Open Thread - Thurs 09 Mar 2023: How Does Private Equity Work?

Submitted by Sima on Thu, 03/09/2023 - 5:00am

Very Briefly: How Does Private Equity Work?

Maybe the title should be 'A Tiny Glance Into Private Equity for Complete Financial Dunces' which would be me! I know nothing about finances really, or about the structures of Wall Street. I read what is posted here and learn a lot, but I still just basically nod along, and will continue to do so! Recently I watched a video which explains how private equity firms operate and wanted to share it here.

from: https://archive.boston.com/bostonglobe/editorial_opinion/outofline/2009/...

The Basics: What is a Private Equity Firm?
Here's the explanation from Wikipedia, in the usual rather confusing financialeze:

A private equity firm is an investment management company that provides financial backing and makes investments in the private equity of startup or operating companies through a variety of loosely affiliated investment strategies including leveraged buyout, venture capital, and growth capital. Often described as a financial sponsor, each firm will raise funds that will be invested in accordance with one or more specific investment strategies.

The private equity firm makes money from management fees, and gets a share or shares of the profits earned by the company in which it is investing or has invested. So in order to increase the amount of profits the private equity firm can receive it makes the targeted company push several things. One is an IPO, or having the startup (targeted) company go public on the stock exchange. Another is through selling the company, whether it is a startup or already established, to another company for cash or shares in that second company. Finally, the targeted company might be 'recapitalized' where cash is distributed to the private equity firm and it's shareholders from revenue generated by the targeted company or

through raising debt or other securities to fund the distribution

(from the Wikipedia article linked above).

In other words, I think, private equity firms buy into another company, get enough shares or whatever is needed to control it, and either help that targeted company become public or 'modernize' or get over 'hard times', if the private equity firm is doing good or the private equity firm just basically strips the targeted company to the bones and dumps it in the dumpster.

Here's a graph of the top 25 private equity firms and what they are currently invested in:

Click on the graph to get a bigger image, or go to this site: https://www.visualcapitalist.com/25-largest-private-equity-firms-chart/

Note this quote from the above linked site at visualcapitalist.com:

Unlike other investment firms such as hedge funds, private equity firms take a direct role in managing their assets. In order to maximize value, that can mean asset stripping, lay-offs, and other significant restructuring.

Traditionally, PE investments are held on a longer-term basis, with the goal of maximizing the target company’s value through an IPO, merger, recapitalization, or sale.

I think that last sentence should be more like, 'PE makes money by stripping everything of value from the target company it bought, and then selling the carcass'. But, what do I know? Maybe many PE investments turn out ok, I don't know. Some of the companies which were bought out by a PE firm are still out there, like Domino's Pizza.

Recently Ryan Grim did a really good segment on Breaking Points, maybe his best, about private equity firms and how they operate. Ryan put it all in terms that an idiot, like me, can understand. Saagar was his example prey (a small company) and they traded monopoly money back and forth (mostly forth) until Saagar's company was basically destroyed.

Here's the segment, it's worth a watch I think, and I apologize if this has been posted here before, life's been nuts and I keep missing important things:

Music:
A week ago OTC mentioned she was reading about the Alamo, it being the anniversary of that battle. For some reason it made me think of a song I used to love which I could remember nothing about but a few words and the general sentiment. It took me a while, but I dredged it out of my memory and have been enjoying it since. It's funny how much we have learned, or whatever it's called when you groove to a song in your younger years (or is that 'hears'?), listening to it constantly, and then forget it for no particular reason even when you own the album/cd!

Stout and High is by the 1980's alt-country band The Wagoneers. The song's about the Alamo and the lyrics are from the point of view of a soldier and sad, but the music isn't sad at all:

and a live version from 1988, gads, I was only in my mid-20s then, just a kid!

So, thanks for reading and here's the open thread - and remember, everything is interesting if you dive deep enough, so tell us about where you're diving!

Tags:

Open Thread

#private equity

#ryan grim

#alamo

Vote

Comments

Submitted by Sima on Thu, 03/09/2023 - 5:56am

Hello, hello!

Hope the day and the week have been treating you well. It has been colder than normal here, but things are growing never-the-less! The animals have sprung forward, so the dog is insisting on being feed an hour earlier, going out for her barking sessions an hour earlier and so on. The goats want the coyote patrols to be an hour earlier... I figure their 1 am is going to be a 2 am in a few days, so whatever.

