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+WEBVTT
+Kind: captions
+Language: en
+
+00:00:00.033 --> 00:00:01.167
+It is everywhere.
+
+00:00:01.167 --> 00:00:04.738
+They own businesses that you have no idea
+they own.
+
+00:00:04.771 --> 00:00:08.742
+There is this kind of narrative that the
+private equity firms are corporate raider.
+
+00:00:08.775 --> 00:00:09.809
+What is private?
+
+00:00:09.809 --> 00:00:12.078
+What are you talking about?
+Industry creates jobs.
+
+00:00:12.112 --> 00:00:15.348
+Ours, the economy and strengthens
+the retirements of millions of Americans.
+
+00:00:15.382 --> 00:00:19.152
+We're talking about a big circle of pain
+that enriches
+
+00:00:19.152 --> 00:00:22.222
+a very small, elite group of people.
+
+00:00:22.255 --> 00:00:25.592
+Money talks in Washington,
+and they spend a lot of it.
+
+00:00:25.625 --> 00:00:28.728
+I just said someone asked to expose it.
+
+00:00:29.229 --> 00:00:38.238
+It's just not true.
+
+00:00:38.505 --> 00:00:39.039
+Hello.
+
+00:00:39.039 --> 00:00:42.642
+Any time you spend money, there's a decent
+chance that private equity is involved.
+
+00:00:42.709 --> 00:00:43.343
+For example,
+
+00:00:43.343 --> 00:00:47.414
+just the other day I was eating a Cinnabon
+inside of a David's bridal while playing
+
+00:00:47.414 --> 00:00:51.885
+a guitar center ukulele in a little ritual
+I like to call Wednesday.
+
+00:00:51.918 --> 00:00:55.889
+I had absolutely no idea
+I was actually funding three different
+
+00:00:55.889 --> 00:00:57.090
+private equity firms.
+
+00:00:57.090 --> 00:00:58.625
+Though private equity is one of the most
+
+00:00:58.625 --> 00:01:02.595
+powerful industries in America,
+it tends to operate behind the scenes.
+
+00:01:02.629 --> 00:01:06.866
+But unfortunately for them, the Good Work
+investigative news team specializes in
+
+00:01:06.866 --> 00:01:10.503
+bringing things that are behind the scenes
+out into the front of the scene.
+
+00:01:10.804 --> 00:01:14.541
+So let's do the news.
+
+00:01:18.578 --> 00:01:22.115
+Just seconds ago, I was matrix
+dodging bullets outside of here,
+
+00:01:22.182 --> 00:01:25.385
+the offices of Blackstone
+one of the biggest alternative asset
+
+00:01:25.385 --> 00:01:29.389
+managers in the world, and a place
+with a Bond villain ass name, I suppose.
+
+00:01:29.389 --> 00:01:32.192
+Dr. Danger's
+Thunder, Doom and Luigi's Haunted
+
+00:01:32.192 --> 00:01:35.462
+Mansion were already taken
+within the bowels of Blackstone and peer
+
+00:01:35.462 --> 00:01:40.200
+firms like KKR, Apollo Global Management,
+the Carlyle Group and Bain Capital.
+
+00:01:40.400 --> 00:01:43.703
+You will find funds whose specialty
+is investing in private equity,
+
+00:01:43.703 --> 00:01:46.272
+an industry that manages a lot of cash.
+
+00:01:46.840 --> 00:01:48.374
+But we're not really sure how.
+
+00:01:48.374 --> 00:01:50.510
+Private equity firms are everywhere.
+
+00:01:50.543 --> 00:01:52.912
+So what is a private equity fund?
+Private equity.
+
+00:01:52.946 --> 00:01:54.814
+Private equity
+is one of the most lucrative
+
+00:01:54.814 --> 00:01:56.249
+and interesting careers in finance.
+
+00:01:56.249 --> 00:02:00.220
+Understanding private equity begins with
+understanding public equity, According
+
+00:02:00.220 --> 00:02:04.224
+to Good Work's forthcoming bestseller
+How to Win Money and Influence Pores.
+
+00:02:04.390 --> 00:02:07.460
+Anybody can invest in public equity
+in the form of stocks,
+
+00:02:07.494 --> 00:02:09.629
+but private companies are different.
+
+00:02:09.629 --> 00:02:12.632
+Average Joes like you and me
+can't just go and invest in them.
+
+00:02:12.966 --> 00:02:14.367
+These companies need to raise
+
+00:02:14.367 --> 00:02:18.104
+capital from other places,
+and that's where private funds come in.
+
+00:02:18.138 --> 00:02:22.075
+The big types of private funds are venture
+capital, hedge funds and private
+
+00:02:22.075 --> 00:02:22.976
+equity VCs.
+
+00:02:22.976 --> 00:02:27.013
+You may remember Gamble Capital on high
+risk, high reward startups, hedge funds,
+
+00:02:27.013 --> 00:02:30.450
+pool partner money together to be invested
+by a professional fund manager.
+
+00:02:30.450 --> 00:02:33.453
+They focus on generating returns fast,
+and though investing pretty
+
+00:02:33.453 --> 00:02:37.190
+much anything to make that happen, but
+usually not directly in private companies.
+
+00:02:37.257 --> 00:02:38.024
+Private equity
+
+00:02:38.024 --> 00:02:41.794
+firms, meanwhile, invest directly
+in entities that aren't publicly traded.
+
+00:02:42.061 --> 00:02:44.597
+They acquire stakes in things
+or buy them outright,
+
+00:02:44.597 --> 00:02:47.634
+then try to sell their positions
+at a profit over a little bit
+
+00:02:47.634 --> 00:02:51.004
+longer of a time horizon,
+usually five or seven years.
+
+00:02:51.004 --> 00:02:54.607
+And lately they've been stuffing
+their privates with a whole lot of equity.
+
+00:02:54.607 --> 00:02:55.842
+It is everywhere.
+
+00:02:55.842 --> 00:02:59.345
+They own businesses that you have no idea
+they own.
