4 ms·

Isn't this pretty much the definition of an ad hominem attack? Why not dissect the argument he's making instead?

btilly 16y ago
If you know what private equity is, you'd know that this destroys the fundamental assumption of the article that the person talking made money by creating value. No. The person talking made money by structuring deals that left him with profit, everyone else with risk, plenty of people unemployed, and the US government without tax revenue due to a silly tax loophole. As for the argument itself, it is reasonable when it applies to people who actually made money by creating value. But that set of rich people doesn't include the author of that piece.
- ryanwaggoner 16y ago
  Umm, do you know what private equity is? Last time I checked, private equity included any form of investment in private companies not traded on public exchanges. This would include venture capital, angel investment, growth capital, etc. I consider that to be creating value. And as for this specific firm, I can't find a ton of info on them, and I can't tell from your comments whether you know a lot about them specifically, or if you're lumping them in with all other private equity folks. I'd like to know more before assuming they're the "scum of the earth" and dismissing their argument.
  - btilly 16y ago
    You're right. There are different kinds of private equity. And some aren't nearly as bad as some of the others. If you want to know more about the author of this article, look at http://en.wikipedia.org/wiki/Ziad_K_Abdelnour http://en.wikipedia.org/wiki/Ziad_K_Abdelnour. His career has focused on investment banking, high yield bonds (nice name for junk bonds), and distressed debt (buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching). He learned the private equity business in the 80s, which he finished at Drexel. That was the heart of the junk bond disaster, it was the company that made Michael Milken famous. At Blackhawk Partners he has been focusing on distressed debt. In short, he doesn't look like the nice kind of private equity.
    - ryanwaggoner 16y ago
      To the contrary, I think that distressed debt is a great part of the private equity business. The process you describe as "buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching" is ridiculously valuable and necessary for a functioning economy. What's your preferred alternative to the problem of failing companies?
      - btilly 16y ago
        I agree that there is a necessary job there, but a lot of the problem they are "solving" is artificially created. You've got to look where they fit in the financial ecosystem. First one set of private equity folks come along, structure a deal, and leave a previously healthy company saddled with lots of debt. (Private equity folks make guaranteed money on the deal, everyone else bears risk.) If that company proves unable to handle it, the distressed debt folks come along, buy up the debt at a fraction of the price, take control of the company cheaply, then forgive much of the debt they bought. The now healthier company gets flipped back to the same private equity folks who ruined it in the first place who, as is their standard operating procedure, load it up with debt again. It is a magic cycle. Every iteration brings more pain and misery to the people working there, making the product worse, slowly bleeding the consumer base, but throwing off more profit for the private equity folks. And the sad thing is that the poor company didn't need to go through any of this. It started off fine and would be in better shape if the whole process hadn't ever started.
- tome 16y ago
  Why does anyone ever bother making a deal with a private equity firm then, if it leaves them in such a bad position?
  - btilly 16y ago
    The previous owners of the company get bought out for top dollar. In interviews years later, the owners come to regret it. But at the time it looks like a good idea.
muhfuhkuh 16y ago
I argued against it and took a shot at him, as is my wont. But, don't you see that his hiding behind people who _actually_ make things and/or provide product or service to the American people is craven and cowardly? He essentially gathers wealthy people's money and, by any means within or without the rule of law (if you dispute that, why would they tout their secrecy so proudly? For dramatic effect?), tries to get them more money. How is that at all "Google"? How is that even remotely the same as what we're doing here or what Brin or Woz or the Pizza shop does? Just because they are _in_ commodities TRADING doesn't mean they are down in the dirt. Their hands aren't the ones sooty at the end of the day. They are market manipulators, not distributors. Middle men. And, they justify their very existence in that rambling diatribe behind the apron of labor. It's disingenuous.

If you know what private equity is, you'd know that this destroys the fundamental assumption of the article that the person talking made money by creating value. No. The person talking made money by structuring deals that left him with profit, everyone else with risk, plenty of people unemployed, and the US government without tax revenue due to a silly tax loophole. As for the argument itself, it is reasonable when it applies to people who actually made money by creating value. But that set of rich people doesn't include the author of that piece.

ryanwaggoner 16y ago
Umm, do you know what private equity is? Last time I checked, private equity included any form of investment in private companies not traded on public exchanges. This would include venture capital, angel investment, growth capital, etc. I consider that to be creating value. And as for this specific firm, I can't find a ton of info on them, and I can't tell from your comments whether you know a lot about them specifically, or if you're lumping them in with all other private equity folks. I'd like to know more before assuming they're the "scum of the earth" and dismissing their argument.
- btilly 16y ago
  You're right. There are different kinds of private equity. And some aren't nearly as bad as some of the others. If you want to know more about the author of this article, look at http://en.wikipedia.org/wiki/Ziad_K_Abdelnour http://en.wikipedia.org/wiki/Ziad_K_Abdelnour. His career has focused on investment banking, high yield bonds (nice name for junk bonds), and distressed debt (buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching). He learned the private equity business in the 80s, which he finished at Drexel. That was the heart of the junk bond disaster, it was the company that made Michael Milken famous. At Blackhawk Partners he has been focusing on distressed debt. In short, he doesn't look like the nice kind of private equity.
  - ryanwaggoner 16y ago
    To the contrary, I think that distressed debt is a great part of the private equity business. The process you describe as "buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching" is ridiculously valuable and necessary for a functioning economy. What's your preferred alternative to the problem of failing companies?
    - btilly 16y ago
      I agree that there is a necessary job there, but a lot of the problem they are "solving" is artificially created. You've got to look where they fit in the financial ecosystem. First one set of private equity folks come along, structure a deal, and leave a previously healthy company saddled with lots of debt. (Private equity folks make guaranteed money on the deal, everyone else bears risk.) If that company proves unable to handle it, the distressed debt folks come along, buy up the debt at a fraction of the price, take control of the company cheaply, then forgive much of the debt they bought. The now healthier company gets flipped back to the same private equity folks who ruined it in the first place who, as is their standard operating procedure, load it up with debt again. It is a magic cycle. Every iteration brings more pain and misery to the people working there, making the product worse, slowly bleeding the consumer base, but throwing off more profit for the private equity folks. And the sad thing is that the poor company didn't need to go through any of this. It started off fine and would be in better shape if the whole process hadn't ever started.
tome 16y ago
Why does anyone ever bother making a deal with a private equity firm then, if it leaves them in such a bad position?
- btilly 16y ago
  The previous owners of the company get bought out for top dollar. In interviews years later, the owners come to regret it. But at the time it looks like a good idea.

muhfuhkuh 16y ago

I argued against it and took a shot at him, as is my wont. But, don't you see that his hiding behind people who _actually_ make things and/or provide product or service to the American people is craven and cowardly? He essentially gathers wealthy people's money and, by any means within or without the rule of law (if you dispute that, why would they tout their secrecy so proudly? For dramatic effect?), tries to get them more money. How is that at all "Google"? How is that even remotely the same as what we're doing here or what Brin or Woz or the Pizza shop does? Just because they are _in_ commodities TRADING doesn't mean they are down in the dirt. Their hands aren't the ones sooty at the end of the day. They are market manipulators, not distributors. Middle men. And, they justify their very existence in that rambling diatribe behind the apron of labor. It's disingenuous.