Showing posts with label Private. Show all posts
Showing posts with label Private. Show all posts

Friday, April 4, 2014

How to Get Beyond Private Equity’s Parasite Economy

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How to Get Beyond Private Equity’s Parasite Economy

Monday, March 31, 2014

Carney: "We"re Talking About Private Insurance, This Is Not A Government Program"





JON KARL, ABC NEWS: How many of the 6 million who have signed up, how many of those who have signed up actually paid?


CARNEY: We don’t have those figures. When we do, we’ll give them to you. As you know, and I think it’s very important, and I look forward to everybody making this clear in their reports, we’re talking about private insurance. This is not a government program.


The contract that you sign if you get health insurance through Healthcare.gov or through a state marketplace is a private contract between you and an insurance company.




RealClearPolitics Video Log



Carney: "We"re Talking About Private Insurance, This Is Not A Government Program"

Wednesday, March 26, 2014

CalPERS’ Private Equity Scandals and the Steptoe & Johnson Report Whitewash

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CalPERS’ Private Equity Scandals and the Steptoe & Johnson Report Whitewash

Monday, March 24, 2014

Creationism being taught in private schools thanks to $1 billion in taxpayer funds

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Creationism being taught in private schools thanks to $1 billion in taxpayer funds

Tuesday, March 18, 2014

Private school tells parents kids can be strip searched & have no constitutional rights

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Private school tells parents kids can be strip searched & have no constitutional rights

Sunday, March 9, 2014

Michael Hastings Cremated, Family Never Requested; Wife Hires Private Investigator

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Michael Hastings Cremated, Family Never Requested; Wife Hires Private Investigator

Saturday, March 1, 2014

Real Estate, Private Equity Industries Fighting Camp"s Tax Plan

“Disappointing.” That’s how both the National Association of Realtors and the Private Equity Growth Capital Council have described Rep. Dave Camp‘s (R-Mich.) proposal to overhaul the tax code.

DaveCampTax.jpgIn his quest to simplify the code for families, Camp, chairman of the powerful Ways and Means Committee, would trim some longstanding perks benefiting the real estate and private equity and investment industries: the mortgage interest and carried interest deductions. A tribe of lobbyists is pressing conservatives to snuff Camp’s proposal, threatening to withhold precious campaign dollars.



The mortgage interest deduction allows homeowners to reduce their tax obligation by subtracting the interest they’ve paid on their mortgage. Tampering with it could hurt home sales, and thus the bottom line of real estate agents and the many others who depend on the housing market for their livelihoods.

Cuts to the carried interest deduction, which allows private equity managers to pay a lower tax rate than other workers on about one-third of their income, would only affect a tiny — but generally very wealthy — proportion of the population.


In both instances, those who would feel the pain have long experience using cash and K Street to make themselves heard.


Private equity contributions skyrocketed to $ 70.8 million in 2012, up 143 percent from the previous presidential cycle.


Contributions private equity.pngThe industry gave to both parties, but favored Republicans at a two-to-one rate. PEGCC, the trade group of private equity firms, contributed $ 300,000, more evenly split between the parties.


The industry was exceptionally generous to outside spending groups in 2012. A number of the top donors to Restore Our Future, for instance — the super PAC backing Republican presidential nominee Mitt Romney, who had been an executive at Bain Capital — came from private equity.


For their part, real estate interests contributed $ 155.2 million in the 2012 cycle, with 65 percent of it going to Republicans. The Realtors’ trade group covered all its bases, funneling money through a PAC, super PAC, and 501(c)(6) political nonprofit.


The Realtors also fielded an army of lobbyists, the second-most of any organization in 2013. That didn’t come cheap: $ 38.6 million, or about as much as two major corporations, Northrop Grumman and Comcast, spent combined. For its part, PEGCC spent close to $ 2.4 million on lobbying last year.


