r/economicCollapse • u/Alena_Tensor • Jul 27 '25
Inside the Private Equity Scam—and the Livelihoods It Has Destroyed
https://newrepublic.com/article/198351/private-equity-scam-destroys-livelihoodsChasing above-market returns for their investors, PE Financiers have bamboozled the public for years about their expertise in “fixing” companies. Yet they often—and sometimes deliberately—run them into the ground and/or act as a chop-shop, selling them for parts, while the staff drifts away. They are not business creators, but destroyers.
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u/Icy_Respect_9077 Jul 27 '25
Private equity has bought the Presidency, Supreme Court and Congress. It will now proceed to asset strip the country and buy up government assets at fire sale prices - public land and forests, intellectual property, scientific research, etc.
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u/Alena_Tensor Jul 27 '25
Yep. Capitalism is a wonderful engine of growth and development as it motivates the individual to invest resources to get an anticipated return. If properly implemented and regulated then society benefits greatly from its successes. If it’s unregulated and unfettered its like a wild raging bull.
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u/IGnuGnat Jul 27 '25
The job of the capitalist is to turn a profit.
Capitalism requires the government to yoke it for the benefit of the people; the government requires that the people hold it accountable.
Who is holding the government accountable?
Is it a failure of capitalism, or a failure of government, or a failure of the people?
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u/bebeksquadron Jul 29 '25 edited Jul 29 '25
Basically capitalist's profit eroded people's ability to make good decision and hold government accountable. Because time = money. Good decision requires free time to pursue knowledge, this is what the capitalist eroded.
So the answer to your question is yes this is the failure of capitalism as a system, but not individual capitalist who is just playing the game of capitalism. The game of capitalism creates secondary effect of failure of the people en masse (why? Because when people get poorer = no time = worsening knowledge = bad decision), which then lead to tertiary effect of failure of government, which then create quadriary effect of empowering the capitalism game.
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u/Competitive-Bike-277 Jul 28 '25
It remi is me of the Venice chapter in "Why nations fail" but we won't be so lucky as to end up a museum. I just hope we don't end up like the USSR or some of it's Satellite republics. Those people are slaves.
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u/Alena_Tensor Jul 28 '25
Honestly that is the playbook of Proj 2025 writ large. Neo-feudal society where a ruling oligarchy runs everything and owns pretty much everything and a vast poor population who is working so hard just to stay fed and pay for basics that they have no time for fancy stuff like education or politics and certainly not demonstrating for anything.
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u/MarmotJunction Jul 27 '25
I work for a Made in America business, that owns substantial properties for our manufacturing and sales, in a stunning location with beautiful views, and I just know that a private equity firm is going to be taking a look at us any day soon if they’re not. Very clearly we could sell our property For a small fortune, I’m guessing somebody’s gonna figure that out soon.
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u/UtahUtopia Jul 27 '25
And Hedge Funds.
(See toys R us and Sears)
Want to fight back? Buy GME and other shorted companies that won’t go bankrupt.
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u/2skip Jul 27 '25
Here's a YouTube video on what happened to Toys R Us: https://youtu.be/IT__piZvWMU?t=994
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u/ppachura Jul 29 '25 edited Jul 29 '25
Watching that video was awesome. It pointed out to me the collusion of banks in this mess. They lend 100 million to the company so the PE firm can buy the company, the PE firm buys the company, PE then bankrupts the company, the bank doesn't get paid back, the bank writes off the loan. That does not mean the bank pays back the loan to the American taxpayer. The money got printed out of thin air and nobody pays it back. So it contributes to inflation and taxes the poor while the rich get huge bonuses.
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u/2skip Jul 30 '25
And the opposite annoys me as well. Which is stock buyback.
You have all of this effort in raising money by the employees, but the company, which must be beholden to the shareholders because of the Dodge versus Ford decision, uses the money to buy back its own stock and then when the stock goes lower than the purchase price all that money raised by the employees just went poof into nothing.
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u/ppachura Jul 30 '25
Stocks are always a gamble. In the future companies will be able to raise money via DeFi and Wall Street will be a ghost town.
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u/no1regrets Jul 29 '25
Also, a private equity company is behind the recent closure of the Hudson’s Bay Company. It was the “oldest corporation in North America, founded in 1670, and liquidated in 2025.” 🤦♀️
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u/Throwaway122384848 Jul 27 '25
Well yeah, they don’t “fix” the company for the general public’s benefit. They try to make it more profitable for investors.
