Sunday, May 20, 2007

£367bn global buying spree brings risks!

'No firm is safe from private equity'

Economic stability was coming under renewed focus as central bankers warned this weekend that highly leveraged hedge funds were creating a risk to the global financial system.

Posted by nearly30 @ 05:08 PM (564 views)
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14 thoughts on “£367bn global buying spree brings risks!

  • Nearly – I think the Harry Enfield comedy points about Hedge Fund managers, Posh Builders etc are well made here and a barometer of the times.

    Actually the Posh Builders is a nice comment on society. I know of science graduates who also trained as plumbers and electricians while they were undergraduates. I also have a friend who was a Physics Graduate (with 1st Class Honours) who retrained as an accountant immediately after graduating.

    These guys saw the writing was on the wall ages ago for British Science and manufacturing – and left the profession much to the detriment of the country – but at least allowed them to put food on the table for their families – and a roof over their head. Others (like me) simply left the country for pastures new.

    Academic/Research pay is sooo [email protected] that I suspect that academics have not been able to get a mortgage for several years now even with the lax lending policies.

    The long term prospects of a society are forecast in the status (pay) that is given to scientists and Engineers. Contrast the future that Germany has now. It has always valued its technical and scientific base. Germany values those who make things over those who sell or count them – which is precisely the opposite to the UK,

    In the UK scientists and engineers are on the same wages as toilet cleaners – some reward for all those years of slog through the hardest of exam paths. Very galling when some cotton-wool-brained Art student who slept through university becomes your boss simply because they can do a Powerpoint presentation about your work.

    Rant over.

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  • The interesting point about Hedge Funds and Private Equity Buyouts is who pays the bill for their financial asset stripping. The people behind these financial antics are only interested in making as much money as possible in the shortest amount of time. These financial smash ‘n’ grab raids will end up being paid for by the average man on the street through increased taxes, poorer pension returns, lower job prospects, higher unemployment etc. etc.

    I suspect that a lot of the money made out of the property boom is now being channelled into this practice which is giving capitalism an increasingly dirty image and may eventually result in the emergence of extreme politics in this country.

    Wake up and smell the reality, your standard of living and eventual retirement hopes are at risk!

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  • Which is all an absolute catastrophy for those with any sort of stake in the future of our Country. Once education has become nothing more that the gaining of skills in order to get a job, vital lessons from history and philosophy are lost and we are thus doomed to make the same mistakes over and over again.

    Once an education system teachs all to view the world as an ‘economy’ and to aquire only the skills needed to serve ‘business’, Nations start to elect representatives who also view the world in this way. Leaders start to believe that the World can be integrated into a single ‘economy’ and that Citezens will happily accept their new status as mere ‘consumers’

    History provides many a lesson for leaders tempted to forget that an economy is only a part of a Nations whole, and furthermore, of the terrible concequences that can result from expanding the grip of ‘International Capitalism’ into areas of life, and geography, where it is unwelcome.

    But you probably wouldn’t know it if you only ever studied business and finance.

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  • The whole heap is rotten to the core, it would seem they are all trying to make a killing before the market self destructs.

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  • Looks like Virgin Media (ex NTL/Telewest) might be the next 7bn private equity victim.

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  • This whole global buy-out is worrying for workers and the economy as a whole. What bothers me is that these Private Equity Buyouts make the target of investing in people very difficult [as a principle] and how this will effect the new and recent graduate market – let alone the employment prospects of many in the UK.

    Basically – you think you are getting somewhere then your firm gets bought out and you get made redundant – or get a worse pay deal.

    For an interesting slant – read this rant from a Graduate blog – about their experiences:

    Going to Uni was the biggest mistake I ever made! 3 years of hard work and I can’t even get a minimum wage admin job! I’m 23 and currently working in a call centre where my 26 year old team leader gets paid twice as much as me despite having not even a gcse to her name! This wouldnt bother me if there wasnt so much *censored* floating around as to how important it is to have a good education-what a crock, employers don’t care about degrees, they want experience and by going to uni, it’s impossible to have the level of experience they’re looking for. Grad schemes are ok if you’re a maths genius that can actually pass those damn online tests or fancy doing a 13k job for 2 years with no guarantee of moving up the ladder.I wished I’d not bothered working hard in school and got pissed every night and had 3 kids and got a job in a shop. My class mate pretty much did that and now is self-employed in the beauty field with her own house etc- sorry for the rant guys!

