Okay, ladies and
gentlemen, welcome
to the Solari Report.
We have an
outstanding guest
for you tonight.
Tiffany Cianci
is someone I’ve
wanted to talk to
and interview for
quite a while.
And Tiffany, thank
you so much for
joining us on
the SLE report.
We really
appreciate you.
We appreciate
your work and we
appreciate your
taking the time.
’cause this is
gonna be a major
conversation, right?
I am so excited
to be here.
I’ve been a huge
fan of you for
a long time.
I’ve been a huge
fan of your work
and I know we have
a lot to go over,
but I’m excited for
every bit of it.
So I’m hoping we can
integrate so much of
what we’ve been doing
at CER with what
you’ve been doing
because you’ve been
doing a great job.
You also have, I
call it the Outward
Bound Law Degree.
So Tiffany had a
successful career and
then decided to start
her own business.
You started a gym
for children at it
was a franchise.
You were head
of the franchise
association.
Yes.
And Private equity
came along and bought
up the the top
layer of the company
and then started
to change the deal.
And you ended up
in a situation
where you and
many of the people
other franchisees
were suing.
And it’s turned
into the litigation
from hell join the
Litigation from
Hell Club where
we’re all here.
It’s a small club
and none of us are
happy to be here,
but we’re happy to
have each other.
That’s why I say you
have an hour bound
degree, law degree.
Anyway, but it,
it became a very
famous story.
And who was it?
It was Washington.
The Washingtonian
wrote it up in
a great title.
The Lawsuit
from Hell.
Yeah, they did one.
And then we were
on the cover of
the New York Times
with an 8,000
word article too.
And I wish
we never had
to be there.
I wish all of the
small businesses that
I was defending never
had to be there.
I wish my family
never had to be
there, but I’ve
learned the hard way
that the world wasn’t
quite what I thought
it was, and that
it’s changing faster
than I want it to.
And that small
businesses are
eroding faster than
our economy can bear.
And along that way
I’ve been able to
do a lot of good.
So it, two
things happened.
You got shut down
by the pandemic
at the same time.
Private equity
was trying to
change the game.
And so you got hit
by the dirty guys
on both sides.
It was really
a squeeze play.
And what’s been
fascinating about
your journey is
you just keep
investigating and
figuring out what’s
really going on.
So the subtitle
on this interview
is See the Game,
change the Game.
And you have really
done a deep dive.
And so we’re gonna
talk today about
seeing on private
equity, see the game,
change the game.
The most important
part, I’m just
telling all the
audience, the most
important part is the
last section where
we talk about how you
use this knowledge
to navigate your
economic life and
make sure you’re not
hurt by this game.
That’s our goal here.
But it’s very
important that
you understand
the private equity
industry, what it is,
where it came from,
what their tactics
are, what their
case history is.
We’re gonna go
through some
case histories.
But I will say
this Tiffany
continues to deal
with very significant
litigation and
expensive litigation.
And so one of
the things I’m
gonna encourage
everybody when we
start and when we
stop, we’re gonna
have your website.
You have a beautiful
website, and we’re
gonna have your, all
your social media
and the commentary.
But I really, we
will also have your
GoFundMe account,
and I wanna show it
right now because
it’s really important
to me when somebody
fights this kind
of litigation
on behalf of all
of us, we really
wanna support you.
And no amount of
money is too small.
I think the more
donors you have
there, there’s really
strength in numbers.
The more number each
donation as far
as I’m concerned,
is a prayer.
So somebody just
gives a dollar or
$5, it’s a prayer,
and the major donors
see that, and then
they’ll pile in if
they see the numbers.
So let’s just
take a look at
your GoFundMe.
There you go.
I wanna see that hit
a hundred thousand
by the end of 2026.
Guys,
that was actually
the photo from the
cover story in the
New York Times.
Oh great.
That’s great.
That was a child I
was teaching a child.
I’ve known since she
was born, actually.
She’s still a child.
I love, I’ve
gone to Oliver
birthday parties.
She’s the best kid.
And and it breaks
my heart to see
that because that
space is gone now.
Yeah.
It didn’t survive.
Okay so we’ll
have all of that up,
but let’s dive in.
I wanna start by
talking, just giving
some background on
the industry and
we’ve prepared a
series of charts to
help you describe
the history of
this in industry.
I first came into
touch with it when
I was on Wall Street
because we were in
the middle of the
KKR takeover of RJR
Nabisco, which we’re
gonna touch on later.
But that was
really the time.
That wasn’t the
true beginning of
private equity, but
it was really when it
came on the stage.
So let’s talk
about the industry
and the growth of
private equity.
So if we could pull
up the first chart,
what is phenomenal
to me, ’cause I’ve
done a lot in my
career with the
stock market, is to
realize that private
equity now controls
more companies than
are present in the
public stock market.
That
is correct.
By a lot
actually.
It’s a pretty
significant number.
It’s a very
significant number,
not in terms of
assets under
management, but in
terms of numbers
of companies.
So we’re looking
at a chart that
starts in 1995
and goes to 2024.
The green line
starting at the
bottom is PE
owned companies.
And and then the
blue line is publicly
traded companies.
Now what’s
interesting is the
publicly traded
companies, and
this is just US
market is more than
70 trillion now.
And if you look at PE
owned companies, it’s
probably about six to
8 trillion in the us
It’s more globally.
I think we’re
sitting between
10 and 13% of GDP
is private equity
acquired right now.
But if you look
at the number of
companies, and one
of the things we’re
really seeing is
that this is one
of the ways that
they’re rolling
up small business,
small practices.
This is really taking
over what used to
create family wealth
and when you add
it to what happened
in the pandemic, of
course, wall Street
got an injection
of $5 trillion.
Main Street got shut
down and everybody
got squeezed.
So it was a field day
for people who wanted
to roll up companies.
Anyway, so let’s look
at the next chart.
So this is the
number of employees.
So privately e
equity or funds
managed by private
equity companies
now have almost 14
million employees.
That was last year.
I think we’re
actually
approaching 16.2
million this year.
And it’s going fast.
Okay, next slide
then this here we’re
looking at value.
And this is the
global numbers,
not the US numbers.
So if you look at
the value of publicly
owned companies,
they’re still much
more significant
because you don’t see
the big, the large
cap companies owned
by private equity.
It’s much more
rolling up the
smaller and mid-caps,
but it’s still,
you can see it’s
growing and it’s
very significant.
And I should say
the European and
Asian private equity
is now just really
getting going.
The US has been
dominant and as
private equity is
grown added to it
is private credit.
And so especially
after the financial
crisis, we’re seeing
a lot more of the
lending being done
in private credit.
And of course,
private credit
can leverage the
private equity.
And so the games
that can go on,
and you’ve pointed
out many of them
are extraordinary.
Okay.
So some of the
really large private
equity companies
have gone public.
And what that means
is the company that
manages the private
equity funds is
publicly traded.
They’re the ones
who get the fees and
then they raise funds
from institutional
investors.
And those funds, by
and large, are not
publicly traded.
They’re private.
And so they’re
managing
private equity.
But the holding
company, the company
that manages them
is publicly traded.
And here we’re
showing that from
2007 on, so basically
the financial crisis
on, we’re showing the
performance of some
of the big private
equity companies.
At the top you
have Apollo.
Then you have KKR,
then you have,
I’m looking at
the green one.
What’s the green one?
That looks like
that’s either
Blackstone or
black Blackstone.
I think that’s, yeah,
that’s Blackstone
and yeah, we have
Blackstone next.
And then where’s
the s and p?
That’s the pink
line, I believe.
Yeah, it’s the red.
So there’s the s
and p in the middle,
and so we have both
Carlisle and TPG
not outperforming
the s and p, but
if you look at the
outperformance,
it’s extraordinary.
And it reminds me
the head of capital
markets, when I
was at Dylan Reed,
whenever somebody
would outperform by
a significant amount
would come roaring
out of his office
and say, tell me
why I’m so lucky,
because in a
competitive market
that shouldn’t
be happening.
It reminds me, I was
just looking at a
chart somebody made
of the extent to
which Nancy Pelosi
had outperformed
Warren Buffet in
the stock market.
And it was again,
quite extraordinary.
Okay, we’re gonna
look at the same
chart, but from
during the going
direct period.
So the going direct
reset began in
August of 2019.
And so this is August
of 2019 to date.
And as you can see,
the out performance
against the s and
p is even stronger.
Yes.
Yeah.
With KKR now stronger
during this period
than Apollo and
Carlisle as well.
Yep.
Okay, so next chart.
So clearly done
really well.
So let’s look at the
billionaire list.
If you look at
the Forbes 500
billionaires and
okay, how many of
those folks are
private equity, it’s
quite extraordinary.
You have they’re not
at the top because
generally the top
is intergenerational
pools of capital
that have had more
time, but it’s
extraordinary.
How many for an
industry that just
really took off in
the mid nineties,
how many billionaires
you’ve created.
All of global
management comes in
and they have six
founders, three of
whom run the company.
Leon Black,
Josh Harris,
and Mark Rowans.
You know where
Jeffrey Epstein came
from, don’t you?
Who paid for
the flights?
Who gave him 200 or
$150 million for tax
revenue services?
Apollo Global
Management,
Leon on Black.
You have to
know this part.
You have to know
all these parts.
But then you also see
how private equity
has manipulated
retail investors
because they’ve
done it from the
start, right?
Because it’s one
thing for companies
to go bankrupt.
It’s one thing
for all these
employees to lose
their jobs and
everyone lose money.
But everybody
wins too.
Are you kidding?
Canada’s invested
in this US economy.
The number one
investor in private
equity period,
the Ontario’s
teachers pension
Ontario, I forget
what it’s called.
It’s like the
O-T-T-P-P, whatever
it’s called.
But yeah, they’re
investing to money
here on our market
in private equity.
So when you see
messages come across,
when you see deals
being done, you
have to ask yourself
who’s on the other
side of that deal.
I think during the
pandemic, the number
I had heard was 500
plus, but yesterday
you used another
number 500 and yeah,
I said there
were 551 new
billionaires created
while 35 million
small businesses
were shut down,
right?
And it was
extraordinary because
you shut down all
the small businesses
and you leave the
big businesses open.
And of course,
the market share
has to walk
across the street.
It has no choice.
And beyond that,
what it allowed were
distressed, like
corporate gr grabs
by all of these
private equity firms
to roll up regional
monopolies and
entire industries
by paying less than
these companies
otherwise would’ve
been worth in small
business areas like
veterinary care
and HVAC roofing,
plumbing, right?
All of those were
just bought up
for pennies on
the dollar because
they were shut
down and they had
no other way out.
And two things,
both SPACs and some
of the money we’re
gonna look at.
And the injection
by the fed of the
$5 trillion it
basically funded a.
A shopping budget
for these guys to
go shopping at the
same time, the guys
they’re rolling up
are squeezed and
in a distressed
situation, thank
you, US government.
Okay.
Next chart.
And if you look at
the concentration
by firm of the
billionaires, by
firm, and of course
the winner you can
see is Blackstone.
Blackstone
always wins.
The rest of us
always lose anyway.
The game is
not over yet.
No, it is not.
No, it is not.
That is right.
We’re I think that
the entire population
is starting to wake
up and recognize
that they’re done
spending their money
with people that
don’t give anything
back to the economy,
to, to our country.
I think people
are waking up.
So this is I we’ll
get into the model
in just a second.
Okay.
Next chart.
Okay.
So this was a chart
that I wanted to
put together and
show you, and you
were kind enough
to look at it
yesterday because
what we’ve seen is
what I describe as
a financial coup.
And in the process of
that financial clue
between the money
that’s gone missing
from the federal
government and the
bailouts from 1998,
essentially to 2015,
we had $50 trillion
pulled out of the
federal government
one way or another,
or the Central Bank.
And then in
addition, during the
pandemic, we had a $5
trillion injection.
That’s an awful
lot of capital.
And the question
I always get is,
where does it,
where did it go?
And there are many
places it could have
gone, but one of
the things that’s
remarkable is if you
look at this chart
and you compare
it to the rise of
private equity,
particularly after
the financial crisis,
it’s remarkable how
much capital they
were able to raise.
And it’s I don’t rem
have you ever seen
those old Pillsbury
dough commercials
where they squeeze
in the Pillsbury
dough boy and
then he balloons
someplace else.
Yes.
So when 50 trillion
or $55 trillion
leaves the place.
It’s gonna show
up someplace.
And it’s simply
remarkable to me
how private equity
then takes office.
The money is
disappearing
someplace.
Anyway, I just
wanna point that out
because there’s an
enormous I would say
correlation between
money disappearing
from the federal
government and the
rise of the private
equity industry.
So let’s move on.
So that’s the growth
of the private
equity industry.
Oh, I wanted to
mention one thing.
Let’s just and
let’s just do it now.
During that period
when the money is
going missing, there
were public policy
changes that you
mentioned when we
first talked, that
made a tremendous
difference to
helping the private
equity industry
really get going
and flourish.
And maybe we
could just mention
them quickly.
One was Reg D the
Reg D changes, one
was the qualified
purchasers in 96,
and the other of
course was Glass
Stegel in 98.
You wanna just Yes.
Say a few words
about those.
Yeah.
So a lot of people
think there are many
people that like to
lay bad financial
policy entirely
at Reagan’s feet.
So many people
say this was
Reagan or trickle
down economics.
In reality, the
expansion of private
equities access
to our markets and
their ability to
hide whatever they’re
doing on their books
from the SEC and any
type of auditing or
scrutiny has been
expanded under every
single president
since Carter.
Every single one,
including Trump.
And so what we saw
were that there
were two very
large expansions
be because back
under Carter, the
only way a private
equity firm could
invest was with 35
or fewer investors,
and literally less
than a million
dollars to start.
Okay.
And then when we got
to the Regulation
D Rule 5 0 6, which
took place under
Clinton with a
bipartisan Congress,
what they did was
they took quite a few
of the wheels off.
They gave them a
hundred investor
limit, and they
made it so that
they didn’t have to
register with the
SEC as long as they
complied with being
like a qualified
investment company.
Okay, so that meant
they could keep
everything secret.
Yes.
They could keep
everything secret.
And it was no
longer 35 investors.
Now it was a hundred
very wealthy people.
And then also under
Clinton, we got the
qualified purchasers
under Investment
Company Act.
That was in 1996.
And this means that
as long as they
chose they added a
section called three
C seven, which meant
that they, you could
invest private funds
and avoid any type
of registration or
scrutiny as long as
they were qualified
investors, meaning
they had $5 million
in assets, or an
institution had $25
million in assets.
And as long as
that was the only
type of investors
they worked with
you could invest
with no scrutiny.
And at that point,
this was only two
years after Reg
D, now you could
have more than a
hundred investors
and you could expand.
So now it was more
investors, less
regulation, and it
was only people with
ultra high net worth
that could benefit.
And we knew, like
back then, we
knew this was bad.
It was, we
got a warning.
I always like to
use pretty Woman.
I’m sure you’ve
seen that movie.
Yeah.
That was the public’s
very first look and
warning that private
equity was bad.
That movie was
made as a warning
bell for us.
When Edward was evil,
he was a private
equity, CEO that went
in, bought up huge
American ingenuity
driven companies,
American excellence
companies, broke
them off and sold
them off for pieces
internationally.
This was our warning.
And he was a
bad guy and his
lawyer, Stuckey
was a bad guy.
And they, he wasn’t
a good guy until
he was reminded
that American
excellence in
building things and
building the American
dream mattered.
And that’s when he
changed his mind and
he was gonna go to
building big ships
and serving America.
And then he was
the good guy.
We knew
then this was right
and then got, then
Stuckey got very
mad because that
was a betrayal.
He did.
That was a betrayal.
So what do you do?
I buy companies.
What kind of
companies?
I buy companies that
are in financial
difficulty.
That promise.
You must get ’em
for a bargain, huh?
Company I’m buying
this week, I’m
getting with a
bargain price of
about 1 billion.
A million dollars?
Yes.
Wow.
You must be
really smart.
Huh?
So you don’t actually
have a billion
dollars, huh?
No.
I get some of
it from banks.
Investors.
It’s not an easy
thing to do.
And you don’t
make anything.
No.
And you don’t
build anything.
No.
So what do you do
with the companies
once you buy ’em?
I sell them.
Okay, let me do that.
You sell them?
I don’t sell the
whole company.
I break it up into
pieces and then
I sell that off.
It’s worth more
than the whole,
so it’s stealing
cars and selling ’em
for the parts, right?
Yeah.
Sort of.
But legal.
And then under
Obama, we saw with
the, with Obama,
we took all of the
guardrails off, okay.
Under Obama, it was
no longer up to a
thousand investors.
It was unlimited
investors, unlimited
amounts of capital.
You still had to
have a lot of money
to play, which meant
that it was creating
a, like a, it was
beginning the cycle
that would start to
alter concentrate
wealth and ultra
strip mine wealth.
Because when you
have a lot of money,
you can’t spend it
effectively unless
you’re buying
very large things.
And that requires
consolidation, right?
If there’s one
billionaire and he
wants to eat at a
thousand dollars
plate dinner,
he can buy one
dinner, right?
But if you have a
hundred millionaires,
they can buy a
hundred dinners.
If you have
a thousand
millionaires,
you can buy a
thousand dinners.
You simply cannot
reign that money
back down into the
economy and spend
it in a way that
stimulates different
parts of the
economy unless you
are consolidating
and consolidating,
and that creates
a spiral.
I wanna point
something out that
I think is really
important for people
to understand.
If I’m not obligated
to provide disclosure
to the SEC, then
I am, then I’m
gonna pro provide
communication
to my investors.
But that
communication is
not subject to
the standards that
filings with the SEC
would be subject to.
And if I play games
or lie there’s no
enforcement other
than maybe they won’t
invest with me again
if they lose money.
I know we have a
lot to cover, but
I’d love to build on
that because, okay.
This is why pensions
matter so much to
private equity.
Pension managers
historically
have underfunded
programs, right?
That’s been the
case for about
the last 25 years.
Pensions are so
attracted to private
equity because when
you put an investment
into private equity,
normal investments,
you have to do
quarterly updates
that are showing
how your assets
are performing.
And you have to
constantly amend
your tables and you
have to constantly
report that to
the commissioners
in states that
oversee your
pension management.
But when it comes to
big private equity
investments, and this
is why it’s been so
bad for pensions, you
get to put for the
next 10 years, the
estimated returns.
They have said
you will get on
your books for a
decade and for that
entire decade you
could say you’re
getting 45, 50, 60%
returns, whatever
they’ve estimated.
And usually that
means that
investment is gonna
get handed off
to the guy that
comes after you.
It’s not gonna
be your problem.
You look like you’ve
got a very shor
up pension fund.
And for those
pensions, it’s
very desirable
because they don’t
have to disclose
exactly how things
are performing.
And that means
that 10 years down
the line, when
it underperforms,
they suddenly get
hit with an atom
bomb that bankrupts
pensioners or
bankrupts industries
that have to shore
up, like shore
up the shortfall.
So somebody just
sent me a note and
you’re gonna help
me with this one.
The company that just
went bust, it was,
it First Brands, it
was an Apollo company
and Apollo was
shorting the credit.
They knew it was
in trouble and
was gonna go down.
They were shorting
the credit at the
same time they
were reporting
a full valuation
on the stock.
The, we’ll get into
it when we get into
returns, but the
games that have
gone on, because
it’s not liquid and
it’s not subject
to SEC standards
good luck and good
luck with really
knowing what it is.
It’s you can’t
believe they got away
with this anyway.
And then of course
with glass stegel and
then the financial
crisis, then you
have the ability
to start building
a private credit.
So private equity
is equity, but
those private
equity deals are
leveraged with debt.
And and now when
you start to do
private credit, you
can start to leverage
your own deals.
And so the funny
business that can
go on is amazing,
particularly if
you hold up the
values by flipping
things back and
forth to each other.
Yeah, absolutely.
And leverage buyouts.
I personally find
them horrifying.
I think they
should be illegal.
I don’t, can you
imagine if we could
go and buy a car and
we went to buy that
car and said, but the
car is responsible
for paying back
the debt to buy it.
Like the car has
to go out and
raise the money.
The car has to go
out and find the way.
And while the car
is trying to raise
the money to pay
for itself through
taxiing or whatever
it’s doing, we’re
gonna sell its
parking space out
from under and
then dividend that
back to ourselves.
We’re going to sell
its maintenance
package we had
originally acquired,
and we’re gonna
dividend that
back to ourselves.
