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Private Equity Forest Fires
Wall Street and the City's Masters of the Universe are stalking Europe, stomping on pension funds, eviscerating established businesses, bidding on the price of basic commodities to send them spiralling beyond the means of ordinary workers.
Says who? German populist Franz Müntefering, who famously compared speculators to locusts? France's President Nicolas Sarkozy, who will be using France's stewardship of the EU to press for a cap on executive salaries? A left-leaning British newspaper columnist such as Polly Toynbee, urging Gordon Brown to scupper the speculators in order to persuade voters of his socialist credentials?
Nope: The column "How the Masters of the Universe are murdering the middle class by gambling on black gold" appeared in yesterday's Mail on Sunday, the quintessence of Tory Middle England.
It's a fiery and populist column, as the title might suggest. Masters of the Universe? Vintage Tom Wolfe, as the author acknowledges. Black gold? Has anyone called oil that since the 19th century? "Murdering" the Middle Class? Emotive stuff, considering that the rest of the papers are stuffed with articles on real teenagers murdering one another.
It is odd to see Milton Friedman and Alan Greenspan criticised in a newspaper previously infamous as a herald of Thatcherism. Stranger still to see calls from readers in the comments section for "parasite" speculators to be imprisoned, to have their profits seized, to have stakes driven through their hearts. One correspondent even praises Ralph Nader and Counterpunch!. And strangest of all, no-one jumps to the defence of the speculators. Yes, they're big fellows and they can defend themselves, but usually when someone has a go at the Masters of the Universe, an Economist-reading type or one of Mr Friedman's disciples pops up to make a case for how the "locusts" actually generate wealth by doing away with inefficient businesses... perhaps "forest fire" is a more accurate analogy than locusts.
The Mail has form in this game. This time last year, (when the economic climate was rather healthier) it published a similar screed, this time attacking the "City fat-cats... robber barons... multi-millionaire buccaneers... locusts... barbarians at the gate... get rich-quick masters of the financial universe... people in sharply-cut suits behind closed doors who are piling the fiscal agony on the middle classes and millions of ordinary hardworking people."
The Mail is playing to its readers' concerns here. The aspiring Middle Classes are reported to be hit harder than others with the rising costs of living; they fear falling house prices could curse them with negative equity, while rising commodities prices leave unable to meet their bills each month. Assaults on pension funds mean their future looks uncertain. In London, the middle classes are having difficulty keeping up with the lifestyles they've come to expect, as City financiers snap up the homes and school places in the patches the British have always aspired to. Meanwhile, the poor get by on state handouts, while the rich dream up ever new ways to avoid their tax responsibilities. And guess who gets screwed when Gordon Brown fails to extract more cash from the "super-rich?"
Moreover, the Mail has a mean anti-American streak: The International nature of the private equity fund managers hasn't escaped its editors. If you're going to have a go at immigrants, may as well be consistent and apply those fears across the board, from Somalia gangsters shooting at one another in South London through to American and Swiss fund managers blowing holes in elderly British companies from Notting Hill.
The pattern is repeated across Europe. One French worker complained that it was bad enough working for his old boss; now he has to slave for a Texan pension fund.
So, in Europe private equity has become a target of loathing not just for the hard left but the conservative right. Former Danish prime minister Poul Nyrup Rasmussen has published a "damning" report on the activities of private equity and its colleagues in the hedge fund game. The Independent reports,
"The report, submitted to the Committee on Economic and Monetary Affairs, calls for greater disclosure from private equity managers and hedge funds about their investments. This echoes similar demands by the House of Commons Treasury Select Committee last summer, which led to a voluntary British code of conduct for private equity.
"Mr Rasmussen also wants a legislative proposal at the European Parliament by November, which would incorporate measures to limit the amount of debt private equity could use to purchase a company. This would severely hurt private equity's potential profits and the number of deals it can afford to complete."
Representatives of the British private equity business, as well as the Confederation of British Industry are sending delegations to "woo" MEPs considering Rasmussen's proposals. What are their chances, with such a broad alliance of left and right ranged against them? And as the credit squeeze, financial downturns and rising prices hit consumers whatever their political beliefs, it's difficult to escape the feeling that Europe's press and leadership are looking for a scapegoat....
