Private Equity, The Enemy from Within…. Part Two…

Private Equity, The Enemy from Within…. Part Two… 

 

And this year’s Neoliberal Darwin Award Winner

 

In addition to finding lower wages in monopsony markets, the researchers also found that, over time, firms that dominate their labor markets were less likely to share productivity gains with employees. A one standard deviation decline in the HHI mapped to an increase in the elasticity of wages with respect to productivity of about 25 percent, from 0.38 to 0.47.

 

The only employees who did not experience wage stagnation in markets with high plant concentration were those who belonged to unions. 

-             Employer Concentration and Stagnant Wages, NBER

 

 

By Gregg Wall (11-22-2026)

 

Two weeks ago, JMH did a dive into private equity from a micro perspective and recent developments within the industry and financialization… this week, we cover financialization from a macro perspective: the role the corporate MSM plays in propping up the failed dereg and neoliberal paradigm that allows financialization to thrive; the catastrophe that is financialization & private equity and why both are so damaging to the economy and ruinous to people’s lives; and financialization not only destroys the economy but leads nation-states to war spending, wars, and fascism.

 

More lies from the Bank of Canada?  This week, the BOC said the keys to prosperity, fighting inflation, and raising everyone’s income was to increase growth & productivity.  The corporate MSM dutifully repeated the lie without question or pushback… the MSM consistently fails to pushback on elite narratives and have little to say about the West’s complete lack of willingness to acknowledge and address the failures surrounding deregulation, financialization, and libertarian dogma.  See massive food insecurity and poverty throughout North America.

 

The BOC & MSM, of course, leaves out, much as Mr. Carney has, that inflation in North America is greed driven, monopoly & cartel driven, private equity driven… that is to say, supply-side driven.  Inflation sure as hell is not demand driven… judging from bankruptcies and skyrocketing credit card debt, and debt the public is accumulating placing groceries on credit cards & payday loans.  No amount of increased productivity or tax rebates will bring down greed driven, supply-side driven inflation, as the robber barons will merely pocket productivity gains w/out passing on the savings to the consumer… that’s the power of financial engineering, that’s the power of M&A, authoritarian cartel, and totalitarian monopoly.   

 

The BOC & MSM also conveniently miss out on the fact that Canada and the US have enjoyed both growth and productivity gains for decades and North Americans have never been more poor & the most privileged more wealthy.  Moreover, the entire dereg, libertarian, and financialization paradigm… along with corrupt crony government… has never been more rotted out entirely.  And the corrupt, corporate MSM, per the usual, fails and entirely misses both the point and story entirely.   Gee, who owns the corporate MSM?  Well, that’d be billionaires, and they have zero interest in investigative reporting and poking holes in a rigged economy and government that have made them catastrophically wealthy.   

 

Before we depart the BOC & MSM, there’s one more point and it is this… given the increased dominance of financial engineering, private equity (remember the 19,000 PE funds from my last piece), and venture capital within the economy, and the destruction of economy & opportunity that comes with financialization & financial engineering… how does one go about measuring productivity?  It’s quite a conundrum.  How to measure productivity in an economy increasingly based upon: Financialization… greed, rent seeking behavior, private equity looting & theft, crony deal making in the halls of government, failed privatization scams, the transfer of wages, wealth, and government largesse to greedy billionaires & multimillionaires (while robbing public services blind)… how precisely, to measure productivity of bankers shuffling papers and computer transactions on the latest junk debt or M&A deal?  How does one measure productivity on real estate speculation, digging cancer & tar sands out of the ground in Fort McMurray (especially when Alberta O&G is a net liability)?  Or productivity and growth from corrupt politicians in Ottawa and Edmonton, who fail Canadians and Alberta, hourly, daily, annually.  And given that financialization is a net drag on the economy and kills jobs, should we discount any so-called growth from private equity, venture capital, and financial engineering?

 

So, there’s the propaganda element to all this, and the role billionaire owned and operated corporate media plays in ensuring that the sacred cow of our failed libertarian economy and financialization are never questioned or BBQed.  I like to call it reporting by commission and omission.  But there’s the financial engineering model itself, which is completely damaging and destructive to the economy, government, and as we shall write about shortly, world peace. 