We’re gonna sell
the garage it had
a parking space
in and we’re gonna
dividend that.
I
would say we’re gonna
sell the carburetors
and the wheels.
Absolutely.
And at a certain
point we’re also,
and then lease all
of it back to the
car and it has to pay
those bills as well.
That is a
leveraged buyout.
And nobody that
pays normal bills
every day could ever
foresee that as a
reasonable way to
engage in finance.
It should
be criminal.
And that is in fact
how all of this,
it’s a reasonable way
to, in, to, to invest
in liquidation.
Sure.
If that’s the goal.
If you wanna shut
down an economy,
it is a reasonable
way to do it.
Absolutely.
Cause if you’re
gonna shut down
economy, you wanna
do it profitably.
You want to extract
the capital and
that’s what you do.
Okay.
So let’s just
take quickly a
look at investors.
’cause I find this
very interesting.
So what astonished
me, so this is
from a recent
KKR publication.
We’ll give them the
acknowledgement.
So the lead investor
in private equity
is pension funds,
but it’s really not
pension funds, it’s
state and local
pension funds.
And I was amazed
when I saw it’s
a surprisingly
small percentage
for corporate
pension funds.
Correct.
That’s absolutely
true because
corporate pension
funds, they’re
friends with these
people, right?
Corporate pension
funds don’t have
10 years to wait.
Corporate pension
funds try to and
a lot of corporate
pension funds are
publicly traded
companies that have
to disclose right?
The value of
their assets.
And if they can’t
get real time
asset valuations,
then they’re not
going to invest
in that mechanism.
And so that’s why
corporate pension
funds oftentimes
do not invest in
private equity.
The other place
we’ve seen a lot
of private equity,
and it doesn’t show
as much on these
percentages, but some
of the real leaders
have been foundations
and endowments,
particularly Yale,
Harvard, and
the university
endowments.
And I’ve been shocked
by how high some of
their percentages
are, and we’ll
talk about that.
’cause Harvard
and Yale are one
of the examples.
The other thing is
private equity has
really grown up in
North America, and
if it’s just really
starting to happen in
Europe and Asia, but
it’s a much smaller
it’s a much smaller
market there but
they’re growing.
The other thing I
do wanna say is my
personal experience
running into private
equity has almost
invariably been
highly negative,
but I do know asset
managers who do know
of private equity
firms they like and
think are excellent
and do real business.
So I would just
mention that they
apparently do exist.
And I think
that’s your
experience as well.
Yeah.
It’s, I wish I
could say I ever
have anything good
to say about it.
I have a few shining
examples of places
where it’s been
used well, like when
Bain Capital saved
dominoes, but for
the most part, by
and large, every
experience that’s
ever relayed to
me ends up having
pretty catastrophic
outcomes.
It’s an
extraction model.
Yes.
And we’ll get into
the model in a
second, but one
of the, one of the.
State pension funds
we’re gonna talk
about is Oregon.
And this is a
story you put
me onto, which
is unbelievable.
It’s called How
the managers of
Oregon’s a hundred
billion dollar
pension fund ignored
expert guidance
and lost big.
And of course,
this is about a
pension fund that
got really over
concentrated in,
in private equity.
But you, let’s
go ahead and look
at the chart.
Now.
Let’s pull up a chart
from this article,
how the Argon
Public Employees
Retirement Fund lost
out on more than a
billion last year.
This is
heartbreaking.
This is a
heartbreaking story.
The picture at the
top of the article
is of the art teacher
who lost her job.
Yeah.
Because they had to
the system is set up
that if they drop
on their actuarial
performance, then
the local governments
and schools or
whatever have to
pony up more money
and suddenly their
budgets get wrecked.
Describe to us what
happened in Oregon.
So they had brought
in a new investment
treasuries manager,
and they had a
standard policy
in place for a
diversified approach,
very similar to
the one that Yale
pioneered with
Swensen, right?
He was the pioneer
that had diversified
investment as a
strategy that the,
they were using for
the endowments at all
of the universities.
This man had
a diversified
recommendation
and he chose to
ignore it despite
specific board
member directives.
They said they didn’t
want him investing
as much in private
equity as he was,
and that they were
very uncomfortable
with the investment
strategy, and that
they wanted him to
go back to bonds,
stocks, and he
ignored them.
And unfortunately, it
has had catastrophic
consequences.
The catastrophic,
when I say
catastrophic, $1.4
billion in shortfall.
But what that equates
to is having to let
go of or not rehire
14,000 teachers in
the state of Oregon.
And as a result, they
have this massive
shortfall because
his investment ended
up only performing
at 4.2% during the
same timeframe that
the stock market
saw an almost
36% performance.
So here’s what’s
interesting.
If you go look at
it year by year if
he had obeyed the
the recommendations
and what the board
wanted in terms of
percentages, they
would’ve been far
more protected.
There’s a reason
you have portfolio
allocations.
Yes.
And nobody you
never bet the ranch
on prophecy or a
particular, and
there’s a reason
it’s diversified and
you have portfolio
allocations.
And if he had enough
time, once they set
the allocation to
adjust and refuse
to do it, it’s
quite extraordinary.
It appears he
thought he had
inside knowledge
and honestly,
he may have been
following CalPERS.
CalPERS had a
similar problem.
In the last decade,
and very recently,
just over the last
two years, they’ve
reigned in all
of their private
equity investment
because they got
so over leveraged
into private equity.
And so CalPERS in
California is another
example of that.
He may have been
following their
strategy and
thought that he was
gonna do better.
I couldn’t say.
But it’s horrifying
for the children
and the families,
and especially,
I’m gonna say the
special education
children of Oregon
because that’s where
they’ve had to make
significant cuts.
’cause those are some
of the more expensive
programs, expensive
teachers right,
to have on staff.
And they’re having
to cut all their arts
as well.
You know the story,
the head of CalPERS
in 1997 told me I
presented our
plan when I ran an
investment back in
Washington called
Hamilton Securities.
And we had done
tremendous simulation
of federal credit
and were able to
show them how we
could re-engineer
the federal budget
and change the
investment in
place in a way that
could produce huge
amounts of increased
equity and make
the pension funds
a fortune, helping
them deal with the
boomer retirements.
And the head of
Calper looked at
me and he said, you
don’t understand.
It’s too late.
They’ve given up
on the country,
they’re moving
all the money out,
starting in the fall.
And I thought he,
what he meant was,
we’re reallocating
equity to the
emerging markets.
I didn’t realize
that the move
was anywhere
near that big.
And I have two
questions now,
looking at
private equity.
Is moving all the
money out of the
country starting
in the fall include
extracting enormous
amounts of capital
from Red Lobster
and Joanna’s and
all these different
businesses that
have been bankrupted
by private equity.
Is that part of
the move to extract
capital and move
it elsewhere?
So that’s question
number one, but
question number
two is after that,
CalPERS lost a
fortune in the
mortgage markets
between then and the
financial crisis.
And I know
from my meeting
that they knew.
They knew and they
certainly would’ve
known about this
extent of the
mortgage collateral
fraud, which says
to me, who’s making
the decisions at
pension funds?
They are not acting
in the best fiduciary
interest of their
beneficiaries.
They are acting on
the basis of what
the insiders tell
them to do, and
that’s a complete
violation of the law.
And it’s inter
Your meeting
was 96, right?
97.
97. So this is April
97,
the exact same
time that we’re
seeing Reg D and
we’re seeing the
qualified purchasers
getting done.
It’s the same
time we’re seeing
the repeal of
Glass Eagle.
At the same time
we’re seeing the
warning from the
movie Pretty Woman.
But it’s also the
same time that
we began pitching
the idea of moving
people from pensions
to 4 0 1 Ks that
gave voting rights.
To the 401k
managers all of
BlackRock, right?
The exact same
timeframe, which
BlackRock was
ultimately spun
off of Blackstone.
They are very
close bedfellows.
And they have a
stranglehold on
our government.
So I had lots
of dealings with
BlackRock when
I was in the
administration.
I’m happy to tell you
this story sometime,
but one of the
things that happened
was Larry Fink
called me screaming
and threatened
that he was gonna
write a letter
complaining about me.
And I said, please,
Larry, be my guest.
’cause I thought,
what could be
better for your
brand than have
Larry Fink on the
record in a letter?
He was complaining
that I I gave
precedent to the
taxpayers above him.
Oh my goodness.
Say it isn’t no.
A lot of people,
that’s a crime.
That’s a crime.
A lot of people like
to say that they
believe, there’s
still these
died in the wool.
Like these people
that believe that we
can vote our way out
of this problem with
the two party system
that we’re dealing
with right now.
There’s so many
people that
say this to me.
Our government’s
playing four D tests.
They’re gonna get
us out of this.
They’re paying
attention.
The economy’s
gonna get better.
I am married to a
federal attorney
and very few people,
believe me when
I tell them the
stranglehold that
BlackRock has on
the US government.
But right now, just
as an example of
one of the reasons
we know that our US
government is never
ever going to work
against BlackRock
is because for the
last 15 years, and
certainly right now,
every single former
federal employee
from the president
all the way down
to the janitors at
the US House, every
federal employee
at the FBI, every
federal employee
at the US Treasury,
their entire
pension is invested.
81% with BlackRock
and 19% with
State Street,
right?
Every US president
going back for the
last two decades
has had members of
BlackRock’s border
former members
on their economic
advisory council.
Biden’s senior
economic advisor
was a BlackRock
board member.
So we have this like
fiscal strangle,
hold on this company
where if they vote
against them, if
they do anything
or pass a law
against BlackRock,
they’re hurting
their own employees.
They’re hurting
their own pension,
they’re hurting
their own future.
And I don’t
think that should
be allowed.
It’s worse than
that because here’s
the big problem,
if you’re the
president, so if we
made you president
tomorrow, you have
a $6 trillion a
year budget, okay?
And you’re getting
revenues of 4
trillion from taxes
and various sources,
and then you’re
borrowing 2 trillion.
And the way the
borrowing is set up
is it goes through
the New York Fed.
Yeah.
And the New York
Fed has your
bank account.
So you are 100%
dependent on the
central bank.
Yeah.
Okay.
And so the people
who run and control
and own the central
banks basically
control you.
Everybody in America
wants their check.
And if you try and
say, look, we’re
gonna cut back by
a third, there’s,
they’re gonna say
or 25%, they’re
gonna say no.
So I’ll never forget,
one of my favorite
quotes is, I had
a senator in Idaho
state, Senator say
to me, every year
we send a dollar
to Washington and
we get a dollar
and 19 cents back.
And every time I
try and enforce
the constitution,
my constituents
say I’d rather
have the 19 cents.
So that’s why there
are many solutions,
but they require you
shifting the money.
It’s not just voting.
You vote in the
marketplace every
day with your time
and your money,
and you gotta shift
that vote too.
Anyway.
Yep.
So let’s talk about
the business model
and returns, because
the fundamental
problem in this
industry is it’s an,
the business model
for the most part.
Not everyone, but
for the most part is
an extraction model.
And that’s with
leverage buyouts.
So what you do is
you why don’t
you describe it, why
don’t you describe
the fundamental model
and how it works?
I like to say that
when you’re engaging
with a company that
is more pirate like
in its private equity
nature your mom
giving you money is
technically private
equity, but that’s
not evil, right?
There are some
evil firms out
there that invest.
It’s very hard for
small businesses
to get investment.
But when we’re
talking about the
pirate, like private
equity that we’re
experiencing, you
have a system of
what can only be
described as fiscal
extraction with
hot potato, right?
You have a,
an investment.
You’re gonna
buy something
through leverage.
You’re gonna buy,
let’s say you wanna
buy, I don’t know,
Catherine’s Tire
Center, right?
Catherine’s Tire
Center is worth
$10 million.
And you think you can
get more out of that
tire center, you can
get a lot more out
of that tire center.
So you’re gonna
come in and you’re
gonna borrow a
bunch of money from
pensions and banks.
It’s not gonna
be your money.
You are gonna put up.
$2 million of your
money and you’re
gonna borrow
98 million from
somebody else.
And it’s not gonna
be your money.
It’s gonna be
the money you’ve
got in your fund.
You’ve got, yes.
It’s gonna be
the money in your
fund.
So I’m a I’m a
KKR or Carlisle.
I’m publicly traded
and that’s the
management company.
The management
company manages.
I’ve got a fund that
I raise from a state
local pension fund,
and I’m gonna use
that money to put
in the 2 million
and then I’m gonna
borrow the other
98 million.
Absolutely.
And what’s important
to recognize in this
as well is that every
one of those funds,
each of these firms
has multiple funds
moving at a time.
And each one of
those firms has a,
or each one of those
funds has a shelf
life somewhere from
seven to 12 years.
I think they’re
starting to extend
them ’cause they’re
realizing exiting
isn’t really
working anymore.
But for the most
part, the standard
in the industry
was 10 years.
So that means that
I have 10 years
to take the money
of my investors
and my own money.
If there’s any of
your own money, which
there usually isn’t,
and I have to put it
to work and extract
as much wealth out
of our economy as
I can in that 10
years, close out that
fund, pay everybody
and move on.
Now, if I wanna
buy Catherine’s
Tire Center, I’m
gonna borrow most
of the money to do
that, and I’m gonna
buy Catherine’s
Tire Center.
Now, let’s say
Catherine’s Tire
Center had a
really amazing
infrastructure that
she had built up.
Okay?
Let’s say she had
her own drivers,
she had her own
warehousing, she
had her own fleet
of trucks, she had
her own back stock
to survive economic
downturn, and she
owned the land.
All of her stores
were built on.
I see immense
opportunity for
myself with very
little concern for
what that means for
the communities.
Okay, so after
I get my hands
on Catherine’s
Tire Center,
I’m gonna borrow
that 98 million.
I’m not gonna
owe it back.
I’m never gonna owe
that money back.
Catherine’s Tire
Center is gonna owe
that money back,
right?
I have no liability
whatsoever, even
though I get all
of the decision
making capabilities.
Now, the first
thing I’m gonna
do for Catherine’s
Tire Center is
I’m gonna set up a
management agreement.
I have the decision
making, but it’s
layered through LLCs
and other funds,
so I’m not legally
liable for the
decisions correct.
You have separate
and apart enterprise
liability, which
means Catherine’s
Tire Center, all
of that leverage
is foisted upon her
center to repay.
Even though I’m the
one that made the
decision, I’m the
one, my fund is the
one that created it.
My fund is the one
that borrowed it.
My fund is the
one that convinced
the bank.
I have no liability
whatsoever in
getting that money
repaid to the
banks and the banks
don’t really care.
This is very
important.
The banks don’t
care because
they’re loaning
that 98 million in
adjustable rate or
floating rate debt.
And they’re going
to repackage it and
sell it off as CS
or collateralized
loan obligations.
Just like in the
housing crisis,
they’re gonna
rebundle this
as AAA CLOs and
they’re gonna sell
that off through
other mechanisms.
So even the bank
carries no longer.
So
your pension funds,
so your pension,
here we go with
pension funds again.
So even
the bank has no
risk or liability
here ’cause they’re
only gonna sit on
their books for
two or three weeks.
So Tire Center now
has been acquired
the first thing
I’m gonna do is
set up a management
agreement that says
that Catherine’s Tire
Center now owes me
$10 million a year
for my management
and oversight advice.
It might also have
a finance agreement
that says that I’m
gonna handle their
hr. Or it might be
an agreement that
says I’m gonna send
in people to advise
and each one of them
gets paid thousand.
And those are
contracts?
Those are
contracts for other
companies I own,
correct?
Absolutely.
And we’re gonna
talk about a lot of
different companies
I own because
first I set up that
agreement, which
means I’m already
making 10 million
of my a hundred
million back in
the first quarter,
just like that.
Second thing I’m
gonna do is I’m gonna
look to my left and
my right and see
if I have any of
my funds invested
in real estate
investment trusts.
And if I do, I’m
very quickly going
to go in and advise
my tire center board
to sell all of the
land under every
one of our stores.
Two, the real
estate investment
trust I already
own or I’m already
affiliated with for
very low, right?
We’re gonna sell
that for cheap and
then we’re gonna
rent it back to
Catherine’s Tire
Center all across
the United States.
So Catherine’s Tire
Center now might have
a new $30 million a
year in leaseholds.
But here’s the thing.
I inject all
that money into
Catherine’s Tire
Centers and then I
dividend up to me.
Correct?
So I put in 2 million
of equity, but now
how much equity
at this point
you’ve pulled out
40 million, right?
And we’re at
quarter two.
We are at
quarter two.
And Catherine’s
Tire Center now
has no real estate
assets left.
That was something
they could rely on
or borrow against an
economic downturn.
So they now have
leases they’re paying
for, they never
had management fees
they’ve never had.
And next I’m
gonna look to the
fleet of trucks.
I’m gonna see if I
have anybody I’ve
invested with, or
I have a friend
that I’m invested
with that would
like to buy my
fleet of trucks,
right?
And
I’m gonna sell that
again for low cost,
and I’m not gonna
use that money to
pay down the debt I
put on Catherine’s
Tire Center.
What I’m gonna do is
I’m gonna dividend
that back to myself.
And now Catherine’s
Tire Center is
leasing back the
truck she owned one
week ago, right?
And we’re spending
another 10 million
a year, okay?
And now at this
point, I’ve gotten
60 million of mine
back and we’re in
quarter three, right?
Then I’m gonna
tighten our
belt because
you know what?
We have a lot
of bills now.
So we’re gonna cut
our staffing, we’re
gonna consolidate
with any other
companies I’ve
acquired, and
we’re gonna start
fixing our prices.
We’re gonna raise our
prices, we’re gonna
reduce our quality,
and then from there,
we’re going to
continue this cycle.
The next thing
we might do is we
might liquidate our
warehouses, and then
we might sell all
of our back stock
to a liquidator.
All of this getting
dividend back to the
private equity firm,
never paying down the
debt that I’ve wasted
upon the tire center
and the tire center
still owes all this
money and interest
rates just went up.
Now, a lot of people
might think this
kind of loan might
be 2% or 3% that
they’re getting very
specialized loans.
Right now in
America, the average
repayment rate that
they’re giving on
private equity is
between nine and
14% at this moment.
And if it’s
a distressed
asset, 21%.
So I would just like
to point out the
history of central
banking is that
whenever a society
approves legalizes
usy, it’s just
a matter of time
until they fail.
Yes.
Okay.
So that’s what we’re
talking about.
Now if you look at
credit cards, they
go the average is
17% and they go up
to 35 plus percent.
It, it could be worse
if you’re doing, if
you’re doing it on
your credit card,
but this is not
sustainable business.
It can’t be
sustainable.
And here’s
the reason.
These funds aren’t
holding these
businesses for
10 or 12 years.
They don’t need it
to be successful
long term.
What they need to do
is identify how much
they could squeeze
out of it very
quickly, and then
they’re gonna flip it
in under three years.
Okay.
The average
just a year.
If they can.
We’ve
got a
lot now
that can’t, so
we Yeah.
But for the last
decade they were
flipping them like
Pokemon cards.
And so what you have
is a system where
when they’re selling
off all of the assets
of Catherine’s Tire
Center, despite
Catherine’s Tire
Center having all
this debt, they’ll
hold the assets with
the tire center for
about a month, just
long enough to get a
reevaluation with all
that cash liquidity.
And then they will
borrow more debt
and stick it on top
of the tire center
and dividend that
back to themselves.
So they’re made whole
in under a year.
Literally
under a year.
And then we’re
going to begin the
process of trying
to figure out how
far we can take it.
Now, when Profit
Equity first started
doing this, it was
very common for them
to actually look, to
take it back to IPO.
That was their
exit strategy.
It wasn’t necessarily
to strip mine
everything out.
And my favorite
example of that
is Bain Capital’s
acquisition
of Domino.
When they did that,
they had a 10 to 14
year hold strategy.
And that meant they
needed franchisees to
be successful for 10
to 14 years for them
to get the exit that
they planned for.
And it worked.
They created a
cooperative in
their food resources
that passed along
savings to their
franchisees, and it
started dividending
back whatever
savings they could
generate for them
through the economies
of scale that
they were buying.
They got new chefs.
They did an amazing
marketing campaign.
They brought in
new blood because
they needed a 14
year strategy.
And it worked.
It saved dominoes.
Now you can flash
forward and look at
what Bank capital did
to toys the rest and
see that changed.
That was not the
strategy that stuck.
Okay.
Instead, what they
did with Toys Us
is they sold all
the real estate.
