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 Handling private-equity hubris -- the Chinese way 嘿嘿！ |
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ceo/cfo
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作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Marketwatch - July 12, 2007
SAN FRANCISCO (MarketWatch) -- Imagine how much dithering, grandstanding, and all-around public hand-wringing we could avoid over scandals and other controversial issues if we just followed China's lead and ordered an execution every time someone messed up?
In the U.S., the legal fate of Zheng Xiaoyu, the former head of China's food- and drug-safety agency convicted of taking bribes, would have involved years of appeals, scores of televised perp walks, and perhaps a presidential pardon. China just pulled the plug on the guy.
Presto, tainted-food scandal over. Right, folks?
Ken Lay, we'd like to see you about this Enron thing. Bernie Ebbers, could you please join us outside in the courtyard to discuss WorldCom? Frank Quattrone, would you explain your involvement in the tech IPO scandal, quickly? Oops, that's right, he was innocent. Sorry, but these things happen.
U.S.-style due process might be painstakingly slow, but at least it works in most cases.
In the financial markets, however, it's much more a case of shoot first and ask questions later. Investors didn't wait to see whether Lay was guilty or innocent. They sold Enron shares from $60 down to nothing in a matter of weeks after the first signs of scandal emerged back in the fall of 2001. Markets are like that. One whiff of scandal, and you've had it.
That's why it's so ridiculous to watch these hearings on Capitol Hill about private equity and whether it should be taxed higher or not. It's not these guys' fault they found a way to make gobs of money at the expense of the public as well as shareholders. Lawmakers can hold hearings, give speeches and ultimately change the tax laws. But by then the masters of the universe will be on to the next big thing. You'll never stop smart people from making big money under the right conditions. You can applaud Congress for at least noticing this phenomenon, but there's no way they'll get out in front of it.
But you can at least warn average investors when the sky is about to fall on them, which is why these hearings do serve some purpose.
The private-equity and leveraged-buyout bubble in the financial markets is starting to strain in a big way, and at some point -- likely this year -- something is going to ignite the whole wad of dough, and it will go up in a flaming panic of blown deals and market turmoil.
Nobody will go to jail. And certainly nobody will be executed. The hot money will simply move on to the next bubble, while the rest of us will be left to pick up the tattered shreds of our 401(k)s and mutual-fund statements.
It won't be the subprime-mortgage mess. That's already working its way through the system and, for that matter, has caused enough trouble.
It will likely be a big deal -- or series of deals -- that don't get done, for whatever reason, that spooks investors. It's probably just a coincidence that General Electric Co.'s $8 billion deal to buy a health-care business from Abbott Laboratories collapsed on the same day that a private-equity group threatened to pull out of its $25 billion deal to buy Sallie Mae . Each was for entirely different reasons. But a few more of these, and you've suddenly got a trend. Then the tumble happens -- first in debt markets, and then in stocks.
This might seem overly bearish, but that is how market bubbles end. At the moment, nobody wants to get off the bandwagon, as long as it's heading uphill.
The performance of the Dow Jones Industrial Average , the Nasdaq Composite Index and the S&P 500 Index on Wednesday were a remarkable example of the ability of the bulls to overlook the subprime scare and the increasing pile of earnings warnings, not to mention oil at almost $73 a barrel.
There is still life left in the bull, and a new round of record highs is not out of the question.
At some point, though, a shot will be fired that will trigger an all-hands exodus from this market, and it won't be some Chinese executioner firing it. As these things always end, it will be self-inflicted.
(By the way, the market just hitted a record high today!!  )
作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 Handling private-equity hubris -- the Chinese way 嘿嘿！ -- ceo/cfo - (4180 Byte) 2007-7-13 周五, 04:18 (721 reads)
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