 

In the early days of private equity and venture capital, it probably didn’t matter a great deal, at the macro level, that a few workers lost their jobs or suffered suppressed wages, lost benefits to pay for private equity executive pay or leveraged debt.  However, when the U.S. economy faces 19,000 private equity funds, the offshoring of labor, the suppression of wages, M&A, monopoly formation, predatory cartels, and software & AI engineered to extract rents, higher prices, & profits from the public, it destroys discretionary spending.  Workers are so distraught and distressed that they have to put essential spending and necessities on credit cards or go without, which leaves no money for mom-and-pop businesses and other enterprises & spending deemed discretionary, which absolutely kills animal spirits, entrepreneurship, growth, and zombie enterprise.  Which might explain record bankruptcies, sky-high credit card debt, and workers delaying retirement or planning to work in perpetuity.  

 

There’s more, increasingly private equity is diversifying into private credit: payday lending, microcredit, online lending with sky high lending rates, terms, conditions, and fees.  Coupled with PE’s growth in residential property and apartments, as well as, PE’s growth into utilities, and it all leads up to rent seeking behavior.  No job creation, no opportunity, no growth in the real economy that the BOC was talking about: just predatory greed.   So that workers are increasingly faced with low wages, if they are lucky enough to have an income, but also parasitic billing and rents taking wages that have not kept up with inflation.  Of course, we haven’t discussed private equity’s move into healthcare, which, within the US in particular, is as, if not more, destructive to the fiscal health of the nation, the US gov, and family budgets.

 

There are so many ways financial engineering… which again, isn’t limited to private equity operations, but is in fact ubiquitous throughout the real economy … is so damaging.  The way publicly traded companies mercilessly prey upon the public, clients, consumers, and labor, one really has to conclude that the core business itself, such as the airlines or even healthcare insurance… is nothing but a sideshow, a vehicle for executives and owners to conduct financial engineering (with the real action taking place in stock manipulation, stock buybacks, mergers, financed dividends, etc.).  A financialized, consolidated, monopoly economy permits this.  Financialization’s lock on government, the two political parties, the day trading in the halls of congress… Wall St’s own rent seeking behavior, its collection on rents and private taxation on core, fundamental commodities, such as oil & gas, are yet more examples of financialization’s damaging effects (e.g. see the price on a barrel of oil plummeting and yet retail prices remain sticky, that is seemingly incapable of falling).  Financialization reaches beyond the private sector and has its tentacles wrapped tightly around local, state, and federal governments… as previously mentioned so as to become, Too Big to Fail and Too Big to Be Questioned & Subpoenaed.  PE and VC throttle the integrity of democracy and the American government, by design.  And it’s not enough for financialization, oligarchy, and Wall St to dominate the courts, the executive & legislative branches, because via crypto, Silicon Valley oligarchs and venture capitalists **appear** to ultimately have their sights set on dominating currency and monetary policy (which, if achieved, will give them fantastic sums of revenue and incredible economic power).  All of this is to say, a functioning democracy and government is bad for Wall Street and Corporate America’s business model.  They like their workers prostrate, destitute, and dependent upon a nonliving wage with few options and preferably little or no safety net.  Financialization is everywhere and allowed to run rampant at the expense of the economy, families, labor, the fiscal health of the nation, and the monetary health of nation-state currency.

 

 

 

 

 

 

 

 

Lastly, financialization and private equity are killers… and lies at the beating, cancerous heart of the necro-economy.  As mentioned in the last write up, PE’s long-standing investments and ties to war contractors and the state, along with its recent moves into financing the Department of War, demonstrates a desire not only to become TBTF but a protected business model & asset under the umbrella of national security.  This, while profiting immensely from America’s insatiable appetite for colonialism, debt slavery, exploitation of labor, global south subjugation, necro-politics (the commodification of human existence), privatization of resources in public lands, and endless for-profit wars… with the Department of War serving as both the oligarchy’s and Wall St’ enforcement arm, global protector of capital, and a profit center.

