4 ms·

This, to me, is somewhat funny in the "that train is going to hit that car.." sense. whenever there's an exploit used by non state actors in an adversarial sen

by xcasex 11y ago

This, to me, is somewhat funny in the "that train is going to hit that car.." sense. whenever there's an exploit used by non state actors in an adversarial sense, there's goverment pressure to cyber this, cyber that, banhammer down, on the technology sector. But several times a year we get to read about predatory behaviour by financial institutions. i'd even venture to say borderline illegal considering the presedences. i digress, but there's simply low enough of a risk of the goverment getting involved that this type of crime is not only "worth it" but also shows how deeply embedded the finance sector is in the pockets of politicians the world over.

arethuza 11y ago
What was "borderline illegal" about it - from what I can see they used a few tricks that are fairly standard in the private equity world and that any "sophisticated" buyers of the stock should have been able to spot if they were any good at their jobs. Of course, the PE company comes across as sharks - but all PE companies are sharks - that's what they do!
- yvdriess 11y ago
  You are being a bit hard on sharks here, they provide a valuable service to the ecosystem.
  - arethuza 11y ago
    Perhaps you could perhaps argue that PE companies play the same role in the commercial world as scavengers do in ecosystems - rip up the dead or nearly dead and try and extract value from it. Not something that I could do, or even admire, but capitalism is much about failure as it is about success.
    - fireflash38 11y ago
      Isn't that the problem here? It seems like Dick Smith was already well on the way to failure, but Anchorage comes in and props it up like it's succeeding enough to cash in on a stock offering.
  - kelvin0 11y ago
    Care to enlighten a neophyte about what the sharks bring to the financial ecosystem in this case?
    - arethuza 11y ago
      Woolworths were presumably happy to be rid of Dick Smith to the PE company - if they thought Dick Smith had a bright future then why did they sell it? [Reminds me of Liars Poker and bonds...]
      - threeseed 11y ago
        Dick Smith could have been wildly profitable and they still would've sold it. It's all to do with focus and Woolworth's core business is not consumer electronics. It's supermarkets. And their core business is being decimated by their competitors (Coles/Aldi) and they are at real risk of not having a long term future if they don't focus. I am in the supermarket business so I know exactly how serious their situation is.
        eru 11y ago
        > Dick Smith could have been wildly profitable and they still would've sold it. Yes, but at a higher price. Or just spun it off and done an IPO for Dick Smith themselves.
    - zodiac 11y ago
      I think he's saying that actual sharks (with teeth and all) benefit ecosystems
    - PeterisP 11y ago
      In general, elimination of uncompetitive companies is one of the important tools that make the economy strong and prosperous. If some system (company, branch, industry niche, product line - in different scales) in the economy is weak and inefficient, then simply allowing it to operate as-is will be a constant drain on the society, and artificially supporting/subsidizing it will hurt the people/companies who are either doing the same thing better, or doing some different, better thing. On the other hand, ripping an inefficient company apart as the 'sharks' do - that is a way to reallocate all those resources (subsidiaries, employees, capital, buildings) to other places that will make a better use of them. The whole reason why large companies exist is because it's a way to get 2+2=5, so to speak. If some company achieves 2+2=3, then tearing it apart to get two 2's out of it is a valuable service for the financial ecosystem. Lack of such 'sharks' increases short-term stability, but at the cost of having a lot of resources tied up in inefficient places; this is considered one of major factors why planned/command economies tend to fall behind to market economies - simply because they tend to leave uncompetitive businesses alone instead of agressively dismantling them.

by xcasex 11y ago

arethuza 11y ago

What was "borderline illegal" about it - from what I can see they used a few tricks that are fairly standard in the private equity world and that any "sophisticated" buyers of the stock should have been able to spot if they were any good at their jobs. Of course, the PE company comes across as sharks - but all PE companies are sharks - that's what they do!

yvdriess 11y ago
You are being a bit hard on sharks here, they provide a valuable service to the ecosystem.
- arethuza 11y ago
  Perhaps you could perhaps argue that PE companies play the same role in the commercial world as scavengers do in ecosystems - rip up the dead or nearly dead and try and extract value from it. Not something that I could do, or even admire, but capitalism is much about failure as it is about success.
  - fireflash38 11y ago
    Isn't that the problem here? It seems like Dick Smith was already well on the way to failure, but Anchorage comes in and props it up like it's succeeding enough to cash in on a stock offering.
- kelvin0 11y ago
  Care to enlighten a neophyte about what the sharks bring to the financial ecosystem in this case?
  - arethuza 11y ago
    Woolworths were presumably happy to be rid of Dick Smith to the PE company - if they thought Dick Smith had a bright future then why did they sell it? [Reminds me of Liars Poker and bonds...]
    - threeseed 11y ago
      Dick Smith could have been wildly profitable and they still would've sold it. It's all to do with focus and Woolworth's core business is not consumer electronics. It's supermarkets. And their core business is being decimated by their competitors (Coles/Aldi) and they are at real risk of not having a long term future if they don't focus. I am in the supermarket business so I know exactly how serious their situation is.
      - eru 11y ago
        > Dick Smith could have been wildly profitable and they still would've sold it. Yes, but at a higher price. Or just spun it off and done an IPO for Dick Smith themselves.
  - zodiac 11y ago
    I think he's saying that actual sharks (with teeth and all) benefit ecosystems
  - PeterisP 11y ago
    In general, elimination of uncompetitive companies is one of the important tools that make the economy strong and prosperous. If some system (company, branch, industry niche, product line - in different scales) in the economy is weak and inefficient, then simply allowing it to operate as-is will be a constant drain on the society, and artificially supporting/subsidizing it will hurt the people/companies who are either doing the same thing better, or doing some different, better thing. On the other hand, ripping an inefficient company apart as the 'sharks' do - that is a way to reallocate all those resources (subsidiaries, employees, capital, buildings) to other places that will make a better use of them. The whole reason why large companies exist is because it's a way to get 2+2=5, so to speak. If some company achieves 2+2=3, then tearing it apart to get two 2's out of it is a valuable service for the financial ecosystem. Lack of such 'sharks' increases short-term stability, but at the cost of having a lot of resources tied up in inefficient places; this is considered one of major factors why planned/command economies tend to fall behind to market economies - simply because they tend to leave uncompetitive businesses alone instead of agressively dismantling them.