Post whatever is interesting you lately, and lemme know what you think about private equity! I love learning from everyone!

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by QMS on Thu, 03/09/2023 - 6:50am

Good morning

Thanks for the money matters essay. I think gjohnsit is perhaps our resident financial
guru, as he posts quite a bit about those things. I lack that processing chip.
So private equity is one form of vulture capitalism?

' the process by which symbolic capital is accumulated '
-
goat ropers beware!
-

—

question everything

Submitted by Sima on Fri, 03/10/2023 - 12:33am

Totally agree about gjohnsit

@QMS
I learn a lot from his essays about finances, and more! And yes, I think private equity is a form of vulture capitalism. I think it's even worse in a way, because it creates the corpse before it eats it.

Love the goat pic! Thanks!

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by Lookout on Thu, 03/09/2023 - 6:57am

Good morning...

What is private Equity? Legal theft.
Back in the 90's the movie "other people's money" is when I learned the way in which corporate raiders operate. I had heard of these take overs, but didn't understand how exactly they take over and sell assets.

It is one reason all our manufacturing was off shored.

Since the catastrophic elimination of Glass-Steagall by Clinton, banks and financial institutions have become nothing more than gambling casinos...gambling with our money, pensions, and in partnership with private equity.
These people are vulture capitalists swooping in to buy entire neighborhoods during economic downturns.

I'm no expert economist either, but I can recognize our economy is rigged to enrich the wealthy and use/see people as profit generators rather than fellow humans.

Thanks for the OT!

—

“Until justice rolls down like water and righteousness like a mighty stream.”

Submitted by QMS on Thu, 03/09/2023 - 7:16am

Exactly

@Lookout

If these vultures were taxed on the cost to social endeavor, they may grow a conscience.
Limit their loop holes to nooses.

—

question everything

Submitted by Sima on Fri, 03/10/2023 - 2:41am

Legal Theft..

@Lookout
Exactly. I had no idea private equity was linked to offshoring, but I can see how it can be.

Bring back Glass-Steagal! Recovering from the current economic stupidity developed under Reagan and Clinton and continued or enhanced by every president since is going to be so difficult, if it's even possible.

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by randtntx on Thu, 03/09/2023 - 8:12am

Good morning

Over at Naked Capitalism Yves Smith has done many articles on Private Equity. The ones that interest me the most are the articles that explain how Private Equity is taking over our health care system. Here is a bit from a book that Y.Smith highlights:

In her harrowing new book, Ethically Challenged: Private Equity Storms US Health Care, political scientist Laura Katz Olson documents how private equity firms are reshaping health care in the U.S., circling in to buy dentist offices, mental health facilities, autism treatment centers, rehab facilities, physician staffing services, and myriad other providers, forcing them into bare-bones, bottom-lined focused “care”.

She goes on to explain how this is accomplished;

In a nutshell, PE seeks to invest or acquire equity ownership in companies and flip them fast for a higher price. They’ll get that higher price by any means necessary – chopping staff, cutting corners, and loading the company with debt along the way. The idea is to buy, squeeze, dump, repeat. Private equity is now a major player in the health care sector, with investments accelerated in recent years at a mind-blowing pace ($100 billion in capital invested in 2018 alone).

“PE firms take over businesses using other people’s money; plunder what they can, and spit out the remains,” writes Olson. And sadly, it’s public pensions that feed the hungry beast. She notes that pension funds, along with endowments and wealthy individuals, finance the largest percentage of PE deals. This means that workers are invested in the very business model that wrecks their jobs – and now, their health.

Further down in the Y. Smith column she documents an interview with Olsen that goes into detail about how PE firms take over businesses. It's pretty horrific. I highly recommend reading it. At the end of the interview Olsen has several suggestions on how to curtail the incentives for PE takeover of health care.

Yves links to a site called Institute For New Economic Thinking, https://www.ineteconomics.org which is a great source for this subject.

The Institute for New Economic Thinking (INET) has focused on the alarming trend of private equity buying health care providers and taking them private through research by Eileen Appelbaum and Rosemary Batt, and detailed the encroachment of private equity into emergency rooms in a series of articles over the pandemic. INET’s Thomas Ferguson and colleagues Paul Jorgensen and Jie Chen have also focused attention on private equity’s political contributions. Now, Laura Katz Olson shares her perspective with INET on how we got to this dangerous place and what we can do to get out of it.

