January 20th, 2012
12:58 PM ET

Watch GPS: Inside the world of private equity

On GPS this Sunday at 10am and 1pm EST: In light of Mitt Romney’s role at Bain Capital, we take a rare look inside the world of “private equity.” What is this industry? How does it make so much money? Is it really all about firing workers?

Fareed speaks to a pioneer of the industry: David Rubenstein of The Carlyle Group, the world’s biggest private equity firm.

Then, a panel discussion on the GOP, the economy, Iran, and more: Arianna Huffington, Mort Zuckerman, David Frum, and Steve Rattner.

Later, the most popular politician in the world’s most dangerous country: Pakistan’s former sports hero Imran Khan.

And how the Arab Spring countries are seeking inspiration and guidance from a surprising source: A former Communist state.

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Topics: 2012 Election • Economy • GPS Episodes

soundoff (49 Responses)
  1. krm1007

    PAKISTAN.....The New Gateway to Central Asia and Europe.
    With a population of over 180 million most of whom are well educated, English speaking, entrepreneurial and a cultural and social fit with Central Asians...Pakistan will now become the new face and gateway to Central Asia and Europe. Pakistan will thus span this region and provide the impetus for growth, prosperity and unity among these countries. These are new and exciting times for Pakistanis who should now look forward to their new leadership role aligned with Central Asia and Europe rather than the Subcontinent. We wish them much success as they have sacrificed the most during the past 30 + years creating a new world order.

    January 20, 2012 at 6:35 pm | Reply
    • j. von hettlingen

      Yes, I do agree that Pakistan could be a gateway to Central Asia, a region of strategic and ecnomic significance. But the country has to overcome the hurdles, before it builds this gateway.

      January 21, 2012 at 5:39 am | Reply
  2. j. von hettlingen

    A group of activists and officials from Tunisia, Egypt and Libya went to Poland in October 2011 a week before the parliamentary elections to watch and learn from the Poles. They met with two deputy foreign ministers, Krzysztof Stanowski and Jerzy Pomianowski, and had a meeting with members and judges of the State Electoral Commission.

    January 21, 2012 at 4:52 am | Reply
  3. Imran

    >>Later, the most popular politician in the world’s most dangerous country

    This description was avoidable. It simple shows hate. Hate will not solve any problem. No one disagrees that Pakistan has huge problems, but this country's potentials far exceed its problems. Americans should not develop myopic understanding of Pakistan. Looking at past week's event, when was the last time, a Prime Minister of a so called 'most dangerous country' had to appear in court to explain his actions. Does media in a 'so called failed state' sharply criticizes and pokes fun at its country's leadership? Despite all its problems, Pakistan is still 47th biggest economy GDP-wise.

    So, please let go of prejudices and let go of negative epithets and thank you Fareed for bringing on Imran Khan. Read his book to understand Pakistan and him:
    Pakistan: A Personal History
    by Imran Khan

    January 22, 2012 at 7:44 am | Reply
  4. don manthei

    Excellent show again, today. I had already read your Time magazine pieces. Very good.
    When you had David Rubenstein, something you do regularly for good balance, you asked about tax a change on capital gains. He broadened it to total reform. I thought you could have gone one step further and inquired how much Carlyle Corp spends on lobbying to keep the tax break in place. Think about going the nest step as you so often do in many interviews

    January 22, 2012 at 10:22 am | Reply
    • Elise S

      I expect Ruberstein wouldn't have answered about how much he directly or indirectly spent on lobbying. He did seem rather defensive. Try watching him with the sound off.

      January 22, 2012 at 7:33 pm | Reply
  5. Pieter Wallace

    When interviewing Rubenstein I noticed that Fareed did not address the issue of money in politics.

    January 22, 2012 at 10:23 am | Reply
    • John G. cox

      Fareed also failed to ask Mr. R whether it is better for Mr. R to earn the amounts he does and then "give" some away for the Washington Monument and Magna Carta or for the US economy to be more equal. My wife are I are part of the top "5%". She is in a wheelchair. We were able to buy long term care insurance to cover the cost of the help for her. The help are generally high school educated. The one we have now has a college degree. She has no insurance and earns minimum wages. This is not fair. It also proves the point of the books "The Politics of Winner Take All" and "Oligarchy." We will eventually have an "Occupy" type revolution if the upper class' wealth increase far exceeds that of other classes and the top 1% of the top 1% continues to increase so rapidly.

