That is a good article, R3. And a good reminder of why people should be lucky Mitt isn't president. He and his kind were directly responsible for the economic crisis, and people think he would have been able to 'fix' things? Not bloody likely.
THE FOUR TRILLION DOLLAR HEDGE FUND BUYOUT ORGY OF 2006
Under Bush, with figures like White and Paulson at the Treasury, Wall Street has forgotten what productive investment in new plant and equipment even looks like. Millions of jobs have been lost to the runaway shop under the auspices of free trade swindles NAFTA, CAFTA, GATT, and WTO. Under the reign of these financial parasites, we have witnessed an unprecedented boom in leveraged buyout deals, where one group of corsairs used junk bonds to take over an existing company, often firing many of the employees, cutting the wages and increasing the hours of those who remain, introducing speedup, busting unions, terminating health care, selling off parts of the business, and leaving what is left groaning under the burden of crushing debt which has not added anything to technology or other capabilities, but has lined the pockets of Wall Street lawyers and investment bankers. These deals are a microcosm of what is wrong with US vulture capitalism today: paper wealth for a few gluttons of privilege is maximized, while jobs, wages, working conditions, and productive output in the real economy are mercilessly driven down. Leveraged buyouts and junk bonds need to be outlawed as a public menace. When Wall Street begs for aid in the coming months, don't forget that they were the ones who for years applauded every time American workers were fired by a leveraged buyout (LBO) pirate.
Since paper profits are no longer invested in anything productive, they flow into these leveraged buyout deals, often called private capital transactions. The peak of this activity came in 2006, when there were $4 trillion in mergers and acquisitions, with $1 trillion of straight leveraged buyout deals. About $500 billion of this frenzy came in December 2006, setting the stage for 2007 to become the crisis year it has now become. Every LBO or private equity or private capital deal means fewer jobs, lower wages, less buying power, and thus, most to the point, less ability to keep up with mortgage payments. This problem was escalated by the takeover of many of the subcontractors and parts suppliers of the auto industry by predator hedge funds during 2005-2006. It got even worse when battered Chrysler was sold by Daimler Benz to the Cerberus Fund, aptly named after the hound of hell. As the collapse and looting of auto rippled through the economy, the income flows on which the sustenance of the mortgage bubble depended were severely constricted, leading to the current panic.