+
+00:02:59.379 --> 00:03:02.348
+Gretchen Morgenson is an NBC reporter
+and author of the book.
+
+00:03:02.448 --> 00:03:06.452
+These Are The Plunderers How Private
+Equity Runs and Wrecks America.
+
+00:03:06.553 --> 00:03:11.424
+There are thousands of private equity
+firms, and I really want everyone to know
+
+00:03:11.424 --> 00:03:16.663
+that the ones I'm talking about
+are the really big, very well-known
+
+00:03:16.896 --> 00:03:21.935
+private equity firms
+Blackstone, Apollo, Carlyle, KKR,
+
+00:03:22.202 --> 00:03:26.606
+that use heavy debt, the largest
+private equity firms in the world own
+
+00:03:26.606 --> 00:03:27.540
+or have an ownership
+
+00:03:27.540 --> 00:03:31.344
+stake in an array of stuff
+that you couldn't even imagine, including
+
+00:03:32.779 --> 00:03:35.682
+Subway, Barnes and Noble, one
+third of Europe's soccer teams, a Formula
+
+00:03:35.682 --> 00:03:38.685
+One team California Pizza
+Kitchen, Hooters, Adweek, Neiman Marcus,
+
+00:03:38.685 --> 00:03:41.754
+FanDuel, Highways, an Indian
+music of Taylor Swift Hospital Emergency
+
+00:03:41.754 --> 00:03:45.792
+rooms, tax on gastroenterology clinics,
+and even oatly
+
+00:03:46.893 --> 00:03:49.229
+that would make the sickest mall ever.
+
+00:03:49.262 --> 00:03:52.365
+Together, private funds
+now have over $25 trillion
+
+00:03:52.365 --> 00:03:55.702
+in assets under management,
+a big chunk of which is private equity.
+
+00:03:55.702 --> 00:03:59.439
+And just this year, Blackstone became
+the first private equity manager of over
+
+00:03:59.439 --> 00:04:05.111
+$1 trillion in amount of money
+that Scrooge McDuck once called orgasmic.
+
+00:04:05.144 --> 00:04:08.414
+But as private equity has grown,
+its operations have become
+
+00:04:08.414 --> 00:04:09.782
+even more controversial.
+
+00:04:09.782 --> 00:04:13.953
+And just like when me and Miranda broke
+up, everyone is choosing sides.
+
+00:04:13.987 --> 00:04:14.854
+Or industry creates
+
+00:04:14.854 --> 00:04:19.325
+jobs, powers the economy, and strengthens
+the retirements of millions of Americans.
+
+00:04:19.359 --> 00:04:21.961
+They're really responsible
+for some of the worst
+
+00:04:21.961 --> 00:04:24.197
+and most abusive business practices
+in the country.
+
+00:04:24.264 --> 00:04:25.999
+Well,
+I've been friends with Emily for years,
+
+00:04:25.999 --> 00:04:28.401
+but I can't really sort of grow on me
+recently.
+
+00:04:28.434 --> 00:04:31.337
+We're talking about a big circle of pain
+
+00:04:31.537 --> 00:04:35.208
+that enriches
+a very small, elite group of people.
+
+00:04:35.241 --> 00:04:37.944
+It's kind of capitalism on steroids.
+
+00:04:37.977 --> 00:04:39.812
+That was actually my nickname in college.
+
+00:04:39.812 --> 00:04:43.983
+But it's strange for something so big
+and controversial to be so back of mine
+
+00:04:43.983 --> 00:04:44.784
+for Americans.
+
+00:04:44.784 --> 00:04:49.922
+It's like mass shootings
+or the bisexuality of Abraham Lincoln.
+
+00:04:50.456 --> 00:04:50.957
+What?
+
+00:04:50.957 --> 00:04:54.661
+Honest Abe did get the sloppiest
+topy in the history of theater
+
+00:04:54.661 --> 00:04:58.731
+while sitting next to his wife, who
+has conveniently named both Mary and Todd.
+
+00:04:58.831 --> 00:05:02.835
+You're trying to tell me our 16th
+president didn't four score both ways.
+
+00:05:04.437 --> 00:05:05.004
+Anyway, how
+
+00:05:05.004 --> 00:05:08.141
+do these private equity companies
+actually go about acquiring a business?
+
+00:05:08.174 --> 00:05:11.411
+I put the question to Jeff Hook,
+a business professor at Johns Hopkins
+
+00:05:11.411 --> 00:05:14.714
+University and author of the book
+The Myth of Private Equity.
+
+00:05:14.747 --> 00:05:17.850
+It's just house
+flipping on a much greater scale, except
+
+00:05:17.850 --> 00:05:21.554
+the companies are operating businesses,
+not real estate.
+
+00:05:21.621 --> 00:05:24.957
+So instead of something big and scary
+like Apollo Global Management,
+
+00:05:25.058 --> 00:05:28.394
+imagine your PE firm is called Chip
+and Joanna Gaines,
+
+00:05:28.394 --> 00:05:31.230
+and instead of acquiring a business
+or another entity that you think could
+
+00:05:31.230 --> 00:05:34.300
+grow, you're just looking to buy
+a shitty house in a nice neighborhood.
+
+00:05:34.334 --> 00:05:36.002
+In slightly fancier financial terms.
+
+00:05:36.002 --> 00:05:39.105
+This is called a leveraged buyout,
+and it's the type of acquisition
+
+00:05:39.105 --> 00:05:41.441
+that the private equity industry has made
+famous.
+
+00:05:41.441 --> 00:05:43.776
+It basically means buying something
+with borrowed cash
+
+00:05:43.776 --> 00:05:45.645
+that you will need
+to pay back with interest.
+
+00:05:45.645 --> 00:05:47.880
+But we're going to fail
+to borrow enough money to buy
+
+00:05:48.881 --> 00:05:49.549
+Subway.
+
+00:05:49.549 --> 00:05:50.750
+Private equity firms.