    Also worth a read is As private equity deals grow, so does public anxiety

    Federal Reserve Chairman Ben S. Bernanke is paid to watch out for creditors, and last week he warned that financing for private equity deals posed “significant risks” for banks and that the central bank was taking a closer look.

    Shareholders may feel that private equity investors are stealing their companies, and workers may believe they aren’t fairly sharing in the wealth. But Bernanke raised the most serious risk of all: that the private equity mania could be sowing the seeds of the next major U.S. debt crisis.

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  • Ditto to the rant. Slogged for 4 years for a BSc at uni (Microbiology) and ended up finally finding work at the bottom of the career ladder earning £8.5k per annum! Thankfully managed to work my way up to a fairly respectable £27k with a partner earning £50k (he left school at 16, never went to college and simply worked his way up the ladder). Why oh why do we bother to better ourselves?

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  • Two undergraduate degrees, a research masters, and a doctorate in a mathematical science from Oxford…and what did I get paid when I was a research fellow at one of the “best” Oxbridge colleges after fending off 180 other applicants similarly educated? 14k per year, and the right to live in a hovel with no central heating, no cooking facilities and an, effectively, outdoor loo. I still remember walking into the digs when I arrived at my new job, looking around at the buckets catching the drips from the ceiling and the fungus garden under the sink and thinking what the **** am I doing this for. That moment was my turning point. Luckily for me I had a mathematical education, which is highly transferable (i.e. I can squander it working in finance). If I’d been an historian or wet biologist or similar….well it just doesn’t bear thinking about. I know one who became a truck driver (and thinks its great), I know others who are in the sorts of jobs for which they don’t need degrees, let alone Ph.D.s. What a complete and utter waste of a nation’s intellectual capital.

    And don’t even get me started on the standard of education being provided in the bureaucratic, internal market driven universities of the 21st century. The number of people in science departments who looked pityingly at me when I suggested that I enjoyed teaching and that perhaps it might be one of the reasons we were here… There is almost no “value being added” in many universities, at least at the undergraduate level, partly because the students get so little attention.

    I despair!

    Whilst I’m at it, one of my colleagues (from Romania) was discussing with me his daughter’s primary school (in England). They refuse to correct spelling as it “stifles creativity”. What poppycock. You can’t be truly creative until you know something. He’s furious, but can’t do anything about it. Who are the idiots who come up with this stuff?

    Academics have not been able to get on the housing ladder unassisted for years, certainly since 2000. In general, most of the young academics I know who are still in the job have one or more of: (a) rich parents, (b) a partner who is either a doctor, lawyer, or banker, (c) a desire never to have a family/life. I had a colleague who was offered a tenured position in Reading about 5 or 6 years ago, which he had to turn down as he and his wife could not afford to buy a house there. Did I mention the professor they found in Oxford living in a bedsit in the sink estate? The fact that they can’t fill certain professorships because they take one look at the salary and the cost of housing and just laugh themselves all the way to a decent US institution.

    I’m 37 now, and could have happily hopped on the housing rocket in London if only I’d had the sense to take up a job as a banker 10 years ago. D’oh!

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  • Skint Academic says:

    D’Oh. You’ve spoken for us all! Thanks for the rant. It’s good to hear other people say what we’re thinking.

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  • I agree that the emphasis in the UK is more on selling advertising and presentation in most work places but it really does come down to your choices when choosing a course or a career at age 18 – 21. I studied Civil Engineering at Uni and out of our class of 40 in year 2 only 8 people admitted that they wanted to work in Civil Engineering. This was despite the fact that studying Civil Engineering really does give you a firm career path with excellent prospects. It just seems to me that most people do not want to work hard. It’s a cultural thing in the UK. I don’t think anyone can change that and certainly not in just a few years it could take generations. There are a few career orientated courses at Uni available, but most people opt for the easy courses. We used to study 40 hours a week and then had to do 4 hours homework at least just to stay on top and pass our Civil Engineering exams but you knew why you were studying, i.e. real skills to make buildings stand up. While others studying history and english had 12 hours a week and the rest free periods, now tell me that they didn’t know what they were choosing when selecting a Uni course. You can’t expect everything to be handed on a plate to you. By the way most Electronic, Chemical and Civil Engineering Grads get jobs inside and outside of the UK because they are highly sought after. Agreed they do not get the “respect” that say an engineer in Germany or France would get.

