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.
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.
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.
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.
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.
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.
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...
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 😮
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.
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
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.
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.
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.
@@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.
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
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.
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.
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.
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.
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 ,
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.
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.
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.
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.
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.
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 ".
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.👍
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 😬
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.
*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.*
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.
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.
We can agree on this one Richard. The Leveraged Buy Out is a disgusting con job. If you are employed with such a company, get out and move on if you can or at least have a back up plan pls 🙏
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
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.
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.
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 ?
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
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.
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.
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.
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.
In his last mansion house speech, Jeremy Hunt stated that, if 5% of Default pensions went to private equity, it would raise £50 Billion per year for start up companies and the pension of an average earner will be £1000 per year better of in retirement. This is pure fiction for several reasons- 1) I have read the report and if anyone could tell me where this figure of an extra £1000 per year comes from please tell me. There is no mention of it in the report. 2) Most start ups fold within the first three years. Would you like to invest in an area where most of the companies you invest in will potentially go out of business within three years? 3) The report states that the private equity companies can charge an initial fee of up to 2%. This means that of the fifty Billion raised. 1 Billion will go to the private equity companies coffers. 4) If the outperform in one financial year the private equity firm is allowed to keep 20% of the excess returns. If the underperform the investor lives with the poor performance.
Hi Crox, carried interest (the 20% excess returns) doesn't work like that. The excess returns are based on the whole fund, cash returned to investors (which is what motivates selling the businesses quickly as Richard Murphy says), and usually after a hurdle rate of, say, 8%. So, if you invest £100 in a fund then the private equity firm starts to get a cut on excess returns only after returning your investment plus an 8% interest rate. Don't get me wrong - it's still a good deal for the PE firm.
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.
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. 👍
All these cons are made possible because a small percentage of people can create has much currency has they like with a few clicks of the keyboard. All the time the rest of us work all our lives and have very little to show for it in the end
Only central banks can create currency and which is government money. Private banks can only create money as credit. We saw during the GFC what happens when banks make bad loans, they loose their capital and go broke.
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.
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.
My take on Labours interest in Private Equity was they want to become a Private Equity firm but with a difference: By pooling local governments pension funds they can buy energy firms (and probably water and other utilities that Private Equity has typically favoured) then they will run them not for ultimate re-sale for a profit but for the returns they can make to fund those pension funds liabilities. As the government sets the price of energy, water etc., they can ensure the pension recipients (typically labour voting council workers, teachers etc.) get a good pension whatever the performance of the ‘pension fund’ as they can control the profits, by controlling the prices we pay for utilities. As evidence I note they’ve already said they’re pooling the pension funds, I also note that despite the highest energy prices in Europe, they’ve allowed yet another price increase.
I'm sure this will end in disaster for many thousands of public servants in retirement. You only have to see what Labour have done in continuing to push forward with SEZs and Freeports to realise how bad this is going to be for the vast majority of people in the long run.
surely is the reason politicians like private equity companies is when politicians stop being politicians, if they like money they could get a job in the private equity company and get paid a lot of money
It really isn't. My native Sweden is an excellent case in point. Arguably the strongest social democracy ever 50 years back, now failing in every imaginable way. Why? We allowed private capital to accumulate and concentrate to the point where they could simply dominate politics and wage incessant propaganda war to utterly brainwash the population. Capitalism works just fine. The problem is that it's destructive by design. It can't be reformed, only destroyed. And until the vast majority of us wake up to this fact, we'll keep heading ever further down the abyss.
Bernard Matthews Body Shop Casual Dining Cath Kidson Comet Debenhams Flybe Four Seasons Health Care Maplin Monarch Airlines Paperchase Poundworld Southern Cross Thames Water Toys R Us
Your question is why all the focus on 'private equity'. Well, if the simple reply is that the majority of modern politicians in this country want to enrich themselves by handing public contracts to avaricious private companies who are happy to fill "brown envelopes" ie: "poliitical donations" and who one day will employ them when they are ultimately voted out of office. It's been that way for donkey's years, and until the general public learns to treat all politicians as duplicitous crooks, it will persist.
My favourite example of how value is destroyed in this way is what happened to Maplin Electronics. 😢
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'm glad you emphasise the short-termism of private equity. Short-termism has been the bane of the British economy for decades
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 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
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.
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.
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.
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
Private equity has ripped apart New Zealand. Well severely damaged.
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.
Isn't this exactly what has happened to Thames Water? Value stripped out by private equity and the public left with the debt.
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...
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.
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.
Totally agree! Many great companies are destroyed by private equity.
I would say all
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 Uniparty believe in corporate power over the individual.
Neo-feudalism is the unspoken word
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
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.
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.
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.
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.
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
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!!!
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.
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.
Govt relying on private equity is like Superman fighting evil by outsourcing to mercenaries
*Starmer's Labour is the party of capital.*
Don't forget that the tories are a capitalist party through and through.
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.
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.
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.
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.
Indytruck Davy has us well informed about GB energy 🏴
All your valid points have been demostrated for over half century yet Labour still persist - WHY?
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.
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 ,
I don't usually agree with this channel, but I think he's got it on this
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.
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.
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.
Mr Murphy, thanks for the Education Sir.
Richard is missing the point. RACHEL IS AN ECONOMIST(with the truth) 😂
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 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.
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.