The disappointment voiced by the two industries’ trade groups may be particularly apt given how generous they’ve been to Camp over the years. He has taken in about $ 3.3 million in contributions from various interests that think his bill undercuts them — including securities and investment ($ 760,616), real estate ($ 396,775), commercial banks ($ 406,975),  insurance ($ 1.2 million) and lobbyists ($ 586,795).


Right after Camp revealed his proposal, Heritage Foundation economist Stephen Moore — who likes the plan — said it was about to be subjected to the “snake pit of special interest lobbyists.” Given how much is at stake for Republicans this year, they’re unlikely to want to get bitten.


Follow Emily on Twitter @emilyakopp


Image: Rep. Dave Camp (R-Mich.) speaks about tax reform at the Utah Valley University, August 31, 2011 (Flickr/Michael Jolly)




OpenSecrets Blog



Real Estate, Private Equity Industries Fighting Camp"s Tax Plan

Saturday, February 22, 2014

Good Grief – Ukrainian President Yanukovych Flees Country – Ukrainian People Get First Looks At Opulent Residence Of President, Even Includes A Private Zoo, Viking Ship and Hovercraft

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Good Grief – Ukrainian President Yanukovych Flees Country – Ukrainian People Get First Looks At Opulent Residence Of President, Even Includes A Private Zoo, Viking Ship and Hovercraft

Monday, February 17, 2014

Why There"s an Even Larger Racial Disparity in Private Prisons Than in Public Ones

Why There"s an Even Larger Racial Disparity in Private Prisons Than in Public Ones
http://isbigbrotherwatchingyou.com/files/people-of-color-private-prisons.jpg


It’s well known that people of color are vastly overrepresented in US prisons. African Americans and Latinos constitute 30 percent of the US population and 60 percent of its prisoners. But a new study by University of California-Berkeley researcher Christopher Petrella addresses a fact of equal concern. Once sentenced, people of color are more likely than their white counterparts to serve time in private prisons, which have higher levels of violence and recidivism (PDF) and provide less sufficient health care and educational programming than equivalent public facilities.


The study compares the percentage of inmates identifying as black or Hispanic in public prisons and private prisons in nine states. It finds that there are higher rates of people of color in private facilities than public facilities in all nine states studied, ranging from 3 percent in Arizona and Georgia to 13 percent in California and Oklahoma. According to Petrella, this disparity casts doubt on cost-efficiency claims made by the private prison industry and demonstrates how ostensibly “colorblind” policies can have a very real effect on people of color.


Chart- people of color

The study points out an important link between inmate age and race. Not only do private prisons house high rates of people of color, they also house low rates of individuals over the age of 50—a subset that is more likely to be white than the general prison population. According to the study, “the states in which the private versus public racial disparities are the most pronounced also happen to be the states in which the private versus public age disparities are most salient.” (California, Mississippi, and Tennessee did not report data on inmate age.)


Chart- inmates over 50

Private prisons have consistently lower rates of older inmates because they often contractually exempt themselves from housing medically expensive—which often means older—individuals (see excerpts from such exemptions in California, Oklahoma, and Vermont), which helps them keep costs low and profits high. This is just another example of the growing private prison industry’s prioritization of profit over rehabilitation, which activists say leads to inferior prison conditions and quotas requiring high levels of incarceration even as crime levels drop. The number of state and federal prisoners housed in private prisons grew by 37 percent from 2002 to 2009, reaching 8 percent of all inmates in 2010.


The high rate of incarceration among young people of color is partly due to the war on drugs, which introduced strict sentencing policies and mandatory minimums that have disproportionately affected non-white communities for the past 40 years. As a result, Bureau of Justice Statistics data shows that in 2009, only 33.2 percent of prisoners under 50 reported as white, as opposed to 44.2 percent of prisoners aged 50 and older.


So when private prisons avoid housing older inmates, they indirectly avoid housing white inmates as well. This may explain how private facilities end up with “a prisoner profile that is far younger and far ‘darker’… than in select counterpart public facilities.”