They sold all the
trucks, they sold
all the warehouses,
they cut all the
staff, they got rid
of the stores and
they made it so that
there was literally
nothing left.
But there’s
something else.
Yeah.
They stuck The
Pension Fund.
Yes.
To the Pension
Benefit Guarantee
Corporation.
Yes.
And they stuck the
unemployment payments
to the employees.
They stuck the
taxpayer with
enormous bills.
They took, they,
Texas US two
stepped out of it.
That’s what they did.
They off, they
offloaded it to a
Shell Corporation
where all the debt
was held in one
place and all the
assets were held
in another and it
worked Horrifyingly
well, and then they
blamed it on Amazon,
which was never true.
It’s just like
Joanne’s right now.
Joanne’s just went
out of business and
they made it say, oh,
it’s just crafting.
No, 97% of
Joanne’s stores
were profitable.
97%. This an
astronomical number.
97% their scale
space had doubled.
Because of COVID.
People got hobbies.
It was doing
very well.
And they stacked
them with billions
of dollars of debt
and they sold all
their land and they
had huge leases.
Now
they were never
going to survive.
And that debt was
adjustable rates.
So as interest rates
rose no endurance.
And we’re about
to watch it
with Michaels.
And at the end
of this game of
Monopoly, hobby
Lobby will be the
last one standing.
Good Lord do
private equity.
Has private equity
got its drawn to
Michael’s yet?
Yeah, they own
it right now.
They just
took it back.
Okay.
But
they don’t have
their strong
to Hobby Lobby?
No.
Hobby Lobby is family
and private owned.
And I literally
hold it out as this
shining example of
if we’re actually
going to allow this
to continue, then we
need companies like
Hobby Lobby to be the
winners in the end.
Because Hobby Lobby
runs on Christian
values and that’s
not why they’re
going to win.
They’re going to win
because they don’t
believe in usy.
So they don’t
borrow money, right?
They only
take on debt.
They can pay back
within one quarter
with cash liquidity.
They’ve expanded
slowly, steadily,
and they’ve built
this enormous
footprint and amazing
infrastructure
with no debt.
And that’s why in
this game of Monopoly
at the craft stores,
after Acey Moore,
Dick Blick we
had what was it?
Hanson’s Fabrics?
I don’t, they’re
Hancock Fabrics.
We have Joanne’s now.
They’ve all been
rolled up, acquired,
consolidated.
The quality is
terrible and we’re
down to two stores.
There’s nothing
else left.
Okay.
So let’s keep
going on the
extraction model.
So one of the things
that is happening
that makes this
so attractive for
the private equity
firms is they get
the benefit of
carried interest,
which is outrageous.
Yes.
This is totally
outrageous.
And once again, we
had a tax bill go
through Congress
and once again,
the administration
protected, carried
interest even though
we have skyrocketing
deficits, and this
is outrageous.
So explain to us what
carried interest is.
So the carried
interest loophole
is something
that, that people
often campaign on
promising to close.
It’s a tax mechanism
that allows you to
carry interest as a
payment to not pay
yourself out, and you
get the benefit of
a very low tax rate.
I
think it’s
under 15%.
So if I do a deal
with a pension fund
and I say, okay,
we’re starting this
fund and I get 20%
of the profits,
that’s my carried
interest and I get
a, an abnormally
low capital gains
rate on that portion
of my return.
I think you have
to understand the
two and 20 model to
really understand
that which is how
private equity firms
get paid and why
it’s not valuable for
most of us to invest
with them ever.
They operate under
something called a
two and 20 model,
which means that they
get paid 2% of the
total amount that
they’re managing
for you, and then
they also get 20%
of your gains.
And the way that
they get that and
they carry it on
their books, it
allows them to keep
that money flowing
without having to
pay taxes as if
it’s been realized.
Right
on top of that,
they’re exploiting
a loophole in our
tax system to pay
dramatically low
taxes on their
income because
of course it’s
called the carried
interest loophole.
Fund managers are
paid most of their
salary in the form
of carried interest
in the fund’s profits
when held for at
least three years.
That carried interest
is taxed at 15% for
income between a
hundred and $600,000
and 20% on income,
over $600,000.
Regular income
of over $600,000
is taxed at 37%.
So not only are
they ruining our
communities and our
jobs, they’re also
getting a major tax
subsidy in the form
of this carried
interest loophole.
And it’s really
horrifying.
And all of these
people have run
on closing it.
Biden ran on closing
it, and he actually,
he almost did in 21.
They had the votes
to close the carried
interest loophole
and Kristen Sinema
took very large
donations from
private equity firms,
took a bunch of
private meetings, and
they promised they
would make Arizona
the private equity
seat for America.
And they did, by the
way, and she crossed
and voted against it.
Then Trump came
into office in this
term and said he
was closing the
carried interest
loophole and instead
after promising
it over and over
again, he instead
used it to extract
a ton of donations
from private equity
firms, and then he
turned away from it.
And then on top of
that, gave them a
$12 trillion bailout
as they real as
their profitability
started to dwindle
by giving them access
to our 4 0 1 ks and
retirement funds.
So we’re gonna
talk about that
later ’cause that
is frightening.
Yeah,
absolutely
frightening.
Okay.
So another thing
that is important
to understand about
the model is the
long lockup time,
which we mentioned
earlier and the
ability when you
do have some limited
redemption power to
freeze withdrawals
and that gives you,
when you combine that
with not being under
strict disclosure
obligations, you
can imagine the
funny business
that goes on.
So tell us a little
bit about that.
So one of the, one of
the things that makes
it so attractive to
pensions, which we
talked about, is the
fact that your money
is stuck for a decade
on average, right?
Once you put money
into a private equity
fund that is a
specific purpose
fund, it’s stuck
there seven to 12
years, usually 10
is the average.
And while it’s stuck
there, they don’t
have to make any real
disclosures to you.
And there’s no
guarantee or auditing
mechanism to see
what they’re actually
disclosing is true.
Now, we’ve seen
this abused already
because your
money is stuck.
We’ve seen this
abused very recently
by Blackstone.
They had the Bright
Fund, the B-R-E-I-T
fund, which was
a fund that was
a limited purpose
private equity fund
that they allowed.
Lesser institutional
investors and lower
net worth investors
into where if you
only had one or $2
million in liquidity,
you were allowed to
invest in this fund.
And it was
all commercial
real estate.
In the aftermath of
COVID, commercial
real estate saw huge
losses in valuation
because people were
working from home.
And all of the other
funds in the United
States that were
publicly disclosed
were losing value
pretty exponentially
dropping by
30 to 50%.
But Blackstone,
for some reason,
kept reporting that
their bright fund
had gone up in value
and people started
to question it.
The Financial Times
was questioning it.
Barons was
questioning
it, Reuters was
questioning it,
and people got very
skittish because
they felt they
were being lied to.
And investors in
this fund were
allowed to withdraw
on the quarter.
And what happened
was when withdrawal
requests exceeded
5% of the fund, they
froze withdrawals
and then they had
to go out and find
capital to come in
because they couldn’t
meet the withdrawal
requests and
they were
manipulating data.
The problem with
reporting high
valuations is then
you have to redeem
at that price.
Correct.
So they were putting
themselves in
their own squeeze.
Correct.
Yeah, but they were
allowed to freeze
their squeeze.
And you
should, right?
You should not be
able to do that.
But we have
no oversight.
We don’t have
any governance.
So this is why I’m a
pr I love liquidity.
I love liquidity
because you know
when every day you
can look at what the
price is and markets
can be managed
and rigged and
influenced, but there
is a price at which
you can buy and sell.
So I’m, I
love liquidity.
I wanted to mention
a Bad Man’s Guide to
Private Equity and
Pensions by Elizabeth
Lewis in 2015.
So I was trying
to look up as many
of the scholarly
studies as I could.
So this is an old
one and cause
there’s been a lot
of shenanigans since,
but in her survey
she found when
was it she found.
1.6 billion in
pension fund bills
dumped on the
Pension Benefit
Corporation from 51
companies abandoned
by pension plans and
bankruptcy at the
behest of private
equity firms.
As of that date
I wish I could say
there’s ever a number
that shocks me.
There’s not.
There’s not.
Oh, I think it’s
much worse now.
I haven’t gotten a
new number from the
pension benefit, but
stripping a company
and then putting
it into bankruptcy,
if you look at the
statistics of how
many private equity
companies go bankrupt
versus publicly
traded or pri just
private companies
it’s clearly a
pattern and it’s
clearly something
they’re using.
And we see them
also go into
bankruptcy, get
rid of the pension
fund, and then come
back out again.
Yeah.
So it’s just a way
of stripping off
and walking away
from your pension
fund obligations
and another thing
that we don’t see,
and I’m just gonna,
I lay, I’m gonna
squeeze this in
there because the
free market should
be responding to
this, but it’s not,
’cause we don’t see
that because in all
of the terms and
conditions of all of
those participants,
they have signed
arbitration
agreements.
So we never see
the lawsuits
that follow ever.
We never do.
And what about the
non-disclosures?
Yeah.
So the investors, a
lot of the investors
sign non-disclosure
agreements.
Yes, absolutely.
Now
a public pension
fund has to admit
their losses when
they take the loss.
But I would say, I
would expect that the
NDAs are protecting
a lot of these firms
and the arbitration.
So let’s move into
tactics and of course
my favorite tactic
is the arbitration.
So tell us, you
are an expert in
arbitration and
forced arbitration.
So tell us about
the arbitration game.
So arbitration is a
secret court system
that exists in the
United States and
other countries,
but primarily in the
United States that
convinces people
that they’re going
to, what they would
describe as an
alternative dispute
resolution process.
They tell people,
it’s cheaper
than court, it’s
faster than court.
It’s better for
you because if you
go to court, the
lawyers are the
only ones that win.
Arbitration was
founded under the
Federal Arbitration
Act, and it was
done, I actually
think for a very
reasonable reason.
It was started
largely because
of maritime and
telecom law.
You had these giant
firms that were
litigating these
very complex legal
issues that very
few judges had any
experience with.
And what would happen
is they would go to
court over a merger
or something, and
they would spend $30
million educating
the judge on the
law before they ever
got hearing heard.
And so what they did
was they lobbied for
the creation of the
Federal Arbitration
Act that said that
these two firms
on equal financial
footing could go
and seek out a judge
for an alternative
dispute resolution
that would be
recognized by the
courts as binding.
And that’s where
it was where
it came from.
Now, unfortunately,
the Federal
Arbitration Act was
very badly written,
and it was written
very vaguely.
Very vastly in a
way that allowed it
to be expanded and
exploited, and no
one ever stops them.
So what’s happened
is we’ve had
this industry
rise up through
this alternative
dispute resolution
arbitration that
has created a cartel
or a monopoly,
specifically with
a brand called the
American Arbitration
Association, that
oversees 93 to 95% of
all of these cases.
Now, originally it
was for these big
companies that had
equal footing and
they could afford
to go in there
and fight, right?
They could.
They could do that.
But it’s been
expanded over
and over again by
companies seeking
to hold people
to arbitration
agreements they
never even saw they
signed.
They certainly
never negotiated
on, it’s buried
in the contract.
It’s buried in
the, that’s why
you’ve gotta
read these things
very carefully.
So I told you one
of my favorite
documentaries
is hot coffee.
Yes.
And it’s about
the effort to go
state by state
and do tort reform
so that you can
systematically deny
companies you know
who are concerned
about liability for
products and services
can systematically,
contractually deny
people access to the
courts and force them
into arbitration.
Now, a lot of folks
might think that’s
okay if it costs
less and it’s faster.
What nobody knows is
that the arbitration
system is in, is
funded entirely
by corporations.
These judges don’t
even have to be
judges, and the
judges do not have
to follow the law.
They can write
their own law.
They can make up
their own law.
And because the
system is funded by
corporations paying
these judges 20,
30, $50,000 a week
for their time, and
these corporations
become their repeat
customers, the judges
rule in favor of
corporations 97%
of the time.
Now, my
understanding,
they don’t have
to explain their
decision, do they?
No.
In my case, I
was there for a
two week trial, and
the most important
piece was should
have required
dozens of pages
of legal analysis.
I got one paragraph
explaining why I
lost on something,
right?
One, one paragraph.
There was no
legal analysis.
It would not be
able to stand up
in a court of law,
except that the
Federal Arbitration
Act says All courts
must recognize the
decision no matter
how insane it
is, and they must
hold people to it.
An 81-year-old woman
has been awarded
$2.9 million after
she sued McDonald’s,
claiming their
coffee was two hot.
Stella Lebeck
spilled just eight
ounces of coffee,
but she attracted a
flood of attention.
The jury’s award set
off a media frenzy
and became a rallying
cry for those who
believed our legal
system had run amuck.
I think it’s absurd,
but as her story
cycled through
newspaper headlines,
talk, show
storylines, and late
night punchlines,
one thing was lost.
The facts,
the public perception
of it is Stella
Lebeck won a lottery.
She bought the
coffee, she spilled
it on herself, and
now look, she’s
a millionaire.
When, of course,
the facts are much
more complicated
than that,
she was burned over
16% of her body.
6% of the burns
were third degree.
She was in the
hospital for a week.
Medical bills
were $10,000.
So Stella reached
out to McDonald’s
and asked to
be reimbursed,
and the response
from McDonald’s was
an offer of $800.
They base the amount
on the revenue from
two days of coffee
sales, $2.7 million.
The size of the
award got the media’s
attention, but it
overshadowed the
rest of the story
details of the case
and the facts related
to how the jury made
its decision went
mostly unreported.
It’s probably one of
the most sensational
high profile tort
cases of the
last 20 years.
So when tort reform
comes up, most people
say, oh, are you sure
the McDonald’s case
Republican lawmakers
crafting the
contract with America
seize the moment.
They tapped into
public outrage
over frivolous
lawsuits to promote
the common Sense
Legal reform act.
Beck’s case
became Exhibit A.
If a lady goes
through a fast food
restaurant, puts
coffee in her lap,
burns her legs,
and Sues gets a big
settlement, that in
and of it of itself
is enough to tell
you why we need to
have tort reform.
We started with
the story of hot
coffee layout, why
you’re doing this.
There’s been a huge
public relations
campaign over the
last 25 years to
convince the public
that we have too many
frivolous lawsuits
that we have out of
control, juries that
we need to change
our civil justice
system, which is
our third branch of
government where an
average person can
go head to head with
the rich and powerful
with corporations
and people have
a completely
distorted view of
our civil justice
system because
of this public
relations campaign.
And.
I wanted to
tell the truth.
I am, I wanted people
to understand that
they were giving up
their constitutional
rights every day
to access the
courts, and they
didn’t even know
they were doing it.
Explain tort.
What do you mean
by tort tor?
A tort is a
civil wrong.
We have a criminal
justice system and a
civil justice system.
We all know what
the criminal
justice system is.
But when people
are injured
by a defective
product or if
they’ve had been
the victim of a
medical ma medical
negligence, they
have the right to
go into a court
system and bring
a case against the
person or the entity,
the corporation
that harm them.
Those kinds of
injuries are
called torts.
If there are
civil harms.
So Jamie Lee Jones
was 19 years old.
She lived in
Houston, Texas,
and Halliburton is.
Huge in Houston.
It’s like the
biggest corporation
down there.
And she went to work
for Halliburton in
their IT department.
And when she was
hired, she was
asked to sign an
employment contract.
What she didn’t know
was that embedded
in the employment
contract is something
called a mandatory
arbitration clause.
Yes.
These clauses
are in all of our
contracts now.
They’re in our cell
phone contracts,
our credit
card contracts.
If you get a car
loan, a mortgage,
some doctors are now
putting them in their
consent clauses.
What they are is
they are literally
contracts where
people are
asked to sign.
Oftentimes they
don’t even have
a choice to sign.
If you get a, a
credit card, for
example, and you
use it, you’ve
agreed to mandatory
arbitration.
People don’t
even know what it
means because it’s
something no dispute
has happened yet.
But if you have
agreed to that and
then you have a
dispute with the
company or the
entity, you have
waived your right
to the court system.
And people say
why should I
care about that?
Why you should
care is because
the company that
you are having
the dispute with,
once you’ve signed
that, they pick
the decision maker,
the arbitrator,
they pay for the
decision maker.
The decision maker
doesn’t have to
give a reason why
they’ve come up
with the decision.
It’s completely
secretive and there’s
no right to appeal.
And what everyone
is doing these days
is they’re literally
voluntarily giving up
their right to access
the court system and
they don’t even know
they’re doing it.
And so you have
this system that has
been fully corrupted
and exploited by
monopolistic control.
It is a cartel
that always and
only supports the
corporations and
people are being
held to arbitration
agreements
in numbers.
Nobody would
believe.
And you end up
having to pay for
the arbitration.
Yeah.
Absolutely.
And that means
my judge in
my arbitration
was almost
$27,000 a week.
My arbitration
went on for a
year and a half.
27,000. Just
do the math.
Okay?
And this is if you
wanna keep fighting,
because if you
don’t have money
in your account,
you don’t get to go
before the judge.
And they have
unlimited money
in their account.
But people don’t
realize how many
of these agreements
they’ve signed.
If you have a phone
in your hand, you’ve
probably signed 30.
Okay.
One for every, right?
If you’ve bought a
new washer and dryer,
this is how liberal
it’s gotten now.
They can put the
arbitration agreement
in the warranty
paperwork in the
box, and as soon
as you plug it in,
you’re held to it.
You wanna buy
a ticket from
Ticketmaster
arbitration.
You wanna get on a
flight arbitration,
you wanna take your
kid to a birthday
party at a trampoline
park and you sign
them in at the front.
Confidentiality,
NDA arbitration,
right?
Your kid dies in
that theme park
arbitration.
And they’re going to
win 97% of the time,
right?
Whereas if you got to
court with a lawyer,
you’re looking at
55% in your favor.
It’s the way that
corporations have
found a way to so
grossly bastardize
the free market
system to hide all
of their terrible
conduct from all
of the eyes that
could respond and
demand market reform,
demand changes, or
simply put them out
of business through
boycotts and
protests.
It’s part of the
model because if
you’re operating,
and we’re gonna get
into some of the
other tactics, but
if you’re using a
lot of shenanigans
and tactics then on
one hand you’re doing
sort of unethical or
illegal practices,
and so you need a
way to come in behind
and make sure you
can’t be held liable.
Exactly.
So
I don’t know if
you’ve been following
it, but the pesticide
manufacturers are now
this close to getting
complete liability.
Thank you.
Trump administration
in several states.
So I’ve actually
been speaking about
this on Infowars
regularly because
this is something I
follow very closely.
And I don’t know if
you saw, but just
last week the DOJ
had their senior
counsel send a letter
to the Supreme Court
asking that they move
to ban all litigation
on pesticides for
any pesticide that
has been approved
by the EPA.
Because if the EPA
says it’s safe, it
should be unlitigated
because they’ve
never gotten science
wrong ever at an
agency in the US
government ever.
And so once the
EPA has approved
it, they’re
protected forever
and you can never
sue them,
even if it
finds out it causes.
So here’s the thing,
if I was the attorney
general, I would
resign before I would
send that letter.
You would think
so, wouldn’t you?
I would, but the
solicitor General
sent that letter.
Wow.
And this is after
they’ve got Alec, the
American Legislative
Exchange Council,
going state to state
right now through the
Dakotas and through
the Carolinas, to
try to get pesticide
immunity passed for
the protection of the
farmers, who by the
way have the highest
lymphoma, Hodgkin’s
lymphoma rate of
any profession
in the world.
So we did a show
with the Taxologist
who helped stop
it in Tennessee
and North Carolina.
She came up on
her own dime
and testified
in Tennessee and
North Carolina
and literally
got it stopped.
And so we had her
on the show that
we do on CHD TV
Financial Rebellion.
And we get to
the end and she’s
very scientific,
very professional,
very calm.
We get to the end
and she said she’s
discussing the
impact of what she
thinks will happen
to fertility if the
liability shield
is created and the
pesticide companies
do what they say
they’re gonna do.
And she says very
quietly, you have
to understand
that the impact on
fertility will be
such that I consider
this an extinction
level event.
You have to, I don’t
know if you’re aware
of this, but right
now the Senate just
added full pesticide
immunity and the
inability of the
EPA to enforce its
own requirements
into the 2026
appropriations bill,
that’s a must pass.
And if they’re
able to do it.
Then it will,
it, that’s it.
