Opinion

Chrystia Freeland

Carlyle Group’s Rubenstein is charmed by China

Peter Rudegeair
May 4, 2011 18:31 UTC

Watch Carlyle Group co-founder David Rubenstein explain to Chrystia why there’s greater political risk in the United States than in the emerging markets; how he gets a better reception from Chinese Communist Party cadres in Beijing than his own members of Congress in Washington; how private-equity firms can help remedy the impending entitlement crisis; and how the procedure that enacts Congressional salary increases can be adopted to cut the deficit.

Posted by Peter Rudegeair.

Where distressed investors should look

Chrystia Freeland
Nov 22, 2010 16:56 UTC

At last Friday’s Wharton Private Equity Partners Distressed Investing Symposium, Chrystia interviewed Mark Gallogly, co-founder and managing principal at Centerbridge Partners, a private equity and credit investment firm with $12 billion in assets under management. Gallogly said finding good opportunities in the distressed sector has become tougher as the “wall of maturities” (the point in time when debt must be refinanced) has been pushed further into the future, thanks to the booming market for corporate debt.

He notes, however, that the wall has been extended mainly for bank notes and senior debt; not for securities that are subordinate on the capital structure, like junior debt. So distressed investors should keep an eye out for situations in which a corporation’s junior debt matures much earlier than its senior debt:

Aside from buoyant bond markets, Gallogly said private equity also faces a challenge of dealing with an abundance of capital at a time when interest rates are reversing their long-term downward trend:

From [the late 1980s] until today interest rates have done nothing but decline. So the question becomes for this industry… over the next, say, twenty or thirty years, what’s the likelihood we’ll have that environment?… The likelihood is very low. The [private-equity] industry has benefited from a two-decade decline in rates. It’s not going to benefit from that going forward.

A member of President Obama’s Economic Recovery Advisory Board, Gallogly has some advice for the White House: the president should postpone fiscal austerity measures in favor of policies that will jumpstart growth in the near term. When asked what he thinks of the charge that the president is anti-business, he said that, like markets, politics faces the challenge of overswinging, and that this criticism was “way overstated.”

Posted by Peter Rudegeair.

Cheers to Elena Kagan, but where are the rest of the women?

Chrystia Freeland
Jul 2, 2010 15:25 UTC

women swimmersThis piece first appeared in the Washington Post.

Watching Elena Kagan’s confirmation hearings this week, it is tempting to declare — as some have of late — that we have entered the age of women. Not just in politics but in school and in the broader economy women are doing well. Yet this female triumphalism overlooks an important exception: The areas where the real money and power reside are occupied almost exclusively by men.

Consider the industries occupying the commanding heights of capitalism: technology and finance. Google, Amazon, Apple and Facebook were all founded by men and are led by male CEOs. All of the big Wall Street banks are run by men. Hedge funds and private equity firms — where the real action is — are a male preserve. Sebastian Mallaby’s fine new history of hedge funds zeroes in on 14 chief protagonists — all male. In 400 pages, he interviews only two female hedge fund executives. Mallaby didn’t speak to more women because there aren’t many to talk to. Of the top 10 highest-paid hedge fund managers in 2009, none were women.

The absence of women at the economic summit is particularly significant because those at the very top of the income distribution have reaped the lion’s share of the rewards in the past couple of decades. For all their success elsewhere, it is precisely this economic apex that women are failing to scale.

The most dangerous explanation for the lack of female plutocrats — Oprah, of course, is in her own category — is probably the one made infamous by Larry Summers (whose  column I once edited): the view that women are less well-represented at the intellectual extremes and tend toward the genetic mean. Fewer women may be born with learning disabilities, the argument goes, but there are also fewer who are geniuses. Then there is the testosterone thesis: A growing body of research suggests that people with lower testosterone levels are more risk-averse, making women less likely to win big in the high-risk, high-reward global economy.

There is reason to be skeptical of these explanations. For one thing, the type of scientific aptitude measured by IQ tests may not be a prerequisite for financial superstardom: The uber-investor George Soros was an indifferent math student. And the financial crisis has shown that an extreme affinity for risk may not correlate all that well with long-term business success.

Surely social factors are at play, too. Whenever a job is high-status, we define it as being male. How many would picture a Wall Street “titan” in a skirt? When I studied in what was still the Soviet Union, almost all of the doctors and factory finance directors were women. In a system where power was vested in Communist Party functionaries, medicine and accounting were low-status professions — or, women’s work. In the West, of course, those were considered masculine jobs. Where I grew up in northern Alberta, most of the futures traders — an important business in a farming community — are women. That’s because the really high-paying jobs are in the (male-dominated) oil patch.

Feminists bear some of the blame for peddling their own brand of sexism: that women are more nurturing, better communicators. Some have argued that these skills are at a premium in the 21st-century economy. Yet that thesis doesn’t do much for the young MBA grad trying to convince Wall Street she has the cojones to make big bets. Broadly speaking, feminism long defined itself, and allowed itself to be defined, as an ideology of the left, and discomfort with capitalism in its rawest form meant that finance was not an area it tackled head-on. It is hard to encourage girls to become business titans if part of your message is that business isn’t such a good thing.

woman weightlifter

Feminists should applaud Kagan’s poised performance on Capitol Hill, but let’s not stop there. The job now is for women to accumulate their own capital.

Chrystia is writing a book about the global super-elite.

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