      January 22, 2012 at 2:23 pm | Reply
  6. Joe Brandstetter

    Fareed, I love your show but you should invite Rubenstein back and ask some more revealing questions about how his group effects main street. All he talked about were the internalized profits, and how those profits were being used for good. He was asked nothing about the costs associated with his business. In what part of the world are those new jobs going? What is good for international corporations isn't always good for the middle class. While giving stunning wealth away is nice, could that money have been used more effectively if it wasn't concentrated in a few persons hands?

    January 22, 2012 at 10:48 am | Reply
  7. Michael Guillory

    During the segment on private equity with David Rubenstein we heard how retirees, CEOs, and private equity managers have prospered. Is the wealth being shared with the workers? Let's see historical data on the effects on workers–wages, average hours per week, number employed, etc.

    January 22, 2012 at 11:00 am | Reply
  8. Maryanne Jofko

    Fareed,I have learned more about the world & how it works(or isn't working)than the entire combination of your peers.Jon Stewart "introduced" you to me years ago & I knew I needed to hear what you said & HOW you explained world/US affairs.I agree w/ the 3 prior posts about Mr. Rubenstein,but I want to commend his efforts to explain private equity & separate his own firm/contributions from the public display of the "ick" factor that Romney is largely responsible for through Bain Capital & his unwillingness to produce ANY tax returns which we all know he has access to since he began filing.

    January 22, 2012 at 11:16 am | Reply
  9. Kevin White

    Strong agreement with the above posts. Very disappointing interview of Rubenstein: "I would like to maintain incentives for what we do" – of course that translates to 'I'd like to maintain favorable tax rates for private equity' so these oligarchs continue to pay 15% tax rates. Fareed seemed frightened to challenge this representative of the gross inequality occurring in America today

    January 22, 2012 at 11:29 am | Reply
    • Andrew Dabrowski

      I agree. The Rubenstein interview is the kind of thing that makes me despair for journalism. Venture capital becomes an election year issue, so whom does Fareed invite? An extremely wealthy venture capitalist who assures us that, surprise, venture capital is great for the economy and has no downsides. And there's no opposing viewpoint. Why was that? Krugman never seems to be allowed on the show unchaperoned by a conservative, why grant Rubenstein this propaganda windfall?

      Without challenging a guest an interview is worthless.

      January 23, 2012 at 1:59 pm | Reply
  10. Ari

    You went very easy on Mr. Rubenstein, there are two questions that you didn't ask which you should off. First on tax policy, the key question is have you made donations to members of congress and if so have you told them that you think private equity firms should keep paying taxes at a rate of 15%. Mr. Rubenstein's excuse that he doesn't write the tax code is disingenuous. He may not write the code, but his immense wealth gives him disproportionate influence on those who do. The second question is what exactly he does to earn the enormous profits he makes. His answer that he aligned the interests of management with the investors seems strange. Is that all he does? Are they not usually aligned and if not why not? His rather tepid claims of alignment hardly seem worth the profit he makes.

    January 22, 2012 at 12:40 pm | Reply
  11. Mariee

    It doesn't matter if you are giving the money away. the problem is you take from the poor and middle class fool. You take our jobs and ship them overseas. How do they sleep at night I don't know. This man is saying the same things "don't blame me" for making so much money and destroying out country. He is disgusting like all the others in the 1%.

    January 22, 2012 at 1:13 pm | Reply
  12. Seattle

    I started to watch your interview with David Rubenstein this morning and had to turn the program off! What a liar! Taking a company over, loading it with debt then shutting the operation down does NOT create jobs in America. I have a new phrase for guys like David Rubenstein and Mitt Romney; Just saying it does NOT make it so. Do you really think the American people are that stupid????? The 1%, the richest amoung us are taking this country down.

    January 22, 2012 at 1:18 pm | Reply
  13. John Greene

    Private equity firms fire middle class employees and replace them with minimum wage, no benefits jobs that require the employees to have two or three jobs just to pay their rent, food, and other necessities. If you evaluate part time jobs correctly as .5, and full time jobs as 1.0, these equity firms didn't increase overall employment, they decreased it considerably.

    Sure, their tactics increased their own compensation, and that of their shareholders, but in the larger macro sense, they have help to significantly reduce the standard of living for average people.

    January 22, 2012 at 1:25 pm | Reply
  14. JP

    Fareed: I'm a great fan, but in my eyes, you flubbed in your interview with Mr. Rubenstein. You asked him what his thoughts were in relation to the 15% tax rate he pays on dividends, which is lower than the income tax rate .His response, part of it, was that he didn't write the laws, that he only conforms to to the laws as they are written .What he did not say, and you did not catch, was that he, like the rest of of Wall Street, pays lobbyists to make sure that laws are written so that they favor firms like the Carlysle Group and Bain Capital. Indeed, lobbysits, in some cases, even right the laws to insure that they contain loop holes that favor their clients. So, in this case, both the interviewee and the interviewer both messed up during this interview. Fareed, you need to address this because I am sure I am not the only own of your viewers that caught this.

