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Ben Chu

Ben Chu has been a leader writer at The Independent since 2004. Before that he worked at the paper on the comment desk, letters department and the personal finance pages. He studied history at Jesus College, Oxford between 1997 and 2000.

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Private equity virtuous? Think again

Posted by Ben Chu
  • Wednesday, 25 February 2009 at 02:41 pm

Bankers' bonuses are indefensible. The colossal fees of hedge fund managers look increasingly hard to justify. But at least private equity remains a beacon of capitalist remuneration virtue, doesn't it? Don't swashbuckling buy-out chiefs snaffle their lucrative rewards after several years, and depending on the performance of the businesses they take private?
           
I think this bubble of self-serving spin is punctured very nicely by Nassim Nicholas Taleb in the Financial Times today. The "Black Swan" author points out that: "Leveraged buy-out companies used the free option by borrowing heavily from the banks and taking monstrous risks: they get the upside, banks (hence we taxpayers) get the downside. These partnerships made fortunes in the past on deals that society will have to bail out. They too should have their past profits clawed back."
 

Comments

Swashbuckling is the right word
cantrell_65 wrote:
Wednesday, 25 February 2009 at 04:53 pm (UTC)
Maybe people will learn now that bankers and equity fund raisers are no more than pirates in suits out to plunder whenever and wherever they can. Next time you see a banker, visualise the black eye patch and metal hook for grabbing your money before you listen.