Quote:
Originally Posted by Tyrone Slothrop
They're not trying to hobble PE, I don't think, nor should they. Fundamentally, aren't they worried that large enterprises will be better capitalized and better able to borrow and so will endure this recession better than small businesses will. That doesn't seem wrong, as a description of what's likely to happen. But blocking acquisitions above a certain size just makes things worse for the struggling targets -- it doesn't give them better access to capital. If you want to solve that problem, the government needs to think much bigger about how to give smaller businesses capital.
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I think they should hobble PE and large businesses from rolling up smaller ones that are only weak as a result of the crisis.
PE has acquired crazy amounts of capital as a result of bad policy decisions following 2008. We flooded the economy with excess liquidity under the ruse that it would trickle down to individuals. Now, we're propping up many large businesses by buying their debt. This gives large businesses and PE an unearned cash pile to use to eat the smaller competition.
I'm all for starting a national bad bank to reorg loans of small to mid sized businesses and to lend into small to mid-sized businesses to help them pay fixed costs until the crisis abates.
But we know that's never going to happen, and we know why: Big business and PE view this is an opportunity to buy everything - to eliminate competition. And they have all the lobbying power. To save small to mid sized business, which by extension saves the essential economic and social character of the country, requires that PE and large business be fought on every available front.
If you kneecap PE and big business with tax policies that make acquisitions difficult, banks will be forced to workout loans with small to mid-sized businesses. Landlords will be forced to workout leases, etc.
Conversely, if you allow PE and big business to gobble up all small and mid sized concerns, banks have no incentive to workout anything. They get 100 cents on the dollar in the purchase. Owners and labor get fucked. Labor gets fucked the most.