+
+00:05:50.750 --> 00:05:53.119
+Oxygen comes from public pension
+
+00:05:53.119 --> 00:05:57.223
+funds, endowments
+and other huge institutional investors.
+
+00:05:57.223 --> 00:06:00.360
+The sugar daddies of private equity,
+insanely wealthy families,
+
+00:06:00.360 --> 00:06:02.295
+insanely wealthy college endowments,
+
+00:06:02.295 --> 00:06:04.864
+and the retirement funds of middle class
+firefighters.
+
+00:06:04.897 --> 00:06:06.132
+But what the hell?
+
+00:06:06.132 --> 00:06:09.902
+CalPERS, the largest pension
+plan in the United States, had $457
+
+00:06:09.902 --> 00:06:14.340
+billion, has a $55 billion
+private equity portfolio,
+
+00:06:14.640 --> 00:06:17.577
+which is normal practice pension funds,
+which poor public sector
+
+00:06:17.577 --> 00:06:20.046
+employees retirement
+funds to more effectively grow in
+
+00:06:20.246 --> 00:06:23.349
+have long invested in private markets
+to meet their high return goals.
+
+00:06:23.383 --> 00:06:27.220
+But once the firms
+get that institutional investor bag,
+
+00:06:27.220 --> 00:06:29.222
+what do they do with the companies
+they acquire?
+
+00:06:29.255 --> 00:06:32.558
+Supporters say that they bail out
+financially underperforming companies
+
+00:06:32.558 --> 00:06:35.628
+and turn them around with capital
+and operational support.
+
+00:06:35.661 --> 00:06:39.031
+We're in a business together
+for a long term, but if you walk down
+
+00:06:39.031 --> 00:06:42.735
+any main street in America today,
+you will see private equity all around,
+
+00:06:42.735 --> 00:06:46.472
+whether you're taking an Uber to work
+or you're grabbing lunch at Panera Bread.
+
+00:06:46.472 --> 00:06:49.308
+All of these businesses
+were supported by private equity.
+
+00:06:49.342 --> 00:06:52.945
+That was Drew Moloney, president
+and CEO of the American Investment
+
+00:06:52.945 --> 00:06:56.616
+Council, one of private equity's
+main lobbying groups in the United States.
+
+00:06:56.649 --> 00:06:58.418
+We were this close to getting a meeting
+
+00:06:58.418 --> 00:07:02.688
+with both him and the AIC,
+but at the last minute they were busy.
+
+00:07:02.688 --> 00:07:05.224
+We assume they actually just
+watched our YouTube channel,
+
+00:07:05.258 --> 00:07:06.993
+or maybe they were working on their own
+YouTube
+
+00:07:06.993 --> 00:07:11.230
+channel,
+which includes sick clips like this.
+
+00:07:16.736 --> 00:07:19.105
+But critics of the industry contend
+that private equity
+
+00:07:19.105 --> 00:07:21.574
+and their leveraged buyouts
+saddle companies with debt
+
+00:07:21.574 --> 00:07:25.111
+that they have to pay back over too
+short of a time frame, the heavy debt
+
+00:07:25.111 --> 00:07:29.215
+that is required to make the acquisition
+and the short time frame
+
+00:07:29.215 --> 00:07:33.252
+that they want the company
+to be able to be more profitable
+
+00:07:33.252 --> 00:07:36.856
+and therefore be flipped
+put to pressure points on the company.
+
+00:07:36.889 --> 00:07:37.790
+For example, Toys
+
+00:07:37.790 --> 00:07:41.794
+R US, which was purchased by a group of PE
+firms and overwhelmed with debt, so much
+
+00:07:41.794 --> 00:07:45.865
+so that it declared bankruptcy in 2017
+and since has not recovered.
+
+00:07:46.032 --> 00:07:47.066
+Noranda Aluminum,
+
+00:07:47.066 --> 00:07:50.269
+the largest power plant in New Madrid,
+Missouri, who went into bankruptcy
+
+00:07:50.269 --> 00:07:53.539
+and was forced to close plants
+after being acquired by Apollo.
+
+00:07:53.539 --> 00:07:58.444
+But private equity firms don't just buy
+companies where there is the big money.
+
+00:07:58.444 --> 00:07:59.512
+That's where they're going to go.
+
+00:07:59.512 --> 00:08:00.813
+Why Health care?
+
+00:08:00.813 --> 00:08:02.682
+17% of GDP.
+
+00:08:02.682 --> 00:08:04.217
+It's $1,000,000,000,000 industry.
+
+00:08:04.217 --> 00:08:06.853
+Well, Flannery is an ophthalmologist
+based in Oregon.
+
+00:08:06.886 --> 00:08:08.588
+He's also a comedian whose videos shine
+
+00:08:08.588 --> 00:08:12.325
+a light on the growing trend of PE
+firms buying out medical practices.
+
+00:08:12.358 --> 00:08:14.093
+He also has more followers than us.
+
+00:08:15.928 --> 00:08:18.898
+But whatever, there's middle man
+all over the place.
+
+00:08:19.065 --> 00:08:22.034
+Health insurance companies,
+we have pharmacy benefit managers,
+
+00:08:22.034 --> 00:08:22.935
+all of these people.
+
+00:08:22.935 --> 00:08:27.373
+They're extracting billions and billions
+of dollars from the health care system.
+
+00:08:27.707 --> 00:08:28.508
+So there's money there.
+
+00:08:28.508 --> 00:08:29.809
+So of course, it's going to attract
+
+00:08:29.809 --> 00:08:33.112
+anybody who wants to get money,
+including private equity.
+
+00:08:33.145 --> 00:08:36.983
+By 2018, Blackstone and KKR controlled
+one third of the nation's
+
+00:08:36.983 --> 00:08:38.551
+hospital emergency rooms.
+
+00:08:38.551 --> 00:08:42.088
+And while some have argued that a firm's
+ownership of practices lets doctors
+
+00:08:42.088 --> 00:08:45.057
+focus on patient care
+rather than running the actual business.