Thanks for the OT Sima. You've brought up an interesting but sad subject. P.E. is the process of further hollowing out our country by destroying our small and independent businesses that were motivated to provide good services if only because that was the only way to stay in business. Private Equity is motivated by profit only. Good service and good outcomes for patients interfere with profit and so are absolutely not the goal. This business model is really bad for our health.

Submitted by QMS on Thu, 03/09/2023 - 8:40am

TESTIFY

@randtntx

Watching the shredding process go full speed ahead with my spouses health care
employer. Her ENT business was bought-out by a 'not for profit' hospital group.
Their company motto is 'Do More', but they left-out the 'with less' part. Cutting
staff, dumping impossible case loads on the remaining few. Burn-out attrition.
It is not about providing quality therapy. Because insurance reimbursements
are more restrictive. And yet the upper management still suck down 6 figures.
It is no longer about health care so much as generating profits.

Over at Naked Capitalism Yves Smith has done many articles on Private Equity. The ones that interest me the most are the articles that explain how Private Equity is taking over our health care system. Here is a bit from a book that Y.Smith highlights: In her harrowing new book, Ethically Challenged: Private Equity Storms US Health Care, political scientist Laura Katz Olson documents how private equity firms are reshaping health care in the U.S., circling in to buy dentist offices, mental health facilities, autism treatment centers, rehab facilities, physician staffing services, and myriad other providers, forcing them into bare-bones, bottom-lined focused “care”. She goes on to explain how this is accomplished; In a nutshell, PE seeks to invest or acquire equity ownership in companies and flip them fast for a higher price. They’ll get that higher price by any means necessary – chopping staff, cutting corners, and loading the company with debt along the way. The idea is to buy, squeeze, dump, repeat. Private equity is now a major player in the health care sector, with investments accelerated in recent years at a mind-blowing pace ($100 billion in capital invested in 2018 alone). “PE firms take over businesses using other people’s money; plunder what they can, and spit out the remains,” writes Olson. And sadly, it’s public pensions that feed the hungry beast. She notes that pension funds, along with endowments and wealthy individuals, finance the largest percentage of PE deals. This means that workers are invested in the very business model that wrecks their jobs – and now, their health. Further down in the Y. Smith column she documents an interview with Olsen that goes into detail about how PE firms take over businesses. It's pretty horrific. I highly recommend reading it. At the end of the interview Olsen has several suggestions on how to curtail the incentives for PE takeover of health care. Yves links to a site called Institute For New Economic Thinking, https://www.ineteconomics.org which is a great source for this subject. The Institute for New Economic Thinking (INET) has focused on the alarming trend of private equity buying health care providers and taking them private through research by Eileen Appelbaum and Rosemary Batt, and detailed the encroachment of private equity into emergency rooms in a series of articles over the pandemic. INET’s Thomas Ferguson and colleagues Paul Jorgensen and Jie Chen have also focused attention on private equity’s political contributions. Now, Laura Katz Olson shares her perspective with INET on how we got to this dangerous place and what we can do to get out of it. Thanks for the OT Sima. You've brought up an interesting but sad subject. P.E. is the process of further hollowing out our country by destroying our small and independent businesses that were motivated to provide good services if only because that was the only way to stay in business. Private Equity is motivated by profit only. Good service and good outcomes for patients interfere with profit and so are absolutely not the goal. This business model is really bad for our health.

—

question everything

Submitted by Sima on Fri, 03/10/2023 - 2:48am

They make money...

@QMS
when we get sick. They should make money when we are healthy... due to their help. But no, the profit, and it seems the drive, depends on making us/keeping us sick. It's insane and so damn sad.

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by randtntx on Fri, 03/10/2023 - 7:50am

It is a shredding process

@QMS . Shredding the fabric of our small towns and communities. I hate to see it happen. I think perhaps our best solutions are to insist on locally owned everything (or at least as much as possible).

Submitted by Sima on Fri, 03/10/2023 - 2:46am

Thanks so much for these great links...

@randtntx
And once again, for your comment. I am learning so much. I'm off to read the article at Naked Capitalism now!

'Private Equity is motivated by profit only'... so true! I am personally seeing this in our local health care, as my father gets worse, the health care gets worse. It's like, 'he's old, so who cares?' The doctors don't talk to one another, they prescribe things that could kill him due to side effects. It's insane.