Private prisons claim to have more efficient practices, and thus lower operating costs, than public facilities. But the data suggest that private prisons don’t save money through efficiency, but by cherry-picking healthy inmates. According to a 2012 ACLU report, it costs $ 34,135 to house an “average” inmate and $ 68,270 to house an individual 50 or older. In Oklahoma, for example, the percentage of individuals over 50 in minimum and medium security public prisons is 3.3 times that of equivalent private facilities.


“Given the data, it’s difficult for private prisons to make the claim that they can incarcerate individuals more efficiently than their public counterparts,” Petrella tells Mother Jones. “We need to be comparing apples to apples. If we’re looking at different prisoner profiles, there is no basis to make the claim that private prisons are more efficient than publics.”


He compared private prisons to charter schools that accept only well-performing students and boast of their success relative to public schools.


David Shapiro, former staff attorney at the ACLU National Prison Project, agrees. “The study is an example of the many ways in which for-profit prisons create an illusion of fiscal responsibility even though the actual evidence of cost savings, when apples are compared to apples, is doubtful at best,” he says. “Privatization gimmicks are a distraction from the serious business of addressing our addiction to mass incarceration.”


But in addition to casting doubt on the efficacy of private prison companies, Petrella says his results “shed light on the ways in which ostensibly colorblind policies and attitudes can actually have very racially explicit outcomes. Racial discrimination cannot exist legally, yet still manifests itself.”


Alex Friedmann, managing editor of Prison Legal News, calls the study a “compelling case” for a link between age disparities and race disparities in public and private prison facilities. “The modern private prison industry has its origins in the convict lease system that developed during the Reconstruction Era following the Civil War, as a means of incarcerating freed slaves and leasing them to private companies,” he says. “Sadly, Mr. Petrella’s research indicates that the exploitation of minority prisoners continues, with convict chain gangs being replaced by privately-operated prisons and jails.”
 


*The study draws on data from nine states—Arizona, California, Colorado, Georgia, Mississippi, Ohio, Oklahoma, Tennessee, and Texas—selected because they house at least 3,000 individuals in private minimum and medium security facilities.



Political Mojo | Mother Jones




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Sunday, February 16, 2014

Obama tees off on Oracle founder"s private course


RANCHO MIRAGE, Calif. (AP) — President Barack Obama is teeing off on a private California golf course owned by supporter Larry Ellison, the billionaire co-founder of the Oracle software company.


Ellison ranks third on Forbes’ annual list of the 400 richest Americans, with an estimated $ 41 billion fortune.


His 249-acre desert property in Rancho Mirage came with a 19-hole private golf course. The extra hole is available for playoffs.


The White House says Obama’s foursome includes childhood friends Bobby Titcomb, Greg Orme and Michael Ramos.


Obama was spending the weekend in California after meeting Friday at a resort with Jordan’s king. His wife and daughters are skiing in Colorado.


The president was returning to the White House on Monday. On Tuesday, he planned to discuss the economy in the Washington area.


Associated Press




Politics Headlines



Obama tees off on Oracle founder"s private course

Thursday, February 6, 2014

Economic Update: Public vs. Private Enterprise

Economic Update: Public vs. Private Enterprise
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Updates on economic democracy from Jackson, Mississippi to Marseilles, France; credit card scandals; phony labels for chicken; and overcharging inmates for calls. Major discussions of re-municipalization of water and electric utilities; post office banking; and new book on capitalism’s inequalities. Response to audience questions on TPP, corporate tax breaks and minimum wage.


To listen in live on Saturdays at noon, visit WBAI’s Live Stream


Economic Update is in partnership with Truthout.org


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Tuesday, January 28, 2014

How Private Probation Companies Make Money From the Those They Trap in the Justice System



Governments still award services to companies with moneyed interest in jailing ever more people.








Marietta Conner watched the judge expectantly. The 63-year-old assistant minister had just pled guilty to “fail[ing] to yield to a pedestrian”—a criminal misdemeanor in Georgia—and did not have enough money to pay her $ 140 fine. The judge ordered that she be put on probation. But instead of county probation, Conner was assigned a private probation company supposed to mimic normal court probabation: meet with her once a month through a probation officer, collect payments and confirm her work and address. In the end, the company sapped Conner of well over the original amount of the fine, and even dangled an arrest warrant over her head when it erroneously claimed she had missed a payment.


