demand tax payer money to keep operating this poor service. Some successfully, E.g . rail
Company, service provider goes bust due to their huge loans, already distributed to themselves.
Equals= no service. We needing service go without. Government poorer. More austerity.
Totally agree! Many great companies are destroyed by private equity.
I would say all
An example of the harm that is done by this is in the veterinary sector. Independents being bought up by companies ultimately owned by private equity. Vet Partners being just one example. It is covered in a lot more detail by the BVU
Sounds exactly like a parasite, one which kills its host and moves onto another one. Capitalism at it's s worst. Scary. Labour under Starmer are worse than the Tories.
They are not worse, but in many ways as bad. No corruption scandals, yet.
Sorry, but that's bot talk, and catastrophizing curtesy of the Daily Wail talk. The idea that Labour are worse than the Tories is just wrong by any metric you care to use. What metric do you choose?
I don't know how old you are, but I'm old enough to have been around to see generational changes in politicians. The Labour Party has changed because of money, and that's why Reform UK and the Conservatives are no better either. I don't know what will follow this period of populist, entrepreneurial politics; that largely depends on our shared values, which wax and wane over time. We need fresh blood and an electoral system that doesn't deliver Horseshoe Politics. Whether the people will stop looking at their phones for answers and start talking to each other about what they value, and be prepared to work with one another, even if they don't agree on every point, will be decisive. Right now, they are content to try everything else except the right things to do. Thus, they get Horseshoe Politics. We should be pushing for proportional representation.
capitalism at its worst is called cannibalism, yup, it exists in the financial system, dog eats dog there too ... We are living in a system called cannibalism, capitalism is just a less suspected name for it.
Curtesy
I always say, don't worry about the people who arrive in rubber dinghies but I would be really worried about the people who arrive in superyatchs and private jets...
The dinghies are symptomatic of a bigger problem. You only see the tip of the iceberg sticking out of the water…. But this is not the place for this discussion
The other aspect is that private equity typically don't actually "invest". They borrow money (on the basis of some level of capital) and then typically put those debts as much as possible into the company they take control of. So using private equity is like PFI (borrowing on the credit card to hide the debt from the mortgage), but many times worse
I would have thought, that Thames Water - who's primary object is to deliver profit to its share holders, secondly to supply water to consumers and there to add PFI's, that built - now crumbling - hospitals was a prime example of the way's and means of privet equity; thus one would think that any rational thinking government - especially seen in the light, that they have a whole repertoire of financing tools at their disposal - would say faraway from private equity.
Why are Labour leader so interest in private equity? well private equity made Tony Blair into multi millionaire. And Labour's leaders of today are no less Blair-ite.
I'm usually on the pro-business side of most arguments. But after I finished my finance masters, it was really clear to me that PE is basically the bad guy. I wish it were more complex. I don't think it is.
The hard truth on what Labour has become and now is. Nothing more to say except that I can't recall voices claiming to be still "on the left" making much noise about private equity practices.
When someone says "private equity" I see a vulture over a carcass. If Private Equity (PE) aka Leveraged Buyout (LBO) is coming to the UK in masses that means we are in deep structural trouble.
I do recall them being referred to as vulture capitalists.
private equity is the fastest way for money to leave the country and bankrupt the UK for shareholders the other side of the planet , Public owned and the money stays in circulation in the country ,
*Starmer's Labour is the party of capital.*
Don't forget that the tories are a capitalist party through and through.
Contra to Norway's national wealth fund, the UK's National wealthy fund is only a fancy-name.
That is because Norway has built up a large sovereign wealth fund, thanks to fossil fuels. By contrast the UK has built up a large sovereign debt.
@@user-xu5vl5th9n
The difference is that the Norwegian government states that the raw material found in the earth belong to the populace and not to those individuals, that own the land. Thus the Norweigen Populace has a mega fund at it disposal. However, they still have high taxation. Their wealth fund invests, in all number of initiatives.
@@michaelmayo3127 I read somewhere that the Norwegians benefit from investments in UK energy. In other words, they profit from UK subjects paying higher energy prices.
I was a member of the Labour Party but since Blair's stewardship I resigned in disgust and to hear that friend of the working class Mandleson boasting about how he helped bring down Corbyn makes me wish I wasn't a pacifist. To be a socialist in todays Labour Party is an endangered species. But at least Starmer can tell a joke when asked if he was a socialist he answered, "Yes ".
He also said he was a social democrat. I cried at that one.
