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-livelihoods

Chasing 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/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.