Inside Scoop on the Hot Poop
Inside Scoop on the Hot Poop
When I worked on Wall Street and made money, my stockbroker would ask me to hear presentations by people in high places who wanted to sell me sure-fire investments. The two big hotels for getting cocktails, canapes and a sure-fire pitch were the Sheraton (the Democrats’ hotel) and the Riga Royal (appropriately, the Republicans’).
At the Sheraton, I saw James Carville, during a wing-ding pre-election pep talk to the faithful, confuse Governors Bill Clinton and Mario Cuomo, so at least he got a good laugh. But the Riga Royal was more opulent — foie gras, rare filet mignon and champagne.
I heard Senator Phil Graham from Texas, chairman of the Senate Finance Committee (whose wife was on the Enron Board), lie through his teeth about what his party would do for all of us, tax-wise, under President George W. Bush. What they did was for themselves, top down as always. But the meeting with the Carlyle Group was the tip-top session for me.
The business world shudders when it hears that name, from fear of being taken over. Like Mitt Romney, they are nabobs with strong bank connections. They borrow money cheaply, and give their targets offers they can’t refuse, sealing the deal with golden parachutes for those now ousted from the trough. Once in control, they fire most of the workers (a la Musk and Twitter), often selling the machinery — particularly popular in the newspaper industry where local newspapers now provide 10 percent of the sales they did 15 years ago.
Then they down-size the pension funds based on fewer workers, using all those proceeds to pay back the bankers. In essence, in large part they buy the company with its own money. One CEO of such a buyout fund (named Smith, adequately anonymously) bought eight $2 million Palm Beach mansions for himself based on one year’s revenue.
The first part of the presentation — where they were raising a blind pool of $5 billion, to be invested in Carlyle’s sole discretion, involved this.
One of their former partners was OUR ambassador to Italy. Carlyle’s starting lineup features several IRS commissioners, senators, former cabinet members and a number of CEOs of major corporations and accounting firms. Beat that? You can’t. FIAT had decided to divest its substantial armaments division, which produced all the items used now on both sides in Ukraine.
When the ambassador got the call from one of the Agnelli family, which controls Fiat, his first call went to the head of the Carlyle Group. That man’s first call was to the said Agnelli and the deal got done before anyone else knew. Did he call the President or the Secretary of Defense or his party’s leader? No, his loyalty was clear. To the money and the people best described as “moneyed,” showing what high level of inside information you could invest with, blindly, but alongside seeing-eye dogs in human form.
An approving murmur and rumble issued from the crowd, and the presenter opened the floor for questions. One man stood up, raised his hand, and got called on. He said he was an investor in a previous blind pool of $4 billion raised by Carlyle, which was now only half invested. The presenter shrugged, asking “But what’s your point?”
It’s simple, the man responded. “How will you decide to allocate our investments among your various future opportunities? Who goes first and who doesn’t?” The answer was quick and simple.
“It’s not complicated,” the presenter replied. “We will always be absolutely fair to everyone, using our best judgment in all cases. I hope that answers your question,” immediately calling on one who unmasked himself as the plant in the audience who asks softball questions requiring long and tedious answers to lull the audience to sleep and keep them at a proper distance from reality.
Mike Parish lives in Alameda.