private equity

Forget commercial real estate, the next shoe to drop is private equity. Apparently, private equity firms themselves are not the problem, it’s the companies they own, which employ some 7.5 million workers in the US alone. Private equity firms buy up struggling companies, aiming to turn them round and flog them off. The purchases are often highly leveraged using short-term loans, which are coming due. One estimate is that half of those companies will fail between 2012 and 2014.

Roubini argues further unemployment is on the way and Jeffrey Immelt, GE chief, has joined predictions of a second stimulus in the US. So the IMF’s speech this weekend was timely: Strauss-Kahn said the IMF should provide global financial insurance