Conner was lucky. She knew someone at the Southern Center for Human Rights who helped her escape the trap the correctional corporation tried to put her in. Yet for hundreds of thousands of others on probation through a private company, the experience routinely entails prolonged harassment, indebtedness and even imprisonment—and sometimes all with the blessing of a judge.


To be ensnared in America’s system of mass incarceration is to be in prison, on parole, or on probation. In 2012 1 in every 35 American adults was trapped in the criminal justice system. The surging number of people whose lives necessitate constant surveillance and management has exploded the coffers of state and federal budgets, and rather than reform heavy-handed laws to ease this burden on public funds, elected leaders have contracted incarceration services out to companies with a moneyed interest in jailing more Americans. 


The private prison industry has stoked the outrage of progressives and civil libertarians for years, as has the practice of prosecutors pushing plea bargains with heavy parole, but an equally dangerous phenomenon is the rise of private probation businesses across the country.  Since the 1970s, the private probation industry has expanded into at least 20 states—most concentrated in the South—and nearly all of its companies are entirely supported by the fees paid to them by the probationers they “serve.” In the last few years, many of these businesses have been given more power to pursue and imprison probationers, playing a starring role in what one federal judge called a “judicially sanctioned extortion racket.”


When someone is convicted of a misdemeanor crime, he or she is often placed on probation by a judge either in lieu of minor prison time or as part of a payment plan to pay off court fines levied for his charge. Traditionally, the purpose of probation has been to facilitate the rehabilitation of the probationer through constant contact with a representative of the court (a probation officer), although this concept may be farcical in an age when an adult can be placed under “community supervision” for jaywalking. With privatized supervision, the offenders are required to report monthly to a contractor acting in the same capacity as a probation officer, and they must also pay a monthly fee to the company on top of the fines they owe the court.


The distinction between fee and fine is important because, as noted by the Economist, it is through fees that private probation companies can afford to pay the salaries of their staff. A report from the Criminal Justice Review explained that “Private agencies…rely on the probationer’s paying a supervision fee to remain solvent.” Solvency, however, is hardly a concern for many of these corporations, some of which have amassed tens of millions of dollars annually off the fees they charge probationers.


One such company is Sentinel Offender Services, whose combined operations in four different states brought in $ 30 million in 2009, according to an investigation by NBC. The company has faced many legal challenges on the grounds that its employees demand payment for fees from poor probationers and then issue arrest warrants when they cannot pay, without consideration for their financial situation. Marietta Conner, the impoverished pastor, was under the supervision of Sentinel.


Although a 1983 federal ruling said that probationers cannot be jailed for being indigent, Sentinel has regularly issued arrest warrants for probationers delinquent on their payments, and has even extended the probationary sentences of thousands—illegally—in order to wrest more money from them. Sentinel has terrorized so many lives a Georgia court recently ruled that the company might have to refund thousands of payments to former probationers who had the unfortunate luck to be supervised by a company that “links its probation officers’ performance evaluations to the amount of money collected from probationers,” according to a 2010 ACLU report.


Sentinel is just one in a vanguard of 34 probation corporations in Georgia pushing to have more power to hunt down delinquent probationers. A new bill up for a vote in the Georgia’s House of Representatives, greased for quick passage by funds from industry lobbyists would give private probation officers increased “immunity from liability” and grant them more discretion to extend a person’s probation—and by extension, prolong a probationer’s “payment period.” 


Some courts have actually been complicit in the racket. A circuit court in Alabama ruled in 2012 that the local municipal judiciary in Harpersville, Alabama had operated “debtor’s prisons” together with the private probation firm Judicial Correctional Services by turning over poor misdemeanor defendants to JCS and then allowing the company to fleece them for every cent they had.



