Say you have a company with $x of profit. It's worth, say, 15 times that. Now, if you can convince a bank to finance a take-over bid on the basis that you'll be able to increase profits by 15% per annum, you can value the company at, say 25 times current profits.
You get a financing of 80% of the purchase prices (i.e. for 20 times current profit), buy the company at 15x, pocket 5x, and have an expected 5x additional profit - if you can get the company to deliver the future profits.
Thus, you have made an immediate, real, profit on what is effectively a promise to the banks to squeeze more profit out of the underlying company. In the long run, we're all dead. John Maynard Keynes
in other words, predation -- and extractive industry... The difference between theory and practise in practise ...
excerpt:
and this predation metaphor (at the heart of the vulgar Darwininism so beloved of neocons and outright Randians) applies not only to our relationship with other biota and indeed the earth's crust, but to our relationship with each other. the biggest thief and looter rises to the top and is admired for it, everyone loves a winner, only sissies care about other people, nice guys finish last, and so on. the predation/competition metaphor is so strongly ingrained in Anglo ideology that when Schwendener and others first documented symbiotic organisms (notoriously lichen), the English scientific establishment (the London Consensus you might say, since England was then the "indispensable nation" and imperial hegemon) had a hissy fit denying and suppressing his research, ridiculing anyone who dared to discuss or republish it. "Schwendenerist" actually became briefly a term of public ridicule for -- guess what -- an unmanly flipflopper, a fellow who can't make up his mind which explanation of a phenomenon is correct, who can't "take a firm stand." the model of admirable predation is the only one that can romanticise and ennoble the practise of profit-taking. or perhaps the practise of profit-taking grows out of the combination of a predatory mindset and the invention of money and compound interest. but at any rate, the attitude of Homo sap. to the planet and to each other is increasingly one of N bio people all dreaming of being top predators. there is only one end game for such a mindset: they will eat the planet bare, and then they will eat each other.
the predation/competition metaphor is so strongly ingrained in Anglo ideology that when Schwendener and others first documented symbiotic organisms (notoriously lichen), the English scientific establishment (the London Consensus you might say, since England was then the "indispensable nation" and imperial hegemon) had a hissy fit denying and suppressing his research, ridiculing anyone who dared to discuss or republish it. "Schwendenerist" actually became briefly a term of public ridicule for -- guess what -- an unmanly flipflopper, a fellow who can't make up his mind which explanation of a phenomenon is correct, who can't "take a firm stand."
the model of admirable predation is the only one that can romanticise and ennoble the practise of profit-taking. or perhaps the practise of profit-taking grows out of the combination of a predatory mindset and the invention of money and compound interest. but at any rate, the attitude of Homo sap. to the planet and to each other is increasingly one of N bio people all dreaming of being top predators. there is only one end game for such a mindset: they will eat the planet bare, and then they will eat each other.
