> The observation was that if the practice was reliably so destructive to the value of the purchased businesses that the loans couldn't be repaid...
That is the observation which is false. Nobody claimed that would happen to the extent that the bank loans couldn't be repaid, with interest and fees. I'm not sure where you got that idea. The value destruction comes from the fact that the company is destroyed in the process, and even though the banks got more than they would have if they kept the company alive, the total value is less.
tl;dr: banks are willing to tolerate the company value going down as long as they make money, which they do, because they, like the private equity firms, are effectively transferring value from the company accounts into their accounts.
> company value going down as long as they make money, which they do, because they, like the private equity firms, are effectively transferring value from the company accounts into their accounts.
But the PE firm owns the company. Why shouldn't it transfer money from the company accounts to its own accounts? That's called "paying a dividend".
Maybe it should, maybe it shouldn't, I don't see how that has any bearing on the factuality of the description.
If we're on the same page there, then we can build off that shared understanding, and perhaps discuss issues like whether that's a net loss or net gain to society as a whole, or to specific individual stakeholders, and what so-and-so should or shouldn't do. That's if were on the same page on the above matter, first.
Do you feel we are? Recall this digression started because a couple people were confused how banks were involved in the matter, and thought the banks were losing money somehow. They definitely aren't. I just want to make sure we're all on the same page there, first, is all.
The bit you quoted is not the observation (as I understood it); the observation is the whole conditional "if A then B". "A is false" is one of the ways the observation can be true.
> making the "if A then B" discussion a distraction at best and disingenuous at worst.
My concern was that it sounded to Tom like people were disputing "if A then B", rather than disputing B by negating A, and that people were therefore talking past each other.
> I take it you understand and agree with that part,
I wasn't weighing in on that part in the first place. I don't dispute or endorse what you've said, but (if you care) do readily acknowledge that it is of the correct structure to address "the observation" if they in fact match reality. I said at the start that I don't know whether that's the case.
> and your quibbles are purely semantic.
I was weighing in on the semantics because it seemed to me like a semantic mismatch was leading to misunderstanding and increasing hostility, and I hoped I could help clarify.
That is the observation which is false. Nobody claimed that would happen to the extent that the bank loans couldn't be repaid, with interest and fees. I'm not sure where you got that idea. The value destruction comes from the fact that the company is destroyed in the process, and even though the banks got more than they would have if they kept the company alive, the total value is less.
tl;dr: banks are willing to tolerate the company value going down as long as they make money, which they do, because they, like the private equity firms, are effectively transferring value from the company accounts into their accounts.