    January 22, 2012 at 1:48 pm | Reply
  15. William Sywak

    Always an excellent program and Fareed's my hero.. Today, however, when Huffington and Rattner voiced opposite opinions on Greece, Fareed cut off the discussion, which would have been very informative (I know, it went outside the show's format). Fareed really needed an NPR-like time to let the discussion run its course. NEXT COMMENT: Howie on the Media was being way too wishy washy about the Newt G and John King issue. The New York Times editorial on this today said it best. Tell John King he did a masterful job as a journalist as the egotistical Newt was indeed playing gutter politician in this backward state. But Howie, I thought we were finished with the unquestioning journalism of the Bush years, whether delivered by bimbos or not.

    January 22, 2012 at 1:59 pm | Reply
  16. JP

    To prove or disprove Mr. Rubenstein's assertions, CNN should take a look at real life examples of firms that were taken over by private equity groups, take a look at employees, and see how they were faring before and after the take-overs. Look a their income and benefits, not just how many employees the company has. I think, like Mr. Greene, that creating more minimum wage jobs isn't necessarily a good thing. Indeed, it appears to me that private equity firms are vultures, scavangers.

    January 22, 2012 at 2:00 pm | Reply
  17. CP

    Fareed; Agree with the others, real softball interview with Rubenstein. None of the deeper issues were explored. Yes, his investors are happy, what about the workers in these firms? At best its a mixed bag, and you let him present only the shiny side of that view. Yes, Rubenstein doesn't write the laws, the heavily lobbied congress does, and who pays for all of lobbyists? Rubenstein and all of rich Wall Street buddies do. Come on Fareed, we have enough light weight soft ball interviews of Wall Street types on Fox News.

    January 22, 2012 at 2:10 pm | Reply
  18. Ross

    Fareed, I was disappointed with the Rubenstein interview, you really could have asked some good follow up questions, which is why I like your show, and you didn't.. you never pressed for answers to the questions that really matter. I see everyone above agrees also.
    The conversation about Greece also ended abruptly, just when the discussion was picking up.. letting Rattner and everyone else just tell Mrs. Huffington she's wrong in her views without and justification and then changing the subject was unacceptable. Yes, I understand you had other topics to bring up.
    I did enjoy the Imran Khan interview very much. As always, he was upfront and well-informed. I think people should take notice of what Mr. Khan said, because it's in sharp contrast to what the Obama administration believes is right and even the republican establishment (Ron Paul excluded) thinks our foreign policy on the Afghan/Pakistani border is just great.

    January 22, 2012 at 2:24 pm | Reply
  19. Mitch

    I enjoy GPS, find it very informative, watch it just about every week. 2 issues – one specific, one in general. Firstly, your guest this AM, Mr. Rubenstein, defended the work of private equity firms capably. But then you got around to the issue of tax policy. He defended his tax situation by saying that he just follows the law, that he didn't write the tax code. Fair enough but you missed the obvious follow up question -yes you didn't write the tax code, however many critics contend that wealthy businessmen such as yourself, through lobbying and campaign contributions, unfairly influence those who do write the code. Secondly, as I mentioned before I watch the show pretty regular. The guests you have on the show are quite articulate and educated. But the great majority come from the No Eastern U.S.- Columbia Univ., NYT, Harvard, WSJ. Would it kill you to have some expert guests from places like Purdue Univ., or the Detroit Free Press once in a while. I'm sure they have some interesting takes on what is going on in this country.

    January 22, 2012 at 3:28 pm | Reply
  20. Bill

    Just outpointing one error on the segment on Poland ... Poland does NOT currently hold the rotating EU presidency. It rotated to Denmark on Jan. 1.

    January 22, 2012 at 3:36 pm | Reply
  21. Bob

    Why didn't Fareed investigate what Bain Capital did rather than what Carlyle does ?

    January 22, 2012 at 4:02 pm | Reply
  22. D. Miller

    I encourage you to revisit the role that private equity plays in our economy and provide a more balanced report.

    January 22, 2012 at 5:07 pm | Reply
  23. D. Miller

    It should not be a surprise that David Rubenstein would be a defender of private equity. If you are looking for an objective perspective you have to look elsewhere. Several months ago I read “The Buyout of America” by Josh Kosman. I am not saying that he is the last word on private equity but he does provide an in depth view of its inner workings. Private equity firms are often in a no lose position. They get all their invested money back out plus large profits. The companies they purchase can be left with unhealthy levels of debt and hobbled by cuts to in their work force and other resources. Investors in these companies can also experience losses when these restructured companies end up bankrupt.

