The long-standing myth of super-duper private equity returns is meeting the cold ugly reality of unfinessable lousy returns. That’s what happens when an industry dependent on long term falling interest rates and then protracted near zero policy rates regime meets up with central banks increasing interest rates and inclined to normalize them well above their former “almost free money” levels.
And a very bad and very consequential hangover has started. David Sirota gives a fine overview. I strongly urge you to read his piece in full. Here is the money section:
As public officials across America prepare to funnel even more of government workers’ savings to private equity moguls, an alarm just sounded for anyone bothering to listen. It is a warning that Wall Street executives want you to ignore as they skim fees off retirement nest-eggs – but the longer the warning goes unheeded, the bigger the financial
Keep reading this article on Naked Capitalism (Yves Smith) - Blog.