+
+00:08:45.091 --> 00:08:47.326
+So I said to the doctor, I said, Why?
+
+00:08:47.360 --> 00:08:49.095
+Why would you partner with private equity?
+
+00:08:49.095 --> 00:08:51.430
+And the doctor said, Well,
+the best thing is
+
+00:08:51.430 --> 00:08:55.034
+I like to practice medicine
+when I have a partner with private equity.
+
+00:08:55.067 --> 00:08:58.304
+They worry about the back office,
+they worry about the I.T.
+
+00:08:58.337 --> 00:08:59.539
+and I don't have to worry about that.
+
+00:08:59.539 --> 00:09:00.406
+I can see patients.
+
+00:09:00.406 --> 00:09:04.410
+Others point to surprise billings,
+higher costs, layoffs and overprescribing
+
+00:09:04.410 --> 00:09:07.680
+patients as examples of what happens
+when a hospital is owned
+
+00:09:07.680 --> 00:09:11.517
+by a profit seeking corporate baddie
+rather than a medical professional.
+
+00:09:11.584 --> 00:09:12.919
+Private practices
+
+00:09:12.919 --> 00:09:17.089
+historically there like run by physician
+deep down all physicians.
+
+00:09:17.123 --> 00:09:21.027
+They got into medicine
+to tell people to practice medicine.
+
+00:09:21.093 --> 00:09:24.630
+Now, though,
+you're selling to this private equity firm
+
+00:09:24.630 --> 00:09:29.535
+that has no motivation to maintain
+or improve patient care.
+
+00:09:29.569 --> 00:09:32.004
+They want to do
+what's going to improve the bottom line.
+
+00:09:32.038 --> 00:09:34.707
+Which is a sentiment Gretchen
+echoed about nursing homes.
+
+00:09:34.740 --> 00:09:37.710
+Nursing homes that are owned by private
+equity companies
+
+00:09:37.777 --> 00:09:42.481
+have the residents
+encounter 10% higher mortality rates.
+
+00:09:42.481 --> 00:09:43.716
+Now, why is that?
+
+00:09:43.716 --> 00:09:47.453
+Well, because they cut staff,
+because they're trying to make
+
+00:09:47.453 --> 00:09:49.722
+the thing more profitable
+to sell outside of health care.
+
+00:09:50.623 --> 00:09:52.925
+You can find
+lots of examples of private equity
+
+00:09:52.925 --> 00:09:56.629
+getting all up in things that are commonly
+thought of as public services,
+
+00:09:56.629 --> 00:10:00.433
+like when water bills rose 28% in Bayonne,
+New Jersey, following KKR, its
+
+00:10:00.466 --> 00:10:02.301
+acquisition of the town's water system.
+
+00:10:02.301 --> 00:10:03.369
+Or when pandemic relief
+
+00:10:03.369 --> 00:10:07.173
+money found its way to PE firms, despite
+being intended for small business support.
+
+00:10:07.206 --> 00:10:11.310
+Or the state of California had to evacuate
+dozens of boys from an abusive Michigan
+
+00:10:11.310 --> 00:10:15.748
+rehab facility for troubled youth that was
+owned by a Bay Area private equity firm.
+
+00:10:15.748 --> 00:10:15.781
+the thing more profitable
+to sell outside of health care.
+
+00:10:15.781 --> 00:10:20.219
+But if we look at all of these troubling
+examples of private equity, massive growth
+
+00:10:20.219 --> 00:10:24.323
+and entanglement into public services,
+one thing remains clear.
+
+00:10:25.057 --> 00:10:27.293
+These guys fucking rock at making money.
+
+00:10:27.326 --> 00:10:30.763
+2012 Private funds as a whole,
+a lot of which
+
+00:10:30.763 --> 00:10:33.766
+is private equity in the net, $9.8
+trillion.
+
+00:10:33.799 --> 00:10:36.836
+Now, ten years later, it's $27 trillion.
+
+00:10:36.836 --> 00:10:40.840
+So the private funds industry,
+which again includes hedge funds and DC,
+
+00:10:40.840 --> 00:10:44.677
+is now bigger than the commercial banking
+sector, according to Gensler.
+
+00:10:44.710 --> 00:10:45.811
+Indeed, private equity
+
+00:10:45.811 --> 00:10:50.282
+has had an even more meteoric career
+rise than euphoria hottie Jacob Elordi.
+
+00:10:50.349 --> 00:10:54.286
+But what, besides Ivy League grads burning
+desire to own a helipad yacht
+
+00:10:54.286 --> 00:10:57.189
+has contributed to this industry's
+startling growth.
+
+00:10:57.390 --> 00:10:59.558
+Low interest rates, zero cost of money.
+
+00:10:59.558 --> 00:11:01.127
+Big reason.
+
+00:11:01.127 --> 00:11:05.965
+Huge easy money
+means you can borrow at low rates.
+
+00:11:05.998 --> 00:11:09.268
+This gave private equity
+a cheap source of debt, which is like new
+
+00:11:09.268 --> 00:11:11.671
+could juice for leveraged buyouts,
+combined with the fact
+
+00:11:11.671 --> 00:11:15.274
+that private markets haven't historically
+been very regulated by the FCC.
+
+00:11:15.541 --> 00:11:18.577
+The industry has been able to expand
+pretty much unchecked.
+
+00:11:18.711 --> 00:11:22.248
+So you've got this really big part
+of the economy that is
+
+00:11:22.448 --> 00:11:25.718
+more or less operating in the shadows
+because there's not really
+
+00:11:25.718 --> 00:11:28.721
+systematic there
+hasn't been systematic disclosure on it.
+
+00:11:28.754 --> 00:11:31.590
+So why does the government
+ignore these asset managers?
+
+00:11:31.590 --> 00:11:33.059
+It's not like they're some annoying ass
+
+00:11:33.059 --> 00:11:36.395
+public school teacher asking for money
+to buy a protractor that works.
