Quote of the day: Gordon Gekko – greed is good

| 14 September 2008 21:21

With blood on the street and one flagging financial institution after another gasping for dear life, a quote from the Movie “Wall Street” bears remembering:

In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.
-Gordon Gekko

Judging by the turmoil this weekend, apparently greed is not so good after all.

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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2 Comments

  1. avatar MAB says:
    14 September 2008 at 23:35

    Ed,

    In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars

    WOW! That sounds great, but let’s take a closer look.

    According to my math, that’s $686 per shareholder per deal. Woohoo!

    After tax, it’s likely around $400 per sharholder per deal. And after the euphoria subsides, it’s likely $300 per shareholder per deal. And after inflation, it’s likely $350 per share holder per deal. And after the business cycle turns, it’s likely $0 per shareholder per deal.

    Private equity (formerly known as leveraged buyouts) is generally a sham. It only works while interest rates are falling. Even then, little if any ecomomic benefit is realized by society.

  2. avatar Edward Harrison says:
    22 September 2008 at 09:37

    I don’t know if I would make the sweeping statement that private equity is a sham. n would say that it experienced a massive bubble because interest rates were so low.

    And I think as you probably do that we are going to see some seriously large leveraged buyout busts.

    The days of Gordon Gekko are well and truly over.