 

Financialization & private equity’s role in the necro-economy & politics, and thereby societal engineering, demonstrates this industry and Wall St, generally, plays a key role in fascism and the spread of militarism, itself.   Not only by backing far-right judges and politicians but through the control and funding of far-right influencers, MSM, podcasters, and social media personalities.  Financial engineering’s business model and the necro economy  manufactures deprivation, desperation, greedflation, joblessness, poverty, scarcity, and underemployment.  Coupled with the mantra that if you aren’t making it and participating in the American dream – it's your fault, many of the unemployed and those faring poorly economically will look to scapegoat disenfranchised groups, immigrants, minorities, women as the reason for their problems… and furthermore, embrace authoritarians and far-right ideology as the answer to their problems and provide a sense of belonging & identity to like-minded individuals.  Generations conditioned by family, white supremacy narratives, and within socio-economic groups also come into play.

 

The failed dereg, libertarian, financialized economy actually breeds fascism, jingoism, and militarism.  It’s in the oligarchy’s and Wall Street’s interests.  Sky-high unemployment & underemployment -- as a result of financialization, cuts to labor to service catastrophic debt loads, industry consolidation, & the offshoring of jobs -- will often make desperate workers seek out military jobs and free healthcare comes with that package.

 

Desperate elites dump money into an unaudited DOW/MIC, because they can portray the economy as growing (ironically, via debt, deficits, socialism, and war) … at the same time, the contractionary forces of debt, financializaton, greed, hoarding, oligarchy, and wage & wealth inequality (all features & outcomes of financialization) restrict growth and opportunity.   Of course, billionaires make obscene profits from the command & necro economy’s greatest endeavor: WAR.  Of course, with all that spending on military and war, America must have an enemy, which is where fascism, the MSM propaganda machine, manufactured fear, societal manipulation, and white supremacy comes in. 

 

None of this is an attack on socialism, I’m merely pointing out the shear hypocrisy of a predatory elite that defends libertarianism and rugged individualism, while being creatures of the state and making a fortune off socialism for the 1%… I’m merely pointing out how much better off Americans would be, if fraud & waste within the Department of War and Empire was instead, allocated to ensuring affordable housing, Medicare for All, and well-paying jobs? 

 

Notice, all this debt and deficits (shoveled into the war machine) … and money printing by the FED... feeds the financialized economy; feeds rising asset valuations for the uber rich; feeds greed, oligarchy, wealth inequality, and private equity & venture capital in one continuous doom loop of economic, planetary, and societal violence.

 

At the end of the day, Wall St., obscene greed, private equity, venture capital, speculation in commodities, derivatives & swaps (used to gamble) w/out proper collateral (reinsured by the taxpayer), financialization & financial engineering… M&A and industry consolidation… are a huge problem for the US & the world.  They add nothing of value.  In fact, the entire industry is a job killer, an economy killer, murders society… doubt me, see soaring nation-state debt to prop up the house of cards.  In short, financialization, greed, hoarding, engineered monopolies, oligarchy, and private equity are a gross misallocation of resources.

 

Wall St and financialization’s profits come from wage & wealth transfer, mercenary greed, looting & theft, unaccountable private sector taxation… even the investment returns for pensions & 401Ks are blood money, coming at obscene costs (essentially robbing current and future generations).  That’s why Financialization and Private Equity are this year’s Darwin Award Winners.  Wall St. is lethal.   What did Goldman Sach’s CEO say during the ’08 crisis, Wall St is just doing the devil’s work?

 

There’s so much more that could be written about this topic and a much deeper dive is in order.  Alas, corporate media doesn’t get paid to protect the public, enlighten, educate, inform, and expose financial engineering and private equity… it gets paid, for the most part, to protect the system, despite the system’s obvious breakdown, decay, failure, and oceans of human misery, poverty, and suffering financialization leaves in its wake.  Any critical write ups & deep dives on financialization and financial engineering are often taken on by independent media and don’t receive the coverage, exposure, & saturation they so richly deserve.  A well-informed public is dangerous to a failed financialized status quo and particularly to this year’s Neoliberal Darwin Award winners: financialization and private equity. 

 

 Copyright JM Hamilton Publishing 2025

Private Equity, The Enemy from Within… Part One

Private Equity, The Enemy from Within…  Part One

 

Worldwide, only four cents in every tax dollar now comes from taxes on wealth. Half of the world’s billionaires live in countries with no inheritance tax for direct descendants. They will pass on a $5 trillion tax-free treasure chest to their heirs, more than the GDP of Africa, which will drive a future generation of aristocratic elites. Rich people’s income is mostly unearned, derived from returns on their assets, yet it is taxed on average at 18 percent, just over half as much as the average top tax rate on wages and salaries.