+
+00:11:36.495 --> 00:11:41.901
+The SCC or the government's first response
+would be, okay, we supervise
+
+00:11:41.901 --> 00:11:45.171
+the public markets where we have
+to protect widows and orphans.
+
+00:11:45.204 --> 00:11:47.573
+They don't know what they're doing.
+So we got to protect them.
+
+00:11:47.606 --> 00:11:48.507
+There's also lobbying.
+
+00:11:48.507 --> 00:11:51.077
+Private equity
+spends more time in Washington, D.C.
+
+00:11:51.077 --> 00:11:52.945
+than the worst kid
+you went to college with.
+
+00:11:52.945 --> 00:11:57.249
+For example, the industry
+spent $70 million on lobbying in the run
+
+00:11:57.249 --> 00:11:59.218
+up to the 2020 presidential election,
+
+00:11:59.218 --> 00:12:03.422
+while they donated $262
+million directly to political campaigns.
+
+00:12:03.422 --> 00:12:04.623
+And it turns out that private
+
+00:12:04.623 --> 00:12:08.360
+equity in Washington have a few mutual
+LinkedIn connections as well.
+
+00:12:08.394 --> 00:12:12.364
+Lawyers that work at the FCC,
+they don't want to work at the FCC.
+
+00:12:12.698 --> 00:12:15.601
+They want to work on Wall Street,
+make triple what they're making now.
+
+00:12:15.601 --> 00:12:18.871
+How are you going to get a job
+on Wall Street if you're a pain in the ass
+
+00:12:19.138 --> 00:12:21.474
+that you prosecute PR firms?
+
+00:12:21.907 --> 00:12:24.043
+You know, that's not the way
+you get a job on Wall Street.
+
+00:12:24.143 --> 00:12:27.179
+Looks like the revolving door
+between Washington and private equity.
+
+00:12:27.279 --> 00:12:28.948
+His gun, too, needs some maintenance
+
+00:12:29.915 --> 00:12:31.183
+because it revolves a lot.
+
+00:12:31.183 --> 00:12:31.917
+Jerome Powell,
+
+00:12:31.917 --> 00:12:35.087
+the current chief of the Federal Reserve,
+was a partner at the Carlyle Group,
+
+00:12:35.087 --> 00:12:38.324
+and three months after finishing his stint
+as Donald Trump's S.E.C.
+
+00:12:38.324 --> 00:12:42.328
+chair, Jay Clayton became Apollo's
+first ever lead independent director
+
+00:12:42.461 --> 00:12:43.629
+of its board of directors.
+
+00:12:43.629 --> 00:12:46.098
+And those are just the head honchos.
+
+00:12:46.132 --> 00:12:48.901
+Private equity's money
+and political influence is so immense
+
+00:12:48.901 --> 00:12:51.637
+that it's been difficult for regulators
+to square up with.
+
+00:12:51.704 --> 00:12:55.574
+The government is reluctant
+to bring a case against the big name like
+
+00:12:55.574 --> 00:12:59.178
+Blackstone or Carlyle private Equity,
+because they think they can't win a case.
+
+00:12:59.178 --> 00:13:01.547
+They just don't think
+they got the horsepower
+
+00:13:02.248 --> 00:13:06.986
+to go up against these gigantic
+blue chip Wall Street law firms.
+
+00:13:07.019 --> 00:13:09.555
+So you're saying that the S.E.C.
+
+00:13:09.789 --> 00:13:12.992
+feels less powerful
+than some private equity firms?
+
+00:13:13.893 --> 00:13:14.426
+Right.
+
+00:13:14.426 --> 00:13:18.597
+And as you might imagine, this unchecked
+growth in private equity has also somehow
+
+00:13:18.597 --> 00:13:22.601
+correlated with the unchecked growth
+of P executives bank accounts.
+
+00:13:22.601 --> 00:13:26.806
+In 2005, there were three
+multi-billionaires among the executive
+
+00:13:26.806 --> 00:13:27.373
+class.
+
+00:13:27.373 --> 00:13:31.811
+In 2020 it was 20 to 22 multibillionaires.
+
+00:13:31.811 --> 00:13:34.480
+Just think of how s their group chat is.
+
+00:13:34.513 --> 00:13:37.249
+You can chalk all this up to the way
+the industry pays itself.
+
+00:13:37.249 --> 00:13:38.517
+Regardless of how investments
+
+00:13:38.517 --> 00:13:43.155
+perform, a private equity firm will charge
+a management fee of about 2% each year.
+
+00:13:43.189 --> 00:13:47.860
+So a fund with $2 billion in management
+will baseline make $40 million annually.
+
+00:13:47.893 --> 00:13:51.764
+But the real claims come from the second
+thing called the performance fee.
+
+00:13:51.797 --> 00:13:56.702
+Unlike the management fee, the performance
+fee is 20% of a firm's annual profits
+
+00:13:56.702 --> 00:14:00.239
+and it's taxes, capital gains,
+which means it's taxed as an investment
+
+00:14:00.239 --> 00:14:03.576
+you've held for over a year
+instead of income for your services.
+
+00:14:03.609 --> 00:14:07.246
+This performance fee is more
+famously known as carried interest,
+
+00:14:07.246 --> 00:14:11.450
+and it's one of the biggest tools PE
+executives use to maximize their earnings.
+
+00:14:11.483 --> 00:14:14.987
+In fact, this carried interest tax rate
+is so important to the private equity
+
+00:14:14.987 --> 00:14:18.123
+industry that this spike in lobbying
+spending in DC
+
+00:14:18.257 --> 00:14:21.927
+happened the same year that Congress
+first started having hearings about it.
+
+00:14:21.961 --> 00:14:26.065
+Income tax, if you're really wealthy,
+might be might be 35 or 40%
+
+00:14:26.065 --> 00:14:29.535
+plus state tax and the capital gains
+tax would be half of that.
+
+00:14:29.735 --> 00:14:33.105
+So there's a big, what you call benefit
+from having a capital gain
+
+00:14:33.105 --> 00:14:36.876
+as opposed to income before an industry
+that generates such an exceptional amount
+
+00:14:36.876 --> 00:14:38.544
+of wealth for its practitioners.