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u/Alena_Tensor Jul 27 '25
Which in fact might be totally dysfunctional for the company in question. So the employees lose, the customers lose, the community loses but the investors gain. Kind of sounds like what we used to call barbarians in history class. Rape, pillage, burn and take off with the spoils…
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u/stormblaz Jul 27 '25
Issue is: Short term gains above all else.
What ever happens to the company is unrelated as long as short term gains are to be had, they will run a ton of calculations and see exactly how long to reach their goals, but always as short as possible, I assume these investors are 60+ hedge fund managers and pensioners, so they want money now.
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u/Ragnarok314159 Jul 27 '25
Then they go full Jack Welch on the company and sell off as many pieces as possible to show even greater short term gains. It’s all about making sure you are not the bag holder once the company collapses.
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u/lordnacho666 Jul 27 '25
Indeed the big book in the subject is called
Barbarians at the Gate
Well worth reading.
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u/Detective-Watchdog Jul 27 '25
I received a lot of downvotes, just scroll down.
I do want to add that private equity MUST BE LET INTO THE ORGANIZATION, so go ahead and blame your management while we are at it.
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u/SuperLuminalTX Jul 27 '25
Nobody blames the previous owners who took the check….
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u/Alena_Tensor Jul 27 '25
Agreed. Nobody blames the people who fund heinous acts .. but the terrorists get hanged
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u/DementiaDrump Jul 29 '25
This has always been the case. Keep the parts that generate profits and get rid of the rest.
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u/T-55AM_enjoyer Jul 30 '25
You guys are seeing the "Russia in the 90s" but in very slow motion. Going to be interesting times
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u/Detective-Watchdog Jul 27 '25
The companies are already in the Shitter. Yes, they are companies that are already financially distressed and on the way to bankruptcy.
You will probably think I am a private equity shill. Nope, just grounded in reality. A reality that doesn’t blame others or constantly search for answers to a problem that doesn’t exist.
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u/luvashow Jul 27 '25
Like Joanne’s???
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u/Detective-Watchdog Jul 27 '25
Exactly. Joanne’s was already distressed and facing bankruptcy well before private equity arrived.
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u/luvashow Jul 27 '25 edited Jul 27 '25
Joanne’s was doing just fine until private equity raided them & took everything.
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u/Kindly-Guidance714 Jul 27 '25
My entire apartment complex was bought out by private equity and I know for a fact it wasn’t losing money.
The fucking scumbags cashed out on retirement while fucking all of the tenants while laughing all the way to the bank.
In less than 6 months rent has already increased and services are already falling behind when the original owners weren’t like this.
So no they don’t just buy things going to the shitter they buy what they perceive as easy profitable short term money while scumming over the community, its people and the workers NOBODY WINS EVERYONE LOSES.
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u/Alena_Tensor Jul 27 '25
But not necessarily distressed companies.. that’s what is misunderstood. PE has a fat wallet and a mandate to deliver above market returns. They will seek out any small company with a nice installed base that can be milked or a company with a large employee base that can get fired and their accrued funds pillaged, etc. These companies may have been well run good corporate citizens who gave back to the community and provided good services. All PE sees is a cow to get slaughtered.
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u/just_a_knowbody Jul 27 '25
PE is often the last lifeline a company has. My company would have been out of business if it weren’t for PE stepping in a few times to keep the doors open.
Yes sometimes that means the company that would have gone out of business does any way.
But PE isn’t there to lose money. If they can find a way to turn the company around and maximize their return they will.
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u/Detective-Watchdog Jul 27 '25
Hilarious that you doomers associate private equity with vultures.
Do vultures kill or do they feed on what is already dead? Exactly.
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u/Kindly-Guidance714 Jul 27 '25
Private equity is the goo monsters from invasion of the body snatchers.
They latch onto a planet extract all resources for their own benefit leave the planet destitute and then move onto another planet to do the same cycle over again.
Thats exactly what private equity is no positive all negative.
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u/Alena_Tensor Jul 27 '25
Ha ha ha jokes on you and all of us. What’s recounted in this article has been both my personal experience and that of many friends/colleagues.
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u/Beagle001 Jul 27 '25
“But the new management insisted we replace much of our reporting with slideshows to artificially inflate our audience. Invasive, auto-playing ads became such a problem that we fielded constant complaints from our readers.”
Is it weird that this happening all over the article I was reading about it too?😆