In the event that the probationers couldn’t pay their monthly fees to the company—as was the case for many probationers in the nation’s fourth poorest state—they were thrown in jail without a trial at the behest of JCS and under the blessing of the Harpersville court, who would then doom already-indigent defendants to an inescapable pit of debt by piling even more fines and fees. The presiding judge who ruled against Harpersville was scandalized so deeply by the JCS-judiciary collusion that he accused the local court of “violating almost every safeguard afforded by the United States Constitution [and] the laws of the state of Alabama.” Meanwhile, JCS continues to operate in 69 cities throughout four different states.


Perhaps the most pernicious feature of these businesses is how they enable local municipalities to perpetuate debtor’s prisons across the country. In Florida, birthplace of modern privatized probation, courts permit correctional firms to tack on a 40% surcharge on top of the debt a delinquent probationer already owes, as detailed in an investigation by the Brennan Center for Justice. The investigation also found that courts in Missouri regularly condemn people to prison when they cannot pay off the fees imposed by probation companies, and in Illinois, corporations shakedown impoverished probationers for 30% more of their standing debt if they miss payments. In total, the report found that nine states charged probationers excessive fees “payable to private debt collection firms”—in other words, private probation companies.


Efforts to resist the abuses of the private probation system have been scattered and slow building. In addition to the class-action lawsuits filed against Sentinel in Georgia and JCS in Alabama, an Idaho-based probation company was sued in 2011 for perpetually increasing probationer’s sentences by manipulating the results of drug tests (testing positive for drugs is usually a violation of probation and can mean further penalties). That same year in Tennessee, a group of former probationer’s filed a successful lawsuit against the owner of a company called Ada County Misdemeanor Probation Services for having “forced them to overpay” and holding them on probation “longer than necessary.”


Yet despite a proliferation of lawsuits across the country, municipalities seem to show no less willingness to contract out probation services. In addition to the 20 or so states that now allow some form of privatized probation, a state senator in at least one other place—Nebraska—has inquired with policy experts about implementing the correctional model in his home state. 


It does not take a legal expert to discern how for-profit correctional services threaten the freedom of Americans. Private probationary companies exist only as long as there is a steady supply of probationers from whom to extract payment, and these companies grow only if the number of people on probation grows. As evidenced further by the case of prison contractors, some of which have compelled state governors to keep prisons 90% full, a privatized correctional model maintains the American system of mass incarceration by further building it into an industry. 



 


 

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How Private Probation Companies Make Money From the Those They Trap in the Justice System

Wednesday, January 22, 2014

Owners of Private Christian Charter School Flee Town with $200k Taxpayer Dollars

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Owners of Private Christian Charter School Flee Town with $200k Taxpayer Dollars

Sunday, January 19, 2014

Saudi says doubles number of citizens in private sector jobs

Saudi says doubles number of citizens in private sector jobs
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RIYADH Sun Jan 19, 2014 2:13pm EST



RIYADH (Reuters) – Saudi Arabia has doubled the number of its citizens working for private companies in the 30 months since it introduced wide-ranging reforms to tackle long-term unemployment, Labour Minister Adel al-Fakeih said on Sunday.


Policy makers fear a failure to create a productive local workforce will leave the kingdom vulnerable to any future fall in oil revenue.


Despite the lack of any significant protests during the 2011 Arab uprisings, they were uncomfortably aware that unemployment contributed to unrest in neighbouring countries and worry about the long-term risk of political instability.


“At this point in time the employment in the private sector is about 1.5 million. This is 101 percent more than it was 30 months ago,” the minister said at a conference in Riyadh.


Although the official employment rate is around 12 percent, economists estimate only 30-40 percent of working-age Saudis hold jobs or actively seek work.


Most Saudis in jobs are employed by the government, but it cannot support such a large wage bill in the long term, and the International Monetary Fund has warned that the private sector must meet future job demand.


Most private-sector jobs are held by the 10 million expatriates in the kingdom.


In 2011, after decades of ineffective localization policies, Riyadh imposed stricter penalties for failing to meet quotas for hiring Saudi citizens.


