When the British Empire spanned a quarter of the globe it was treated with deep suspicion and mistrust by its neighbours. The sun never set on Britain's overseas possessions back then because, it was said at the time, God didn't trust the British in the dark.
Similarly the United States, the world's only remaining super power, is treated with at best disdain and at worst hatred by much of the rest of the world.
The simple reason is because human nature dictates that too much power is regarded with profound suspicion. And so it is in the financial markets.
One only has to say the word Macquarie in a pub full of underpaid journalists and there is a notable frosting of the air and a distinctive snarling of upper lips.
"The millionaire's factory," they will mutter darkly to themselves as they dig about in their worn corduroy jackets for enough change to buy the next schooner.
The power of private equity is another part of the financial markets that has come under intense scrutiny in the past 12 months.
The much publicised failure of the Qantas deal was met with unadulterated joy from union officials across the land and cost Qantas chairman Margaret Jackson her job.
"Too much debt," they cried at the time. "And what about Australian jobs?"
The deal's failure sparked a series of mainstream television documentaries that talked of huge debt packages and soaring price multiples.
It's all about scale. Gone are the days when private equity was actually private. Five years ago it was about picking up struggling companies priced at low multiples and turning them around. These days no company, whatever its size, is outside the private equity radar. Hence the large debt component of most deals and deep media scrutiny.
"The large end of the private equity market has found itself in the public arena," according to Mario Giannini, the chief executive of one of the United States' biggest fund of private equity funds, Hamilton Lane.
"People are trying to figure out how to react to it and what to do."
Giannini told Investor Weekly that it is the accommodating nature of global debt markets that has driven today's booming private equity scene.
"The biggest difference these days is that whereas 10 years ago lenders would scrutinise a deal for two weeks, these days they scrutinise it for two hours. All they care about is tranching the debt out and selling it on," he said.
The huge debt packages required for a private equity deal to succeed are no longer subject to covenants. This is undoubtedly a big risk for lenders, but for private equity deal makers it means the risk of a deal falling through is greatly reduced.
"No-one can take the deal away; no-one can default a company," Giannini said.
It is this fact that spreads fear and panic through the media whenever a large deal is about to go through. But for Giannini the detractors miss the point.
"Private equity allows companies to better utilise corporate debt. More leverage means better return on equity. The public market does not reward companies for taking on more debt as much as the private market will," he said.
He stressed, however, that the private equity market was a far harder place to make money now than it was five years ago.
"The average multiple on deals above US$1 billion between June 2006 and December 2006 was 10 times earnings. Early findings for this year show that this average price multiple increased to 12.5 times earnings between January and May of 2007," he said.
That means private equity managers are on average paying 25 per cent more for assets now than they were six months ago - a worrying trend that could have a severe impact on returns.
"If multiples go up more than interest rates go down, then private equity managers have to grow a company rapidly or their IRR [internal rate of return] will go way down," Giannini said.
