The Real Crooks: Profits for Buyout Firms as Company Debt Soared

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Yes the quote is long. Yes the article is four pages. But if you want to know how badly Wall Street and the rich are screwing you, you're going to have to spend a little effort.

These guys gladhand and backstab their way to the top, create nothing but busywork and live like princes. Gone are the days of paternalistic CEOs with business acumen and a sense of morality - they have been replaced by the new royalty.

Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company — the seventh time it has been sold in a little more than two decades — all after being owned for short periods by a parade of different investment groups, known as private equity firms, which try to buy undervalued companies, mostly with borrowed money.

For many of the company’s investors, the sale will be a disaster. Its bondholders alone stand to lose more than $575 million. The company’s downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons, most of that time at a factory outside Atlanta. He is one of 1,000 employees — more than one-quarter of the work force — laid off last year.

But Thomas H. Lee Partners of Boston has not only escaped unscathed, it has made a profit. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company’s fortunes have declined. THL collected hundreds of millions of dollars from the company in the form of special dividends. It also paid itself millions more in fees, first for buying the company, then for helping run it. Last year, the firm even gave itself a small raise.

How so many people could make so much money on a company that has been driven into bankruptcy is a tale of these financial times and an example of a growing phenomenon in corporate America. Every step along the way, the buyers put Simmons deeper into debt. The financiers borrowed more and more money to pay ever higher prices for the company, enabling each previous owner to cash out profitably. But the load weighed down an otherwise healthy company. Today, Simmons owes $1.3 billion, compared with just $164 million in 1991, when it began to become a Wall Street version of “Flip This House.”
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http://www.nytimes.com/2009/10/05/business/economy/05simmons.html?pagewanted=1&_r=1
 
Wow, this is amazing. These evil, greedy corporate assholes just buy and sell, buy and sell, and the hard-working average Joes lose their jobs while these motherfuckers take in millions of dollars! You know what, the capitalist system just isn't working out anymore. I mean, I'm struggling just to find work so I can take care of myself, and these money-hungry sons of bitches are the ones who put the company in debt, but they get tons of money and they leave the common man to carry the burden? That is one of the most fucked up things that I have ever heard.
 
As a friend of mine once said, "This country is pretty fucked up, but it's the best fucked up country out there". I gotta agree with him. Stuff like this is beyond terrible, but I wouldn't trade capitalism for anything. These guys will get payback one day. Just remember, it's the working man that keeps this country alive, and once we all get fed up enough with this, we're going to go on strike. You can have as much money as you want, but if you don't have the working man to do the work, you don't have shit. One day, these corporate bastards are going to have to kiss OUR asses and beg for a bailout. And as the old saying goes, "paybacks are sweet".

Just remember, this country was built around the working man, and we can take away life just as easily as we created it.
 
How are they gonna get it in the end? CEO and executives have been getting bonuses in the millions while their companies are bled dry. The companies might go bankrupt but the guys at the top will always have millions to fall back on while they wait for another offer to bankrut a major American corporation.

Access, you profess your love for capitalism and the working man in the same post but don't see how that contradicts? Big business is built to use the working man until he breaks down and then replaces with him with a machine, younger worker, or a worker in another country. Then, it does everything it can to lower the retirement benefit that was contracted. You can't love big business and the working man at the same time. There are no free-market communists.

Oh, and camoor, there has never been such a thing as a paternalistic CEO. The New Deal was created because companies literally threw people out the door when they couldn't do their job anymore. People were scrounging to survive so Social Security had to be created to feed and clothe the starving elderly.

Vanderbilt, Rockerfeller, Carnegie, and all those fat cats are all remembered for their philanthropy but everyone seems to forget that they didn't start giving money until they were old and on the way out. Their productive years were spent pinching pennies in the factories, buying out smaller companies, and building huge glittering palaces in places like Newport, Rhode Island. I'd love to see what an average Joe said about Vanderbilt while he was still in his prime.
 
It's not contradictory. I like capitalism because it does give people chances to better themselves. Unfortunately, there are some who take advantage of the system. But as I said, one day, things are going to equal out, and we won't have any more of these CEOs making billions and bleeding the system dry. There will come a point when a CEO will make not much more than the highest paid laborer. It's just going to be a while before we get there. But then again, this is all my opinion.
 
[quote name='Access_Denied']It's not contradictory. I like capitalism because it does give people chances to better themselves. Unfortunately, there are some who take advantage of the system. But as I said, one day, things are going to equal out, and we won't have any more of these CEOs making billions and bleeding the system dry. There will come a point when a CEO will make not much more than the highest paid laborer. It's just going to be a while before we get there. But then again, this is all my opinion.[/QUOTE]

:rofl:
 
[quote name='depascal22']Oh, and camoor, there has never been such a thing as a paternalistic CEO. The New Deal was created because companies literally threw people out the door when they couldn't do their job anymore. People were scrounging to survive so Social Security had to be created to feed and clothe the starving elderly.

