As I have mentioned before, this blog relies a bit more than I’d like on the Financial Times because its writers have a greater understanding of the inner workings of the financial markets and take a jaundiced view of recent developments. One has to wonder if the two traits are linked: if you have a […]
Read more...Unlike its US counterparts, the Financial Times has consistently been on top of the various unsavory elements of the credit market bubble: the near disappearance of risk premia, the growth of leverage on leverage, the lack of investor sophistication. A piece by John Plender does a very good job of connecting some of the dots […]
Read more...One news items that hasn’t gotten much press attention is the effort to close a loophole in the tax code by which the “carried interest” of private equity professionals, which is labor income, gets capital gains treatment. Moreover, the funds are often able to get their regular management fee the same favorable tax treatment as […]
Read more...Although it’s the Dow’s new highs that get the headlines, the really speculative action is taking place in the debt markets. As we have discussed in past posts, lenders and bondholders have abandoned their customary caution and are accepting yields that many feel are inadequate for the risks involved, and are also waiving customary covenants, […]
Read more...Bernanke normally adopts a measured tone and, as befits someone whose words can move markets, takes great care not to dwell too heavily on bad news. So it was suprising to see him issue a fairly pointed statement on risks to the banking system. His remarks on the perils of private equity loans, when taken […]
Read more...It’s quite remarkable how indifferent to bad economic data keeps coming in and the markets keep shrugging it off. And what is of particular concern, if you are the worrying sort, isn’t the peppy equity markets (that’s for the optimistic types anyhow), but the near-total indifference to risk in the credit markets. Aside from a […]
Read more...It’s curious, and telling, that this story, “Union in move to halt Blackstone IPO,” appears as a headline story at this hour for the Financial Times (meaning it will probably be featured in the news summary in the print edition) yet has no counterpart at the Wall Street Journal or New York Times websites. The […]
Read more...The Wall Street Journal’s Deal Journal tells us that former Comptroller of the Currency and later Bankers Trust Vice Chairman Eugene Ludwig is forming a (target size) $1 billion private equity fund to acquire banks. Now the bit the WSJ doesn’t seem to know is that Ludwig has been looking to form a fund in […]
Read more...You seldom hear language like this from anyone in the deal community, particularly a borrower. But Steve Rattner, head of Quadrangle Partners, sees himself as not just your average LBO maven, but also a thoughtful Democrat (he was expected to get a post in a Kerry administration). But also notice that his comments in a […]
Read more...The ever-informative John Dizard of the Financial Times inspects the theory that the US economy will be shored up by the spending of LBO proceeds and finds it wanting: There’s a thought in the market that while the Wal-Mart consumer has been hit by the weaker housing market, the economy will be bailed out by […]
Read more...An excellent article Thursday in the Financial Times, “In the new liquidity factories, buyers must still beware,” by Mohamed El-Erian, the CEO of Harvard Management Company. He explains that a great deal of the liquidity in the markets is created not by the monetary authorities, but by the participants themselves, and works through a simple […]
Read more...Apologies for a light day; some family demands took precedence. Hope to have a more normal series tomorrow. A item in today’s Financial Times, “Unions vow to fight the ‘cancer’ of hedge funds,” may seem to be old news, labor versus capital, but there are some new elements in this story. First, the unions have […]
Read more...In the post above, we discussed how hedge funds’ desire to play financial games like bankruptcy contests by their own rules is backfiring. Not only are they failing to get their way, but their efforts to win special treatment are confirming an increasingly dim view the public has of them. In Friday’s Financial Times, Gillian […]
Read more...Forgive the Financial-Times-heavy series of posts today, but it seems to work out once a week or so that the FT has a lot of good material that isn’t replicated in the US press. John Kay’s comment on private equity funds in Tuesday’s FT is skeptical without being doctrinaire. His big question is whether the […]
Read more...Private equity funds are under fire these days. Their very size and success is starting to work to their disadvantage as the great unwashed public becomes increasingly uncomfortable with their concentration of power. Witness the fact that, in the fight to acquire Texas utility TXU, suitors Texas Pacific and KKR made overtures to environmental groups […]
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