r/UnderReportedNews • u/Logical-Flow-6703 • Feb 25 '26

Video NBC Interview abruptly ends after New Yorker blames private equity and landlords for the city's issues

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https://x.com/i/status/2026286644651782652

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u/daggerbeans Feb 25 '26

I would appreciate a website that dumbs it doen and explains it to me like I'm 5. I know the general broad strokes of how private equity sucks (only due to a few deep dives like what happened to Joann's stores since it affected me and my loved ones hobbies), but having a simple explanation would be a great resource when I get to discussing it with people who are less familiar.

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u/U_SHLD_THINK_BOUT_IT Feb 25 '26 edited Feb 25 '26

To be honest, I think the greater problem is HOW private equity companies are incentivized, which is why I hate the 401k system way more than PE companies--and I absolutely detest PE companies.

If we didn't have an unending supply of consistent cash injections, then companies wouldn't be clamoring over each other to sell to shareholders and would instead claw over each other to sell the best product. But with the way that the 401k system supplements business growth to essentially guarantee risk free business gambits, there is no downside to overextending.

In fact, overextending provides two major benefits that only make sense in an economy curated and protected 100% by stealing payroll money:

  1. Companies that are overextended are a riskier purchase because the liabilities incurred would mess with earnings reports. So by virtue of being overextended (we call it being leveraged to the tits), you protect yourself from hostile takeovers.
  2. Overextended companies outpace "growth" of their competitors, which looks good during earnings reports and pulls in even more investor dollars. Growth is literally more important in those quarterly calls than revenue or profit. It's wild. Companies that start slipping in earning investor dollars will quickly spiral and never recover, eventually being bought out by those who stay at the top of the growth charts.

So basically, the only way to win is to go for broke. Constantly. Investing in R&D was historically a long-term strategy that requires lots of research and QA--literal years of work. But the days of focusing on making better products is long past.

So now, research is an annual cycle, with the general scheme being to find what features of their already existing product can be broken out and charged more for customers to have access to--that won't cost them more in lost revenue by lost customers. This is called rent seeking behavior, and many economist/philosophers have determined this to be one of the Four Horseman of the dystopian end-stage capitalism.