Vanderbilt, Rockerfeller, Carnegie, and all those fat cats are all remembered for their philanthropy but everyone seems to forget that they didn't start giving money until they were old and on the way out. Their productive years were spent pinching pennies in the factories, buying out smaller companies, and building huge glittering palaces in places like Newport, Rhode Island. I'd love to see what an average Joe said about Vanderbilt while he was still in his prime.[/QUOTE]

To a certain degree you're correct. Robber barons did some pretty awful things to amass their wealth, that cannot be denied.

However going back in history, you're cherry picking some of the worst. Many other CEOs and corporations treated their employees like family - family days, Christmas parties, employee recognition, these all used to be common. Henry Ford used innovation to scale his employee's work weeks back from 48 to 40 hours, setup a minimum wage, and wanted his employees to be able to afford the cars they produced. Can you think of any major CEO acting this way in the modern world? Today they all want the big next-quarter win and they don't care who they have to stomp on to get it. Noone's playing the long game, and it shows.

Let's look at your examples - you're correct that Rockerfeller and Carnegie are known for being world-class philanthropists. However even they are better then the modern executive who takes and takes, and then only uses that money to acquire more and more personal wealth. The only modern executive I can think of as being similarly generous is Bill Gates. Try asking the Waltons for a charitable donation (ha-ha)

I'm not saying things in the past couldn't have been better. But IMO we've seldom seen darker days for wealth disparity. No matter what your political philosophy is, I don't see how you can argue with that fact.
 
[quote name='mykevermin']:rofl:[/QUOTE]

It's not funny, it's true. Wait for our dollar to be worthless due to all the money printing and everybody will be broke.
 
[quote name='mykevermin']:rofl:[/QUOTE]

Say what you will, but what happens when the government prints off trillions of dollars, and cash has no value anymore? Who's going to have all the wealth then? Will it be the CEO of the largest company? Nope. It's going to be the guy with hundreds of acres of corn. Or the guy who is able to fix your home heating system. Or the guy who makes durable clothes. Things won't be this way forever. It might not happen in our lifetimes, but it will happen. You can only fuck people in the ass for so long.
 
[quote name='UncleBob']So, at what point do we stop supporting politicians who give these guys tax money?[/QUOTE]

Sadly, the vast majority still voted for Obama or McCain.
 
[quote name='elprincipe']Sadly, the vast majority still voted for Obama or McCain.[/QUOTE]

Not to mention that the vast majority still thinks any of these guys could be innocent.
 
[quote name='camoor']However going back in history, you're cherry picking some of the worst. Many other CEOs and corporations treated their employees like family - family days, Christmas parties, employee recognition, these all used to be common. Henry Ford used innovation to scale his employee's work weeks back from 48 to 40 hours, setup a minimum wage, and wanted his employees to be able to afford the cars they produced. Can you think of any major CEO acting this way in the modern world? Today they all want the big next-quarter win and they don't care who they have to stomp on to get it. Noone's playing the long game, and it shows.[/QUOTE]

First of all, the companies that treated employees like family don't exist any more.

Second, you're confusing small family run operations that weren't run so much by a CEO but by an owner operator and their family. These companies were great places if you wanted to feel like a valued part of the business but also were places to wonder if you were going to actually get paid on time.

Can you find one example of a large corporation that treated employees like family?

Let's look at your Ford example. Do you think he really wanted to create a middle class? That's the popular opinion among union supporters but there is anecdotal evidence (I'm looking for the link) that he did it to retain workers.

Simply, it was cheaper to pay workers $5 an hour for 8 hours (instead of the $2.50 an hour for 9 hours) because they stuck around. Never mind that they were still treated like crap and took it because there was zero chance to get that kind of money elsewhere. It made Ford the desired job for anyone in the auto industry but not because of the perks. It was the money. It allowed Ford to cherry pick the best talent and create the cars that everyone in America bought and loved.

There's little evidence that any worker fifty+ years ago was treated like family. Workers were fired as soon as they were unable to work. Not taken care of like family. Fired.

And Christmas parties as an example of CEOs taking care of workers? Anyone that's worked for a company knows that a handful of workers plan and pay for much of the party. They usually pay for the party through fund raisers and other ways but even then you'll hear stories of one or two people that end up stuck with the bill. Think it's the CEO most of the time? You're dreadfully mistaken. The CEO or boss provides the cake and takes all the credit.
 
[quote name='depascal22']First of all, the companies that treated employees like family don't exist any more.