Now actually I
don’t agree with
him on a lot of
things, but Senator
Cory Booker has
just introduced
the Pesticide
Accountability
Act, and it’s,
right now, the only
hope we actually
have to stop this.
God bless him.
Yeah.
Yeah.
So he just introduced
that, but he can’t
find a co-sponsor.
No one will
co-sponsor it.
Even though we have
this MAHA agenda,
we put a bunch
of agrochemical
lobbyists in
charge of the
EPA to undermine
everything on the
Maha agenda that’s
coming from HHS.
So we’re, when we
get to health, we’re
gonna, we’re gonna,
now, can I finish
doing the business
model and then
we take a break?
Yeah, absolutely.
Are you good
for another?
Okay.
So let’s go
through some of
the other tactics.
The legal
shenanigans are
endless, as okay.
Including the
litigation, but
they, I once had
a litigator tell
me the number one
firm that lies the
most of any firm
they dealt with.
And when I was
doing a search for
who has the most
private equity legal
business, who should
pop up as number
one, but that firm
I was laughing my
head off, but do
you feel comfortable
saying who it was?
I would rather not.
Okay.
Okay.
So I don’t wanna I
don’t wanna get him
in trouble okay.
But
I’ll tell you,
Seidler is the
most litigious
firm I’ve seen.
Really?
Not because of them.
There, there’s a
companies there
there’s a whole
pile of them.
I used to be married
to a partner in a
big Washington New
York law firm,
Skadden Arps.
And so I saw
quite a lot.
But one of the
things that happens
is the law firms are
usually the conduit
that hires the
private investigator
or security firms,
or if there’s
certain kinds of
surveillance and
other tactics going
on, special kind of
research certain
kinds of pressure.
It goes through the
law firms behind
attorney-client
privilege.
Yes.
And so between
the NDAs and all
the secrecy, the
law firms add
another layer of
secrecy to it.
And because I
will tell you, I
just wanna read
you something
from Gretchen
Morganson and
Joshua Rosner book.
They are the
plunders, she’s
describing one of
the stinkiest deals,
yet the executive
life insurance
deal with Apollo.
Yes.
And she describes
how the pressure
was bought to
bear on the state.
I guess it was
the insurance
commissioner to do
what turned out to
be a horrible deal.
And and she let
me just read it
seconds after ma
hung up, another call
came through, was
Hardigan, the Apollo
lawyer, angrily,
he told ma he’d
heard Garamendi was
choosing whoever and
wanted confirmation.
It was so obvious
he had listened in
on his short call.
My phone had
to be bugged.
Okay.
Yeah my theory,
watching their
performance year
after year is this
is a group of people
who are teamed up
with the intelligence
agencies, whether
it’s private
security firms or
actually government
intelligence
agencies.
They’re using
those tactics.
At Solari, when I
litigate, I litigated
for 11 years and
I ended up doing a
series on the report
called deep State
Tactics 1 0 1 that
describe every dirty
trick and covert
operation tactic
that I dealt with
for that 11 years,
and my general
counsel as well.
And it’s extensive.
And if you look
at what a private
equity or LBO firm
can do, using those
tactics, particularly
surveillance if
I’m competing and I’m
an honest business
and they’re, and
they have access
to everybody’s
telephone,
everybody’s email,
they have complete
surveillance data,
they’re always
gonna outcompete me.
I’m gonna I’ll
give you an example
from my court case.
I could give you
20, but I’ll just
give you one.
At the beginning of
my case, I was not
trying to leave, I
was trying to stay
with my group of
franchisees that I
represented as the
union president.
Okay.
And they had a
lawyer named Norman
Leon, who was DLA
Piper, also happens
to be one of the
senior lead counsels
for the International
Franchise Association
and Fran Pack.
Wow.
They
had him call up
my lawyer and tell
him, we want cooler
heads to prevail.
We don’t want
this to turn
into an incident.
I think we’re gonna
just fix this.
We’ll fix this.
So tell her to
keep operating.
We don’t want the,
we don’t want the
customers to know,
we wanna keep these
customers happy,
we wanna be able to
bring this back in.
So just tell her to
keep operating and
we’ll get through it.
So I was told to put
all of the trademarks
back up on my
walls, all of them.
Okay.
And this
happened through
communications,
written and audio
between my lawyer
and their lawyer.
And Fran P’S lawyer,
the is a’s lawyer.
And I did, I put
’em all back up on
the wall because
they told me to, and
I kept operating.
And during that
time, they sent in
private investigators
to photograph them
on my wall so that
they could sue
me for trademark
infringement.
And then when it
came time for me to
prove that they hid
behind privilege and
lied to the judge
in my courtroom.
And I actually
had the proof,
fortunately I had
the proof that it
had taken place.
I had the proof
of the reports.
Norman Leon was
sitting across
from me and said
I was a liar and
I went to pull it
out and he wouldn’t
let me answer.
And then they
looked at the
judge and said,
she’s not allowed
to use rebuttal
evidence, your Honor,
and said I wasn’t
allowed to show them
right
as simultaneously
the same court
case where they
got the judge.
The arbitrator
ordered me not to
talk to my own lawyer
the whole week.
So I couldn’t
even help him.
And I was the
only litigant.
And I had all the
documents and I
couldn’t even prep
him every day.
Like the tactics
that they use
are horrifying.
They’ve sent felons
with 88 felony
convictions and 13
years hard time.
They gave them my
address, sent them
to forge documents.
In my case,
we proved it
right.
They forged documents
and sent them to
every member of the
union saying I was
abusing children.
They used it.
They’ve done
horrifying things,
terrorized everyone.
I know all my
employees like they,
they can do it and
they do it every day.
But it’s
organized crime.
Yes.
It’s not business.
It’s organized crime.
It’s a shakedown.
It’s, you’re
dealing with the
Russian mafia
and it’s organized
crime that hides
behind the bar
that no longer
fulfills its ethical
obligations to like
holding attorneys to
ethical standards.
You can’t, they the
bar is sanctioning
this violence.
One of my favorite
we had a judge who
was the former CIA
general counsel, and
he talk about dirty.
It was unbelievable.
But we had a a
Department of Justice
attorney had come to
HUD to be the general
counsel of the ig
and she falsified
evidence and we
caught her and were
able to document
it and turned it
into the court and
she didn’t realize.
We turned it into the
court and she writes
a letter accusing
us of obstruction of
justice, which was
the phony frame that
she, we caught her.
Anyway, one thing
led to another and
we caught her in
some other stuff
and she ultimately
had to resign
because the whole
thing had failed.
She had mud on
her face where
she went to work.
Arranged, I believe
by the general the
former CIA general
counsel, she went
to run the ethics
committee at the
DC Bar Association.
I’m gonna, I’m gonna,
I’m gonna meet your
bet and I’m gonna
raise you two chips
because in our case
where apparently
this is a whole
standard operating
procedure because in
our case I happen to
have been terrorized
and enforced, and
I apologize if
this triggers any
of your viewers,
but I, during my
case, the opposing
counsel wanted me
produce faster for
deposition despite
me being on bedrest
with a pregnancy.
And they filed a
motion to force
me to schedule an
abortion because
they said I was going
to need one anyway.
I heard,
yeah, you made a
video about this
and I heard it.
I did.
And you know
something.
It’s exactly the kind
of things they do
well.
So they did this
and they applied
immense pressure
and then they
threatened me with
sanctions motions.
If I didn’t comply
and schedule an
abortion, I did
not want, as a
Catholic woman, I
would not schedule.
And when they did
this, it was a crime
because they did it
in Arizona where it’s
actually a crime to
coerce an abortion
that is a crime.
And I went to the
State Bar Association
and filed an ethics
complaint against
the three lawyers
were like Madeline
Cordray, Norman Leon,
and Laura Six Killer.
I filed this motion
and they took it
very seriously.
And after a couple
months of me
sending in all the
evidence, sending
in videotapes, all
of the timed respe
receipts, all the
emails showing they
filed these motions
to force me to have
an abortion in the
secret courtroom,
he said he was gonna
get this to a hearing
and he disappeared.
I had to fly to
Arizona to get
somebody to respond
to me after that.
And we found out that
at the same time, my
arbitrator was made
the chair of the
character and fitness
committee for the
state of Arizona.
I hate that we
have such identical
examples, but when
I say this is crime
this is, it’s a
death sentence.
When they could
target you and come
after you forever.
There’s never
a way out.
This is absolutely
endorsed by the bar
that governs itself.
We should have
community oversight
of bar associations.
So one of the things
I will say is when
the only way you
succeed in these
situations is you
have to just work it.
Okay?
And it’s a lot
of work, as
you can tell.
And when you work
it, what happens
is they have to
buy everybody off.
And so you end up
blessing hundreds
of people who all
get promoted when
they sell you down
the river, right?
Yeah.
Oh,
look at the, look at
who survived in their
corporate office.
’cause almost
nobody, but everybody
that testified
against me did.
Okay so we’ve talked
a little bit about
fees, but let’s
talk about returns.
Because these deals
are so loaded down
with returns and we
have the secrecy and
disclosure problems.
And the reality
is they.
They are not
producing there
was a belief that
they produced higher
returns in the early
years because it
was new and there
was easy pluckings.
Yeah.
But if you look at
the last decade, they
haven’t been able to
produce the returns
and then coming into
high interest rates
with adjustable rate
debt you haven’t
been able to do IPOs,
you haven’t been
able to create enough
of a a private
sales market, and
they are basically
choking on their
portfolios and the
returns aren’t there.
So I just wanna show
one live clip of I
don’t normally show
clips of Warren
Buffett, but this
one was priceless.
I don’t know if
you’ve seen it.
I would not get
excited about
alternative
investments.
There’s supply demand
situation for buying
businesses privately
and leveraging
them up has changed
dramatically from
what it was 10
or 20 years ago.
And, but we have
seen a number of
proposals from
private equity funds
where the returns are
really not calculated
in a manner that
they’re not
calculated in a
manner that I would
regard as honest and
so I
it’s not something
if I were running
a pension fund, I
would be very careful
about what was
being offered to me.
It’s not as good
as it looks.
And I really do think
that when you have
a group sitting as a
state pension fund,
Warren, all they’re
doing is lying a
little bit to make
the money come in.
Yeah.
Yeah.
That sums it up.
Like I said, you can
keep that balance
sheet looking
pretty good for a
decade until the
cows come home,
so mugger couldn’t
stand it anymore, and
he had to just jump
in and basically
call it what it was.
But I, one of the
papers I took a
look at was one from
the uni from Oxford
University called
An Inconvenient
Fact Private Equity
Returns in the
Billionaire Factory,
published it in 2020.
Let me just read
essentially what he
said is you’re
not getting better
returns, you’re just
paying bigger fees.
Yes.
And so why should
you do, if you’re
not gonna get
outsized returns,
there’s no reason
to go illiquid.
I agree with you,
but there’s a lot
of reasons if you’re
trying to do things
nefariously, because
there’s no oversight,
there’s lots of
reasons if you wanna
do things that you
couldn’t otherwise
get away with in
the public markets.
That is the
impetus that I see.
And the
consolidation is also
the impetus I see.
I don’t know if
you’re familiar
with this statistic
or not, but
statistically over
the last four years,
private equity owned
bankruptcies have,
they’ve reached new
records each year,
four years in a row.
But last year,
private equity
owned businesses
were responsible
for 67% of all
large bankruptcies.
This is bankruptcy
for a hundred
million dollars.
This year.
We’ve reached
a new record.
It is now 71%.
Of all large
bankruptcies.
And if you look at
bankruptcies even of
small businesses,
you’re still at 56%.
But there’s no
you know what
I would say?
And it’s the
nature of the
extraction model.
That’s not a
performance,
that’s a plan.
That’s a plan.
And it is executing.
And unfortunately
that leaves all
of the employees
unpaid, all of
the small business
creditors unpaid.
It leaves all of the
landlords, the small
landlords unpaid
who’s first in line,
the private equity
firm, and they’re
gonna get paid for.
And you
know who else
it leaves them.
It kills the
tax base.
Yes, it does.
Because we have to
bail all of that out.
It kills.
And that’s what’s
so strange about
state pension funds,
finance financing
this because it’s
killing they’re
financing their
funding, the
killing of their
own tax base.
Yes.
And it kills their
own tax base in a
multitude of ways.
Yeah.
A lot of people
think that oh,
Joanne’s went away.
Oh, shucks.
No.
Joanne’s went away.
And as a result,
6,000 parking lots
in the United States
filled with small
businesses lost
their anchor store.
And those hundreds
of thousands of
small businesses
now no longer have
traffic coming to
their parking lots,
and they’re going to
start to close, which
is why for the first
time in decades,
we saw 150,000
small business
jobs lost, when
historically, they’re
the job creators
in economic small
business create jobs.
And we’re
losing that now.
And that’s
gonna slaughter
the tax base.
Yes, it is.
Now they’re gonna
blame it on ai,
but it’s not ai.
It’s
not ai, I promise.
It’s not
ai.
We don’t really
have AI right now.
What we have is a
really good excuse
and a very expensive
parrot that is very
well trained to
do a couple things
that need constant
human oversight.
There is not an AI
that is replaced
a single job, but
it’s a great excuse.
I totally agree.
Okay, so we’ve
mentioned
concentration,
but now let’s look
at some charts.
So Dr. Mark Skidmore
from Michigan State
University is a
wonderful economics
professor at the
university who I’ve
had the privilege of
working with on many
different projects.
But he is we have a
young builders course
and he’s preparing
a course for the
young builders.
And he made a series
of charts to show
concentration in
different industries.
And I said, mark,
you have to let
me use those.
So he said, yes.
And I wanna show you
a series of charts.
The first one,
consolidation
and control.
And it all of
these charts start
at 1970 except
for the first one.
So we’ve got
six charts.
The first one is
1990 to date, and
then 1970 to date.
And it’s it’s
showing it in
gasoline in
community banks.
So gasoline, 25%
concentration.
Community banks, 70%
have been bought up
farms, 30% retailers.
37 convenience
store, 33
manufacturers, 30%.
So we’re watching
massive consolidation
across the board
in all of these
enterprises that
used to be owned and
operated by families.
And it’s
extraordinary because
that is the tax base.
I think the
community banks
scare me the most.
Yes.
All of it scares me.
I’m anti monopolist
and I believe
that our FTC
and our DOJ have
woefully failed us.
But Congress in
failing to update
the antitrust laws
has failed us more.
But the community
banks scare
me to death.
I think we should
have 10,000.
Yep.
Different banks.
I don’t think
we should have
nine.
Richard Werner has
done several studies
for us or with us
one in Tennessee,
one in Florida.
And what he shows
you is the more
good community banks
you have, the more
growth you have
without inflation.
And when you shrink
the community banks,
you simply shrink
the economy for no
good reason other
than to destroy
independent income.
It’s, it would
be only and the
reality is it’s the
independent income
that’s the basis of
a democratic process
or a healthy society.
And without that
you have enormous
central control.
So let’s look at
the other one,
and this gets even
more frightening.
One is independent
physicians and
independent dentists
I don’t know if you
know how much COVID
had to do with a huge
acceleration here,
but in the state
of Maryland, they
made it illegal for
regular pediatricians
to offer any
well-child care.
During COVID, you
could only go in
for emergencies,
and they lost 90%
of their revenue.
They couldn’t, my
god, physicals.
And so our, I
say this with very
personal experience.
We had an
amazing doctor
named Dr. Beck.
She’d been our
kids’ doctor since
they were born.
And during COVID,
her practice, her
small one, one person
independent practice
went out of business
because she lost 90%
of her income due
to state mandates.
And she was forced
to sell to another
consolidator.
Just like all of the
children’s businesses
were forced to
consolidate.
Because they were
shut down for a
year and a half.
They were forced
to sell to evil
corporations like
the one that owns
the little gym now
the one I’m fighting.
So
is it a good idea,
do you think, to
allow PBMs to buy
up independent
pharmacies?
Should PBMs be
purchasing pharmacies
and purchasing
doctors practices
in some cases
and purchasing
hospitals, or merging
with hospitals?
Is that kind of
consolidation,
vertical
consolidation
across the medical
supply chain?
Is that a good
thing for patients?
No, and we know
this from various
studies, including
studies that we’ve
conducted looking
at patient outcomes
when that has
occurred, outcomes on
patients are worse.
If outcomes were for
patients who were
actually better in
terms of access,
quality of care, and
things like that,
we would have a big,
having a different
conversation.
But instead, we’re
seeing the opposite.
And in particular,
it’s because they’re
prioritizing kind
of bottom lines.
What can they
do to be able to
maximize profit
instead of actually
thinking about
patient outcomes?
Let me read to
you from a recent
news article about
private equity and
their entry into the
healthcare system.
Here’s a quote.
When private equity
enters healthcare
closures are not
side effects.
They’re the
business model.
Extracting value
for investors comes
at the cost of
extracting access
from patients.
COVID was an
accelerator of
this in ways people
just don’t discuss.
Let’s see the
next chart.
So I told you last
night about the
extent to which life
expectancy in the
US diverged from the
other 20 sort of high
income countries.
From the time if
you look at when
the money started to
go missing from the
federal government
and private equity
started to grow
here’s what we saw.
Life expectancy
steadily diverge,
and then of course,
in the pandemic, it
falls off the cliff.
And so if you look
at the divergence
of life expectancy
in the United
States from all
the other high
income countries,
it’s extraordinary.
It’s absolutely
extraordinary.
I worry it’s going
to get so much worse
too with our younger
generations and the
younger millennials
that have been living
in a constant state
of just chronic
stress and lack
of hope for the
last 25 years with
just huge hurdle
after huge hurdle.
I worry this is gonna
get so much worse.
But if you look
so, so let’s go,
let’s turn to
private equity and
healthcare, because I
think if you look at
how private equity is
making money, rolling
up physicians,
rolling up hospitals,
being involved
in pharmaceutical
and insurance as
well as services
for autistic kids.
Yep.
They are literally
making money.
So you just saw
the numbers on
life expectancy.
Yes.
The Swiss system,
which is arguably
one of the best
healthcare systems
in the world, cost
8,500 per person.
Our system costs
13,500 per person.
Yeah.
And I think one of
the reasons you see
those numbers is the
healthcare system
is poisoning people
and then you make
huge amounts of money
telling people that
the toxicity the
symptoms of toxicity
are a disease.
Yes.
And then you
make a fortune.
And so it’s a
business model.
And I remember
when the COVID
injections first
came out, one of the
business newsletters
said, wrote, and
said, investors
are expecting to
make a fortune on
mRNA technology.
First you have the
COVID shot, but then
they listed all these
other vaccines that
were gonna come and
everyone they listed
was for something
that was gonna be
the adverse event
that occurred from
the first vaccine.
Yeah.
It was the perfect
business model.
And I don’t think
that’s an accident.
So let’s talk
about some of this.
The healthcare,
you’ve pointed
out that the.
In nursing homes
and hospitals,
the outcome
for the patient
is much worse.
If private equity
is involved,
it’s quantifiably
worse.
And to a degree, I
think would shock
most people to hear
it the first time.
So they did a recent
study, actually
our government
and a couple of
research institutes
did a study of
Medicare patients
having surgery and
private equity owned
surgical centers.
And the chance of
dying in the 30 days
after that surgery,
if the surgery took
place in a private
equity owned surgical
center was 42%
higher, you were
42% more likely to
die in the 30 days
after that surgery
due to complications
and improper care
than you were if
you had surgery
in a non-private
equity owned
surgical center.
That is astronomical.
And there have been
multiple studies
that have confirmed
that you are between
10 and 13% more
likely to die of
whatever illness
you’re suffering
from if you walk
into a private equity
owned emergency
room because they
don’t have the
staffing to properly
diagnosed and care.
So you have a 13%
increased risk
of dying in, of
pneumonia walking
into that facility.
40%, 42% technically
higher, increased
risk of death after
surgery in these
surgical centers.
But we’re also seeing
huge increases in
the nursing homes and
the recovery centers.
The rehab centers
that are private
equity owned,
which are far
more staggering.
And Carlisle which
is somebody we
talked about at
the beginning, was
the model creator
of that method.
So they had a
manner care deal
that was particularly
egregious.
$6.5 billion to
buy up hundreds of
nursing care and
rehab care facilities
that they stacked
with billions of
dollars of debt.
And then during
their, not even
lengthy ownership
period, they
dividend back.
They sold all
the land out
from under them.
They created
a large bills.
They cut down all
the staffing to a
point where at 1.1 RN
would be responsible
for 65 patients with
no doctors on site.
Oh my
God.