In 2012 it also introduced a levy of 2,400 riyals ($ 640) a year on every foreigner a company employed over the number of its Saudi workers.


Fakeih later told reporters that the increase of 750,000 jobs over the past 30 months only included those who had remained in the workforce, but that around 500,000 others had taken jobs and then left.


He added that since the reforms were introduced, the average starting salary for Saudis had risen and that graduates of technical training colleges now found a job on average five months after qualifying, as opposed to 13 months in 2011.


EXPATRIATE CRACKDOWN


Some companies, particularly in labour-intensive industries such as construction, have complained that the reforms have caused bottlenecks in important projects and cut profits by increasing the wage bill. Expatriates are typically paid less than Saudis.


Others have said they struggle to find qualified Saudis to replace expatriates despite high government spending on university scholarship programs and technical training colleges. They have also complained that employment rules make it too hard to fire Saudis.


Young Saudi job-seekers often say they are reluctant to look for work in private companies, because government agencies offer better pay, benefits and job security.


Last week Riyadh announced it was introducing unemployment insurance for Saudis who lost their jobs for “reasons beyond their control” and who had been in work for more than a year. The policy was designed to encourage more young Saudis to look for jobs in the private sector.


On Sunday Fakeih said the introduction of unemployment insurance was also designed to “make it easier” for the government to relax employment rules and give companies more flexibility to fire workers who did not perform well.


Fakeih also said a crackdown last year on foreigners breaking visa regulations by working for companies that did not sponsor their work permit was necessary to close loopholes that allowed employers to dodge hiring quotas.


Previous attempts to localize the Saudi labour market have foundered because companies could hire lower-cost foreigners who were registered to other sponsors.


But more than 1 million expatriates left the kingdom between March and November during an amnesty for foreign workers to leave without paying fines for visa violations or to switch their sponsorship to a new employer.


(Reporting By Angus McDowall; Additional reporting by Marwa Rashad; Editing by Andrew Heavens)






Reuters: Business News




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Monday, January 13, 2014

TYT Network Reports - Is Your Driving Private? Not After The Block Box Mandate

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Wednesday, January 8, 2014

Honduras attempts to solve their violent crime problem with private cities


Honduras attempts to solve their violent crime solution with private cities



Are private cities the miracle cure for Honduras’ surging violent crime, state violence and institutional disarray?



For many Hondurans, the past few years have been among the worst in memory. In the wake of a June 2009 coup that removed leftist president Manuel Zelaya from office, violent crime has soared and state institutions have fallen into disarray if not outright failure. Five months after the coup, the de facto government held elections which members of the political opposition boycotted and regional heads of state overwhelmingly refused to recognize. Under the resulting government, led by the National Party’s Porfirio “Pepe” Lobo Sosa, lawyers, journalists, human rights defenders, and Zelaya loyalists have routinely been the victims of threats, arrests and assassinations.


The role of the national police in violent, often politically motivated crime became a liability for the Lobo administration, which responded by developing a highly publicized police reform law. The bill appeared on its way to passage until November 2012, when a Supreme Court panel, by a 4 to 1 vote, ruled the law unconstitutional. Shortly after the court’s decision, the congress, in an extraordinary session reminiscent of Zelaya’s ouster years earlier, voted to dismiss the four justices who rejected the cleanup law. The press raised concerns that the move could turn into a full-blown crisis, many commentators focused on the police reform ruling as the conflict’s source; others pointed elsewhere.


A month earlier, the same four justices had ruled unconstitutional a law that would allow the creation of privately run municipalities with their own police, tax structures, and judicial systems, known as Regiones Especiales de Desarollo, or RED. According to Russell Sheptak, a Research Associate at the University of California and co-author of the Honduras Culture and Politics blog, the proximate cause for the justices’ removal was their ruling on the police reform law. “However, the muttering against them began at the top with Lobo Sosa chastising them over the RED ruling,” Sheptak wrote in an email, “and remained in the background of the debate about removing them.”