Over at Naked Capitalism Yves Smith has done many articles on Private Equity. The ones that interest me the most are the articles that explain how Private Equity is taking over our health care system. Here is a bit from a book that Y.Smith highlights: In her harrowing new book, Ethically Challenged: Private Equity Storms US Health Care, political scientist Laura Katz Olson documents how private equity firms are reshaping health care in the U.S., circling in to buy dentist offices, mental health facilities, autism treatment centers, rehab facilities, physician staffing services, and myriad other providers, forcing them into bare-bones, bottom-lined focused “care”. She goes on to explain how this is accomplished; In a nutshell, PE seeks to invest or acquire equity ownership in companies and flip them fast for a higher price. They’ll get that higher price by any means necessary – chopping staff, cutting corners, and loading the company with debt along the way. The idea is to buy, squeeze, dump, repeat. Private equity is now a major player in the health care sector, with investments accelerated in recent years at a mind-blowing pace ($100 billion in capital invested in 2018 alone). “PE firms take over businesses using other people’s money; plunder what they can, and spit out the remains,” writes Olson. And sadly, it’s public pensions that feed the hungry beast. She notes that pension funds, along with endowments and wealthy individuals, finance the largest percentage of PE deals. This means that workers are invested in the very business model that wrecks their jobs – and now, their health. Further down in the Y. Smith column she documents an interview with Olsen that goes into detail about how PE firms take over businesses. It's pretty horrific. I highly recommend reading it. At the end of the interview Olsen has several suggestions on how to curtail the incentives for PE takeover of health care. Yves links to a site called Institute For New Economic Thinking, https://www.ineteconomics.org which is a great source for this subject. The Institute for New Economic Thinking (INET) has focused on the alarming trend of private equity buying health care providers and taking them private through research by Eileen Appelbaum and Rosemary Batt, and detailed the encroachment of private equity into emergency rooms in a series of articles over the pandemic. INET’s Thomas Ferguson and colleagues Paul Jorgensen and Jie Chen have also focused attention on private equity’s political contributions. Now, Laura Katz Olson shares her perspective with INET on how we got to this dangerous place and what we can do to get out of it. Thanks for the OT Sima. You've brought up an interesting but sad subject. P.E. is the process of further hollowing out our country by destroying our small and independent businesses that were motivated to provide good services if only because that was the only way to stay in business. Private Equity is motivated by profit only. Good service and good outcomes for patients interfere with profit and so are absolutely not the goal. This business model is really bad for our health.

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by usefewersyllables on Thu, 03/09/2023 - 8:28am

How does it work?

The Golden Rule.

If you have the gold, you get to make the rules. Period, end of statement, full stop.

As Alvin Lee said:

Tax the rich
Feed the poor
Til there are
No rich no more...

—

Twice bitten, permanently shy.

Submitted by Sima on Fri, 03/10/2023 - 2:51am

Exactly!

@usefewersyllables @usefewersyllables

The gold holders make the rules, the rest of us have to obey. Gah. Also, great song. I haven't heard it in years, but it sure makes the point.

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by randtntx on Thu, 03/09/2023 - 8:39am

Pro Publica did an incredible

story on private equity in hospice care. https://www.propublica.org/article/hospice-healthcare-aseracare-medicare
Talk about a horrific story. Hospice care used to be considered the very best in compassionate care. This example in the article is nauseating.

Things began to change in 2004, when Hospice South was bought by Beverly Enterprises, the second-largest nursing-home chain in the country, and got folded into one of its subsidiaries, AseraCare. Not long before the sale, Beverly had agreed to pay a $5 million criminal fine and a $175 million civil settlement after being accused of Medicare fraud. Its stock value had slumped, and Beverly’s CEO had decided that expanding its empire of hospices would help the company attract steadier revenue in “high-growth, high-margin areas of health care services.” Less than two years later, as part of a wave of consolidations in the long-term-care industry, Beverly was sold to a private-equity firm, which rebranded it as Golden Living.

It might be counterintuitive to run an enterprise that is wholly dependent on clients who aren’t long for this world, but companies in the hospice business can expect some of the biggest returns for the least amount of effort of any sector in American health care. Medicare pays providers a set rate per patient per day, regardless of how much help they deliver. Since most hospice care takes place at home and nurses aren’t required to visit more than twice a month, it’s not difficult to keep overhead low and to outsource the bulk of the labor to unpaid family members — assuming that willing family members are at hand.