    Eventually our UK attitude of school and workplace has to be fun first and foremost will turn around and bite us in the @rse as other countries will overtake us.

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  • Another thing, you can’t expect to study just Maths and then expect an employer to take you on because you are good at theoretical and pure maths. Face it, businesses are there to make money, how exactly would your skills in pure maths benefit an employer, apart from the fact you have shown yourself to be more intelligent than most other people. Maybe you should have planned your career rather than rely on others (in this case an employer) to try and fit you in with the skills that you have.

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  • The minds of men were reduced to the same level, the fire of genius evaporated.

    Edward Gibbon ” Decline and Fall of the Roman Empire”

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  • Darren – I presume the maths comment was directed at my rant? I planned my career in academia, from sometime in high school in a time when it was still a respected profession, but the world went nuts. I’ve never had a problem getting well remunerated jobs outside of academia. I’m terribly pragmatic. Although my initial education was in pure mathematics and theoretical physics, I’ve since worked inconsulted for telecoms, biology, the oil industry, economics and finance. I’m currently employed (with generous stock options) as the head of a software team at a small company that builds financial exchanges. I’m not whinging about the world not providing me with a living, but how can we have a properly educated workforce if we don’t have a decent tertiary education system? How can we have a decent tertiary education system when those who are committed to it are expected to survive on no job security until perhaps their 40s, combined with pitiful salaries and a working week that never ends? I know junior academics (myself included) who tried to get on the housing ladder back in the 90s, but who were refused mortgages because they could not prove that they would have employment for 5 years, as research contracts are 1 to 4 years long and the age at which people get tenure is getting older and older. With house prices as they are now, I am well and truly stuffed, unless I want to buy a railway carriage, I mean new build apartment.

    I’m fine, but even with a salary far beyond what I would ever get in academia, I still cannot justify leaping onto the housing roller-coaster in its present state. For different reasons, I cannot justify leaving my pension to a company; I manage it myself. That I feel have to do these things is just evidence that there is something deeply, deeply wrong with how our society functions.

    In the company I work for, we employ people without specific degrees. All we are looking for is someone bright and who has learned how to think. One can get that from studying any subject area, provided one does it in depth. This is one of the wonderful attitudes that I see in British employers which you don’t see in many other countries. None of the developers we have taken on actually have degrees in computer science. We’ve found that most of the new degree level cs grads have such poor training they are basically useless to us. I don’t see how business/career focussed degrees actually solve anything. The problem is deeper than whether people do media studies or not. (I will agree with you that engineering degrees still seem to enforce a solid education.)

    My belief is that the UK and Australia (I’m Australian) have education systems that fail students – they do little more than leave them in debt. Of course one can chose to utilise the opportunities available to you at university or not. But, given human nature, most will not utilise those learning opportunities unless they have to. Any education system has to take that into consideration and not pander to it. I’m sure many students would rise to the challenge of obtaining an education if the challenge was presented to them. Instead, because of the workings of the internal market for students (especially bad in Australian universities) I found myself in departmental meetings discussing by how much the the pass mark should be lowered for 2nd year students so we didn’t lose them to the psychology department – for if that happened we wouldn’t be able to pay the department’s photocopying bill. One of my friends lost his non-tenured position because he had the temerity to fail the 10% of his class that handed in absolutely no work whatsoever during term. I kid you not. Students do no work because they know they don’t have to do any work to pass. The fact that English Lit. grads can get their degrees with only 12 hours work a week is part of the problem. If the universities took their job seriously one wouldn’t be able to do it. What is the point of people wasting 3 or more years not getting educated. It’s a waste of everyone’s time and money.

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  • d’oh … Well written, point taken. I also despair at the education system in the UK, I am not sure where to advise my son to study when he turns 18. I am not even sure whether the motivation for reducing our educational standards is political at a higher level, class driven or just greed for money. Whatever the reason, it is clearly not working as it should, I do not have faith that it will be repaired in the near future. Same old story, I am not staying in the UK for much longer, but I will visit in a good few years after leaving, I know for sure that things will not change for the better, by then at least I can laugh about the state of the country, which once was great but now is broken.

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