-             Richest 1% bag nearly twice as much wealth as the rest of the world put together over the past two years, OXFAM

 

 

By Gregg Wall (11-8-2025)

 

Within the beating heart of America’s financialized economy lies the heart disease of private equity.  This week, we do a quick recap on financialization and private equity and outline some of the recent developments within the industry.  Financialization and private equity, arguably, are the epicenter corporate greed in America and play no small role in why the US economy is a disaster for well over 60% to 70% of Americans, who can’t cover their basic needs.  At the same time, executive and CEO pay has never been more extreme, relative to the average or median pay of a company’s workforce.  As a brief introduction or refresher, private equity (PE) leverages companies up with debt, junk debt, to buyout companies and take them private.  Investors, in turn, are promised outsized returns for PE management, restructuring the company, and via financial engineering.  Frontloaded profits and dividends are part of the buyout process, and companies are often cannibalized and stripped of assets, such as buildings & land and used to extract rents.  PE also charges management fees to acquired companies throughout the life of the investment (arguably, not unlike paying a thief a fee for stealing from you).  To pay down the debt & service the debt… and due to the industry’s notorious short-term outlook… product development, R&D, customer service, and products & services quality often suffer, employees and head count are often gutted.  Investors who put money into private equity funds generally are committing to a five-year window (sometimes longer), at which time PE flips the company to another investment or private equity company, sells it off, merges it within the industry, takes it public, or strips it for parts to repatriate capital to investors.  Yet another option, PE owners may choose to retain the company and buy it out.

 

The PE industry began in the deregulatory wave of the ‘70s and ‘80s and four or five decades later has encountered difficulty in returning the initial investment to investors.  Major universities, notably Harvard and Yale, have had to sell their PE investments in secondary markets to raise cash.  The fact that PE has had such a hard time returning capital and investment dollars is driven by a higher interest rate regime, due to inflation & supply-side greed, and because so many of these companies are heavily leveraged and no few in number have become what is referred to as zombie corporations (companies so mired in debt that they can no longer pay down the debt and are kept on life support).  In short, financialization and private equity sacrifice the financial health of a company, CAPEX, employees, often times product & service quality, customer service and long-term commitment… and instead, aim for immediate gratification, greed, and the fast buck.  Private equity ownership, investors, and shareholders are first… customers, employees, and the public are dead last.  Because companies are often bankrupted, stripped, merged with other companies in a given industry, as part of the exit strategy, the role the PE industry plays in corporate consolidation, monopoly and monopsony formation is considerable. This financialization process is one of the key reasons employees find themselves at the mercy of their employers, suffer low wages, reduced benefits, and the cost of healthcare is increasingly shifted onto backs of labor and their families.  Pensions?  … employees under the private equity regime may find cutbacks and even elimination to pensions and 401Ks.

 

The cornerstones of the PE model is cheap debt, easy money policies from central banks, a lax and enabling regulatory regime, and highly favorable tax laws & weak enforcement that focus on debt, debt service loads, lower overall tax rates, and taxes that afford an industry specific advantage, like the carried interest loophole, etc. … the ideal for PE firms is for the targeted company to constantly be run on the edge of existence so that income taxes on the company are nonexistent.  Financial engineering is not limited to PE owned and operated companies, but rather, many of the industry’s practices have been adopted in publicly and privately held companies nationwide.  Due to the proliferation of financial engineering, the rise in zombie enterprise, and favorable tax laws and rates, corporates pay less and less taxes to the US government annually.  Therefore, financial engineering and PE contributes to explosive national debt, higher debt service loads, greater taxation on the public (see Trump’s new tariffs regime).  And it works out great for the industry, the financialized economy pays, relatively speaking, little or no taxes, helps send debt & deficits higher, increases central bank intervention, encourages accommodative monetary policy, which increases and inflates asset classes of the wealthy… all of which is music to the PE industry’s ears.  Moreover, PE and financialization exacerbates wage and wealth inequality, destroys entire sectors of the economy & social mobility, and because of the role money plays in American and Western politics, the PE industry and corporate monopolies are able to hold outsized influence over the U.S. and Western governments.  