There are some really
horrifying examples
of what happened in
those facilities.
For example, one
woman she was
having a problem.
Her breathing
apparatus had slipped
and she was slowly
suffocating and
she rang her bell
thousands of times
and finally was able
to reach her purse
and call 9 1 1 and
she was code blue.
By the time 9 1 1
got to her room,
she’d been ringing
the bell for two days
begging someone to
help her breathe.
You are more likely
to sit in your own
feces or urine in
those facilities.
You’re more likely
to be dropped.
You are more, they
have far worse
patient outcomes
for bedsores
because they’re not
properly cared for.
These facilities are
ter like the outcomes
are terrifying.
I was just
gonna read you.
So the National
Bureau of Economic
Research did a
February, 2021
study revealed
during the 12 year
sample period study.
The bureau believes
private equity
ownership of nursing
homes cost 20,150
American lives.
Correct.
Almost 22,000 of our
grandparents, 22,000
of our veterans.
Huge numbers
in veterans.
22,000 of our
greatest generation.
These are people
that had families
and loved ones
that thought they
were making good
choices for them
because all of the
litigation about
these facilities took
place in arbitration.
So no one knew
that there were
terrible things
going on there.
And that means 22,000
senior citizens
died up till 2021.
This is what they
found with just
a small sample,
including the
Carlisle group.
But this is
continuing to happen.
It is not
getting better.
It is getting worse.
The consolidation
is increasing.
Recently we saw a
group that came in
and manipulated what
was like an HOA
fee where a bunch
of senior citizens
had bought in for
a lifetime lease
in these senior
communities where
they would have,
that’s the problem.
You
lock in one
condition and then
private equity
changes the deal.
Yes.
And pulls the
capital out and you
end up having paid
for one thing and
getting another.
Yes.
Senior citizens are,
they’re buying in
with 350, $400,000
to live there for the
rest of their lives.
And then private
equity comes in
and buys it, and
they’ll add a new,
like HOA assessment.
And I have seen
examples of these
companies coming in
and adding seven or
$8,000 a month as
a fee so that these
people don’t, they
end up homeless.
They’re homeless,
and they’ve lost
their life savings
that they bought
into a community
they were supposed
to live in for
the rest of lives.
And they’re homeless
and then they
extract all the
money, and then
the whole community
ends up bankrupt,
and then it rolls
to the next guy in
bankruptcy and they
start all over again.
And it’s wash,
rinse, repeat.
And it’s always with
our most vulnerable.
Always.
Grassley and White
House, Senator
Grassley and Senator
White House just
produced a study
this year, private
equity in healthcare,
shown to harm
patients, degrade
care and drive
hospital closures.
I think that
was the Steward
Hospital situation.
But yeah.
Big report from
the Senate.
So it’s not that
the oh, here’s
what’s interesting.
They know, and
they’re still giving,
they’re still giving
the carried interest
and they’re still
collecting all of
those donations,
bribes, whatever
you wanna call them.
They’re cashing
in big, I’ll
call them bribes.
I’ll call
them bribes.
Yeah.
Okay, so one of my
favorite authors,
I don’t know and
researchers is
Toby Rogers.
Do you, are you
familiar with
Toby Rogers
if they research
private equity?
I’ve probably read
it, but I don’t
recognize the name.
I’m sorry.
So Toby Rogers,
he’s an American.
He did his PhD in
Sydney because they
have one of the best
politi, university
of Sydney has one of
the best political
economy departments.
Okay.
And he ended up
doing his thesis on
the cost of autism.
And he’s been
sounding the drum for
years trying to tell
people, this is gonna
bankrupt the country.
This is gonna
bankrupt the country.
This is gonna and
he’s been very
critical of Maha
because he keeps
saying, look we
didn’t get you
elected so that
we could hear
about fruit loops.
We know what’s
causing autism.
We and it’s
really not.
It’s huge
neurological damage
coming off from
pharmaceuticals.
Anyway, Toby and I
have done a couple
of interviews and
we’ve tried to
integrate the model.
And what he’s
realized is, if you
can’t go to the third
world and plunder
the third world,
the way you plunder
the third world
the first world is
by making people
poisoning people.
And then you get them
on the allopathic
medical model
and you start off
with a $1 million
home and $2 million
in your brokerage
account and a million
dollars of saving
at the local bank.
And by the time
you’re through
going through
the allopathic
medical system,
you’re bankrupt.
Yeah.
One of the things
that people are
talking about is this
huge cash infusion
that’s gonna come
to millennials as
the boomers retire.
But that’s not who’s
gonna get that money.
That money is going
to these private
equity owned
pharmaceutical
companies.
It’s gonna go to
these private equity
owned nursing
facilities that’s
gonna go like we
are not a soci.
We have been
conditioned as a
society here in
America to separate
from our loved ones
that we’re encouraged
to cancel our parents
or to cut contact.
We don’t live in
an environment
where we’re all
together anymore.
We’re not
multi-generational.
And as a result,
all of our money,
all of our money is
gonna end up going
back to the system
and it’s never
gonna go to, it’s
so frightening to
see young people
supporting policies
that’s gonna be
used to steal
their family wealth
and inheritance.
It really is always.
There’s a study
called Pocketing
Money Meant for Kids
Private Equity and
Autism Services.
Have you seen
that one?
I have seen
that study.
Actually, I wanted
to show the chart.
I think it’s
chart three.
I’m sorry.
It’s a graph and it
shows, basically what
is starting with a
financial crisis.
Almost all the
deals on autism
service centers
are private equity.
And oh, here’s
what it says.
The 12 private
equity owned a
BA autism service
chains examined in
the study employ at
least 30,000 people
at 1300 locations.
That’s extraordinary.
Okay.
Look at this chart.
Okay.
What it shows you
is they basically
understand that a
process is underway
by the pharmaceutical
companies to
poison kids causing
neurological damage.
And that’s gonna
create a market of
providing autism
services because
parents are gonna
be overwhelmed
and private equity
is anticipating
that and basically
buying up the
industry to provide
those services.
I talk a lot about
something that
happened in, in like
2014 and again in
2020 where there
was a big meeting
of private equity
investors in Sun
Valley, Idaho.
The second
one was Uhhuh.
I don’t know where
the first one was.
I’ve been spoken
to about when
it happened.
But there was a big
meeting where they
were trying to decide
what were the things
they should invest in
that they knew would
be ironclad, that
would survive any
recession indicator,
economic downturn.
And they had speakers
there that talked
about the importance
of investing in
things that we
were emotionally
in lock with.
And so they wanted
to acquire things.
We would find a
way to pay for no
matter the cost.
If we didn’t
have the money,
we’d borrow it.
We wouldn’t borrow
it, we’d steal it.
If we couldn’t
steal it, we
would sell what
we had to get it.
These weren’t nursing
homes, these were
autism facilities.
These were
veterinary clinics.
These were like
funeral
services, right?
So we call this an
inelastic demand.
Yeah.
They were looking
for things that
people of middle
or modest income
have an in an
inelastic demand for.
That’s what they
were looking for.
Anyway, so let me
keep going because
one of the ones that
frightens me the
most is insurance.
Okay.
So we did a wonderful
interview with
Lucy, er, wrote a
special report on
private equity,
getting their clause
into insurance, and
it’s pretty scary.
I think she did
two reports.
And one of the
problems is you
can see when a
private equity firm
buys an insurance
company, but a lot
of times they won’t
buy the company.
They’ll make a deal
to provide annuity or
handle their
investments.
So it’s coming in
the back door and you
can’t see it clearly
from the disclosure.
Now here’s
the problem.
Insurance is one
of those industries
where I buy an
annuity or I buy
a life insurance
policy and I pay
based on the credit.
And then the private
equity firm comes in
and does a series of
things to make money
that dramatically
reduce or destroy
the credit.
But I’m locked into
my original price.
Yeah.
And if the
state insurance
commissioner is not
stopping or watching
this, there’s
nothing I can do.
I’m just getting
my savings stolen.
Yeah.
What really concerns
me is that this is
really gonna change
the nature of our
economy and the
nature of wealth
distribution in the
United States, which
is the nice thing
about mom and pop
shops is that mom and
pop generally live
in the community.
And as these
businesses get
rolled up it’s not
just that mom and
pop are potentially
gonna be sidelined
economically, it’s
that the income from
these businesses is
going to be funneled
to larger and
larger corporations
that may or may
not be based in
the community.
And I think that
is going to have
a really profound
effect on our economy
in a way that I
think regulators
and observers
are just starting
to grapple with.
Yeah.
And our culture too.
Yeah.
Yeah.
I live in small
town America, right?
The local hardware
store, the one that’s
left sponsors, the
the local basketball
team or the little
league team,
it does concern
me because I, my,
my girlfriend is
a veterinarian.
I doubt that there’s
going to be mom
and pop veterinary
clinics in a decade
if the current
trend continues.
The same with
hardware, the same
with OBGYNs, the
same with plumbers
and a whole bunch of
different industries.
Unless we decide
we want to go a
different path
economically
I feel like there
has to come a moment
where we’re going to
I believe we should
have hit enough is
enough, so long ago.
I want so badly
for people to
start screaming
and marching, but
I think they keep
us so overtired,
so overextended,
so underfunded,
so exasperated, so
over so unable
to provide for our
children that we’re
just too, everybody’s
too tired to
fight.
So we’re gonna
talk about what
we can do.
’cause I think
there’s a lot of
things we can do.
Okay, let’s
keep rolling.
Sports, they’re now
in college sports.
Yeah,
but they’re also
in youth sports.
They’ve acquired
almost the
entire youth
sports industry.
There’s almost
nothing left.
Youth sports
used to be a great
equalizer where
children from all
backgrounds could
learn teamwork
and grit and build
community bonds.
Today it has become
the next victim
of a financialized
economy.
Private equity is
stealthily capturing
youth sports using
the same playbook
it has deployed
in veterinary
clinics, nursing
homes, firetruck
manufacturing,
and countless
other industries.
Kids are burning
out because the
spec, because of
specialization and
injuries are on the
rise, families are
going into debt and
it’s based on a lie.
49% of parents
believe their
children will earn an
athletic scholarship.
In fact, only 2% of
college applicants
actually do.
So what does
youth sports
look like today?
Take Three Step.
It claims to be
one of the largest
youth sport
event organizers
in the country.
It operates over
5,000 clubs, across
seven sports and
promises families.
Quote, immediate
national brand
recognition
within the college
recruiting landscape.
Black Bear Sports
Group operates over
40 hockey rinks
across the Midwest
and East coast.
A recent report by
the Lever revealed
the Black Bear
is often the only
game in town for
hockey leagues and
tournaments and
forces parents into
its streaming service
to record games.
Varsity brands
monopolized
competitive
cheerleading as
insiders put it
from bow to toe.
So how did
this happen?
First, a private
equity firm acquires
competitors through
hundreds of small
acquisitions.
Next, it eliminates
competition through
vertical integration,
so it controls the
whole ecosystem.
Finally, it extracts
maximum profits from
captive customers,
in this case,
parents who have
to pay thousands of
dollars for their
kids to play sports.
In short, private
equity is turning
what was once an
affordable public
good into a profit
extraction machine.
The numbers
tell the story.
Youth sports has
grown into a $40
billion industry
roughly equal to
the annual revenue
of the NFL and
all of college
athletics combined.
How did we get here?
The 2008 financial
crisis slash parks
and recreation
budgets, the
COVID-19 pandemic
delivering another
crushing blow.
Community programs
have disappeared and
private equity is
ready and eager and
has filled the void.
These firms control
leagues, tournaments,
venues, uniforms
tech platforms,
and even governing
bodies, they create
a flywheel that
extracts more and
more revenue for
wealthy investors and
trapped families have
no choice but to pay.
There’s not a
single rec league in
many communities,
and they’ve made
it a $40 billion
industry, but it
wasn’t a $40 billion
industry.
It was an $8 billion.
And they’ve shut a
lot of families out
of sports because the
kids can’t afford it.
There was a senator
that would, was at
his son’s hockey
game just a
couple weeks ago.
And it was in a
black bear sports
owned facility.
Black Bear
Private Equity.
Okay.
It was a
hockey center.
They bought all
the centers in
the area and got a
monopoly, which is,
I talk to you about
regional monopolies
a lot yesterday.
But it was a, they
were at a hockey
facility and he was
taking a picture of
his son and he was
approached and they
said, I’m sorry, sir,
what are you doing?
And he said,
I’m taking a
picture of my son.
Why?
And they said,
you don’t have the
package that allows
you to film your
own child, sir. And
he said, excuse me.
And they said, you
have to pay for a
membership to film
your child, and
if you don’t, then
we’re going to have
to take action.
And he said, what
kind of action
could you take?
And he said, oh,
it was built into
your contract that
if you get caught
photographing your
son, they lose
playoff contention
or they get demerits
against their
playoff contention
calculation and
they get removed
from the playoffs.
So you will not
film your son.
Oh my God.
Do you remember
the senator’s
name?
It was Connecticut.
It was Murphy,
I think.
Chris Murphy.
Okay.
Wow.
And it went
very viral.
I was actually
on Info Wars.
The night had
happened and we
talked about it at
ad nauseum and it
went so viral that
Black Bear Sports
has come out and they
have clarified their
position and they’re
no longer saying you
can’t photograph your
children, but you
absolutely could not
call your husband on
FaceTime and let him
watch because you
cannot broadcast
your children
because they sell a
broadcast package.
Now you also can’t
do a photograph next
to the sidelines.
There’s they’ve
come out and made a
bunch of statements
because it was such
a huge backlash
that private equity
is not used to.
But this is not a
one-off problem.
This is happening in
every part of sports.
It’s happening
in lacrosse,
it’s happening
in travel ball.
Somebody sent me a
message yesterday
that said his
daughter wanted to
do travel volleyball.
$10,000 for a three
month season for
the travel 10,000.
Dollars for
three months.
Now another woman
came and talked
to me about how
her daughter got
a grant from the
state of Maryland
to do gymnastics.
She got a grant
because the private
equity firms had
bought up all
the gymnastics
facilities,
including the one
that I used to run
here in Maryland.
And she got a grant
to put her child
in gymnastics.
And she’s actually
very good.
But because the grant
only includes local
stuff, her daughter
is not allowed to
travel for any of
the competitions.
And she got given
a price and it
was $17,000 for
four months.
Oh, $17,000 for
four months.
Travel baseball.
I’ve seen
$8,000 figures.
So
I’ll tell you very
interesting things.
The New York Times,
one of the great
political successes
in America has
been homeschoolers.
Yes.
If there’s
anything Mr.
Global is afraid
of it’s moms.
Yes.
Because the moms
keep whooping
their butt and they
whoop their butt
on homeschooling.
The New York Times
just came out with
a huge attack on
homeschoolers, and
I bet it’s because
the private equity
firms don’t want
leakage out of their
different they
intend to make a
fortune in education.
Yeah.
I I used to think
that school choice
and funneling the
money to people was
this really great
idea until I realized
private equity had
bought up all the
private schools.
One of my favorite
things to talk about
is a company called
Spring Capital,
which is owned by
Primavera Capital
and Spring Capital
owns the largest
elite private school
institutions in the
world, including
a whole bunch in
Bethesda where the
politicians’ kids go.
And while they’re
busy trying to cancel
TikTok for being
affiliated with a
Chinese Communist
Party, they don’t
recognize Primavera
Capital is a Chinese
Communist party
managed private
equity firm that owns
all of the private
schools in America
and is writing
their curriculum.
Oh Jesus.
What could go wrong?
I don’t know if
you know this
’cause I followed
Tac a fair amount
Tic-Tac before.
The BRUHAHA started
was majority owned
by US private
equity firms.
KKR had a position
in TikTok.
KKR still has a
position problem.
They haven’t
been bought out
yet, but they’re
getting close.
The problem was
you had the Chinese
founders who had
20% and they had
operational control.
That was the problem.
And they kept saying
it was Chinese owned,
but in fact, the
majority of the
equity was American
buyout firms.
They also had 7,000
American employees
that each had equity.
There you go.
Huge equity here in
America for TikTok.
That’s not why
TikTok was canceled.
TikTok was,
no, it was
canceled.
They, because
they want, Larry
Allison wanted
control and his pals
Correct.
It was all for
propaganda and
there was an immense
amount of money
spent by Meta to
get rid of their
competition as well.
Almost $60 million.
Very stinky.
Okay, let’s turn
to retail, because
retail we’ve
seen Red Lobster,
Joanna’s, we talked
about Hooters, all
these companies
stripped, but we’ve
also seen companies
that have invested
hugely, it’s not just
private equity, but
private equity is
then the lead on what
I can, could I’ll
call dynamic pricing.
Okay.
And there, there
are thousands of
schemes in dynamic
pricing, but one
is you rent a
car online and the
next thing you know,
they had this and
that and this and
that, and the price
doubles and and they
don’t have the car.
And and you can’t
get anybody to talk
to you unless you
call the 800 number.
And good luck with
getting a human being
on the 800 number
without a fee.
And it’s all
orchestrated by
algorithms to, to
figure out how much
you’re willing to
pay to just give
up and go away.
It’s an extraction
model and it’s it’s
basically, it should
be illegal, but I
know we, we’ve
seen an enormous
deterioration or
bankruptcy of
all sorts of re
retail stores.
Any thoughts
on, on, on.
What private equity
is doing in retail.
Private equity in
retail has been
consolidating and
limiting any type
of differentiators
in the market.
I like to say that
millennial grge
is absolutely an
outcome of private
equity consolidation.
They wanna produce
as few options as
possible, take away
our individuality,
which I think is
really important to
them, is limiting
individuality so
that we’re marching
in lockstep as good
little workers, right
as they strip mine.
Everything that
we care about,
everything we
build, all of our
excellence and all
of our ingenuity.
Do they
just want us buying
everything online?
You wouldn’t think
so given that they
have some real
estate investments
in commercial
real estate
investments, you
wouldn’t think that.
However, if you
want to control the
way that pricing
happens, buying
online is certainly
more effective,
although they’re
getting better at
doing it in person.
And I’m gonna
give you a
non-private equity.
There’s a lot of
private equity
invested in their
institutional
investors, but
Walmart last week
I went to Walmart.
I left my phone in
the car, I left my
daughter in the car.
She’s old enough,
don’t worry.
And I had to run
in to buy one
single thing.
I did not put in
my phone number.
I went in there
and I paid cash.
And when it, when
I went to finish
paying cash into my
self checkout, it
asked me if I would
like the receipt
sent to my phone.
Mrs. Cianci
Wow.
Biometrics.
They’ve got your
Didn’t bring my, I
didn’t use anything
that would allow
the No, but they
recognized your face
and they followed me
through that store.
They knew what
I had bought.
There is nowhere.
We are not being
tracked for
our purchases
at this point.
Except in small
mom and pop
stores all across
your community.
And that is why I’m
going to continue
to say that the
safest path we have
forward is to just
force away from it.
Here’s what
I will say.
We’re not gonna talk
about food, but.
But I will tell
you that the
deterioration in
the food system and
the corporate food
system is such, if
you don’t have a
farmer and rancher
that you can trust
that you can buy food
from, it’s not safe.
It’s just I
agree with you,
it’s not safe.
One thing I do wanna
say on media, we
talked about TikTok,
but we have a lot
of material on CLIA
report about what I
call neuro warfare.
And I think one
of the key tactics
that they’re using
is they’re using
neuro warfare on
the phones, on the
digital TVs, on
everything else.
I, when I was on Wall
Street, I heard two
billionaire types
in 1984 talking
about entrainment
technology that was
gonna be rolled out
on TV and subliminal
programming.
And it scared
me to death.
And that was it
for me in TVs.
But I think they’ve
rolled that stuff
out and I think it’s
very much in the mix.
And
I’ve been wondering
about lighting
because I recently
watched a video
study of children
in a classroom,
and there was some
children that were
clearly demonstrating
under these, like
pulsing LED lights
propensity for like
hyperactive conduct,
which, first of
all, kids need to
be outside playing.
They don’t need to
be in a classroom
eight hours a day.
They need play.
And I have a
small business that
creates play-based
learning that’s
very important.
We need to
bring it back.
But then they moved
this child and the
other kids that were
struggling with those
same issues to a
classroom that did,
that had incandescent
light and it
almost stopped.
They filmed them
for weeks in each
environment and
it almost stopped.
And so now I’ve
started to wonder
about the lighting.
There’s also, I
don’t know if you’ve
ever seen this,
Jeffrey Smith had
it on his website.