A protest against Charter cities legislation in Honduras. Reading: Coup d’etat: Economic crisis + model cities. Image credits: Black Fraternal Organisation of Honduras (OFRANEH)


Charter cities in Honduras?


The idea of building private cities is a divisive one. Many of the country’s elite advanced the concept as something new to spur economic growth. The cities would facilitate foreign investment and development, which would reduce the influence of criminal networks. Those opposing the concept, however, variously rejected the proposition as a neoliberal gift to the rich, a continuation of oligarchic rule and a threat to democratic governance. These objections came in the context of economic policies that have exacerbated inequality, poverty and unemployment. According to a recent report by the Washington-based Center for Economic and Policy Research, from 2010 to 2011 over 100% of income gains went to the 10% of Hondurans at the top of the income distribution ladder.


In 2009 Paul Romer, an economist then teaching at Stanford University, started presenting his idea to build new cities in poor countries as an innovative economic development strategy. The RED came to prominence in Honduras shortly after Pepe Lobo met with Romer. The new “charter cities,” as the U.S. economist called them, would be overseen by developed countries with a stronger rule of law and would prioritize investments in infrastructure. Each city would resemble a country within a country and would compete for hard-working, law-abiding residents from around the world. The islands of economic development would, in Romer’s vision, pressure governments to clean up their act and, cumulatively, could have a massive global impact.


Honduras’ governing officials enthusiastically embraced the idea and, given the country’s poverty and crime, Romer likely saw it as a natural fit. Yet after Lobo’s emergence through fraudulent elections, with the country’s institutions in shambles and many leading officials suspected of having ties to criminal networks, one could begin to see the plan’s inherent contradiction: How could you build brand new, principled institutions in partnership with a government so plagued by corruption?


Read More…



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Honduras attempts to solve their violent crime problem with private cities

Monday, December 9, 2013

Sysco to buy US Foods from private equity, shares leap




Mon Dec 9, 2013 1:40pm EST





An US Foods Chef


1 of 2. An US Foods Chef’s Store is seen in an undated publicity photo. Sysco Corp said it would buy rival US Foods Inc for about $ 3.5 billion and assume about $ 4.7 billion in debt to cement its position as the biggest U.S. food distributor, driving up Sysco’s shares 30 percent before the bell.


Credit: Reuters/Handout via US Foods




(Reuters) – Sysco Corp (SYY.N) will buy US Foods Inc for about $ 3.5 billion from its private equity owners in a deal that will combine the top two U.S. food distributors and create a company commanding about a quarter of the $ 235 billion North American market.


Sysco, whose shares jumped about 25 percent to a record high in early trading, will also assume US Foods’ debt of about $ 4.7 billion as it combines its supply chain expertise with the strong consumer-facing technologies of US Foods.


Shareholders of US Foods, owned by affiliates of private equity firms Clayton, Dubilier & Rice and KKR & Co (KKR.N), will own about 13 percent of Sysco after the closing of the deal, which creates a company with revenue of $ 65 billion.


“Combining and maximizing the significant strengths of two outstanding companies is certain to be of tremendous advantage in supporting our customers,” US Foods Chief Executive John Lederer said in a statement on Monday.


Sysco Chief Executive Bill DeLaney, speaking on a conference call with analysts, said Sysco now has an 18 percent share of the market, while US Foods has 9 percent.


DeLaney said the Federal Trade Commission, which rules on antitrust matters, would certainly scrutinize the deal but he noted that there were about 15,000 private companies involved in the U.S. food distribution industry.


Sysco and US Foods distribute foods to restaurants, hotels, hospitals, schools and other institutions.


DeLaney said Sysco was attracted by US Foods’ customer-facing technologies, such as standardized ordering software and mobile apps. “We are particularly strong in the supply chain side of things,” DeLaney said.


Clayton, Dubilier & Rice and KKR acquired the former U.S. Foodservice from Dutch grocer Ahold (AHLN.AS) for $ 7.1 billion in 2007.


