Nickel and Dimed: On (Not) Getting By In America [Excellent read, by the way]
First off, let's dispense with the bullshit, "private equity" used to be called leveraged buyout (LBO), but the industry got such a bad reputation for gutting the U.S. that they rebranded themselves so that the Lost Boys of the Idiocracy wouldn't look as stupid for defending the industry. Secondly, need I state the always-omitted most obvious fact that public employees would be the last ones to say anything about outsourcing private sector employees, since (Federal) public jobs can't be legally outsourced in the first place - duh!!! In other words, you are far more likely to get a visceral opinion on LBO outsourcers by asking the guy wearing the orange bib at Home Depot, who took a 60% reduction in pay and benefits from his job in the factory v.s. asking someone who is fat and happy working for the Federal Government knowing their job can't be outsourced. Now that I think about it though, that's the most likely reason for anyone wanting Mitt Romney as President - he is an expert at outsourcing so now he can outsource what's left of the middle class i.e. the public sector workers. Brilliant ! And if the millions of Americans in the private sector who have already been outsourced are not the most vociferous critics, perhaps it's because they are too busy subsisting and don't have the time to write a blog or otherwise blow smoke up everyone's ass (I know, mea too culpa). Let's face it, that "unsuccessful" part of America is largely hidden from world view. We don't want potential immigrants to realize that the "American Dream" is really just a lottery, after all...
Having not grown up in the U.S., I can tell you how it works in the entire world outside the U.S. Instead of getting rid of industries, governments are actually focused on gaining new industries - that's right it's a new concept. How do these apologists for Private Equity think that Asian nations gained so many U.S. industries? Hint: it wasn't because they wanted to be American. It was because they were not focused on quarterly earnings statements and because they didn't want an entire nation of Starbucks baristas. Or go ask the Germans what it took for the past 20 years as they held onto their manufacturing base even as every Anglo-American economist excoriated successive German Governments for not taking the easy path and adopting the 'American Model'. In the end Germany is already vindicated for making the effort (and yes less profit in the interim) to become more competitive, focusing on high-end manufacturing and otherwise preserving their middle class.
Globalization Has Already Failed the Majority on This Planet AND The Majority in the U.S.
Globalization has already turned the U.S. economy into a lottery and permanently offshored hundreds of entire industries, yet apologists for the Globalized Ponzi Model are still debating whether or not that is a bad thing. So let me put this whole discussion in a way that any Simple Jack can understand - it's only "ok" when they outsource everyone else's job, but when they come for your job, suddenly it's not such a great fucking idea anymore. Apparently some people have to find out the hard way...
The End Game For the Marketing Based Economy - No One Needs a Middle Man
Ironically, the best recent example of why not to take outsourcing to its maximum limit comes from none other than ZeroHedge. As one would expect, it was only a matter of time before the Chinese manufacturers cloned American designed products (i.e. created a parallel assembly line) and started selling them directly to consumers, bypassing the middleman e.g. Apple and other shell marketing companies. After all, the foreign companies have the intellectual property, they have the manufacturing know-how, what else do they need - a brand logo? Stay tuned for future events when consumers buy everything directly from foreign suppliers, causing U.S. corporate profits to collapse like a cheap tent.
The Angel Heart School of Ayn Rand Management [Revisited]
For those outside the U.S. I have no doubt it's impossible to reconcile the poverty statistics already baked into reality and the continuing denialism of the U.S. Corporate Class not wanting to make the connection between mass outsourcing and the nascent jobless depression. And I can tell you that it all boils down to latent guilt that this generation can't bring itself to admit that they auctioned off their own country - they did it. So they will continue to make up excuses and reinvent all new Voodoo Economic theories until the last day when Louis Cypher (aka. reality) shows up and forces them to own up to this overwhelming catastrophe.
P.S. I'll have an MBA and a coke to go - keep the change...
Lastly, as far as private equity aka. leveraged buyouts go, like any leveraged investment they work great until they don't work at all. In other words as long as the economy is expanding and cash flows are staying the same or growing then the model works. However, as soon as the economy stalls out, these will be the first companies to fail because they have high contractually fixed interest costs and therefore once cash flows decline below interest costs (or usually before, when debt covenants are breached), then they are bankrupt. Again, for the greedbots investing in these things (debt side or equity) it's all about timing and incentives - and suffice to say, no one is getting paid to think long-term. Or put it another way, I guess the ADHD Twitter generation defending the always "efficient allocation of capital" has already forgotten 2008 when global investors were gobbling up Goldman's subprime CDO's which only had the shelf-life of about 3 months before they imploded - now that's high finance !
The End Game For the Marketing Based Economy - No One Needs a Middle Man
Ironically, the best recent example of why not to take outsourcing to its maximum limit comes from none other than ZeroHedge. As one would expect, it was only a matter of time before the Chinese manufacturers cloned American designed products (i.e. created a parallel assembly line) and started selling them directly to consumers, bypassing the middleman e.g. Apple and other shell marketing companies. After all, the foreign companies have the intellectual property, they have the manufacturing know-how, what else do they need - a brand logo? Stay tuned for future events when consumers buy everything directly from foreign suppliers, causing U.S. corporate profits to collapse like a cheap tent.
The Angel Heart School of Ayn Rand Management [Revisited]
For those outside the U.S. I have no doubt it's impossible to reconcile the poverty statistics already baked into reality and the continuing denialism of the U.S. Corporate Class not wanting to make the connection between mass outsourcing and the nascent jobless depression. And I can tell you that it all boils down to latent guilt that this generation can't bring itself to admit that they auctioned off their own country - they did it. So they will continue to make up excuses and reinvent all new Voodoo Economic theories until the last day when Louis Cypher (aka. reality) shows up and forces them to own up to this overwhelming catastrophe.
P.S. I'll have an MBA and a coke to go - keep the change...
Lastly, as far as private equity aka. leveraged buyouts go, like any leveraged investment they work great until they don't work at all. In other words as long as the economy is expanding and cash flows are staying the same or growing then the model works. However, as soon as the economy stalls out, these will be the first companies to fail because they have high contractually fixed interest costs and therefore once cash flows decline below interest costs (or usually before, when debt covenants are breached), then they are bankrupt. Again, for the greedbots investing in these things (debt side or equity) it's all about timing and incentives - and suffice to say, no one is getting paid to think long-term. Or put it another way, I guess the ADHD Twitter generation defending the always "efficient allocation of capital" has already forgotten 2008 when global investors were gobbling up Goldman's subprime CDO's which only had the shelf-life of about 3 months before they imploded - now that's high finance !
