Indianapolis Indiana Under the Hedge Fund Gun

Hedge funds and equity funds have been seizing large parts of the real estate bubble. Cereberus Fund bought GMAC, the real estate arm of General Motors. Now the Carlyle Group has financial grabbed the Indianapolis based transmission company of General Motors, known as Allison Transmissions.

June 28, 2007 (LPAC)--Carlyle Group, -- the private equity group closely linked to British BAE Systems, which is in the middle of the "scandal of the century" and multiple U.S. and foreign investigations,-- has announced a takeover of a division of General Motors. Both BAE Systems and the Swedish Bofors Defence Group which BAE bought from Carlyle, are accused of bribing government officials on a large scale all over the world, to get big defense contracts, and building up slush funds for political use, through these contracts.

On the same day Carlyle announced the planned takeover of GM's Allison Transmissions division for $5.6 billion, Carlyle had to cut back a scheduled IPO of a bond investment fund, because of increasing liquidity problems on the speculative junk-bond markets on which Carlyle plays. Many financial analysts are now fearfully forecasting the failure of some large private-equity "leveraged takeover," bringing on a general junk-market collapse--and Carlyle's GM takeover could well be the one to fall apart.

Carlyle Group in 2005 sold BAE Systems a large chunk of its U.S.-based military contracting corporate group, until then known as United Defense Industries. It also sold Bofors to BAE that year. BAE is now trying to add to that, Armor Holdings, the firm which makes armor for U.S. Armed Forces' Humvees.

For the U.S. auto industry, the takeover, if it goes through, will mean seven more technologically productive and well-tooled plants, and 4,000 employees--all in the Indianapolis, Indiana area--going under the control of speculative private-equity funds and hedge funds, along with Chrysler Corp., GMAC, Delphi Corp., and scores of smaller firms. Allison Transmission also has 1,500 distributors and dealers in 80 countries.

Carlyle has a junior partner in the planned takeover, the Canada-based private-equity group Onex Corp.