+
+00:14:38.544 --> 00:14:44.717
+Surely they must get a great deal
+for their investors as well, right?
+
+00:14:44.750 --> 00:14:47.486
+The answer isn't as obvious a
+yes as you might think.
+
+00:14:47.753 --> 00:14:48.787
+In July, the Wall Street
+
+00:14:48.787 --> 00:14:52.124
+Journal reported that for the first time
+since the 2008 financial crisis,
+
+00:14:52.358 --> 00:14:56.228
+benchmark, private equity returns turned
+negative for the reported fiscal year.
+
+00:14:56.262 --> 00:14:59.431
+But since the government can't regulate
+private equity very effectively,
+
+00:14:59.565 --> 00:15:02.902
+it's pretty difficult
+to figure out what the industry's finances
+
+00:15:03.535 --> 00:15:06.305
+actually look like
+even if you are an investor in the fund.
+
+00:15:06.438 --> 00:15:10.676
+In terms of regulation,
+I'll contrast this with like mutual funds.
+
+00:15:10.709 --> 00:15:14.213
+You go to Vanguard's website
+and you look at one of their mutual funds,
+
+00:15:14.246 --> 00:15:18.117
+you'll see a semiannual report
+that's got maybe 28 pages and it's
+
+00:15:18.117 --> 00:15:22.021
+got their expenses,
+and that's like required by regulation.
+
+00:15:22.021 --> 00:15:25.724
+What is currently required
+by regulation is basically no disclosure
+
+00:15:26.358 --> 00:15:29.495
+by funds, by private equity
+funds to their investors.
+
+00:15:29.662 --> 00:15:32.631
+The investment process
+would all be hush hush.
+
+00:15:32.631 --> 00:15:36.201
+And for the private equity industry,
+you know, that's good.
+
+00:15:36.235 --> 00:15:40.172
+They can keep a lot of their fees
+hidden and their returns,
+
+00:15:40.172 --> 00:15:42.341
+which are mediocre at best secret.
+
+00:15:42.374 --> 00:15:43.943
+And while there are studies claiming
+
+00:15:43.943 --> 00:15:47.146
+that private equity as a whole offers
+better returns than the stock market,
+
+00:15:47.313 --> 00:15:49.548
+there's reason to be skeptical
+about their numbers.
+
+00:15:49.581 --> 00:15:54.119
+We have seen a number of proposals
+from private equity funds
+
+00:15:54.119 --> 00:15:59.091
+where the returns are really not
+calculated in a in a manner that,
+
+00:16:00.292 --> 00:16:00.759
+well,
+
+00:16:01.126 --> 00:16:03.595
+they're not calculated in a manner
+that I would regard as honest
+
+00:16:03.629 --> 00:16:06.465
+or all are doing is lying a little bit
+to make the money coming in.
+
+00:16:07.032 --> 00:16:09.335
+Yeah. Yeah, that sums it up.
+
+00:16:09.535 --> 00:16:11.904
+Those gobbling muppets raise a good point.
+
+00:16:11.937 --> 00:16:15.040
+One of the reasons why the returns can be
+tough to trust is that they're often
+
+00:16:15.040 --> 00:16:19.178
+calculated by people who are hired
+by the firms themselves for the most part.
+
+00:16:19.645 --> 00:16:23.615
+There's no outside party
+going in and doing a smell test.
+
+00:16:23.782 --> 00:16:29.254
+To some extent, the auditors might do it
+like PricewaterhouseCoopers deliver.
+
+00:16:29.288 --> 00:16:32.825
+The problem with them is they're
+getting paid by the p e fund itself.
+
+00:16:34.960 --> 00:16:35.494
+Okay.
+
+00:16:35.494 --> 00:16:37.896
+I'm receiving
+breaking news against all odds,
+
+00:16:37.896 --> 00:16:40.265
+the Southeastern Football Conference
+has announced
+
+00:16:40.265 --> 00:16:43.936
+the most significant regulations
+to private.
+
+00:16:45.304 --> 00:16:46.038
+I am sorry.
+
+00:16:46.038 --> 00:16:48.207
+The Security and Exchange
+Commission has announced
+
+00:16:48.207 --> 00:16:52.011
+the most significant regulations
+to the private equity industry in years.
+
+00:16:52.745 --> 00:16:55.948
+It makes much more sense down by the SEC
+imposing changes on hedge funds
+
+00:16:55.948 --> 00:16:58.050
+and private equity firms on fee
+disclosures.
+
+00:16:58.083 --> 00:17:00.919
+The move is meant to curb preferential
+treatment of certain investors.
+
+00:17:01.220 --> 00:17:05.657
+There's the disclosure
+on a quarterly basis of of performance
+
+00:17:05.657 --> 00:17:08.460
+in a way that right now is not required
+per se.
+
+00:17:09.061 --> 00:17:12.398
+There is a element
+that prevents special deals.
+
+00:17:12.564 --> 00:17:14.133
+So so everything's fixed, right?
+
+00:17:14.133 --> 00:17:16.735
+So it's about 15 or 20 years too late.
+
+00:17:17.069 --> 00:17:18.871
+Now the train's left the station.
+
+00:17:18.871 --> 00:17:21.073
+A plutocracy has become too powerful.
+
+00:17:21.306 --> 00:17:23.776
+They'll be able to ride
+roughshod over these
+
+00:17:23.776 --> 00:17:26.645
+if they don't even try
+to get them thrown out in a court case.
+
+00:17:26.678 --> 00:17:28.213
+Well, the new rules
+have to mean something, right?
+
+00:17:28.213 --> 00:17:30.115
+Like, how fast could they sue them anyway?
+
+00:17:30.115 --> 00:17:34.653
+So they're really three reasons
+why we're suing the FCC to sue today, man.