It was a short video
about a school, I
think it was Happy
Valley, Wisconsin
where the kids had
there was a lot of
behavioral problems.
There was a lot
of bad behavior, a
lot of low grades.
They stopped buying
the corporate food
and they bought
all local, fresh.
Food all the
behavioral
problems went away.
The grades
skyrocketed.
Total change.
I’m glad you brought
that up because
one of the things
that’s been really
horrifying to watch
in the current
administration, it’s
been really hard
for me to watch,
is that they went
in saying they were
gonna engage in Maha.
As I’ve been
on Robert F.
Kennedy Jr. Show.
I’ve spent a lot
of time in the MAHA
environment talking
largely about private
equity in healthcare.
In healthcare.
But one of the
things that’s
happened is that
while they put Robert
F. Kennedy Jr in HHS
to make everybody
happy, what they
did was they put a
bunch of lobbyists
from the industrial
farming community
and the Agrochemical
companies in charge
of the FDA and the
USDA and the EPA.
All right.
Really.
So they can all
these lobbyists in
charge over there.
And one of the first
things that happened
was the USDA canceled
all of the new
programs that had
just started in the
three years prior
that were connecting
regional farmers to
school cafeterias.
Oh god, you’re
kidding.
They canceled all
of that funding and
then they said, don’t
worry, we’ll have
some MAHA initiatives
coming soon.
But they terminated
all of the programs
that were connecting
regional farmers
that were already
about to lose
everything because
we’re putting all
the soybean sales
to China over to
Argentina, and
we’re bailing
out Argentina and
American farmers are
losing everything.
It’s got enough.
It was at U us it was
at USDA, it was USDA.
I gotta find
this.
So we have the
EPA approving new
Forever chemical
pesticides and trying
to get immunity
for everybody
for glyphosate so
that they can keep
poisoning everyone.
And over at the USDA,
we’ve eliminated all
regenerative farming.
We’ve eliminated all
of the programs that
connected regional
and local farmers
to the school of
lunch rooms that
would’ve given kids
that otherwise do
not get access to
organic or healthy
food, access to
immediate out of the
ground healthy food.
We’ve gotten rid
of all of that.
And now don’t worry,
Lee Elden says, now
we’re gonna roll
out a maha because
we’ve already
destroyed all of
the building blocks
that were in place.
No, I, it’s
horrifying.
One of, one of
the good things
about Kennedy.
Going to Washington,
going through the
confirmation process.
I’ve never seen more
overwhelming proof
for the fact that the
poisoning of America
is intentional.
It is intentional.
It is a policy.
It is a plan, and
they are stuck on it.
Okay, so let’s
turn to, I
wanna talk about
Harvard and Yale.
I’ve covered
Harvard a lot
because Harvard,
the Harvard corpora,
Harvard is an
investment syndicate.
It’s not a
university, it’s
an investment.
More like a big hedge
fund.
It’s Harvard
Corporation is the
governing entity
and the endowment
is a piece of it.
And essentially
the endowment has
the benefit of
tax exemption.
And if they roll
off 4% a year to
the university,
that’s cheaper
than paying taxes.
And then they
basically create a
network that feeds
the investment
syndicate.
It’s very powerful.
It’s a very
successful
business model.
Anyway, so I ran
into a lot of dirty
shenanigans in the
housing market.
Yeah.
With their
real estate
investment crew.
And because of that,
I dug in a look at
Harvard and in 2017
they announced they
were gonna fire a
lot of their in-house
management staff
at the endowment
and outsource
tremendous amounts.
And they were gonna
stop providing as
much disclosure
on the endowment.
And I said, uhoh,
they’re gonna do
plunder and they
want to team up with
the private firms
and keep everything
secret and they’re
gonna make lots
and lots of money.
Yeah.
But in fact, that’s
not what happened.
They did
dramatically Yale.
Yale was the leader
of private equity
in the endowments.
But yeah, Harvard
came in as well.
They did take up
the private equity
portfolio to what I
would consider very
dangerous levels.
You need an
institution like
that needs liquidity.
And, but they didn’t
make a lot of money
because we’ve seen
the whole industry
stall on higher
interest rates and
what’s going on
in the economy.
And then Harvard
runs into a big
fight with the Trump
administration,
needs liquidity,
goes out to the bond
market, can’t get it.
And that announces
they’re gonna
sell a big
portion billions.
Yeah.
Between
Harvard and Yale,
it was almost $10
billion worth.
Now there’s a saying
in the markets,
he who panics
first panics best.
And it looks to me
like Yale and Harvard
are panicking first.
They’re cutting the.
They’re taking,
they’re they’re
marking their
portfolio down and
they’re getting
it out and getting
the liquidity
they need because
it’s a different
environment.
And I’m shocked
because if I thought
anybody could make
money playing the
plunder game, it
would be Harvard.
But apparently they
got their heads
handed to them
Harvard and Yale both
took a real hit here.
David Swenson at Yale
pioneered the private
equity investment
for endowment method.
He was there
from, what, 1985
to 2021, I think.
And he pioneered
the private equity
investment strategy.
But when you look at
what really happened
towards the end, when
they started panic
selling, they were
getting fewer than
6% returns, and they
were paying two and
20% on the gains.
And they were getting
nothing out of it.
And what’s you
just mentioned that
he who panics first
and you know that
they’re getting
they’re discounting
and selling,
they’re trying to
celebr everyth on
the secondaries
market, and a lot
of it is stuck.
They can’t
get rid of it.
And so what’s
happening is, right
now, just at Yale,
I think it’s Harvard
is $1.54 billion a
year in management
fees for the assets.
They can’t sell
Jesus, 1.54 billion,
and I think you’re
at 1.23 billion.
At Yale.
At Yale, they’re
paying one plus
billion dollars a
year in fees because
they can’t close
the funds and they
can’t get liquidity.
So now they have to
keep paying those
fees to the private
equity firms in
perpetuity, whether
they can sell them
or not, through their
two and 20 model.
And so it’s
just giving them
increasingly
diminishing returns
because they can’t
get anything out.
And the interest
rates are making
it in the secondary
markets incredibly
skittish.
They
can’t borrow, I
expect all the
business schools to
do case studies on
this exact situation.
Okay.
Because it’s
another argument
for liquidity.
Yeah.
Now, if you
read the private
equity literature,
they’re all now
focused on creating
secondary markets,
including using ACE
tokens to create
secondary markets.
And the question is,
why do we need you to
charge enormous fees?
To take something
private and then
create I don’t
know, high friction
liquidity with a
secondary market
in the private
market and with
asset tokenization?
Why not just use
liquid markets?
What do we
need you for?
You just gave us
the $11 trillion
question of assets
under management.
Because the reality
is that two and 20
model is paying them
two and 20 on $11
trillion in assets
under management.
And it only took
a few well-placed
people that were
positioned to make
a lot of money
convincing everyone
else to do it.
And so what we have
right now is we have
it being perpetuated
by these markets that
are, we’re not even
like inviting people
to the table anymore.
What they’re
doing is they’re
having, OpenAI
is still private
right now, right?
They just had a
presale that was
invitation only where
people got to come
in and they got to
buy super shares
before their IPO
and a whole bunch of
very wealthy people
came and gave them a
bunch of liquidity to
get super shares in
advance of the IPO.
So they have private
share grabs right
now, but we’re seeing
that all across
private equity.
So I used to see
wealthy wealthy
clients I had would
get approached and
say, look, trust us
on the exit, you’re
gonna get such and
such a profit and
just come in and
it rigged profits
for the insiders.
But the secondaries
market and for,
to be clear, the
general partners
that give the most
money up front are
always first in line
in the liquid, in,
in the liquidation.
So they’re gonna
get made whole.
But all of the
pensions that bought
in and all of the
401k systems that
now will buy in,
those guys are not
gonna get made whole.
And we’re seeing,
as we saw with
the Oregon school
pension, as we are
seeing from Harvard
and Yale in real
time right now, we’ve
seen with CalPERS,
we’ve seen with
the Michigan State
Pensions, it’s not
working anymore.
And the reason is
because if these
companies were
actually worth what
they claim they are
worth, they would be
able to sell them and
close their funds.
They need the
secondaries market,
which for anyone
watching at home that
doesn’t know what a
secondaries market
is, that is a market
where other private
equity firms that
also have stuff that
is stuck buy from
each other to keep
the scheme going.
And so you have
to create a
fake valuation.
You have a company
worth a million, but
it’s supposed to be
worth 10 million.
And I have a company
worth a million, and
it’s supposed to be
worth 10 million.
So I buy yours for 10
million and you buy
mines for 10 million.
And there we go,
and we kick that
can 10 more years
down the road, baby.
And it will
come home.
These chickens will
come home to roost
at some point.
But that hot potato
keeps moving and the
secondaries market,
even the financial
times describes it
as a pyramid scheme.
Yep, yep.
Yeah.
When the
financial times is
I don’t I’m not used
to the financials
times stepping up
for what’s right.
But things have
gotten so egregious
that they’ve been
doing more and
more in that.
Yeah.
Okay.
So let’s turn to the
Trump administration.
So step one is the
Trump administration
refused to close the
carried interest,
which if you look at
what was going on in
the tax issues and
how private equity
has really been very
negative for America
that’s not
what you do.
You don’t make
America great again
by giving benefit
to the mafia who’s
destroying your
neighborhoods.
You make billionaires
great again
and that’s it.
Exactly.
Nobody else.
Exactly.
Okay.
But the other thing
is now we have an
executive order for
4 0 1 Ks, and this
is frightening.
The Trump
administration has
been very friendly
to private equity,
refusing to close
a tax loophole that
largely benefits
private equity
fund managers.
And just recently
considering an
executive order
to allow 4 0 1
Ks to invest in
private equity.
So explain the
executive order
for alternative
investments.
I, for, first of
all, I fought so
hard to stop this.
We generated with
my audience more
than 200,000 tweets
to Trump begging
him not to do this.
About nine years
ago, a bunch of
private equity
firms sent through
a lobbying group,
a group to DC to
start advocating for
allowing diversified
asset acquisitions
in 4 0 1 Ks, pensions
and other retirement
mechanisms.
And we’re
talking about
12,000,000,000,004.
Is it 12 or
14 trillion?
In 4 0 1 Ks,
we’re talking about
12 trillion in 4 0
1 ks, $12 trillion.
Okay.
Okay.
Now you compare that
with $11 trillion
in supposed assets
under management with
private equity, but
it’s illiquid, right?
And 4 0 1 Ks
have money.
They have liquidity.
And so what you
have is you have
nine years of
campaigning to try
to get this access.
And I, they were
ahead of the curve.
They knew they
were gonna need
it someday, but
no president
would do it.
No president would
do it because it’s
insane because the
two and 20 model
says that if you
as an investor
aren’t investing at
least $10 million,
you’re gonna lose
money no matter how
well it performs.
You cannot make more
than you could in
the stock market.
You were going
to lose money.
Just so I, I do wanna
stop you because if
you look at how 4
0 1 Ks are invested
now, there’s a huge
amount of money
going into the
management companies
that are trading
publicly because
all those 4 0 1 Ks
are in index funds.
Yeah.
And through the
index funds, they’re
funding the people
who are doing this.
Yes, that’s true.
But if you look at
the fee calculation
between the two if
I invested a hundred
thousand dollars,
either in the index
funds or private
equity, my fees, if
I saw a 150% return,
we’re gonna go shoot
for the moon here.
We got 150% return
on 10 years.
Okay?
And my 100,000 turn
into 250,000, my
fees to get that
money out are gonna
be $6,700 total.
That’s what I paid
for my a hundred
fifty, sixty
seven hundred in
private equity.
I’m gonna
pay $60,000.
$60,000. Okay.
That’s an
astronomical
sum, and so when
you look at the
reason, it makes no
sense for 4 0 1 Ks,
nobody’s investing 10
million with a fund.
If you’re in a 401k,
and that’s your
retirement plan.
But these had all
tried and everybody
said no, it wasn’t
until they got
together with crypto.
That was the game
changer because
crypto also wanted
access to 4 0 1 Ks
and people wanted
access to crypto
in their 4 0 1 Ks.
So crypto went to
Washington, which
is one of the most
powerful lobbies
there right now.
Okay.
And crypto was almost
across the finish
line, but they’d run
outta money to spend.
Okay.
And they were they
had the Cry Crypto
caucus and they
have now they’ve
got crypto week,
like every quarter
in DC they’re having
all these crypto
events, right?
They had a crypto
ball for the
inauguration this
year, but at the
end of it, private
equity came in and
they said, Hey,
we’ll back the rest
of this spend to get
this across if we
can work together.
And they made,
it’s like a match
made in hell.
And Trump signed
the executive order
against all advice.
And now private
equity, which has
$3.9 trillion in
unmovable assets
right now that
cannot sell in the
secondary’s market,
has gained access.
Now here’s the thing,
standing between
your 401k and their
ability to stuff
is a whole bunch
of administrators.
Yes.
And they’re gonna
have to work
that system.
There’s a lot of
friction in that
system and they’re
gonna have to
work that system.
Yeah.
And so it’s gonna
take time and that
gives you time
to either exit or
make sure you’re
working back.
Because the first
thing I would do
if I had a 401k,
is I would call
up and I say, you
better make sure
that none of this
gets stuffed into
my and whatever
my options are.
They are private
equity free.
A hundred percent.
And that is
something that every
American can do.
Not all of them have
the savvy to do it.
Not all of ’em have
the time, the energy.
Not everybody knows
that they have to,
but that is one of
the small things we
can do to protect
ourselves from what
is the very steady
strip mining of
American excellence,
ingenuity and
wealth in America.
Okay, so let me
bring up a wild card.
Yeah.
Because there is
a wild card that I
predict will impact
private equity.
Private equity
has been talking.
So we, this year we
passed the Genius
Act, which was a
regulatory framework
for stable coins.
And I believe
they’re gonna
use stable coins.
They’ve reserved
the right they’ve
refused to outlaw
cbdc, so they could
still use cbdc
but they want to
use stable coins
like a privately
controlled CBDC.
Same thing.
So that’s another
problem that we’re
gonna have to face.
’cause the same guys
that did private
equity now want to
do programmable money
and that’s worse.
But private equity
has been talking
about so we have
a new bill coming.
The Clarity Act was
passed in the house.
There’s a response
in the Senate and
they’re trying to
work it out that
when that bill
passes, you’re gonna
have a regulatory
framework for all
crypto, including
asset tokenization
and private equity
has been talking
about using asset
tokenization to
create a secondary
market, which as
far as I’m concerned
is ridiculous.
Why pay all those
fees to get to a less
liquid market than
the one liquid market
you’ve already got?
But put that aside
for a second.
Coinbase just
announced that they
are gonna start in
early 2026, perpetual
24 7 trading of
stocks everywhere
in the world.
Next up, we’re
launching equity
perpetuals, so you
can get 24 7 access
to trade equities
capital efficiently
from anywhere.
So let’s take a
look at this too.
I’m back in the trade
tab where there’s
a whole section
for perpetuals.
I can now see
contracts for single
stocks and indices.
And early next year,
these contracts
will be available
to traders on both
our simple and
advanced trading
platform outside
the us enabling
trading with up to
20 times leverage
traders across the
world will be able
to react instantly
to earnings, macro
events and weekend
news with one of
the most efficient
trading instruments
created in crypto.
Now coming to
the largest asset
class in the world,
and they say they’re
gonna offer 20
times leverage.
The girl who
grew up in Vegas,
right?
The US stock market
is 70 trillion.
The global
stock market is
140 trillion.
You allow, because
right now it’s
very high friction.
If I wanna trade a
market on the Swiss
Exchange, I have
to go to a huge
amount of work to
open an account in
Switzerland, huge
paperwork, huge
trouble and then
high fees to buy
the stocks on the
Swiss Exchange.
If I can go to
Coinbase and simply
buy a token, which
represents the stock
on the Swiss Stock
Exchange, there’s
no friction, there’s
no regulation.
If I can leverage it
with margin times up
to times 20, you can
imagine the games
that could go on.
But here’s
the problem.
If you are the
private guys, the
liquid markets are
about to get a lot
more trading happy.
They’re gonna get
crowded, right?
They’re gonna
get crowded.
How are they gonna
compete against that?
They already can’t
compete against that.
So you’ve got 8
trillion so say
globally, you’ve
got $10 trillion
in private equity.
But the 140
trillion gorilla
just got a lot more
accessible and a
lot more interesting
and a lot more
potentially bubbled.
So the relationship
between liquid
and private is
gonna get very
interesting here.
Tiffany.
I don’t pretend
to know what
will happen.
I’m wondering if
Coinbase is trying to
get ahead of the AI
bubble burst too with
this to prepare to
bounce on it.
Yeah.
Could be.
We’re gonna
have a mess.
The other thing
I should have
mentioned because
of the dreadful I
think the impact of
private equity on
children has been
absolutely dreadful.
And
I think the thing
that’s gonna get more
dreadful is open AI
just announced that
they’re going into
porn in a big way and
that’s because they
can’t make money.
I
just wanna just
take a minute.
You have to take a
minute for the, we’re
gonna cure cancer
to, we’re gonna make
unlimited kitty porn.
Like e egomaniacal
transition for
Sam Altman there.
Everybody we’re
gonna cure
cancer last year.
This year we’re gonna
make porn and it
makes perfect sense.
This single most
profitable per
employee company
in the world
is OnlyFans.
They literally make
like $30 billion
per employee.
But porn is the
world’s finest
neuro warfare
delivery mechanism.
Absolutely.
And they’re
not gonna stop
with adults.
It’s great for
brainwashing people
and it’s great for
addiction creation.
It’s also gonna make
it impossible to
actually find where
the real porn and
the real trafficking
is happening.
’cause the
market will be
flooded with it.
I don’t know
sometimes, my
father was a doctor,
and he used to
say, sometimes you
just have to let
the infection rise
to the surface.
So maybe it’s gotta
get worse before
it gets better.
Okay.
So now we’re gonna
talk about the
important part,
and that is how to
protect ourselves.
So I had a wonderful
colleague who’s had
a relative young
man working for a
company, and he kept
seeing, identifying
ways of improving
the company’s
products, improving
their profitability,
and he’d bring
it forward and it
would be rejected.
And he was
totally baffled.
Why does the company
not care about
growing stronger and
making more money?
And and it, so I
told the colleague,
find out if they’re
owned by private
equity, and sure
enough, it was owned
by private equity
and they were looking
to get their money
out fast and run.
And ingenuity is
time consuming
and resource
consuming, right?
And so what he
discovered was he
wasn’t part of a
business, he was
part of a trade.
It was a transaction.
And
I think the first
thing you have to
do is you have to
know who you’re
doing business with.
You have to know
who owns a company.
I think it was you
who said or no,
maybe it was Gretchen
Morganson had a great
interview where she
said if you go
to a doctor and it
turns out they’ve
been rolled up by
a private equity,
you need to find
another doctor.
I’ve said it, she’s
probably said it too.
We both say
that a lot.
What can
regular people do?
What can we do
on a day-to-day
basis to push
back against this?
First things first,
private equity is
coming for the little
guy’s money now.
Okay.
Okay.
Traditionally,
they’ve been
where pensions
invest, where
endowments invest.
Big institutions.
But that pool is not
getting larger, fast
enough for them.
And they want
additional.
Fees and additional
enrichment.
And so they’re
gonna go after
the little guy.
Now they’re
gonna go after
people like you.
So if you get
pitched on a private
equity deal, that
just sounds great,
just say no.
Okay.
Because you’re
really going to
be perpetuating
this unsustainable
business model.
Second thing is,
until we have
more transparency
about who owns
what and whether my
supermarket is owned
by private equity
finance, or my Okay.
Yep.
And whether my
dermatologist
is until that
happens, if it
does you’ve gotta
ask the question,
especially of your
doctors go to
your dermatologist,
are you owned by
private equity?
Because if you are, I
think I might take my
business elsewhere.
Because studies
have shown that
increased costs
biopsies go missing.
It’s a safety
thing important
health issues.
Yeah.
Occur.
Look the lack
of transparency
is appalling, but
we don’t have to
tolerate the lack
of transparency.
Do you understand?
We have mechanism,
so transparency
is one very
important facet of a
multifaceted problem
we need to address.
But transparency,
there are ways
around it.
It’s just time
consuming.
I’ll tell you right
now, I have my
secret weapon is
that whenever private
equity is acquiring
something, they’re
also acquiring
their intellectual
property.
And they never, ever
hide that in niche
shell corporations
quite as well.
