Showing posts with label transparency costs inflation Loewen. Show all posts
Showing posts with label transparency costs inflation Loewen. Show all posts

We are in a brave new private equity world

I recently had lunch with an expert in private equity who shared his helicopter view of the Canadian scene. He believes that we may be sitting calmly seeing the markets recover, but there are severe clouds on the horizon. Here are a few of his points - see if you agree:

  • Power has swung from Wall Street to Washington. Government is now where the power lies because business has proven to be dangerous. Between melting down the global economy to Bernie Madoff outrages, business is not seen to be capable of making clear headed decisions.
  • Tax payers’ money is funding auto industry and GM pension funds. The government is setting bankers’ pay. Government believes it is more capable than business experts to run companies.
  • Increased regulation is now a given by government officials. For example, pension Funds in California are being asked to be completely transparent about their investments. Any private equity fund with pension fund money will need to operate like public money. The logic is that it is tax payer money in pension funds and transparency is to be expected.
  • The European private equity associations are developing transparency codes before they are regulated to do so.
  • Government used to be open to how to help business, but that door has slammed shut. Now Government wants legislation and regulation. The same regulation for big business applies for small business and that is too bad if the costs are too onerous.
  • The swing away from America to the East will remove the US $ from being the currency. The dollar will drop to 70c and money will be printed like crazy, boosting inflation. The US dollar will be lower than the Canadian dollar which will rise because of increased demand for raw materials. Companies manufacturing using the Canadian dollar and selling to the US will be pinched.
  • Obama is moving his focus away from Europe to the East. Brand America is broken and this has tremendous consequences for society.
  • Improved technology to hold virtual meetings means that business travel will drop and all industries feeding into travel.

Jacoline Loewen, author of Money Magnet and partner with Loewen & Partners, private equity.