Return of the Barbarians

Profiting from Distressed Assets

The business world is a place of beaten drones and drab uniformity. It is rarely the font of inspired art.

An exception was the magnificent literary classic from 1990, Barbarians at the Gate. The book, which made celebrities of the principals of private equity firm KKR, was a scintillating memoir of the glorious capitalism of the 80s.

In these times of sackcloth and ashes, with bankers and CEOs scorned like pederasts, the proud, unabashed greed of 1980s Wall Street evokes a fond nostalgia. Would that those days could come again.

Perhaps they have. If one thing can be relied upon in addition to death and taxes, it is greed. We all love a boom. Bubbles are fun, and despite all our current purported disdain of executive greed, we all love to make money. Popping champagne corks is better than paying off credit card debt. Would someone please end this recession so we can go back to full-fledged, debt-fuelled capitalism?

Cue Barbarians at the Gate part 2. Like most VCs, KKR was brutally decimated by the credit crisis. But the magic of markets is in how they use human greed to lubricate capital allocation. With assets cheap and stock markets recovering their mojo, The Economist reports that the VCs (those that survived the crisis, that is) are back.

Greed is coming back in fashion. First we will have the IPOs. Then the champagne. Welcome back, boys.