So if your local
doctor has a sign
on the door or a
name that they’ve
registered for
a trademark in,
you can go to the
publicly available
U-S-B-T-O test
system and see who
owns that trademark.
And it will have
transferred to the
private equity firm.
They can hide it
on the website,
they can hide it
everywhere else.
You can’t hide
the intellectual
property that is
publicly available.
Wow.
So that’s my favorite
place to do research.
So one of, one of my
concerns is if my
doctor has my private
records and data,
and he’s bought by a
private equity firm,
they get that data.
You sure do.
They sure do.
And the next time
you log in to get
your files, they’re
gonna have you
remind your terms
and conditions will
have been completely
updated and you won’t
even know you’ve
signed the rights
away to somebody.
You won’t
even know it.
Blackstone, I think
owns ancestry.com
now, and they also
own they’re selling
all the 23 and me
DNA right now in
the bankruptcy to
a bunch of private
equity firms and
pharma companies.
Oh my God.
All of the 23 and
Me database that
is now bankrupt is
being sold to the
highest bidder.
And there was a
big hearing about
it, and Josh Hawley
really went to the
mat on this issue
and it didn’t matter.
They were like we
have to sell it.
We’ve gotta
make those
creditors whole.
He didn’t say
the institutional
investors with the
creditors, they
were making whole.
So that means be
very careful who you
give your data to
and don’t start,
it’s becoming, not
sign, it’s becoming
where you can’t
give it to anyone.
It really is.
And I’m a big
believer that right
now, transparency
is definitely the
path, but there
are other paths
we can take too.
And I think the
best path for all of
them is through the
referendum states.
That’s what
I believe.
Yeah.
So explain how
a referendum, so
there’s several
things you can do
at the state level.
One of them is
a referendum.
So describe what
a referendum in a
state that can do.
A referendum is.
So there are 19
states that have some
form of referendum
capability in the
United States.
Some of them
are constitution
amendments only,
and some are
regular bills.
The what a referendum
state, like Nevada
or Arizona affords
you is it means that
you as a regular
citizen can write a
law and you can go
out and collect, say,
10,000 signatures
backing that law and
it goes immediately
past the legislature
and to the ballot.
And in those
circumstances, if
you can get those
signatures, you can
get that law of the
ballot trust and
believe the private
equity firms will
come and campaign
against you.
But I’ve gotta say
it’s not working
like it used to.
It’s just not.
And so we have
the ability to
start passing laws
for transparency.
We have the ability
to pass laws to
make arbitrators
comply with the law.
We have the ability
to pass laws in
our states that ban
private equity from
pr, from practicing
healthcare.
We have the ability
in 19 states, the
United States to pass
laws to, to restrict
the kinds of money
that can own kinds of
specific businesses.
So here’s the
thing, a state has
the power to pull
the license to
operate in a state.
Yes.
So we do that.
That is an
enormous power.
And part of the
problem is before
it can pull your
license, it has
to go through its
contracting budget
and make sure it’s
fired you from the
contracting budget.
No, ’cause if you’re
purchasing and doing
business with these
guys, you can’t just
pull their license.
So a state can move
them out of their
financial statements
and a state can
literally pull their
license to operate.
And I’m one of
those people who
believe if people
have a death penalty,
corporations, if
they have right of
personhood, should
have a death penalty.
I talk about
this so often.
There was actually
one of the people who
ran as an independent
for president last
cycle was Randall.
Randall.
Terry.
He said, corporations
and private equity
firms don’t have a
sold a damn or an as
to kick and we need
to start holding
them accountable
like they do.
And we just saw
this with Boeing.
Boeing was found
guilty of felonies
for lying to the
government and
allowing 300 souls
to die on their
planes by hiding that
there was a defect.
They were found
guilty of felonies
and no one
went to jail.
They got some
small fine that
became ac cost of
doing business, and
356 families went
to arbitration.
Wow.
That’s what happens
over and over again.
As long as we
have allowed and
we continue to
allow our justice
system and our
legislative system
to be bastardized
in favor of these
corporations.
We already know that
the legislators are
bought and paid for.
We know that,
but we still have
tools and weapons
in our arsenal.
We have to start
using them.
So I think one of
the most powerful
political tactics
that’s ever occurred
is boycotting
and shunting.
So my attitude is, if
you are interviewing
for a job, you
find out if they’re
owned by private
equity and if they
are, walk away.
Yeah.
If you don’t
for products and
services, you don’t
do business with
institutions that
are owned by private
equity unless you’ve
seriously researched
and due diligence
and make sure that
they are okay.
We’re watching this
happen in real time
right now with the
company I’m fighting
they bought up
in COVID tons of
children’s businesses
that only serve kids
and only exploit
the profitability
of moms that are
trying to take
care of their kids.
So they acquired
adventure parks
called Urban Air.
They acquired the
Little gym, which
was my, the brand
that I owned, snap
Biology XP League,
class 1 0 1.
They said they were
gonna have control of
mom’s pocketbook from
cradle to college.
That’s what
they promised.
Oh God.
And they were gonna
build a big umbrella
that controlled and
built data models
based on parents
and what they were
willing to spend
on their children.
And what happened
was they started
cutting corners
to get more money.
And I ended up
getting sent some
documents that showed
they were cutting
corners in these
urban air adventure
parks and in these
adventure parks,
they were cutting
harness checkers on
zip lines that were
35 feet up in the air
over concrete floors
and metal fences.
And the safety
team had told them,
don’t do that.
And in the
documents I had, it
suggested that they
were overridden.
And the CEO’s
team let it at
least advocated
for it to happen.
And just a couple
weeks later, children
started falling off
these zip lines,
30 feet to concrete
floors, breaking
every bone in their
body, rupturing
organs, permanent
brain damage,
blindness, scalping,
quadriplegia,
paraplegia.
All of them got
forced into secret
arbitrations.
No one knew.
No one knew until
I got sent those
documents and their
cuts have continued.
They started
advocating for hiring
14 year olds to run
these parks with
attractions where
children could die,
people could die.
Recently, a woman
was strangled and
then a geor in
Georgia, a 6-year-old
was strangled
on these rides.
It just kept
happening.
And this past
weekend, a beautiful
6-year-old little
girl named Emma
died in one of
their parks.
These private equity
owned urban air
adventure parks,
little gyms, snap
ologies, right?
When you pair private
equity with our
senior citizens, when
you pair them with
healthcare, when you
pair them with our
pets, when you pair
them with the lives
of our children,
it doesn’t mix.
And people started
calling, way
caught online.
We didn’t talk about
the rolling up of
the veterinarians,
but that’s very
significant.
We’ve talked about
that on the Solari
Report, and that’s
one place where when
you go to a vet,
you need to make
sure it’s not owned
by private equity.
Yes, very.
They’ve gotten,
almost 76% has been
rolled up at this
point in major areas.
That’s a
terrifying number.
And they’re
price fixing.
They’re price
fixing in every
industry they get
to, whether it’s
serving your kids or
your grandparents or
your pets, they’re
price fixing and
they’re creating
regional monopolies.
This is
something else.
The referendum law.
We can write
new antitrust
regulations to stop.
We can stop this,
but it takes effort.
Can a state
write regional
antitrust laws
and enforce them?
It’s never been
tried, but I
think we could.
Yes.
I think we could
do any trust laws
are the only laws
in the United States
that have a civil and
criminal penalty or
a civil and criminal
prosecution method,
and that are allowed
to be prosecuted by
regular citizens.
They’re the only
laws where you don’t
have to wait for a
prosecutor because
you’ve been harmed
as a citizen if
antitrust or any
competitive conduct
is being executed.
The problem is it’s
so expensive that
we would have to
all work together
to make it happen,
but with new laws,
we could make it
more affordable.
We could make
them pay the bill.
We could literally
say, and when we
bring it, they have
to pay the bill if we
meet this benchmark.
That is something
we could write
in from day one.
That’s true.
That’s true.
Now, one thing we
can do is we can stop
our pension funds
and the state pension
funds from investing
in this stuff.
Absolutely.
I think one law I
think one law should
be that pension,
state pension funds
have to buy liquid
securities, subject
to transparency laws,
disclosure laws.
We can pass that law.
We should also
say that private
equity firms cannot
practice healthcare.
The private equity
firms shouldn’t
own healthcare.
They shouldn’t
own emergency.
We know for a
fact you’ve got
a 42% higher
chance of dying.
That should be
reason enough.
After Steward
Hospital, after the
Steward Hospital
scandal, didn’t
one state put a
limitation on
private equity
buying hospitals?
Yes.
There are several
states that are
trying, and they’re
being sued by
private equity
firms to undo it.
And Stewart
and Prescott, both
of these hospital
systems had CEOs
that wrote off into
the sunset with
$300 million yachts.
But what we have
now are vast regions
of the Northeastern
United States where
rural areas now
have no healthcare
within three to four
hours, and women
have to take four
hour rides to the
hospital in labor.
People are dying
on the way to
the hospital.
During the nineties,
the early nineties,
I was on the board
of Sally Mae and
I had run-ins with
the leadership that
wanted to privatize,
and I felt their
mission was not
to make money.
Their mission was
to help kids get
a great education.
Anyway, after I
left, they were
instrumental in
getting the laws
passed so that kids
couldn’t write off
their student loans
in bankruptcy.
I’m embarrassed to
say, right after
privatization, I
went to work for
USA funds, one of
their private arms.
That was where
I Oh, really?
Worked my first job.
Yep.
I worked for USA
funds, so on their
Sally Mae contract.
So what they did
was they engineered
the law so they
could make money
on kids failing.
They didn’t need
the kids to succeed.
They could make money
on kids failing.
And I’ve researched
a lot about what
happened and who
did it, et cetera.
And it’s clear to
me that it was an
intentional plan
to simply extract
and plunder the
next generation.
They knew what
they were doing.
It was intentional.
They were very
effective in
that effort.
IJ actually just
saw Jerome Powell
advocate for making
them bankruptable.
He just advocated
for that in a recent
hearing in Congress.
He said
that’s, thank God
it’s 20 years, 30
years too late.
But when they took
off the purse springs
on professional
degree allocations,
that also gave a
signal to the schools
to start spending it.
And what kills me
is that they’ve
raised their rates
at insurmountable,
like just massive
like metrics over
inflation, the
way that fees
have gone up.
When I was in
college, my class
used to cost me $284.
Now at that same
college it’s
like $2,400.
It wasn’t
that long ago.
But when we see that
they’re doing this,
we’re also seeing
that 67% of those
increases are only
going to bureaucracy
and bloat.
Absolutely.
67% of that spend
is just salaries for
people in the admin.
They’re not giving
better teachers.
You’re not getting
better facilities,
you’re not getting
better education,
you’re getting more
administrators.
More bureaucracy,
right?
Yeah.
And phony research.
Yes.
Phony.
You’re getting phony
research that lots
of phony research,
air cover to the
air cover to the
private equity
guys in government.
Okay, so let’s talk
about investment
because one of the
things I can do is
I can stop investing
in these companies
and their funds.
Okay?
And, but it does mean
if I’m in a four, oh,
if I’m locked into a
company administered
401k, I’ve gotta
get active and
make sure that the
administrators know
that is not going to
happen in my 401k.
Yes.
Literally
that has to be a
huge promise that,
that teams get
together and makes
one another to all
advocate for that.
And if you have
a union, get
your union rep
advocating for that.
Absolutely.
You should be
galvanizing whatever
worker protections
you can to get your
company as far away
from private equity
as you can with your
retirement tools,
right?
That applies
not only to your
401k, but to your
insurance benefits.
Yes.
And insurance.
Absolutely.
Because the other
thing you need to
do is you need to
do due diligence
on your insurance
policies or annuities
or any other deals
you have with private
insurance companies.
And you need to
make sure they’re
not, their credit
is not leaving
out the back door.
Okay?
And there are
things you can do.
You can contact
the state insurance
department and
commissioner.
There are many
things you can do,
but the other thing
you can do is you
cannot buy insurance
or enter into an
insurance policy
with an insurance
company that’s owned
by private equity
or has too many
backdoor deals with
private equity.
I also recommend
people turn away
from anything that
has an arbitration
agreement.
Strike it in the
contract, sign it,
and hand it back.
If they don’t
notice, you’re free.
Strike it in
contracts.
Move away that
from anything.
That is an
excellent idea.
And I’ll tell you
another thing you
can do, lining it
out, signing it,
initial next to
it, hand it back,
and hope they
never look at it.
Get rid of it.
Don’t sign
anything that has
an arbitration
agreement.
Whether it’s an
employment contract,
a storage unit, a
veterinary clinic,
strike it out.
Ladies and
gentlemen, always
listen to someone
who has an Outward
Bound law degree.
Yes.
Okay.
So the other thing
you can do is
your alma mater
or charities you
give to, if they’re
putting money into
an endowment and
putting money into
private equity, you
can make a huge why
should you give
money to a university
that is financing?
This is financing
the destruction
of America.
Seems to me
a bad idea.
The other thing is
social life, right?
Remember Liz
Estrada, you don’t
need to date or
associate with
people who do this.
I think making the
people who do this
highly socially
unacceptable would be
a major contribution.
Yeah.
If you see them
on the board at a
museum that you use
to support, start
fighting back, send
letters, post ’em
publicly on their
Facebook pages.
If you have a bunch
of private equity
investors or a bunch
of private equity
board members or
general partners
that are serving on
nonprofits that are
important to you,
trying to whitewash
their strip mining
conduct through
right through
altruism, make a
stink about it.
Make sure the
world knows, right?
If you see that
somebody is in
proximity to you,
in, in any social
environment and
anywhere you’re
looking that has
made their fortune,
JAB Holdings is
a good example.
This is a private
equity firm that
made all of their
family money through
the exploitation
of concentration
camp labor, and
now they own Panera
and now they own
now they own like
Insomnia Cookies
and Krispy Kreme.
We don’t
support them.
They own Dr.
Pepper and they own
Keurig and Green
Mountain Coffee.
We don’t support
them because they
made all their money
on concentration
camp labor.
And when it came
out publicly, they
said, we’re gonna
make a big donation.
We’re gonna make a
big donation to the
Holocaust Museum.
Now they found a
list of 800 families
they had exploited.
And rather than
paying restitution to
those families, they
exploited to make
all their wealth.
They gave a $10
million donation
to a museum, which
represented 0.04% of
their wealth, even
though it all came
from exploitation.
So when you find
these institutions
that are engaging
in unconscionable
conduct or have
come from a point
of engagement of
unconscionable
conduct, you
call it out.
You boycott, you
make it known, and
you don’t play ball.
So one of the things
we have a place at
Solar where called
connect, where
people in the same
place get together
and share things.
But it’s a
lot of work.
It’s inconvenient
when you are going
through the world
and making sure
you’re doing business
with all these
different businesses.
And it’s inconvenient
to not go to the
big grocery store,
but find a rancher
or farmer that
you can trust.
It’s a lot of
work to figure out
which doctors are
okay, or which vet
clinics are okay.
And I think there’s
a lot to be gained
by teaming up.
Yeah,
I agree with you
and Right.
And I think we
have to team up and
share information.
One of the things,
I moved to Tennessee
from Washington
in 1998, and I
had family in
the neighborhood.
And basically that’s
the kind of place
where you gotta
make sure you have
the right plumber.
You gotta make
sure you have
the right leg.
You gotta and she,
my cousin just sat
me down and said,
okay, here’s who you
can trust in these 40
different categories,
and that’s, I only
went through if
it hadn’t been for
people that I could
know and trust.
Telling me who
I could trust in
these different
areas, I would’ve
been in trouble.
So there’s a real
need to organize
and team up
for food.
I have a solution
that could
help people.
There’s actually
a new app that
just launched
called Buyer, BUYR.
It has a scanning
function that allows
you to see whether
the food you are
trying to buy is
private equity owned
major corporation
or consolidation
owned, or if it’s
from a family or
founder owned brand.
Oh,
great.
That one’s new
and I’m using it.
I’ve been using it
for the last two
weeks and I love it.
It’s great.
Do you really?
Yeah.
I, somebody
recommended it to
me, but I like it.
I haven’t tried it.
Okay.
Yeah.
It’s working Okay.
It’s great.
Okay.
But we need more
communication
about this.
You should be
doing this in
your community
Facebook groups.
If you find out
that your veterinary
clinic suddenly hikes
the prices and you
ask the women at
the desk, they’re
already scared for
their jobs, they’re
already mad they
were acquired,
they will tell you.
Find out and post
it very publicly
to everyone.
It’s what we
have to do.
So it’s what
we have to do.
So we all need, as
we travel around
the world doing
transactions, we
all need a private
equity filter.
Yes.
It’s that simple.
So we need, okay.
So there are lots
of great businesses
out there.
There are lots
of great people
out there who you
can do business
with and trust.
That’s what’s
so amazing.
It’s always
shocking to me.
I do a lot with
banking and I’m
always shocked
when people are
complaining about
the most hideous
thing their big
bank just did.
And their big bank
has been doing
hideous things for
decades and they’re
still in the big
hideous bank when
they’re wonderful
community banks and
credit unions that
they get move to.
And I’m like, why?
Why?
It’s almost like the
Stockholm Syndrome.
Why are you
tolerating this?
You could have
a wonderful
relationship with
a great bank.
Why are you putting
up with this?
We had a small bank
around us that it,
I, there’s a few, and
I use one of them.
There was a small
bank called Sandy
Springs and it
just got bought up
by Atlantic Union
because people
aren’t using enough
community banks and
we’re not keeping
them safe and
fiscally healthy.
We need to be using
these community
banks to lose those
community banks.
You’re gonna
lose them.
Yeah.
Okay.
We’ve certainly
covered a lot
of territory.
I know there’s
more, but before
we close, is there
anything else you
wanna add that we
haven’t covered
that I forgot?
I just like to
finish by reminding
people that someone
has been hurt
by this system.
Every one of you
knows somebody that’s
been hurt by this
system, whether
it’s the arbitration
system that hides
the bad conduct of
corporations or the
private equity firms
that exploit it and
hurt your kids or
the employees or
the customers.
You have to
understand, you
just don’t know.
Every single year
in America, 1.6
million Americans
are forced into
secret courtrooms.
They’re never allowed
to tell you about,
and there’s only 300
million of us here.
So if you’ve
been alive for 10
years, that means
you know a fair
percentage of them.
You know them, you
know these people.
You just don’t
know what’s
happening to them
in the background.
And so if we don’t
start pushing back,
if we don’t use the
shoes we stand in
right now to forfeit
our convenience
and maybe a small
percentage of our
capital to stop
trying to save money
at all costs, which
I know is hard in
this environment.
I know it’s
hard, right?
But we have to give
up our convenience
and our capital
in small numbers
to support the
small businesses
in our town.
They’re the ones that
sponsor sports teams.
They’re the ones
that sponsor the kid
with cancer down the
block that needs a
jar on the counter.
They’re the ones that
are gonna sponsor
a Girl Scout troop.
They’re we’re
not seeing that.
Every time a private
equity firm acquires
a business in your
community, 94% of
the money you give
that company will
leave your community
and never come back.
But if you support
a small business
in your community,
a small business
is going to keep
68 to 74 cents in
your community.
It stays in
your town.
So you have to
start looking for
those businesses.
You have to support
those businesses.
And if you know
somebody that’s going
through hell through
a secret arbitration,
be there for them.
Help them out, right?
But know that you
need to do everything
you can to protect
yourself from that
secret court system.
And when you help
them use cash,
because then,
yeah,
after 10 transaction,
all the money
hasn’t left the
community in fees.
Yes, absolutely.
Use cash.
Find those
local farms.
Find those local
small businesses,
because every single
sandwich chain
has been acquired
by private equity
at this point.
There’s not one left,
but there’s a really
great restaurant
down the block for me
called Pumpernickel
and Rye, and
that’s where I go.
Yep.
I used to like,
I used to like
Jersey Mike’s.
We tried to save
them and they
ended up selling
to Blackstone.
You have to
understand that
almost everything
is gone.
And so if it’s a
chain restaurant
or has very strong
intellectual
property, a logo
you recognize, you
need to look away.
You need to start
supporting the small
mom and pops that
care about the people
you live with.
You need to do
business with
companies who
are trustworthy.
Yes.
And have a
demonstrated record
of being trustworthy.
Seek out small
medical practices.
Seek out small
orthodontists.
Optometrists.
You have to really
do the work, but
once you find
them, stay there
and tell everyone
else about it.
That’s the best can.