    January 22, 2012 at 5:09 pm | Reply
  24. HD

    CNN pls upload Imran Khan's interview on GPS.

    January 22, 2012 at 6:28 pm | Reply
    • Noel

      waatuamsem on November 29, 2009 Hyundai, Kia have virtually got nothing to blame these days, actually the best car money can buy,, but any other choice?you are simply throwing away the best value option, period, Don't be a fool to go by old stale name brand, You can not afford to fool youself in the toughest economy now

      February 12, 2012 at 1:55 am | Reply
  25. Brian M.

    Fareed: Your interview with David Rubenstein did not reveal as to how many jobs the Carlyle Group has created and where?

    Also why did George H.W. Bush as a senior member of this group hold meetings in New York the same day as the 911 attacks? Where does his loyalties lie, if that is the case?

    January 22, 2012 at 7:02 pm | Reply
  26. Marc Irvin

    Fareed Zakaria regarding the Rubenstein interview of 01/22/2012;
    It is unfortunate that highly intelligent business men like Mr. Rubenstein get paid so much for, in effect, being serial killers of America’s industrial hegemony. As to what America’s business elites did wrong, please watch Clayton Christensen’s video. He explains best how America’s business elites precipitated the mess we’re in, and why they can’t wait to do it again. http://gartner.mediasite.com/mediasite/play/9cfe6bba5c7941e09bee95eb63f769421d?t=1320659595

    January 23, 2012 at 1:37 am | Reply
  27. Philip Cataldo

    Fareed's interview with Mr. Rubenstein was worse than terrible. Fareed please don't do interviews on topics you have not done your research on! Mr Rubenstein was factually accurate but material inaccurate having told only a part of the story. And Fareed you gave him a platform to spin his partial truth into a defense and by doing so CNN gave the spin the stamp of approval of truth! So Fareed if you don't have time to learn about the topic then at a minimum have someone from the other side of the issue to rebut the spin and add in the parts that were left out. This interview calls into question every interview I have heard on this show. Maybe they are all just unchallenged spin.

    January 23, 2012 at 10:35 am | Reply
  28. Mark Brodsky

    With regard to discussing overhauling the entire tax code . The current system is a disaster, and it seems we need some better replacement

    The problem may be that an income based system is obsolete. Pencil and paper are so 20th century. Should not taxation be as invisible as bank, and brokerage charges?

    A better solution is a painless small fee on all monetary transactions processed and collected automatically. SMALL fee on ALL transactions is the key.

    The Swedish experience with an FTT/Tobin tax on stock transactions shows activity changes are directly proportional to the tax it replaces. Thus even a small FTT can help end the wild swings in the computer driven marketplace.

    No form, no filing, no pain. Just a tiny percent of every transaction picked off and processed by the same groups that automatically take their cut today. Brokers, Banks, credit and debit cards, and check cashers all take a piece of most transactions. A limit may be set at 1 percent of all transactions, with some exceptions (ie 0.1% for home purchases, and 0.2% for index arbitrage and stock sales). Maybe 1% on all international transfers out of the country and 0% for those coming in. As long as this tax is never is raised over 1% it remains basically painless

    And it is not regressive. The poor only move their money once while businesses turn their dollars many times over the years. Savers don’t get penalized and lobbyists can still get congress to offer more pro-active (non-tax) plums for their masters.

    SMALL & ALL FTT eliminates all the need for tax planning and the grey area of defining what is really a business expense.

    And it can be started at the lowest levels immediately While generating funds in the background it allows for a more orderly shut down of the current tax code .

    Please look into this option for what would be the most painless way to reform and replace the current tax code system with an Invisible Tax. An Untried FTT or the Expanded Tobin, or simply SMALL & ALL.
    Thank you for your excellent interviews.

    January 23, 2012 at 12:09 pm | Reply
    • Thamiris

      MyFreeProductSamples on September 25, 2011 @myabigail100 Hey, I got a dry smpahoo, a smpahoo, and a conditioner. I did get them all at Target but in two shopping trips. Yes, I had to pay tax on them. Do you mean Target has a policy on only 2 free products/person or the Suave coupon does? I did the Suave video twice. Once at my home computer and once on my laptop. So the first time, I got a coupon for 1 free product and the second time I got a coupon for 2 free products. I hope I answered your questions

      February 10, 2012 at 7:13 pm | Reply
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