April 28, 2008 / 10:49 PM / in 11 years

Carlyle exec sees only U.S. economy woes this year

BALTIMORE, April 28 (Reuters) - A co-founder of U.S. private equity group Carlyle CYL.UL said on Monday that he does not expect the listless national economy to gain strength before year-end and holds little hope that a $150 billion stimulus package will do much to aid recovery.

“It is tempting for me to say, ‘Yes, the worst is behind us. We are near the bottom and coming back,’” Carlyle co-founder David Rubenstein told a conference of business journalists.

“But I can’t honestly say that. ... I think that we still have a ways to go.”

While the federal government will dole out tax rebates to consumers in coming months as a way to encourage spending, Rubenstein said he did not think the project will have much impact on the $14 trillion national economy.

“I am not sure that the government itself has the power to forestall recession,” Rubenstein, who is a managing director of Carlyle, told the Society of American Business Editors and Writers.

Many financial services companies have not yet “begun to scratch the surface” in reporting losses and “it is going to be toward the end of this year” before the U.S. economy begins to show any meaningful signs of recovery, he said.

The private equity market is dealing with tighter credit, Rubenstein said, and many leading firms are set to become shareholder-owned companies. All of the top 10 private equity firms will be in the hands of shareholders in the next five years, he said.

Rubenstein said a lack of easy credit, not sloppy deals, has recently curbed private equity business.

“Ultimately, the music kind of stopped and people would not lend us money any more,” he said. “The debt terms were so favorable that (debt buyers) ultimately had buyers’ remorse.”

Rubenstein’s address was delayed after dozens of union organizers noisily protested in the hotel hosting the annual conference.

The Service Employees International Union, which represents health-care workers, is fighting for strong organizing rights for nursing home operator Manor Care Inc. which was bought by Carlyle late last year. (Reporting by Patrick Rucker; Editing by Leslie Adler)

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