The article is long, but really good. It will break your heart though. It's all about money.

Submitted by Sima on Fri, 03/10/2023 - 3:23am

I can see why people I love are wary of hospice care...

@randtntx
And the article you quote (and I'm going to be reading soon) makes it damn clear how that happened. I've a friend who has had to have medical care due to disabilities for her whole life. The care in her little town was once really good. It's crap now, everything has been bought up.

My parents have an independent doctor. He will not take insurance (except medicare), and refused to be bought up by a chain. However, he's 78, and retiring. There's no replacement

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by randtntx on Fri, 03/10/2023 - 7:55am

That Doc sounds great

@Sima . We are running in to the same situation with our Docs retiring. We are having trouble finding new ones who we would like. Looks like there is no replacement. I do hope there are some out there who value their independence. It looks like most Docs don't have good choices either though. They are caught in a trap as well.

Submitted by Enchantress on Thu, 03/09/2023 - 10:00am

Another reason to stay away from Medicare Advantage

Health care should not be for profit. I've had at least three different providers tell me that they were glad that I didn't have Medicare Advantage. Even health care workers are tired of trying to practice medicine because they have to wait to get approval for every little procedure. It makes it hard to schedule appointments when you have to wait two or three weeks for permission. People die waiting.

My friend worked for a small local nursing home. She quit after they were bought out. Didn't like the changes. Now she works for one of the hospices. Hard job watching people die.

Submitted by Pluto's Republic on Thu, 03/09/2023 - 11:44am

In the end, this is the real reason

@Enchantress

....why the US and its compliant citizens have to be left behind by the rest of the world.

Soylant Green

Submitted by Sima on Fri, 03/10/2023 - 3:33am

This goes right to the point...

@Enchantress
And if Iceland can do it, we can, right? Right? Ohh wait, we've got to buy more bullets for Ukraine, or whatever.

American Woman Finds A Lump While In Iceland, Shares How Awesome Their Healthcare Is Compared To The US

Basically an American woman living in Iceland had to go get a lump in her breast examined. It took... no referrals, no appointments, about 45 minutes at the docs (with no waiting), several 'expensive' tests. Sadly she had to pay for the treatment, the total cost around 300 bucks, the initial exam was 3 bucks.

This parallels my experiences in Europe when I was younger. I wanted our country to move in that direction so badly, but not a chance. There's no money to be made!

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by enhydra lutris on Thu, 03/09/2023 - 12:05pm

Good morning Sima, et. y'all.

Ahhhh, the Alamo, Fess Parker, and Tejas. One relevant time line

1808 - Bonaparte invades Spain, destibilizing the Spanish Empire, especially in South America
1810 - Grito de Dolores - Mexican war of independence starts
1813 - Mexico formally declares independence and abolishes slavery, war of indepencence continues
1821 - Plan Igual, Mexican Independence is affirmed and seemingly real
1829 - Mexico, under Santa Anna, again abolishes slavery as part of being independent & free
1835 - Tejas revolution against Mexico

just sayin'

be well and have a good one

—

That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

Submitted by Sima on Fri, 03/10/2023 - 3:37am

History is complicated...

@enhydra lutris
And you show that well in this comment. I am no big fan of war, and I detest and am ashamed of the American embrace of slavery, gotta admit. I love the song though. Heh.

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by soryang on Fri, 03/10/2023 - 9:55am

I just realized

@enhydra lutris @enhydra lutris one of the family clan fought in the battle of San Jacinto. Kind of surprising to me, I had found out about another of the clan's connection to the Alamo, when I visited there in 1986 or 87. Never bothered to follow up on it till now. I had no idea any of the family namesake had lived in Texas.

Guess I came from the poor side of the clan, I have had no relation to any of these bluebloods with the so called patriotic history complete with plantations and Texas independence. My son likes to do those ancestry things, I will have to let him know. This is not a direct ancestor, it's a branch of the family.

Typically, when I hear people say, my great, great so and so, fought in the revolution or whatever, my reaction is "so what?" Although I have to say, that if someone says the they themselves or mother of father served in WWII, Korea or Vietnam, or more recent wars it is meaningful to me. The Alamo reference just gave me a clue to a riddle in my more recent family history, I had struggled to understand for years. Thanks for bringing it up EL and Sima (edit duh!).