That’s the thing.
You
can stay forever
as long as they
don’t sell out some.
As long as we
keep bringing
people, they won’t.
Now speaking of good
things to do with
your money one
of the things I’ve
done is I’ve spent
11 years in highly
expensive, very
dangerous litigation.
I know what it’s
like and and
Tiffany is still
litigating and I,
she’s got a co-fund
me and I would love
for everybody to
go support and
I would just say
I believe every
donation is a prayer.
And so if you
can’t afford a lot.
Donate a dollar,
donate $5, donate
a little bit.
The success of a
donation campaign
depends not just
on lots of money,
but lots of donors.
The more donors who
come in, the easier
it is to bring
in the people who
can afford money.
I would really ask
that you consider
giving a donation.
It’s Christmas
time, it’s the
time to donate.
I’m going to go
Tiffany, after
this interview and
make a donation.
And I hope everybody
else, if you can
afford it, will
do and and also
keep Tiffany and
her efforts and
her family and your
prayers because
she, what she is
doing with her
litigation is making
a contribution
to all of us.
And as she’s done
this litigation, she
has researched and
network and dug out
fantastic amounts of
information, which is
bringing tremendous
transparency to
what’s going on,
and it’s made
it possible.
She and a few
other people who’ve
written some great
books, we have
reviews at soleri
Tiffany and their
information is making
it possible for me,
people like me to
integrate what’s
going on in private
equity with some of
the other shenanigan
going on in the
financial system.
And we’re getting
a very much more
clear picture of
what’s going on.
So this is somebody
who’s done enormous
service for me,
for the CEL team,
and for all of us.
And I would just ask
that you consider
including her in your
holiday donations
because this is a a
great thing she’s
doing and it’s got
a very high return
for all of us.
Tiffany, I can’t
thank you enough
for joining us
on the report.
I can’t thank you
enough for doing
what you’re doing
and we are here.
If there’s anything
we can do to support
you and help your
efforts, I hope you
will let us know.
It’s been an
honor to be here.
I’ve really had
such a good time,
like just learning
from you and
collaborating and
learning new things
that I think impact
my research too.
And I hope you’ll
have me back.
Of course.
Absolutely.
We, as we always
say at c, we’re
in cahoots.
I love it.
Thank you.
Ladies and gentlemen,
you have a wonderful
evening and thank
you for joining us
on the Solari Report.
Okay.
Ladies and gentlemen,
Tiffany, I and I
are back because
we recorded
several weeks ago.
We’re gonna publish
next week on January
6th, and so much
has happened in the
last three weeks.
I would say the last
three weeks in the
private equity world
is explosive, other
than I think a lot of
the media’s catching
up with you, Tiffany.
That’s what’s
explosive.
Yeah.
So let’s
just dive in.
We’re gonna do a
quick addendum to, to
the interview we did
to give you a taste
of what’s happened in
the last three weeks.
Okay.
Tiffany, dive in.
Tell us what’s
happened.
So in addition to
several sort of red
flags that are coming
out of the Fed and
coming out of the
banking regulators
right now that sort
of send up warning
signs that there’s
about to be a lot
of need to get out
of certain markets.
What we see are a
series of articles
that have come out
in the Financial
Times, the Economic
Times of India, the
New York Times that
are all saying that
they have identified
a clear rot in
private equity.
Who could have
predicted, right?
They’ve identified
clear rot in private
equity and investors
are very scared and
pensions especially
are very scared
and rightfully
so let me just put
some numbers on this.
So last in 2025,
we’re recording
on the first
day of the year.
So congratulations.
Welcome to 2026.
In the, in last
year, o private
equity only sold 321
companies and that’s
an all time low.
And they have
something like
how, what’s the
total portfolio?
17,000 companies
higher I think
we’re closer to 21.
But they’re not
tracking the
small firms.
And so basically
they weren’t able
to get any exits.
As a statistical
matter, almost no
exits in 2025, which
means the whole
portfolio is stuck.
But what they did
get, what they did
get is a hundred
million dollars of
that 321 exits were
to themselves, right?
They sold them
to themselves.
And that’s what’s
really triggering
all of these
massive alarm
bells right now.
They also got the
amazing honor of
being responsible for
70%, 70% of all major
bankruptcies in 2025.
Oh, wow.
Anything over.
So that’s a
new record.
It was
private equity
aligned.
And we just saw
Sachs file yesterday,
Sachs, and then
Sprinkles which is
one of the first big
private equity exits
that Shark Tank brags
about all the time.
They filed
yesterday as well.
They’re gone.
They closed all their
stores this morning.
So how many
bankruptcies from
private equity
have we seen since
you and I spoke?
Oh, just in the
last two weeks.
Over a dozen.
A dozen,
over dozen.
A dozen with
four majors.
Okay.
And so now we have
the entire industry
basically not
able to get exits.
Correct.
They’re sitting on
almost 4 trillion in
backlog right now.
But what they’ve been
doing is trying to
exit with each other
and as you said,
that’s not working.
So now they’ve
come up with
something called
the continuum funds.
Explain what the
continuum funds are.
Yeah.
When we first
recorded, we
talked about the
danger of the
secondaries market
that’s swapping two
businesses between
two private equity
firms that they
can’t offs sell.
It’s like we have to
close out our fund.
Another firm has to
close out a fund.
Neither of them can
sell their assets.
So they sell them
to one another.
They can’t get a
fair market value.
So they in inflate
the value and
they trade it.
And that was
called a pyramid
scheme three years
ago by the Fran.
The Financial Times,
it’s been called
a pyramid scheme
over and over again
because they’re
just trading.
There is no fair
market valuation.
Even those
are now stuck.
They won’t trade with
one another either.
So they’ve each
started doing
something called a
continuation fund.
That’s where, let’s
say I have a, b,
c private equity
and I own a company
that I cannot
sell, but my fund
has to close out.
My investors can
start suing me
if it doesn’t.
Okay.
And I need to
collect my two and
20 fees and I need
to deliver on returns
for these investors.
Or we go belly up.
And so what I do
is, instead of
trying to continue
selling it and
making my investors
mad, I create a new
fund that’s gonna
expire in 10 years.
And I put new
investors in that
fund and I tell
them I have the deal
of a lifetime and
the new investors
buy the business
from my other fund.
I sell it to myself.
And I use that new
money to pay out
the investors from
the first fund.
It is a Ponzi scheme.
Period.
Now, why would
the new investors
come in?
Right now what we’re
seeing, and if you
look at the New York
Times article I sent
you this morning the
one that talks about
the circular deals
being the rotten
private equity, what
you’re seeing is
that a lot of them
are pensions that
can’t take a loss.
And so they have
to go into the new
fund to keep pushing
their books out.
Oh,
their pensions
go Wow.
They’re about
50 50 right now.
I’m in the old
fund, and I’ll come
into the new fund.
So the old fund can
close out and I can
keep, I can help
keep the game going,
but they’re also
getting sued.
The Saudi Royal
family, I think is
in one of the big
lawsuits against,
I think it might
be Clear Lake.
They’re suing
several funds
right now that are
doing this because
they’re saying
they’re sending
different numbers to
different investors.
The fees associated
with it are
different for
different investors.
They’re doing
whatever it takes,
and they’re giving
people 48 hours to
decide whether to
lose money or go
into the new fund.
And so they’re suing,
saying it’s a self
enriching scheme and
it’s happening Wow.
In the chancery
court in Delaware
right now.
Wow.
Yeah.
Wow.
There’s something
else too, because
I’ve been reading
reports from private
equity firms, and
one of the things
they talk about is
how they can create
liquidity in addition
to selling to each
other, creating these
funds, these new
continu, it’s the
continu continuation
funds,
continuation
fund, take
sellable assets
and continue them
into a new fund
instead of closing
out traditionally,
or IPO Inc.
Now they’re talking
about once the
Clarity Act or the
Senate version is
called you’re gonna
love this Responsible
Innovation Act.
Forgive me for
spraining my eyeballs
just now I apologize.
So the responsible
innovation, once
that passes, they’re
talking about doing
asset tokenization
and using asset
tokens to get
liquidity on their
existing portfolios.
They’re running.
I don’t know a better
way to explain it,
than they’ve run out
of ways to cash out,
like every single
vehicle they’ve
used isn’t working.
And so now it’s
just whoever can
come up with the
newest thing that’s
not illegal yet.
So there’s an old
saying on the street,
he who panics first
panics best and
Harvard and Yale
marked down their
portfolios and have
been marketing them.
I don’t know how much
they’ve sold, but
they clearly followed
the panic first rule.
’cause they
were the, yeah.
And particularly
Yale was the big
leader in they
had a 30 year head
start
on private equity.
So has that message
gotten out to
the pension funds
and what are
the pension funds
saying and doing?
Yeah, I think it’s
more than just
Harvard Neil getting
out to the pension
funds because
there are pension
funds invested
with Harvard Neil.
But they definitely
ate billion dollars
in liquidation
of their private
equity holdings,
was definitely a
huge warning bell.
Absolutely.
But what we’re
seeing right now
is that one of the
biggest booms for
pension investment
in private equity
happened between
2015 and 20 19.
There was a huge boom
in pension investment
in private equity.
And right now
what we’re seeing
right now is all
of them are coming
up on the closing
of their funds.
And the thing that
pensions love about
private equity
is that for 10
years, they get
to keep whatever
the estimated
gains are gonna
be on their books.
They don’t have
to give quarterly
updates, whatever
they said they
were gonna make,
they get to keep
on those books for
that full decade.
And it looks
like they’re
all shored up.
The states don’t
get involved, the
regulators don’t
get involved.
Everything looks
peachy keen.
But what we’re
looking at right
now is thousands of
these funds about
to close out from
this boom period of
pension investment.
And they’re
not closing.
They’re sitting on
so many, on billions
and in trillions
of dollars in
unsellable assets.
Okay.
19,000 stock
companies, they
can’t sell right now.
19,000. The
pensions can’t close
out and they’re about
to have a reckoning.
And so if they
don’t pour into
these continuation
funds, they’re gonna
have to acknowledge
what’s happened.
And if the private
equity firms don’t
pay out to the
original funds,
they’re gonna lose
pension investment
across the board.
So they have no
choice but to
find liquidity
and they’re doing
it through really
nefarious means.
And not one of those
means involves taking
a hit to their own
balance sheet because
they’re getting fees
on both foot now.
For not succeeding,
for failing.
So I wanna bring
up two parallel
developments.
First of all, I just
finished reading
a very thoughtful
and well done
local investigative
piece on the Somali
supposed Somali
fraud in Minnesota.
Yeah.
And it, it looks
like a remarkable
amount of the
facilities were
these autism centers.
And according to one
of the reports I read
when we did our first
interview, that has
been a particular
area of the private
equity firm is
rolling up the autism
service centers.
So there are more
than a hundred
private equity firms
I’ve identified
that are explicitly
focusing on education
and healthcare and
where they intersect.
A really good
example actually
is Platinum Equity.
I just did a
huge story on
platinum equity.
It went viral on
every channel on
Platinum Equity
because they were
rolling up the, what
I call the childcare
to education to
prison pipeline.
And they own prison
services and school
services and they’re
buying everything
in between.
Everything
in between.
And actually I think
they might be the
ones getting sued
by the royal family.
I have to rethink,
I think that they
might be the ones
getting sued.
They’re at the heart
of one of the big
lawsuits that’s just
happening right now.
And they’ve had
several bankruptcies
roll out of their
investments.
But what’s happening
is that they’re
finding that you
can, when you don’t
have a really good
diagnostic capacity
for quantifying
things, you can
exploit just about
any amount of money
out of the government
through lots of
different mechanisms.
And yes, autism
centers are at the
heart of several of
these private equity
roll-up strategies
I don’t know.
I think there’s
a story there.
I’d love to
see somebody
go after that.
So that’s number one.
Number two, what
is now coming out
because the economy
is slowing, is that
for many years,
many municipalities
it’s both at a county
level and a state
level, have been
doing off balance
sheet bonds that
now have the
risk is coming that,
that they’re gonna
have to be moved on
balance sheet or the
defaults are gonna
have a ramification
for the formal
ba balance sheet.
So at the same
time that the state
pension funds are
getting hit by
private equity,
you’re gonna see the
muni municipalities
get hit by the off
balance sheet debt.
At the same time if
the valuations and
performance of the
pension funds go
down, many times
their payments for
the pension funds
are going to go up.
We’ll see a ton of
mentions this week in
rumblings everywhere
on social media about
bonds in the silver
market as well.
And I’ve seen that
silver got really
close to its call
line for a bunch
of, for a bunch of
corporations and
banks this week.
And that they had an
emergency late night
meeting on, I think
it was Christmas
Eve where they got
together to sell.
Yeah.
There’s a very
high paper to
collateral ratio on
the silver markets
and it’s squeezing
a lot of people.
Now.
I think we’re facing
I think this year is
gonna be terrible.
I don’t like
saying it.
I wanna come in
a positive note.
We still have
time to do stuff
so I’m a great
believer if I have
to live through
another year where
they keep all these
lies floating along.
The worst part
about this Tiffany,
is not the fraud.
The worst part of
this is you create
an economy where
everybody stops
being productive.
Yeah.
And they.
Invest a huge
amount of time in
being unproductive.
So you had a
business that was
helping kids grow
up and be strong and
successful, right?
Yes.
And they just wrecked
HAC with that.
Okay.
Now translate that by
millions of different
businesses and
people throughout
the economy.
You literally reward
the unproductive
and destroy
the productive.
Okay.
And if we’re gonna
get back to anything
productive this
needs to unwind.
It needs to
collapse, it needs
to hit a wall.
So I don’t know,
it’s like an
infection rising
the surface
and draining.
My attitude is
I let it blow.
I’m happy.
The New York Times
got it right when
they said it’s
a rot and it has
to be cut out.
It has to fall.
Yes.
And one of the
biggest things that
I’ve been advocating
for the last several
years is that we’ve
gotten so good at
giving socialism
to corporations
will, allowing
people to bear the
downstream penalties
of capitalism.
We’ve gotten
exceptionally
good at socialism
for corporations
and banks.
I don’t think
this is socialism.
I think this is
organized crime.
No, I agree with you.
I really do.
I agree with you.
I think it’s
organized.
And if you look
at the tactics
they’re using, I
think they’re using
organized crime tax.
I
agree with you.
It is cartel like
Rico, like conduct
across the board.
What I worry about
is that if we’re
not very vocal in
not allowing our
pensions to bail them
out and not allowing
our 4 0 1 ks to bail
them out, if we’re
not very vocal with
our government,
and I’m gonna be
frank right now, I
can already tell you
what’s gonna happen
in the midterms.
We’re gonna see
a big shift.
Big shift.
If we’re not very
vocal with the people
that are about to
ask for our votes, if
we’re not, if we’re
not out in force,
then what we’re
gonna see is a whole
bunch more socialism
for corporations.
Nothing’s
gonna change.
We’re gonna kick the
can down the road.
I think you have.
So Trump has passed
or has adopted an
executive order
encouraging the 4
0 1 Ks to pick up
the private equity.
I don’t think you
wait for November.
I think you roll
into your 401k
administrator
now, and you say
absolutely no way.
I just think
we need to push
back in the
private markets
hard and fast.
We need to say to our
financial planners or
investment advisors,
or our discount
broker or our 401k
administrator we
need to start
screaming.
If Harvard or Yale,
if I was an alum and
they asked me for
money, I would say
Not on your life.
Yep.
You’re basically
giving my money
to criminals and
destroying my world.
Yeah.
We, when we first
recorded the episode
I mentioned that
people have known for
a long time that you
weren’t winning the
American way through
private equity.
We knew it when
we saw the movie
Pretty Woman back
in the nineties.
We knew it.
We knew it.
He was a bad guy
when he was breaking
up companies and
extracting wealth
and selling them
off for pieces.
We knew it.
He was a good guy
when he was building
American excellence,
building ships,
doing things right.
He was a good guy.
We have known this
for a very long
time, but we haven’t
known how to do
anything about it.
And there are things
we can do right now.
These are things we
can do right now.
You start by
protecting yourself
and as you protect
yourself, you stop
feeding the parasite.
Yes.
So I just do wanna
mention thing, one
of the top stories
we have, we’re
about to record
our annual wrap
up this Saturday.
One of the top
stories of somebody
very experienced
naval person just
published an article
talking about
the fact that the
Navy is no longer
the Superior Navy
and is basically
falling apart.
And that ties back
to what’s going on
in private equity
and the fact that
we’re busy extracting
capital instead of
building great ships.
Yeah.
Now, here’s why I say
the whole game that
the private equity
floats on is having
the reserve currency.
If you don’t have
a good navy, you’re
gonna lose the
reserve currency.
That’s how you lose
a reserve currency.
You can’t, the
parasite can destroy
the host, and that
is what is happening.
Yeah.
Anyway, so an
exciting two
weeks, and we’re
gonna publish this
next week, and
I have a feeling
the excitement is
not gonna stop.
So remind everybody
again how they
keep up with you.
You’re on X I’m on
X and as the vino
mom, I’m on TikTok as
Tiffany Sea, and I
have tiffany sea.com.
You can keep up
with me everywhere.
And when you publish
interviews, when you
do public interviews,
do you put them up
on your TikTok and XI
do, I take clips
because you don’t,
you can’t publish the
whole thing there.
And I do publish
most of my
interviews@tiffanysea.com.
Okay.
Okay.
Ladies and gentlemen,
this is gonna be
a very exciting
year in 2026 in
private equity.
And I think that
Tiffany’s you
definitely wanna
plug into what
she’s up to because
I think you’re
gonna be covering
it all year long.
It’s gonna keep
you quite busy.
Yeah.
You’re gonna have
a very exciting
year, Tiffany.
Anyway, I can’t thank
you enough for what
you’re doing, and
thank you again for
coming and doing
this addendum.
It was when I saw
the sex bankruptcy,
I said, oh,
here it comes.
Here it comes.
Here it comes.
And we’re watching
right now, I
think we’re
gonna get up for
unfortunately, the
largest bankruptcy
year for private
equity on record.
And we’ve had that
four years in a row,
but we have so many
funds that have to
clo out close out,
and there’s so much
debt out there.
I just don’t see
it any other way.
Can, do you have
any sense for the
funds that have to
close out this year,
who are the biggest
pension fund holders?
Do you have any
guess at all?
I think CalPERS
started pulling
back this year.
’cause they
saw their risk.
CalPERS had
over invested.
But we’re seeing
it in the Oregon
teachers funds.
We’re seeing
it in several
of the states.
Washington has a lot
in their, Nevada has
an immense amount in
their teachers funds.
We’re seeing it in
a lot of public
work sector funds.
All of the, I hate
to say it, all of
the pension funds
went over on private
equity about, about
eight years ago
and they’ve started
scaling right in
the last years.
But that’s because
those funds are
not performing the
way they expected.
I was shocked.
I went to look
at, I think it was
CalPERS or Calsters.
I was surprised
at how little
liquidity they had.
It was scary.
Nothing.
They’re all tied up
and that’s why they
started pulling back.
But I will say they,
they almost went
the other direction.
And that’s because
they had one
non-private equity
board member on
CalPERS and he was
forced out by Newsom
and they, he replaced
him with a pro
private equity guy
and then they saw the
returns and even all
the private equity
people pulled back.
’cause they saw how
danger, how dangerous
it wasn’t even then.
That’s when I knew
the hell was about
to break loose.
For sure.
So my guess is that,
I just wanna come
back to this, that
the municipalities
have no idea that
they could suddenly
see their pension
fund bills skyrocket.
I think they’re about
to, and I think the
next years are gonna
be really hard for
the pension funds.
I think we’re gonna
see, we saw in
the article I sent
you from our first
recording, we saw
a pension fund that
got a shortfall on
their private equity
return so bad that
they had to let go
of 6,700 teachers.
6,700 teachers jobs.
I remember that.
Jobs.
We talked about that.
That is a
warning that’s
a canary.
That’s not something
that’s an outlier.
That’s what we’re
about to witness.
So here’s the thing,
when you organize
your economy to
build billionaires
instead of building
wealth Yeah.
This is what you get.
Yep.
You’re
absolutely right.
We get billionaires
and a lot of poverty.
Yeah.
Okay, Tiffany.
Si, you’re great.
Have a wonderful day.
Thank you for joining
us on the report,
and I look forward
to being in cahoots
with you in 2026.
You too, ladies
and gentlemen.
Welcome to 2026.
It’s gonna be a cork.