Sysco said the deal would add to earnings immediately after closing, probably in the third quarter of 2014.


Goldman Sachs & Co is financial adviser to Sysco, while Wachtell, Lipton, Rosen & Katz and Arnall, Golden & Gregory LLP are legal advisers.


Simpson Thacher & Bartlett LLP and Debevoise & Plimpton LLP are legal advisers to US Foods, which did not identify a financial adviser.


Sysco shares were up 12 percent at $ 38.31 in late morning trading on the New York Stock Exchange.


(Additional reporting by Maria Ajit Thomas; Editing by Kirti Pandey and Ted Kerr)





Reuters: Most Read Articles


Reprinted with permission from the source



Sysco to buy US Foods from private equity, shares leap

Whistleblower Describes How Private Equity Firms Flagrantly Violate SEC Broker-Dealer Requirements

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Whistleblower Describes How Private Equity Firms Flagrantly Violate SEC Broker-Dealer Requirements

Monday, November 25, 2013

Private equity-backed groups vie for IMG as KKR exits: sources

Private equity-backed groups vie for IMG as KKR exits: sources
http://currenteconomictrendsandnews.com/wp-content/uploads/2013/11/bfad1__p-89EKCgBk8MZdE.gif





NEW YORK Mon Nov 25, 2013 1:06pm EST



NEW YORK (Reuters) – The buyout firms bidding for talent agency IMG Worldwide Inc have all secured partnerships with other companies in the sector after KKR & Co LP (KKR.N) exited an auction seen fetching more than $ 2 billion, according to people familiar with the matter.


KKR withdrew last week, leaving Silver Lake in partnership with William Morris Endeavor Entertainment LLC, CVC Capital Partners Ltd in partnership with Chernin Group LLC and Carlyle Group LP (CG.O) in partnership with ICM Partners Inc as the private equity-backed groups in the race, the people said.


Private equity firms that own or partner with companies that have synergies with the companies they want to acquire have an advantage in auctions over buyout firms without a strategic angle.


KKR was pursuing IMG alone after another buyout firm, New Mountain Capital LLC, dropped discussions about a potential joint bid, the people said on Monday on condition of anonymity because details of the auction are confidential.


Final bids for IMG, whose clients include top tennis player Novak Djokovic and supermodel Gisele Bundchen and which owns the rights to numerous sports leagues, are expected by December, the people said.


It remains unclear if another party, not associated with private equity, is still involved in the process as a suitor.


Spokespeople for IMG, ICM and Silver Lake did not immediately respond to a request for comment while William Morris, KKR, CVC, New Mountain and Chernin Group declined to comment.


The sale of IMG is being driven by the trustee that runs the estate of Teddy Forstmann. His private equity firm, Forstmann Little & Co, acquired IMG for $ 750 million in 2004.


Forstmann Little has held onto IMG for longer than a typical investment period for private equity, and for years it has rebuffed overtures from prospective buyers. Buyout interest increased following Teddy Forstmann’s departure in April 2011 as IMG chairman and CEO, and his death later that year.


Buyers that had approached Teddy Forstmann included former Yahoo CEO Terry Semel, who was willing to pay $ 1.5 billion in 2008. Sources told Reuters at the time that Teddy Forstmann wanted at least twice the amount.


Last month, advertising agency WPP Plc (WPP.L) CEO Martin Sorrell described IMG as an asset he would love to own but said his company cannot afford it, as a frothy auction process pushed valuation towards the $ 2.5 billion mark.


Akin Gump Strauss Hauer & Feld litigation partner Mark MacDougall and corporate practice co-chair J. Kenneth Menges, Jr., are managing the wind down of Teddy Forstmann’s private equity empire. Forstmann Little tried to sell 24 Hour Fitness last year but the process has since stalled.


Sports Business Daily first reported on Friday that KKR had withdrawn its bid for IMG.


(Reporting by Greg Roumeliotis, Soyoung Kim and Nicola Leske in New York; Editing by Krista Hughes)






Reuters: Business News




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