 

Add opaque, private accounting to the mix, the proliferation of zombie companies, the short term myopic thinking of shareholder value uber alles, the proliferation of monopolies and cartels, the march of private equity into every nook & cranny of the economy – like healthcare… the evolution of software that maximizes profits at the expense of families, the general public, and labor… as well as, the growth of gambling within the Wall St economy, derivatives, options, & swaps, at the expense of the real economy, and additionally, the catastrophic corruption of local, state, and the federal governments: And we can quickly see why financial engineering and private equity have been an unqualified disaster for the U.S., Canada, the UK, and Western economies at large.   

 

 

This overview provides an excellent segue into several recent developments that caught my eye concerning the industry:  One, it was recently noted the number of US private equity funds is approximately 19,000, versus the number of McDonald’s franchises nationwide at 14,000.  This means we have 19,000 PE funds and their employees tearing the heart out of a functioning real US economy, doing their utmost to dodge taxes, playing a significant role in dollar devaluation as ever-expanding debt, deficits, & central bank easy money policies become the norm… and gutting and offshoring the US workforce… so that a handful of individuals and investors can become filthy rich.  Second, returns within this industry -- thanks to the catastrophic debt, leverage, and higher interest rates (as a result of price gouging and greedflation) -- are often no longer exceptional and, as previously mentioned, the industry’s ability to return capital to investors has suffered considerably.  Third, PE increasingly has the goal of insinuating itself into every aspect of American life.  One would think an industry, as well as financial engineering practices… that are so completely damaging to companies, customers, employees at the micro level, and the integrity and fiscal health of democracy, the economy, and government at the macro level… would be under the scrutiny of the federal and state governments.  It speaks to how corrupt the two major parties are that this industry, and the industry’s practices, are not in the spotlight and under little or no scrutiny; but quite to the opposite, the PE industry and financialization practices, seemingly, remain bulletproof.  To such an extent that POTUS Trump signed an executive order this year clearing the way for 401Ks, employee retirement accounts to start up private equity investments and funds for employees.  PE investments, of course, are again, generally opaque investments with private financial statements, largely unregulated, and have a low level of liquidity (in other words, these investments can be locked in for five, seven, and even ten years … perhaps longer, if the PE company cannot come up with a suitable exit strategy).  In short, PE is generally reserved for sophisticated corporations, funds, and investors, who have a better understanding of the risks, perils, and sharks they are swimming with.  

 

Of course,  we can see where this is going: an industry that some have called a Ponzi scheme, because of private, opaque financials… wraps it tentacles around employee retirement accounts, and if there’s a disaster in the industry (such as, major losses due to economic downturn, greed, a black swan event, rising interest rates, a change in tax laws, etc.), private equity suddenly becomes too big to fail (TBTF).  How convenient for an industry that has nothing but contempt for employees and workers, that PE should use employee retirement accounts as a vehicle to ensure the industry is bailed out by the taxpayer should it find itself in crisis (not unlike Wall St. banks in ’08).  Perhaps a crisis the industry is already in?  Some have even speculated that PE wants to avail itself to 401K funds, so as to dump nonperforming assets and companies into employee investment programs.  

And along these TBTF lines, the fourth and final observation is PE’s move into financing the Department of War.  Why would Trump’s Department of War (DOW) need financing and funding from private equity?  Like all privatization scams, private equity will add nothing but additional costs, fees, interest expense, and overhead to the taxpayer.  Here again, PE is being added to the DOW mix because of connections and clout, and so it can make money off the taxpayer… it’s basically a free ride (undoubtedly, more corruption, cronyism, and kickbacks for the GOP?).  PE financing the U.S. military and wars is classic rent seeking behavior.  But like PE’s goal of becoming a party to 401K plans, the goal in financing the DOW seems to add to the TBTF objective and additionally, conceivably, may make a future or pending bailout of PE a matter of “national security.”  Further insurance to make sure profits stay private and PE bailouts & losses are borne by the public and the taxpayer.  That is, for one of the most repellent, repugnant, and violent industries in the nation, PE’s foray into financing the Department of War is likely just the beginning, and yet, another tentacle stretched into one of the darkest facets of America’s dystopian reality: colonialism, empire, forever wars, genocide, and wholesale murder.  And isn’t it ironic.  Don’t you think?  A mercenary industry, private equity, merged with for-profit wars and the U.S. deep state.

 

Copyright JM Hamilton Publishing 2025