—

語必忠信行必正直

Submitted by Shahryar on Thu, 03/09/2023 - 1:15pm

the de-evolution of our local supermarket

when it opened, in 2000, it was pretty cool. They were concerned with the impact on the neighbors. They provided wagons so those walking (like us) could cart our groceries home, the wagons to be returned the next time we shopped. They put up photos of the local farms where their produce and meat came from. Those were the good times. They lasted until 2009 when something called Endeavor Capital became the majority owner. No longer did we have carts. The tags on produce that used to say "McMinnville, OR" now said "USA". The local chicken became Tyson, all the way from Arkansas. Wonder Bread appeared on the shelf.

Since then it's been sold twice. They're about to install the self-checkout machines. And sadly, our alternative store is closing down at the end of the month so we're stuck. As in "yuck"

Submitted by enhydra lutris on Thu, 03/09/2023 - 1:40pm

Grocery stores are favorite and frequent

@Shahryar

targets, all of ours keep getting churned over and over.

be well and have a good one

—

That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

Submitted by Sima on Fri, 03/10/2023 - 3:42am

We've a supermarket like that...

@Shahryar
When it opened 20 years ago or so, it was wonderful. Slowly, like yours, it's gotten worse, but not drastically - yet. Ours is still basically independent, part of a local chain which is NOT owned by a bigger chain. It's still selling local produce and such for now, which makes me happy. People will drive an hour to shop there, an hour!

I hate the way grocery stores are targeted for these takeovers.

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by humphrey on Thu, 03/09/2023 - 1:26pm

The war mongers are running the government (cuckoo's nest)

What could possibly go wrong?

"The United States will not allow Iran to acquire a nuclear weapon." - Lloyd "Raytheon" Austin pic.twitter.com/AMrMX7fK2E

— AZ (@AZgeopolitics) March 9, 2023

"The Iranian nuclear threat requires us to be prepared for every course of action,I repeat and emphasise.We must be prepared for every course of action." - Israeli Defense Minister pic.twitter.com/NqA1CNKyFk

— AZ (@AZgeopolitics) March 9, 2023

https://t.co/26nZ15Bk9e

— AZ (@AZgeopolitics) March 9, 2023

https://www.washingtonexaminer.com/policy/defense-national-security/bide...

The Biden administration is requesting $842 billion in its new defense budget request for fiscal 2024, which continues the trend of it increasing from year to year.

President Joe Biden's request this year is $26 billion more than the enacted level for fiscal 2023, an increase of 3.2%, and it's nearly $100 billion higher than the year before that. Specifics of the defense budget will be released next week.

Submitted by exindy on Thu, 03/09/2023 - 3:21pm

I don't believe the war mongers are part of DoD

@humphrey

They draw funds from multiple agencies and are not subject to oversight over their functions. Eg, DHS, State, Executive Br, etc. The original separation of functions which were a form of checks and balances is gone. Dismantled after 9/11.

We often talk about the revolving door but there is no door. There is no oversight, no separation of functions. The intern program for foreign "leader" is to our shadow agency and paid out of funds which are allocated to our alphabet agencies.

Wonder where those billions that were "lost" in our proxy wars? They weren't lost. Ask our shadow agency where they are. Wanna bet a big chunk of the money sent to Ukr is being used to overthrow Georgia? Fly our "diplomats" to Taiwan, Iraq, Kosovo, Moldova, etc, and pass out pay checks.

(added on edit) I forgot to include the funds passed on to this shadow group from the NGOs and individuals in the form of "humanitarian donations" -- you know, widows and orphans checks. Maybe some money to help people like Cookie during those dark days when she didn't have an income from her gubmint job.

Submitted by on the cusp on Thu, 03/09/2023 - 2:55pm

The CIA is not audited.

@exindy No budget is ever produced. There is no official list of employees. There is no accounting for financial assets, or any other assets, including spies and informants referred to as human assets.

—

"We'll know our disinformation program is complete when everything the American public believes is false." ---- William Casey, CIA Director, 1981

Submitted by Pluto's Republic on Thu, 03/09/2023 - 3:00pm

The Head of the DoD is an infamous warmonger.

@exindy

Submitted by Sima on Fri, 03/10/2023 - 3:49am

Very good points!

