The Bust Out
Related
Rising Energy Prices and the Falling Dollar: Ron Paul
03/06/08
by Antonino D'Ambrosio
In Martin Scorsese's now classic film Goodfellas, there is a scene where wiseguys Henry Hill (Ray Liotta) and Tommy DeVito (Joe Peschi) burn down the Bamboo Lounge, a nightclub the gangsters had been using as a way station to house cases of liquor, food, and expensive clothes that they then "flipped" (to turn a huge profit on) on the street. Watching as the U-Hauls pull up and unload the merchandise, Henry Hill sets up the scene with the following voice-over:
As soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and sell it for a hundred. It doesn't matter. It's all profit.
Sonny, the club's owner, is unable to make the payments and soon the debt is insurmountable. The gangsters have been profiting and now they will score one last huge gain by burning the place down and leave Sonny, the owner, with a huge load of debt impossible to repay. Liotta as Hill once again in voice-over:
And, finally, when there's nothing left, when you can't borrow another buck from the bank or buy another case of booze, you bust the joint out.
When I read the endless stories of private equity's record breaking billionaire buyouts in today's news, this scene in Goodfellas plays like a constant loop in my mind. In essence, private equity companies like KKR, Blackstone, and the Carlyle Group (these names should ring a bell for most folks reading this because they are key players in the sub-prime mortgage catastrophe and the debt crunch that threatens to plow this country deep into recession) have perfected the art of the legal "bust out."
--MORE--
Rising Energy Prices and the Falling Dollar: Ron Paul
03/06/08
by Antonino D'Ambrosio
In Martin Scorsese's now classic film Goodfellas, there is a scene where wiseguys Henry Hill (Ray Liotta) and Tommy DeVito (Joe Peschi) burn down the Bamboo Lounge, a nightclub the gangsters had been using as a way station to house cases of liquor, food, and expensive clothes that they then "flipped" (to turn a huge profit on) on the street. Watching as the U-Hauls pull up and unload the merchandise, Henry Hill sets up the scene with the following voice-over:
As soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and sell it for a hundred. It doesn't matter. It's all profit.
Sonny, the club's owner, is unable to make the payments and soon the debt is insurmountable. The gangsters have been profiting and now they will score one last huge gain by burning the place down and leave Sonny, the owner, with a huge load of debt impossible to repay. Liotta as Hill once again in voice-over:
And, finally, when there's nothing left, when you can't borrow another buck from the bank or buy another case of booze, you bust the joint out.
When I read the endless stories of private equity's record breaking billionaire buyouts in today's news, this scene in Goodfellas plays like a constant loop in my mind. In essence, private equity companies like KKR, Blackstone, and the Carlyle Group (these names should ring a bell for most folks reading this because they are key players in the sub-prime mortgage catastrophe and the debt crunch that threatens to plow this country deep into recession) have perfected the art of the legal "bust out."
--MORE--