He's a lawyer. Words can have any meaning he likes. The reality and truth are not relevant 😢
It’s Davos all the way baby. Westminster or Davos? No contest. Blackrock anyone? That’s who Starmer is - and the astonishing thing is that he says it out loud.
Bot talk.
Mr Murphy, thanks for the Education Sir.
All their assets should be seized without compensation
that's what they fear, that's why there is so much noise around marxists and leftists in the position of power. They do not want 90+% of tax as it took place in the early 20 century in the US. People were happy then, No the tables have turned again because politicians are so easily corrupted. They are so hungry that even a scrap will be enough to make them pass favourable laws and deregulation. That's why in countries like in the UK businesses are collapsing. The managers do not care, it is not their country. They will take their loot to America. America is a plagues that should never be allowed into Europe.
In around 2007 Macquarie issued several million pounds worth of Thames Water bonds. In the event of failure of the company those bonds would have precedence over every other debt, including the £200 million hole in the company pension fund.
For a good example of private equity/ leveraged buyouts in action, look at the financials of Manchestet United plc.
Yes, debts of over £1 billion.
@BillDavies-ej6ye Exactly.
Please how ?
Am a born Christian and sometimes I feel so down 😭 of myself because of low finance but I still believe God😞
It's Maria Angelina Alexander doing she's changed my life. A BROKER- like her is what you need.
$356K monthly is something you should feel differently about....
Lovely! I enjoyed it like I enjoy a $100k monthly around the turn!!!
All your valid points have been demostrated for over half century yet Labour still persist - WHY?
You are being exceedingly generous in saying that the Labour Party has “fallen for the con”.
I believe they know EXACTLY where the con lies - and it’s on the UK population.
He's also being generous in saying that the only plausible reason for getting into bed with PE is to enrich the Labour party. I suspect some of that may be true but there will also be some notable individuals within the party who leave politics having made some serious gravy out of this alliance.
Indytruck Davy has us well informed about GB energy 🏴
We have the Bank of England you’ve said it yourself Richard, so why are we always constantly hearing about outside investment in this country instead of internal investment because we are just becoming a poorer and poorer country. The veneer is thin, very thin.
Well said Richard. I think this issue needs to be brought out into the open more and into the wider public consciousness. I think high street shops, Farming and Supermarkets are good examples of this practice.👍
It's simple it's like buying something on your credit card which you can't afford.
Especially if you can walk away... and leave the tax-payer to foot the bill.
Philip Green asset stripper ripped the guts out of many of the High Street icons. Maybe the days were numbered, but that is all Philip Green is the asset stripper so Richard you’re right
To please Tory voters!
@@ranar1036 IMHO this would only influence those on the margin. Hard core Tories are blinded by their ideology, as are this Labour supporters who refuse to see Kid Starver for the shallow, mendacious liar that he is.
The global crime syndicate, exemplified.
you just need one tool, capital, accidentally that's the tool you yourself create as an entity close to the US government.
Govt relying on private equity is like Superman fighting evil by outsourcing to mercenaries
Richard you’re asking / answering the important questions. Thank you!
I don't usually agree with this channel, but I think he's got it on this
Thank you for disclosing this information
- vital information which our media withholds from us
Every time I hear about private equity, it sounds more and more like it should be illegal.
Private Equity is targeting the taxpayer….stripping their public services and leaving the debt
very eye opening - thank you
Just had one installed.
Very quiet and no more than a noise than a gas boiler pump.
Works great and is proving already to be far cheaper.
Thanks for another clear and concise explanation.
Because they've taken massive private business/corporate donations onboard?
Richard is missing the point. RACHEL IS AN ECONOMIST(with the truth) 😂
Here one pound in three of council tax goes to pay off PFI debt run up under the previous Labour Gov. There's about another 10 years of repayments left - and even then, the council don't own the assets (like schools) - they've got to negotiate a price with the PFI company. It doesn't bear thinking about how much more of tax payers' money will have been transferred to Labour's PFI pals before the next election.
Like PCP financing for a car with a final balloon payment. Creates the illusion of wealth because you can drive a car you could never realistically afford. Ultimately you pay much more than if you took out a car loan or saved to buy outright in the first instance.
Excellent as always Richard - clear and informative. Yep, just more money grabbing middle men. The billionaires are taking more and more of our wealth ultimately - continuing to drain money towards themselves and away from us. Labour so far are making a hellava lot of mistakes. Shared.