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 😢
Private Equity is targeting the taxpayer….stripping their public services and leaving the debt
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.👍
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.
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
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 😬
Thanks for another clear and concise explanation.
very eye opening - thank you
Thank you for disclosing this information
- vital information which our media withholds from us
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.
*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.
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.
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.
Because they've taken massive private business/corporate donations onboard?
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.
We can agree on this one Richard. The Leveraged Buy Out is a disgusting con job. If you are employed with such a company, get out and move on if you can or at least have a back up plan pls 🙏
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.
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.
Well said! Clearly and cogently explained.
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.
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.
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 ?
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
Which is why we need stakeholder capitalism
That bird flew years ago.
Private Equity companies own care homes? or Care Worker provider companies?
Is this why successive govts wont sort out the care sector?
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.
These guys basically own US politics, healthcare and arms industry.
Need i say more.
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.
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.
Every time I hear about private equity, it sounds more and more like it should be illegal.
really succinct explanation and at the same time very ominous, what do we do about it Richard. Guide us!
Greed, the gift that keeps on giving….
private equity is the problem.
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.
Sounds a bit like a type of ponzi scheme
Labour continue to disappoint.
All because Labour are scared to simplify/update the UKs tax system to reflect that public services cost real money.
In his last mansion house speech, Jeremy Hunt stated that, if 5% of Default pensions went to private equity, it would raise £50 Billion per year for start up companies and the pension of an average earner will be £1000 per year better of in retirement. This is pure fiction for several reasons-
1) I have read the report and if anyone could tell me where this figure of an extra £1000 per year comes from please tell me. There is no mention of it in the report.
2) Most start ups fold within the first three years. Would you like to invest in an area where most of the companies you invest in will potentially go out of business within three years?
3) The report states that the private equity companies can charge an initial fee of up to 2%. This means that of the fifty Billion raised. 1 Billion will go to the private equity companies coffers.
4) If the outperform in one financial year the private equity firm is allowed to keep 20% of the excess returns. If the underperform the investor lives with the poor performance.
Hi Crox, carried interest (the 20% excess returns) doesn't work like that. The excess returns are based on the whole fund, cash returned to investors (which is what motivates selling the businesses quickly as Richard Murphy says), and usually after a hurdle rate of, say, 8%. So, if you invest £100 in a fund then the private equity firm starts to get a cut on excess returns only after returning your investment plus an 8% interest rate. Don't get me wrong - it's still a good deal for the PE firm.
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.
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. 👍
All these cons are made possible because a small percentage of people can create has much currency has they like with a few clicks of the keyboard. All the time the rest of us work all our lives and have very little to show for it in the end
As many clicks as they like. And if they overdo it we have to pick up the tab and ex politicians become senior bankers.
Only central banks can create currency and which is government money. Private banks can only create money as credit. We saw during the GFC what happens when banks make bad loans, they loose their capital and go broke.
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.
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.
Back handers..hmmmm Atlas Shrugged perhaps 🤔
answers are not to be found in politics, which are owned and run by those with the most money. it's morally sick
My take on Labours interest in Private Equity was they want to become a Private Equity firm but with a difference: By pooling local governments pension funds they can buy energy firms (and probably water and other utilities that Private Equity has typically favoured) then they will run them not for ultimate re-sale for a profit but for the returns they can make to fund those pension funds liabilities. As the government sets the price of energy, water etc., they can ensure the pension recipients (typically labour voting council workers, teachers etc.) get a good pension whatever the performance of the ‘pension fund’ as they can control the profits, by controlling the prices we pay for utilities. As evidence I note they’ve already said they’re pooling the pension funds, I also note that despite the highest energy prices in Europe, they’ve allowed yet another price increase.
I'm sure this will end in disaster for many thousands of public servants in retirement. You only have to see what Labour have done in continuing to push forward with SEZs and Freeports to realise how bad this is going to be for the vast majority of people in the long run.
Ah, ain’t capitalism grand…😐
surely is the reason politicians like private equity companies is when politicians stop being politicians, if they like money they could get a job in the private equity company and get paid a lot of money
Capitalism is fine so long as it's strictly regulated. It's good to make a tidy profit, but not at the expense or exploitation of your workers
It really isn't. My native Sweden is an excellent case in point. Arguably the strongest social democracy ever 50 years back, now failing in every imaginable way. Why? We allowed private capital to accumulate and concentrate to the point where they could simply dominate politics and wage incessant propaganda war to utterly brainwash the population.
Capitalism works just fine. The problem is that it's destructive by design. It can't be reformed, only destroyed. And until the vast majority of us wake up to this fact, we'll keep heading ever further down the abyss.
Bernard Matthews
Body Shop
Casual Dining
Cath Kidson
Comet
Debenhams
Flybe
Four Seasons Health Care
Maplin
Monarch Airlines
Paperchase
Poundworld
Southern Cross
Thames Water
Toys R Us
What is the definition of "believe" in use here?
Your question is why all the focus on 'private equity'. Well, if the simple reply is that the majority of modern politicians in this country want to enrich themselves by handing public contracts to avaricious private companies who are happy to fill "brown envelopes" ie: "poliitical donations" and who one day will employ them when they are ultimately voted out of office. It's been that way for donkey's years, and until the general public learns to treat all politicians as duplicitous crooks, it will persist.
Poor blighty!