Wait, what? Why me? I guess I argued with you another time or something, it’s gone down the memory hole I’m afraid. Pretty weird that it can’t figure out what you mean there though. For the record, double R, double S, and a minimum of Es.
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While we’re hating Chrome, they got rid of the “Close Other Tabs” context menu option, which I used to use constantly.
It will be a tech bro like Zuck.
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You’re actually too smart to understand how you can buy a company with its own debt. You can’t, it doesn’t make sense, and it doesn’t happen. People are just lying about how things work to make a better story. What actually happens, and what actually makes perfect sense, is this:
- There’s a business worth $100M on a debt-free basis.
- A private equity fund has $30M to invest.
- The private equity fund sets up an LLC to make the investment and contributes $30M to it.
- The LLC then borrows $70M from a bank, and buys the business.
This is the same as how you buy a house, except your house isn’t owned by an LLC. The hook for the made-up stories is that for various reasons (tax, finance, etc.), you might choose to do the same thing like this:
- Business is worth $100M and has no debt.
- Business borrows $70M, and then distributes the debt proceeds to the shareholders. The business is still worth $100M, but all of its stock is now only worth $30M, because it’s behind $70M of debt.
- The LLC buys the stock for $30M.
To see how this is the same, imagine that when you’re buying a house, instead of going to the bank and borrowing 80%, and adding it to your own 20% to make up the purchase price, the seller took out a mortgage, put the cash in their pocket, and then you agreed to pay it off. You wouldn’t do it that way for many reasons, but if you did, everyone would end up with the right amount of dollars in their pocket.
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On it.
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TrollyWantACracker is my Christian name
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https://podcasts.apple.com/us/podcast/the-ezra-klein-show/id1081584611?i=1000455572277
This latest episode of Ezra Klein’s podcast is spectacular. He has this long, deep conversation with Edward Norton that is ostensibly about EN’s movie, Motherless Brooklyn, but it touches on the mind, power, the struggle between human interests and corporate interests, and several other topics that have really captured my interests and thinking lately. I found it fairly profound (in a personal sense) because it helped bring clarity to a lot of ideas that have been slowly coalescing in my mind over the last couple of years, in particular, how the pursuit of and desire for material wealth is such a trap, but is so pervasive throughout our society and embedded deep within our cultural and moral values. I highly recommend giving this episode a listen.
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But what I can’t do is pay myself huge fees salary and bonuses for running my house, transfer all of the value in the house to my personal bank account then walk away scott free when there’s no more money to pay the mortgage.
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What Bob is leaving out:
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In a $100 million PE deal, the PE partners can easily have $500k or less of their own money in the deal.
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The PE partners charge management fees and financing fees and whatever else they can dream up, which goes straight into their pockets, often far exceeding their initial investment.
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Now they have a heads I win tails you lose situation - they already got their money out. To flip the company - the only reasonable exit story - they have to grow EBITDA. They of course do this by firing people and slashing investment. We have an obvious incentive problem here.
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When it works, their “carried interest,” upon which they were not taxed at the outset even though it clearly is a thing of value, is taxed at long term capital gains rates even though the PE Manager never had any actual capital at risk with respect to their carried interest!
Now, I know the response - LPs give them money and often the returns are good, so all is well, who really gets hurt, the lenders lose money on dumb deals, etc. That’s all well and good except for the real people getting fired part.
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Yeah. It totally destroys value which is the total opposite of the one thing capitalism is supposed to be good at. Like toys r us, a decent business, not flashy but consistently profitable with little to no debt, probably would’ve kept chugging along indefinitely making a few % return and keeping tens of thousands employed. Now gone.
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We are different people. He is the funny one.
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I like this article as an example of responsible science journalism. That the author sought commentary from a relevant but uninvolved peer to the authors of the work in question that includes some alternative hypotheses and interpretations of the results along with important caveats is, dare I say, quite conscientious and regrettably rare.
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Interesting article explaining why we’re probably all fucked, and if we’re not and somehow get out of this era intact, maybe future generations will think of US capitalism the same way boomers think of Soviet/Chinese/Cuban socialism.
https://twitter.com/drewmagary/status/1189644249010192384?s=21
Magary quit Deadspin this morning too. I wonder if all the writers are gonna go separate ways or stick together.
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Because when you think of Nashville, you think of…Bob Saget?
https://twitter.com/cmtsquares/status/1188802599312601091?s=21
In her radio show, Dr Laura Schlesinger said that, as an observant Orthodox Jew, homosexuality is an abomination according to Leviticus 18:22, and cannot be condoned under any circumstance.
The following response is an open letter to Dr. Laura, penned by a US resident, which was posted on the Internet. It’s funny, as well as informative:
Dear Dr. Laura:
Thank you for doing so much to educate people regarding God’s Law. I have learned a great deal from your show, and try to share that knowledge with as many people as I can. When someone tries to defend the homosexual lifestyle, for example, I simply remind them that Leviticus 18:22 clearly states it to be an abomination … End of debate.
I do need some advice from you, however, regarding some other elements of God’s Laws and how to follow them.
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Leviticus 25:44 states that I may possess slaves, both male and female, provided they are purchased from neighbouring nations.
A friend of mine claims that this applies to Mexicans, but not Canadians. Can you clarify? Why can’t I own Canadians? -
I would like to sell my daughter into slavery, as sanctioned in Exodus 21:7. In this day and age, what do you think would be a fair price for her?
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I know that I am allowed no contact with a woman while she is in her period of Menstrual uncleanliness - Lev.15: 19-24.
The problem is how do I tell? I have tried asking, but most women take offence. -
When I burn a bull on the altar as a sacrifice, I know it creates a pleasing odour for the Lord - Lev.1:9.
The problem is my neighbours. They claim the odour is not pleasing to them. Should I smite them? -
I have a neighbour who insists on working on the Sabbath. Exodus 35:2 clearly states he should be put to death.
Am I morally obligated to kill him myself, or should I ask the police to do it? -
A friend of mine feels that even though eating shellfish is an abomination, Lev. 11:10, it is a lesser abomination than homosexuality. I don’t agree. Can you settle this? Are there ‘degrees’ of abomination?
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Lev. 21:20 states that I may not approach the altar of God if I have a defect in my sight. I have to admit that I wear reading glasses. Does my vision have to be 20/20, or is there some wiggle-room here?
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Most of my male friends get their hair trimmed, including the hair around their temples, even though this is expressly forbidden by Lev. 19:27. How should they die?
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I know from Lev. 11:6-8 that touching the skin of a dead pig makes me unclean, but may I still play football if I wear gloves?
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My uncle has a farm. He violates Lev.19:19 by planting two different crops in the same field, as does his wife by wearing garments made of two different kinds of thread (cotton/polyester blend). He also tends to curse and blaspheme a lot. Is it really necessary that we go to all the trouble of getting the whole town together to stone them? Lev.24:10-16. Couldn’t we just burn them to death at a private family affair, like we do with people who sleep with their in-laws? (Lev. 20:14)
I know you have studied these things extensively and thus enjoy considerable expertise in such matters, so I’m confident you can help.
Thank you again for reminding us that God’s word is eternal and unchanging.
Your adoring fan.
James M. Kauffman, Ed.D. Professor Emeritus, Dept. Of Curriculum, Instruction, and Special Education University of Virginia
(It would be a damn shame if we couldn’t own a Canadian)
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