+
+00:17:34.653 --> 00:17:37.923
+That's Brian Corbett,
+CEO of the Managed Funds Association,
+
+00:17:37.923 --> 00:17:40.926
+one of the many groups that lobby
+for hedge funds and private equity
+
+00:17:40.926 --> 00:17:44.229
+firms and are currently suing the SEC
+for its recent regulation.
+
+00:17:44.229 --> 00:17:48.500
+We think the FCC in this final role
+has exceeded its statutory authority.
+
+00:17:48.500 --> 00:17:52.571
+So as we stand today, private equity
+is mobilizing their cinematic universe of
+
+00:17:52.571 --> 00:17:56.608
+lawyers while the FCC tries to rein them
+in for the first time in many years.
+
+00:17:56.642 --> 00:18:00.112
+So what does this mean for the future,
+not just for private equity,
+
+00:18:00.312 --> 00:18:04.183
+but for us everyday people whose lives
+have been in one way or another
+
+00:18:04.183 --> 00:18:05.584
+tied to this industry?
+
+00:18:05.584 --> 00:18:09.088
+If I was a union employee looking forward
+
+00:18:09.088 --> 00:18:12.558
+to retirement
+and let's say I can pose a few questions
+
+00:18:12.691 --> 00:18:17.429
+to my union representatives on the board
+of trustees of these gigantic funds,
+
+00:18:17.429 --> 00:18:21.900
+I asked my representative, Hey, look,
+I've been taken a closer look at this.
+
+00:18:21.900 --> 00:18:22.801
+I think it's a moment
+
+00:18:22.801 --> 00:18:26.805
+to really sit down and say, okay,
+what kind of capitalism do we want?
+
+00:18:26.839 --> 00:18:32.044
+Do we want the kind that really benefits
+the a broad array of people?
+
+00:18:32.044 --> 00:18:37.082
+Or do you want to have a system
+that benefits a tiny, tiny fraction
+
+00:18:37.249 --> 00:18:41.153
+of people at the expense of a lot of a lot
+a lot of people?
+
+00:18:41.186 --> 00:18:43.889
+What type of capitalism do we really want?
+
+00:18:43.922 --> 00:18:46.592
+Do we even know the type of capitalism
+we already have?
+
+00:18:46.625 --> 00:18:50.329
+If investigating private equity teaches us
+anything, it's that powerful profit
+
+00:18:50.329 --> 00:18:54.833
+seeking forces are indeed all around us
+in every part of our lives in places
+
+00:18:54.833 --> 00:18:56.068
+we wouldn't even think to look.
+
+00:18:57.302 --> 00:18:59.838
+Wait a minute.
+
+00:19:01.206 --> 00:19:03.208
+This YouTube channel is owned by morning.
+
+00:19:03.208 --> 00:19:06.278
+Morning Brew
+was bought by Business Insider in 2020.
+
+00:19:06.411 --> 00:19:11.150
+Business Insider is owned
+by Axel Springer, who is 43.54% owned
+
+00:19:11.150 --> 00:19:13.785
+by private equity mega fund KKR,
+
+00:19:14.419 --> 00:19:17.022
+which means for good work.
+
+00:19:17.823 --> 00:19:22.928
+I'm 43.54% private equity.
+
+00:19:23.729 --> 00:19:27.666
+And lately they've been stuffing
+their privates with a whole lot of equity.
+
+00:19:27.666 --> 00:19:31.703
+And lately they've been stuffing
+their privates with a whole lot of equity.
+
+00:19:31.703 --> 00:19:32.404
+And lately,
+
+00:19:32.404 --> 00:19:35.741
+these guys have been stuffing
+their privates with a whole lot of equity.
+
+00:19:35.741 --> 00:19:39.444
+And lately they've been stuffing
+their privates with a whole lot of equity.
+
+00:19:39.444 --> 00:19:42.514
+And lately they've been stuffing
+their privates with a whole lot of equity.
+
+00:19:42.514 --> 00:19:46.051
+And lately they've been stuffing
+their privates with a whole lot of equity.
+
+00:19:46.051 --> 00:19:47.586
+And lately these guys,
+
+00:19:47.586 --> 00:19:50.055
+they've been stuffing their privates
+with a whole lot of equity.
+
+00:19:50.055 --> 00:19:53.992
+And lately they've been stuffing
+their privates with a whole lot of equity.
+
+00:19:53.992 --> 00:19:55.561
+And lately these guys,
+
+00:19:55.561 --> 00:19:58.797
+they've been stuffing their privates
+with a whole lot of equity.
+

app.py

@@ -1,6 +1,5 @@
 import gradio as gr
-from pytube import YouTube, exceptions as pytube_exceptions
-from youtube_transcript_api import YouTubeTranscriptApi, TranscriptsDisabled, NoTranscriptFound
+import subprocess
 import requests
 import re
 import traceback
@@ -33,94 +32,73 @@ def test_youtube_transcript(link):
     test_result = test_network()
     debug_info += f"Network test result: {test_result}\n"
 
+    # Include package versions
+    import gradio
+    import yt_dlp
+    import requests
+    debug_info += f"Package versions:\n"
+    debug_info += f"gradio: {gradio.__version__}\n"
+    debug_info += f"yt-dlp: {yt_dlp.version.__version__}\n"
+    debug_info += f"requests: {requests.__version__}\n"
+
     try:
-        # Initialize YouTube object
-        yt = YouTube(link)
-        video_id = yt.video_id
-        thumbnail_url = yt.thumbnail_url
+        # Use yt-dlp as a subprocess to download subtitles
+        command = [
+            'yt-dlp',
+            '--skip-download',
+            '--write-subs',
+            '--sub-lang', 'en',
+            '--sub-format', 'vtt',
+            '--output', '%(id)s.%(ext)s',
+            link
+        ]
 
-        debug_info += f"Video ID: {video_id}\n"
-        debug_info += f"Thumbnail URL: {thumbnail_url}\n"
+        result = subprocess.run(command, capture_output=True, text=True)
 
-        # Attempt to list available transcripts
-        try:
-            transcript_list = YouTubeTranscriptApi.list_transcripts(video_id)
-            debug_info += "Successfully retrieved transcript list.\n"
-            debug_info += "Available transcripts:\n"
-            for transcript in transcript_list:
-                debug_info += (
-                    f"Language Code: {transcript.language_code}, "
-                    f"Language: {transcript.language}, "
-                    f"Is Generated: {transcript.is_generated}\n"
-                )
-        except TranscriptsDisabled:
-            transcript_text = "Transcripts are disabled for this video."
