Sunday, April 21, 2013

Economics, not Toones

This article gives some of the background of the deal. Blackstone buys Sea World and leverages $1.3B in debt. That means they really did not have the money to buy them, used their name to borrow $1.3 billion and then transferred the debt immediately to Sea World. Blackstone has no debt and Sea World has to cut, austerity for all. And then goes for public sale to cover that debt, promising dividends all the way. In the meantime the Blackstone group makes $500,000,000 for putting this together. net, that means the invested $1,000,000,000 and borrowed $1,300,000,000. They moved that debt immediately to the new company they bought and asked public investors to buy stock to fund that debt. and paid themselves $500,00,000 in management fees for coming up with the scheme. I wonder if investors will ever get their 3% dividends. So for putting up $1,000,000,000 Blackstone gets $1,800,000,000 profit, almost a 2--% margin from other people's money, promising to pay them back over time. Wow!

It must be nice to play with the money of others and not have a ton of risk. And if this fails, Blackstone still makes money as managers and consultants. It's good to be the king!

And oddly enough Blackstone backs the austerity plans of members of Congress (Simpson, Bowles, Ryan). Not saying debt is not a problem. It sure in the hell is, but when your basis for doing business is borrowing money and then selling things off to pay for it, making sure you take your percentage off the top of the sale, regardless of whether the sale makes sense or not--basically making money using someone else's money with little if any risk to your own pocketbook, you have to wonder whether that economic model ever has an end. The last guys to invest in Ponzi schemes always get burnt. Follow this through to the logical conclusion.

the government runs up debt by doing stupid things like not budgeting for our annual ecological disaster, appropriates unbudgeted emergency funds (at this point do not think about the $4,000,000,000,000 unbudgeted for Iraq and Afghanistan) has no real backing to pay for these debts and has to start selling off what was supposed to be a public trust. Little things like property and mineral rights in national parks. Eventually the debt gets to the point that the big traunche of money that is a surplus and is supposed to be kept sacred (Social security) gets to be sold in an attempt to cover irresponsible management, which does not affect the managers because they still keep their jobs and get bonuses and perks. Remember in the long term how effective Chain Saw Al was as a manager. He gutted companies, took his bonus, sold them as a shell of their former self (basically selling the name) and road off in to the sunset holding money and creating nothing. Oh yes, many of those companies investors found were worthless when he was done. There are two ways to cut debt--revenue and austerity.

The US is in bad enough shape both are needed. Management ran up debt, the Federal reserve printed money to cover it quantitative easing) and the money was used by groups like Blackstone to amass more money they now keep offshore. It's good to be the KINGS! Use other people's money to make vast amounts, leverage the whole damned government and then keep the money out of circulation waiting for the next crisis.

Eventually the whole country gets sold. When will people realize money is not a commodity but a symbol for something real--people's work, love and life. And then cannot be traded bartered and sold without real damage. Out of control capitalism really is unsustainable. Vampires run out of blood eventually if they turn them all.

Of course, debts could be paid and revenue (taxes) raised to do it, but first you would have to be grounded in your country.

Monday, April 08, 2013

New Toones

It has been a long hiatus, but I'm baaccckk.

heard this on the radio today and they deserve a look see.