So Private Equity firms act in a parasitic way to take over a firm and make it serve the PE’s interests and not that of the original owners, employers or general public. The current Labour Party have history on this going back to Blair. Hospitals, schools etc are still paying off the huge loans to these PE firms. Costing much more than would have originally been the case if Government would have paid up front. It’s a way for government to shift spending off the official books and onto ‘private investment’.
It’s a way to guarantee themselves a well paid job after leaving politics by selling the country down the swanny to asset strippers who syphon billions of taxpayers funds into offshore bank accounts
"going back to Blair." True, but remember, invented by the tories.
In the US private equity companies have been heavily investing in the housing market and a major reason why rents and mortgage prices are so inflated.
Richard, you’re preaching to the congregation now we need actions we need to change what is happening. We need to tell them what we want. Not what they want. What the British public wants and how do we do that that we actually do what we want I’m talking about!!
Why do you think Richard or any Individual can tell what people want or think? Richard is offering a critique. So the first question is for us to answer, and that is, is what he says true? Then the next question is, if it is true, what should or can be done about it? Those are question we have to answer. Some people have leapt on Reform UK, and that's just wolves in sheep's clothing. New Labour are the sheep.
No; the real question is what do you want? If you don't know, why are you asking someone else to tell what you *should* want? What are your priorities? They are the roots of whatever problems you have. And if you don't like your problems, then you have to look hard at your priorities. **You** might even have to change your priorities.
Thank you Richard, please keep exposing these sharks by telling the truth.
Thanks
Well said! Clearly and cogently explained.
You have confirmed my worst fears about PE and LIEBOUR I use a phrase Born Stupid and insist on practising! Thank for the confirmation of ongoing fleasing operations by LIEBOUR
How's the weather where you are? Did they give you a spelling test before you got the job?
@@CuriousCrow-mp4cx Weather is grey and over cast. No it was my company and I employed a great PA / Sec for all my external comms. Called disleptic at school colledge and Uni. Now 72 and don,t care You got the jist, so whats the real problem, purile ?
Our politics has gone like America, two versions of Tories. Old Labour aspired to public investment and wealth via the old clause 4 of its constitution, and as such was always the enemy of financial capitalists. New Labour succumbed to the pressure being applied to them to remove that aspiration and since then we have had two parties pandering to the demands of 'Neo Liberal' financial (casino) capitalism. Make the most of your declining standard of living, in a declining environment, and declining democracy 😬
Neither Labour or Tories treat either the state's remaining assets, or tax- income, as if it was our own.
These so-called investments never return taxpayers a profit. As you rightly point out they only benefit monopolist, parasite-businesses, and speculators.
It's for kickbacks. Ostensibly for the benefit of the country but the services rendered are universally subpar and the people providing these low quality services live off benefits from the government for the rest of their lives.
yup and the real kick in the teeth is that these VC's are using monopoly money courtesy of the national centralbank, which equates to our, the peoples' money, to be gambled like in a high-stakes las vegas casino where the owners know they will always be winners. Such is the state of affairs where the illegal has now become legal.
Private Equity companies own care homes? or Care Worker provider companies?
Is this why successive govts wont sort out the care sector?
Entirely agree, Richard. So, what can ordinary citizens DO about this given the non-representative and dysfunctional version of democracy we have in the uk?
The game is to extract new money created out of nothing by a private commercial bank and pass the debt on to another entity.
Trebles all round!!
Private equity doesn't work that way. Sorry. Asset stripping has nothing to do with the banks. In fact, private equity is trying to replace them. Why private equity is less regulated than banks, so they can to the global money markets and get loans for "dry powder funds" as offshore entities to finance acquisitions. Banks are only the conduit. They are not the pump.
really succinct explanation and at the same time very ominous, what do we do about it Richard. Guide us!
*Excellent analysis, I have never seen an analysis as well structured as yours. Look, I have been investing in Bitcoin ETFs and other dividend income since 2020, I have a total of 734 thousand dollars, with my 83 thousand I am very grateful for all the knowledge and information you have given me.*
6 months, $17k invested and almost there too!!
Next year, I'll reach $185k.
I'm 37 and have been looking for ways to be successful, please how???
Sure, the investment-advisor that guides me is.. Mary Elizabeth
How did you do this please? I am new to investing in cryptocurrencies, can you please guide me on how to do this?
It is advisable to seek professional guidance when creating a solid financial portfolio due to its complexity.
You are describing the situation that exists now within the NHS .....
It excuses them from liability for their incompetence
Thank you for this and sadly very true. Would only add that the current Labour set-up is filled with Blair era appointments who believed in the '3rd way' of governing.