-            debug_info += "Transcripts are disabled for this video.\n"
-            return transcript_text, debug_info, thumbnail_url
-        except NoTranscriptFound:
-            transcript_text = "No transcript found for this video."
-            debug_info += "No transcripts found for this video.\n"
-            return transcript_text, debug_info, thumbnail_url
-        except Exception as e:
-            transcript_text = f"An error occurred while listing transcripts: {str(e)}"
-            debug_info += f"Error listing transcripts: {str(e)}\n"
-            debug_info += traceback.format_exc()
+        if result.returncode != 0:
+            transcript_text = "Failed to download subtitles using yt-dlp."
+            debug_info += f"yt-dlp error: {result.stderr}\n"
             return transcript_text, debug_info, thumbnail_url
 
-        # Attempt to find an English transcript
-        try:
-            # First, try to find a manually created English transcript
-            transcript = transcript_list.find_transcript(['en', 'en-US', 'en-GB', 'en-AU'])
-            debug_info += (
-                f"Selected transcript language: {transcript.language_code} (manually created)\n"
-            )
-        except NoTranscriptFound:
-            # If no manually created transcript is found, try to find an auto-generated one
-            try:
-                transcript = transcript_list.find_generated_transcript(['en', 'en-US', 'en-GB', 'en-AU'])
-                debug_info += (
-                    f"Selected transcript language: {transcript.language_code} (auto-generated)\n"
-                )
-            except NoTranscriptFound:
-                transcript_text = "No English transcript found for this video."
-                debug_info += "No English transcripts found (neither manually created nor auto-generated).\n"
-                return transcript_text, debug_info, thumbnail_url
-            except Exception as e:
-                transcript_text = f"An error occurred while finding generated transcript: {str(e)}"
-                debug_info += f"Error finding generated transcript: {str(e)}\n"
-                debug_info += traceback.format_exc()
-                return transcript_text, debug_info, thumbnail_url
-        except Exception as e:
-            transcript_text = f"An error occurred while finding transcript: {str(e)}"
-            debug_info += f"Error finding transcript: {str(e)}\n"
-            debug_info += traceback.format_exc()
-            return transcript_text, debug_info, thumbnail_url
+        # Extract video ID from URL
+        video_id_match = re.search(r'v=([A-Za-z0-9_-]{11})', link)
+        if video_id_match:
+            video_id = video_id_match.group(1)
+            debug_info += f"Video ID: {video_id}\n"
+            thumbnail_url = f"https://img.youtube.com/vi/{video_id}/maxresdefault.jpg"
+            debug_info += f"Thumbnail URL: {thumbnail_url}\n"
+        else:
+            video_id = "unknown"
+            debug_info += "Could not extract Video ID.\n"
 
-        # Fetch and compile the transcript
+        # Read the downloaded subtitle file
+        subtitle_file = f"{video_id}.en.vtt"
         try:
-            transcript_data = transcript.fetch()
-            transcript_text = "\n".join([item['text'] for item in transcript_data])
-            debug_info += "Successfully fetched and compiled the transcript.\n"
+            with open(subtitle_file, 'r', encoding='utf-8') as f:
+                transcript_text = f.read()
+
+            # Process the VTT file to extract plain text
+            transcript_text = re.sub(r'WEBVTT\n\n', '', transcript_text)
+            transcript_text = re.sub(r'\d+\n', '', transcript_text)
+            transcript_text = re.sub(r'\d{2}:\d{2}:\d{2}\.\d{3} --> \d{2}:\d{2}:\d{2}\.\d{3}\n', '', transcript_text)
+            transcript_text = transcript_text.strip()
+
+            debug_info += "Transcript fetched using yt-dlp subprocess.\n"
+        except FileNotFoundError:
+            transcript_text = "Subtitle file not found."
+            debug_info += "Subtitle file was not found after yt-dlp execution.\n"
         except Exception as e:
-            transcript_text = f"An error occurred while fetching the transcript: {str(e)}"
-            debug_info += f"Error fetching transcript: {str(e)}\n"
+            transcript_text = f"An error occurred while reading subtitles: {e}"
+            debug_info += f"Error reading subtitles: {e}\n"
             debug_info += traceback.format_exc()
-
-    except pytube_exceptions.RegexMatchError:
-        transcript_text = "Invalid YouTube URL provided."
-        debug_info += "RegexMatchError: Invalid YouTube URL format.\n"
-    except requests.exceptions.RequestException as e:
-        transcript_text = f"Network error occurred: {e}"
-        debug_info += f"Network error: {str(e)}\n"
-        debug_info += traceback.format_exc()
     except Exception as e:
-        transcript_text = f"An unexpected error occurred: {str(e)}"
-        debug_info += f"Unexpected error: {str(e)}\n"
+        transcript_text = f"An error occurred with yt-dlp subprocess: {e}"
+        debug_info += f"Error with yt-dlp subprocess: {e}\n"
         debug_info += traceback.format_exc()
 
-    return transcript_text, debug_info, thumbnail_url  # Return URL instead of path
+    return transcript_text, debug_info, thumbnail_url
 
-# Gradio interface using the updated syntax with enhanced debugging
+# Gradio interface
 demo = gr.Interface(
     fn=test_youtube_transcript,
     inputs=gr.Textbox(label="YouTube Video URL", placeholder="Enter YouTube video URL here"),

requirements.txt

@@ -1,4 +1,3 @@
 gradio==4.44.1
-pytube==15.0.0
-youtube-transcript-api==0.6.2
+yt-dlp==2023.10.7
 requests==2.32.3