Summary of These Are the Plunderers by Gretchen Morgenson E-Book

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• Herausgeber: BookRix
• Kategorie: Geisteswissenschaft
• Sprache: Englisch

Veröffentlichungsjahr: 2023

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Summary of These Are the Plunderers by Gretchen Morgenson : How Private Equity Runs—and Wrecks—America
 
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Gretchen Morgenson and Joshua Rosner investigate the insidious world of private equity, revealing how it leeches profits from everyday Americans, tanks companies it acquires, and puts our entire economic system at risk. They show how companies absorbed by private equity have worse outcomes for everyone but the financiers, such as employees losing their jobs, companies going bankrupt, patients having higher healthcare costs, residents of nursing homes dying, towns struggling, and public workers having lower returns on their pensions. These are the Plunderers exposes the greed and pillaging in private equity, revealing the many ways these billionaires have bled our economy and us.

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Summary of These Are the Plunderers by Gretchen Morgenson

How Private Equity Runs—and Wrecks—America

Gretchen Morgenson and Joshua Rosner expose the greed and pillaging of private equity, revealing how it has bled our economy and us.BookRix GmbH & Co. KG81371 Munich

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Summary of

These Are the Plunderers

A

Summary of Gretchen Morgenson’s book

How Private Equity Runs

—and Wrecks—America

GP SUMMARY

Summary of These Are the Plunderers by Gretchen Morgenson: How Private Equity Runs—and Wrecks—America

By GP SUMMARY© 2023, GP SUMMARY.

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This is an unofficial summary & analysis of Gretchen Morgenson’s “These Are the Plunderers: How Private Equity Runs—and Wrecks—America” designed to enrich your reading experience.

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Copyright 2023. All rights reserved.

Money-Spinning Machines”

John Dingell asked the Congressional Research Service for an analysis of merger and acquisition deals in the works. The report's authors agreed that the firms doing the takeovers were "money-spinning machines" formed by refugees from Wall Street. Congress held several hearings about reining in debt-laden takeovers, but the hearings resulted in no new laws. Private equity buyouts have caused ten times as many bankruptcy lings, job losses, tax receipts, and environmental damage than other investments. Stanley Sporkin summed it up as "Capitalism is the greatest thing going, but unchecked, it’s its own undoing." The COVID pandemic has caused serious complaints about working conditions and compromised patient safety.

Three facilities in Idaho, Lewiston, Idaho, and McMinnville, Oregon were managed by LifePoint Health, a nationwide hospital chain owned by Apollo Global Management, a wealthy and powerful New York investment rm. After Apollo bought the hospitals, they saw a sharp deterioration in care, with lower patient satisfaction and fewer employees per occupied bed, and higher charges than peers that are not owned by moneymen. LifePoint was able to tap taxpayers for massive amounts of pandemic relief money in 2020, but it also slashed salaries and benefits and reduced charity care. This helped generate an enormous profit for Apollo, Black, and his colleagues. In autumn 2020, the federal government instituted an eviction moratorium, but four wealthy landlords led more than 15,000 eviction proceedings between March 2020 and July 2021.

Pretium Partners, an investment rm, joined forces with private equity powerhouse Ares Management in the fall of 2020 and initiated 6,264 eviction actions against its tenants, some led when residents fell as little as $500 behind on their rent. Ming Lin, a veteran emergency room doctor in Bellingham, Washington, was removed from his post two weeks after the World Health Organization declared the coronavirus a global pandemic. He had spoken out about a lack of COVID-19 preparedness at his facility, PeaceHealth Medical Center, and was hired by TeamHealth, a privately owned company owned by the Blackstone Group. TeamHealth's focus is to increase the numbers of patients moving through emergency departments and generate more revenues from them. Doctors take an oath to do no harm and put their patients' interests first.

Stephen Schwarzman is a multibillionaire who serves as a top economic advisor to President Donald Trump. His holdings in Blackstone have been beneficial to Schwarzman, resulting in his net worth increasing from $16 billion to $35 billion. Lin had to move on due to his public criticism, but was offered a job as an emergency department supervisor for the Indian Health Service. The COVID-19 pandemic revealed the fragilities in the nation's financial system, which had been built for decades by elite nanciers, corporatists, and money-spinners. This book explores the role of elite nanciers in this predation over the past thirty years.

The activities of a core band of privateers have been largely overlooked, but their use of excessive debt and dubious practices to undermine our nation’s economy has been largely overlooked. The power and wealth these debt-fueled billionaires have accrued in recent years has rocketed, while the American middle class has been drawn and quartered. These privateers take over companies in transactions using high-cost borrowed money raised in the corporate bond markets from investors willing to take on greater risks. Their takeover of the nation’s economy has been steady, piecemeal, and hard to spot, and their reach extends from cradle to grave. Private equity rms, such as Apollo, Blackstone, the Carlyle Group, and Kohlberg Kravis Roberts, buy companies and load them with debt while bleeding them of assets and pro ts.