@exindy
I think a lot of the money is, as you said, being used for other 'operations'. I think a lot of it is lining the pockets of our stooges like *linksy. Just like the tales of the planes full of money being flown out of Afghanistan when the government fled... wonder what happened to reporting on that?

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If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by soryang on Thu, 03/09/2023 - 5:50pm

Austin appears

@humphrey ... to be trying to restrain Israel. He put the tough sounding talk out there toward Iran about nuclear weapons development to reassure Israel, so that it wouldn't attack Iran, by laying out the public stance, that the US doesn't want Iran to have nuclear weapons either. Iran presents some interesting challenges in terms of a potential military conflict. I had often thought in the past that it would be difficult for Israel to mount an air attack on Iran, without tacit US cooperation and even support aircraft from the US or forward base support. The distances involved are great. Maybe Israel could use subs to launch cruise missiles at Iranian nuclear sites. This kind of attack, might also escalate into a wider war and is not acceptable in the international community.

But the fundamental consideration for the US is embroiling military resources unnecessarily on a third or fourth potential military front. This would draw assets away from Ukraine and the two related but separate fronts in northeast Asia (North Korea) and the East China Sea, (Taiwan) and the South China Sea, gateway to the Indian Ocean. In spite of its huge military budget, the Pentagon is still resource constrained because it has basically bitten off way more than it can chew already, trying to dominate the entire planet without mobilizing for war at a WWII level. Even then how long would it take to ramp up the industrial capacity which the US now doesn't have. Both Russia and China are first rate military powers despite the claptrap in the western press. That's why they are called "peer rivals."

Currently, the US has production constraints (industry), manpower constraints (recruitment), and logistical restraints (building more Western Pacific military bases). The costs of trying to dominate the world requires shifting obligations onto allies, while at the same time, keeping them from setting the agenda for the next war.

See this military times article on the AUKUS plan below. I think it's quite revealing.

In AUKUS, Navy eyes a full-service submarine garage in Asia-Pacific
Mar 9

WASHINGTON — The U.S. Navy envisions a submarine hub in Australia from which the service can oversee the entire range of undersea activities in the Asia-Pacific region, from boat production to repairs to missions, service Secretary Carlos del Toro said last month.

His comments, made ahead of a major announcement about the U.S.-U.K.-Australian submarine partnership dubbed AUKUS, reveal how Washington views its future relationship with Australia as a key foothold in closer proximity to rival China.

One thing has become clear during the 18-month study phase announced at the pact’s start in September 2021: it could be decades before Australia gets its nuke-powered subs.

Reuters reported Wednesday the eventual submarine design will be British, with U.S. Virginia-class boats intended as gap-fillers until then. Options for operating American submarines entail deploying dual U.S.-Australian crews on American subs and building up to five new boats, officials told the news service.

Lawmakers here have been saying for months the prospect of selling U.S. submarines to Australia will further tax an already-strained industrial base.

https://www.militarytimes.com/global/asia-pacific/2023/03/09/in-aukus-na...

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語必忠信行必正直

Submitted by Sima on Fri, 03/10/2023 - 3:47am

They could slash this budget

@humphrey
by half, still leaving it one of the biggest, if not the biggest 'defense' budget in the world, and pay for the health care we all need! They could pay for the homeless to get homes, they could help people get good wages, they could stop private equity, they could... yea, not a chance they will.

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so

Submitted by on the cusp on Thu, 03/09/2023 - 3:40pm

Private equity

only piqued my curiosity a bit when Romney was running for President. After he lost, I lost interest. Nevertheless, the predators are buying up everything in the US, so this dunce promises to give this all due consideration today.
The song was great, Sima!
Let's hope the day never comes when we must fire off a cannon, yell, "Come and take it!"

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"We'll know our disinformation program is complete when everything the American public believes is false." ---- William Casey, CIA Director, 1981

Submitted by Sima on Fri, 03/10/2023 - 3:53am

I never paid much attention to private equity either...

@on the cusp
Until I happened across this explanation by Grim. Although gjohnsit's posts bring it and other financial/Wall Street shenanigans to my attention. And I agree, no cannon firing please!

—

If you're poor now, my friend, then you'll stay poor.
These days, only the rich get given more. -- Martial book 5:81, c. AD 100 or so
Nothing ever changes -- Sima, c. AD 2020 or so