The $3 Trillion Private Equity Bubble is Finally Bursting

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There has been a lot of talk about how the US real estate market is in a bubble. But people are getting it wrong. The real bubble is in a little corner of the finance industry that is unknown to the average person. This industry has trillions of dollars in assets, and the companies it owns employ roughly 12 million Americans. The industry that I’m talking about is Private Equity. In this video we are going to cover how this bubble in private equity formed, when it could burst, and most importantly what this means for the economy.

Private equity has long been considered the gilded class of high finance. Its big bets and ginormous pay days are the envy of Wall street. Private equity firms such as Blackstone, KKR, and Carlyle are considered some of the most prestigious companies in the entire world. Even relatively junior employees at these funds can see their pay approach half a million dollars annually with senior investors regularly taking home 7 figure paydays.

Yet for all their savvy dealmaking, even the titans of private equity are getting caught off guard by the swift rise in interest rates. Higher interest rates are costing companies owned by private equity billions of dollars in higher interest payments and threaten to push many of the portfolio companies into bankruptcy. The consequences of which would be devastating to investors, the economy, and the millions of people employed by these companies.

*Disclaimer: Neither this video, not any content produced on this channel should ever be considered investing advice or official financial advice. All content is made for entertainment and educational purposes.


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