To meet the interest payments, they typically gut the acquired company through the sale of assets or businesses, then cut costs by laying off employees and reducing worker costs. A 2019 California Polytechnic State University study found that 20% of the companies taken over by these rms led for bankruptcy, ten times higher than the failure rates in other acquisitions. Bankruptcies lead to lost jobs, health insurance, evictions, and family disruptions for companies' former workers. Acquirers typically put down a single-digit percentage of the purchase price when they buy a company, allowing them to legally insulate themselves from the companies taking the fall. Between 2003 and February 2020, retailers owned by private equity nanciers eliminated over a half million jobs across America.

A 2020 study by the Government Accountability Office identified the top employers in nine states with the largest numbers of workers receiving food stamps. Additionally, a large landlord backed by private equity was among four companies responsible for thousands of evictions during the Coronavirus Crisis. Representative James Clyburn, a South Carolina Democrat, criticized private equity companies for expediting evictions and charging large fees to retirees and other beneficiaries of public pensions. Academics at Harvard University and Stanford University studied $500 billion of investments by two hundred public pensions in partnerships sponsored by privateers, and found that fees depleted the pensions’ returns by $45 billion. Schoolteachers in Ohio, firefighters, emergency medical technicians, and other public workers have also been victimized by these fees, and taxpayers may be asked to support underfunded pensions or failing public school system budgets when they go broke.

The most important details in this text are that billionaire-owned rms, such as Blackstone, Apollo, and other prosperous rms, mine their wealth from the poor and middle class through complex financial dealings, and that their companies arrange for them to avoid paying taxes on the billions in gains that their stockholdings generate. This business model creates little of value for society, and their job cuts, higher costs of goods and services, and exploitation of the tax code have worn the nation’s social fabric thin. However, no “system” operates on its own, and people are always at the controls. Healthcare, which accounts for 18.3% of the nation’s economic output, is a special focus of the titans. The most important details in this text are that healthcare and education industries had long been focused on protecting the public interest and delivering social benefits.

In 2005, these money-spinners began prospecting for riches in healthcare, spending over $1 trillion to buy up hospitals, physician practices, nursing homes, medical billing services, and other companies. This practice caused higher prices and dubious practices, leading to higher prices and dubious practices. Congress came together to enact a law to curbed this practice, which was rarely enforced prior to COVID-19. Private equity has become so ubiquitous in healthcare that ocials associated with the industry began to pop up on state medical boards. They have used tactics such as reducing services and hospital beds, ventilators, and personal protective equipment to generate profits.

Healthcare professionals have been met with reprisals for speaking out about the harm caused by the nanciers' methods. Washington has provided assistance to the nanciers, such as deregulation, incompetence, and inaction. In response to the COVID health crisis, the US government allocated trillions of dollars to “save” the economy. The corporate bond market, where companies sell debt obligations to investors, is where private equity raises money to buy the companies it acquires. In 2020, the Federal Reserve Board promised $750 billion to keep the market aloft, but many of the nancier-backed businesses that received billions in government support used COVID as an excuse to cut jobs, slash wages and benefits, or require workers to take on more hours for the same pay.

Apollo was one of the first investment rms to mount a D.C. lobbying campaign to insulate their interests from a COVID collapse. It was a replay of the 2008 financial crisis, when big banks begging for taxpayer rescues. Wealthy financial players demanded a bailout from Washington to avert a disastrous economic downturn due to the coronavirus. Apollo executives claimed that a rescue would not be an example of the government helping a criminal escape punishment.

However, healthcare was run for patient outcomes and resources had been depleted, leaving hospitals less prepared. However, Apollo's government rescue mission reaped big results. LifePoint Health and YRC received $1.4 billion in federal funds and a $700 million bailout from the US Treasury, even though they were under investigation for overcharging the government for trucking services. This was not the first time that government assistance went to companies that exploited other stakeholders, as it had been happening for almost forty years. COVID-19 made it easier to see this.

A Note to Readers

The private equity industry is a modern-day plunderer, plundering businesses armed with spreadsheets, debt nancing, and high-priced lawyers. It is a business model that is pernicious and growing, widening the wealth gap in this country. Public corporations can be constrained by shareholders whose interests they must consider, and their public disclosures are pored over by investors, reporters, academics, and policymakers. Private equity firms are private and make few, if any, regulatory disclosures, and have little need to listen to outside holders. If a client tries to hold them to account, they threaten to ban them from future deals.

The marauders answer almost no one. Private equity is a business model that involves acquiring a company, loading it with debt, cutting costs to pay that debt, extracting cash along the way, and selling it in ve years. However, recent data shows that private equity's returns are no better than a low-cost and transparent Standard & Poor's index fund that invests in public companies. Litigants hoping to hold these firms to account face an uphill battle. The American Investment Council is the main U.S. organization lobbying and advocating for the private equity industry, but its website teems with superlatives about the benefits it bestows on the economy and the industries in which it invests.