Stakeholders is the new term they like to use and they’re gearing up for the great taking, go look it up if you value your retirement fund.
I bet the recipient investortgat will buy these assets will be government-funded entities, and the final price will be inflated to maximise returns to private equity operators. I bet that's what's going to happen.
Labour continue to disappoint.
Greed, the gift that keeps on giving….
Richard much of what you say on your podcasts makes a lot of sense but at the same time like the majority of people whose aim is maximising channel subscribers and hence revenue you have appeared to refrain from stating your idea of what the government should do in terms of social well being and sustainability which I would suggest implies a trade off between growth and well being.
This is how absolute power corrupts absolutely
The country needs long-term investment government investment from our bank of England, and I’m looking at 20 years, 50 years of sustainable investment
private equity is the problem.
It has to do with the cost of debt making exit valuations of PE investment impossible to achieve, and the last bit of wealth in private pensions that can be accessed to bail them out (i.e. provide exit route at fake, overinflated valuation).
They are the vultures of the financial services market. They perform a useful function like vultures in nature, it's just something you wouldn't want to be associated with
All because Labour are scared to simplify/update the UKs tax system to reflect that public services cost real money.
What is the definition of "believe" in use here?
Just as I suspected that Johnson would destroyThe Tories I suspected that Stamer was put into Labour to do the same. Just look at how heavy handed the State is now, Starmer is using Terrorism charges to deal with Journalists and peaceful protesters.
Tories jailed JSO protesters.
Which is why we need stakeholder capitalism
That bird flew years ago.
Didn't Warren Buffet of Berkshire Hathaway describe private equity firms as 'typically' dishonest?
Labour love of PFI's under Blair showed us they way. Massive profits for offshore companies, the NHS paying through the nose.
My locality was infested by one such in the 1980s. Without mentioning the companies they took over, I can tell you that they included ones that you would see on supermarket shelves everywhere, but have now disappeared totally. The factories closed. workers sacked, only remembered by the workers. In one case an upmarket housing estate now exists where once loads of people were employed (and you HAVE eaten their produce, I'll absolutely guarantee! Big name, gone forever.
Dear Prof. Murphy, you seem to be confusing Private Equity with Vulture Funds. A vulture fund will "rescue" a badly run company which usually has cash-flow problems, perform the activities you have discussed and then spit out the bones. Such 'funds' are often private companies run by astute individuals with a vast amount of working capital. In contrast I have held shares in organisations such as Partners Group, Chrysalis VCT and Polar Capital Technology; these and similar should be thought of as private equity because they fund and encourage non-listed companies into the state of being a robust enterprise. Sometimes it can be difficult to discern vulture funds from true private equity, and VCTs are in decline due to adjustments in taxation by the previous government.
I always enjoy your videos for their thought-provoking content. 👍
It's the perfect vehicle for people who believe in Neoliberal dogma. They believe that wealth is created not by labour (their prime delusion is that they "debunked " the labour theory of value) but by "transactions". As private equity companies literally do nothing but transactions, then logically, they must create nothing but wealth. Unfortunately, the institution which once represented the political interests of labour has completely bought into this drivel and is hell-bent on putting it into practice. Brexit has severely damaged the UK as an entity but the ideology that inspired it, Neoliberalism, has nowhere near finished.
because the UK cut itself not from neoliberalism but from European socialism.
@@swojnowski453 Brexit IS Neoliberalism! The likes of Rees-Mogg and Boris Johnson convinced a bunch of turkeys that Christmas was the answer to all their problems.
Oh my, the 2 political opportunists having this love affair with private equity isn’t entirely surprising. The goal is to keep stripping Britain and selling its used parts. I’m sorry I just can’t wait for Rachel and keir to leave, because they are the worst for labour at this point, maybe add in Wes streeting too, who’s also fine with the concept of privatized healthcare like in the US.
These guys basically own US politics, healthcare and arms industry.
Need i say more.
A National Investment Bank along the lines proposed by Corbyn's Labour would be a great idea, or something not unlike Japan's Post Office bank.
When Labour were last in power involving the private sector in hospitals, for example, resulted in huge debt for hospitals and poorly built hospitals, Repeating that is a bad idea. The government would do better listening to you, Richard, rather than advisors employed by private equity firms. Taking money off pensioners to give to provide cash for private equity funds is not something that a party even slightly left of centre should do.
answers are not to be found in politics, which are owned and run by those with the most money. it's morally sick
Because they are tories who believe that income support, aka benefits, are a blight.
Pe is essentially a hostile takeover without actually paing for it.