Another DealBook supplement in The New York Times appears today to the sound of tooting horns, with a basso profundo rumble in the background: "Private Equity Thrives Again, but Dark Shadows Loom." This sounds like the trailer for a horror movie. The story itself is perfectly fine, if a little eager to establish absolutes, which means, like its headline, it can't really decide what's going on there. It's not alone.

A few thoughts. First, the very fact that the Times can call private equity, well, private equity, and not engage in either some complicated verbal gymnastics or provide potted explanation about how it works suggests that the business, after 40 years, is finally mainstreaming. Second, the very notion that private equity is "thriving" runs against the conventional wisdom of the last few years, often found in the Times, that the business was dead, done, doomed -- not only because there were few deals, and there probably would never be buyout deals again, but because of that proverbial looming wall of debt, which this piece manages to mostly ignore and which has, in fact, grown less threatening. Indeed, the notion of "thriving" is a relative one. Yes, the business is thriving compared to 2008 and 2009. No, it's not thriving compared to 2005-2007. So maybe it's thriving compared to 2004, which is better than a few months ago, when the comparison might have been 2002 or 2003.

The dark shadows thrown by the Times piece mostly emanate from -- ta-dah! -- the pension funds, which in Times-land mostly means giant CalPERS and CalSTRS. The pension funds are shaking their heads. Returns aren't so hot. Not thrilled about secondary deals. Not so hot on PE firms flipping properties to each other. Don't like dividend recaps. Not sure what they're going to do when it comes times to re-up. The only criticisms they didn't roll out, which is interesting, are high fees and mark-to-market accounting.

But the public pensions themselves may be the most interesting story here. They've gotten murdered. Returns are down, there are giant holes to fill, states are underwater, and much of the beleaguered citizenry is angry over high taxes and spending on public employees. For all of their concerns, where will they go? They might be concerned that buyout shops feel the need to invest their money before they have to give it back, but every day of mediocre performance, particularly in the equity markets, puts them further behind. Both GP and LP suffer from the same problem: They have to do something about performance, and catch-up gets harder with time. Which suggests that while CalPERS and CalSTRS are shaking their heads publicly about recaps and secondaries, they're not desperately unhappy in private when they get a decent return.

And they have a chronic problem that just won't go away: They're so large that they can't really abandon any important sector. This exposes them to the charge of hypocrisy. They can moan and groan about governance, but with so many of their equity assets indexed, they can never just sell. In terms of private equity, they may alter their allocation a bit (and some shops may fall off the table) but they're pretty much locked into some exposure to buyouts.

And, again, if they could, where would they move their vast bulk? Emerging markets? More bonds? More hedge funds? Mortgages? Gold? Each of these poses all kinds of problems, political, economic and financial. The fact is, the public pensions, for all their performance woes, are so large that they simply have to ride along with the economy, muttering all the way. There's almost no chance that they're going to get smaller and nimbler and actually have viable options any time soon. - Robert Teitelman