From Marie Duggan‘s “Diamond Turning in the Age of Impatient Finance” (Dollars&Sense, November 2018): “The 26-year-old [Don Brehm] made the rounds, looking for a community banker who would take a chance on his character, given that he had no assets to use as collateral (p. 15).”

“Although Brehm met with many obstacles and had to sell his company twice and give up another, he still started off an amazing company at such a young age. When he started [Pneumo Precision], he was only six years older than I am now. I wonder if the same opportunities are available to young engineers today as there were for Don Brehm in 1962.

chloe labrie

From William Lazonick’s Profits Without Prosperity, Harvard Business Review, September 2014: ”
“Given incentives to maximize shareholder value and meet Wall Street’s expectations for ever higher quarterly earnings per share (EPS), top exectuvies turned to massive stock repurchases which helped them “manage” stock prices. The result: Trillions of dollars that could have been spent on innovation and job creation in the US economy over the past three decades have instead been used to buy back shares for what is effectively stock-price manipulation.”

Manufacturing jobs are being lost because the firm’s own executives would rather put trillions of dollars into the stock market than their own equipment or their own employees, leading to less innovation and job loss.

jesse lebarre

From Eileen Appelbaum and Rosemary Batt (2014). Private Equity at Work: “Dividend recapitalizations are controversial, even among PE investors. Traditionally, private equity owners wait for an exit evene–such as a sale of the business or a return to public trading on a stock exchange–before generating a return. Not only do dividend recaps undermine the argument that PE returns are due to improvements in company performance, but in several instances PE firms have been accused by creditors of bleeding out the company and causing it to become insolvent.”

Crony capitalism at its finest.

Jackson brannen

From Eileen Appelbaum and Rosemary Batt (2014). Private Equity at Work: “the lack of publicly available comprehensive data on the financial activities of PE funds makes it impossible to know the biases that are built into the data sets used in analysis of the true returns to PE investments.”

The big companies should be transparent about their profits because it affects everyone else in the economy. The lack of transparency allows these businesses to manipulate their profits under the radar without any consequences.

ack to home page.

Lindsey ljungberg

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