Second, you're confusing small family run operations that weren't run so much by a CEO but by an owner operator and their family. These companies were great places if you wanted to feel like a valued part of the business but also were places to wonder if you were going to actually get paid on time.

Can you find one example of a large corporation that treated employees like family?

Let's look at your Ford example. Do you think he really wanted to create a middle class? That's the popular opinion among union supporters but there is anecdotal evidence (I'm looking for the link) that he did it to retain workers.

Simply, it was cheaper to pay workers $5 an hour for 8 hours (instead of the $2.50 an hour for 9 hours) because they stuck around. Never mind that they were still treated like crap and took it because there was zero chance to get that kind of money elsewhere. It made Ford the desired job for anyone in the auto industry but not because of the perks. It was the money. It allowed Ford to cherry pick the best talent and create the cars that everyone in America bought and loved.

There's little evidence that any worker fifty+ years ago was treated like family. Workers were fired as soon as they were unable to work. Not taken care of like family. Fired.

And Christmas parties as an example of CEOs taking care of workers? Anyone that's worked for a company knows that a handful of workers plan and pay for much of the party. They usually pay for the party through fund raisers and other ways but even then you'll hear stories of one or two people that end up stuck with the bill. Think it's the CEO most of the time? You're dreadfully mistaken. The CEO or boss provides the cake and takes all the credit.[/QUOTE]

Well, I don't know how old you are but when I was a kid I remember going to family days. Some companies would buy baseball game, amusement park tickets or more for family members. It was more then annual. On top of that they paid more then phony baloney lip-service to the family concerns of employees. I'm certainly not talking about the sad affairs you refer to - what sounds like the potluck party boosted by some petty cash which I think any working man is familiar with these days.

I never said it doesn't make sense to pay workers a fair wage or implement policies that lead to better working conditions and more retention - on the contrary I think treating workers right boosts the bottom line. The only way companies get around that today is by acting illegally and taking advantage of illegal immigrants desparate for a job or cutting corners as happened with the peanut scandal. Our increasingly non-capitalist and disfunctional economic system continues to send more rewards towards short-term thinkers, corporate raiders and wall street financial wizards and away from strategic thinkers and long-term conventional businessmen.

I'd be interested in seeing that link about Ford firing 50+ year-old workers on the spot ala Logan's Run. I've never seen anything about that. As for the other reforms that we agree improved employee quality of life - Ford could have been self-interested when he treated workers right, but what's so bad about that? It's similar to the cases when thinking green actually saves green. The only insanity is when a win-win situation is overcome by unmitigated executive greed and insane financial markets that reward financial hucksters at the expense of punishing the people who actually do the work.
 
[quote name='Access_Denied']Say what you will, but what happens when the government prints off trillions of dollars, and cash has no value anymore? Who's going to have all the wealth then? Will it be the CEO of the largest company?[/QUOTE]
The CEO probably already isn't holding dollars anymore. The thought that inflation will eat these guys up is laughable. The voraciousness you describe as these people aren't simply satiated by having the biggest pot of gold. They're going to defend it with your government if need be.

Cause that's what capitalism does.
 
[quote name='camoor']Well, I don't know how old you are but when I was a kid I remember going to family days. Some companies would buy baseball game, amusement park tickets or more for family members. It was more then annual. On top of that they paid more then phony baloney lip-service to the family concerns of employees. I'm certainly not talking about the sad affairs you refer to - what sounds like the potluck party boosted by some petty cash which I think any working man is familiar with these days.

I never said it doesn't make sense to pay workers a fair wage or implement policies that lead to better working conditions and more retention - on the contrary I think treating workers right boosts the bottom line. The only way companies get around that today is by acting illegally and taking advantage of illegal immigrants desparate for a job or cutting corners as happened with the peanut scandal. Our increasingly non-capitalist and disfunctional economic system continues to send more rewards towards short-term thinkers, corporate raiders and wall street financial wizards and away from strategic thinkers and long-term conventional businessmen.

I'd be interested in seeing that link about Ford firing 50+ year-old workers on the spot ala Logan's Run. I've never seen anything about that. As for the other reforms that we agree improved employee quality of life - Ford could have been self-interested when he treated workers right, but what's so bad about that? It's similar to the cases when thinking green actually saves green. The only insanity is when a win-win situation is overcome by unmitigated executive greed and insane financial markets that reward financial hucksters at the expense of punishing the people who actually do the work.[/QUOTE]

I'm in my 30s and know for a fact that the companies don't always buy the tickets. They take credit for it but there are usually several fundraisers and things on the side that pay for things like that. Very few employee perks like that come directly from the company.

I agree it's a win-win that employees get treated better. I'm just saying take off the rose colored glasses that make you see the past as something that was inherently good because some employees got to go to a picnic that had the company name on it. For some reason, you equate a couple picnics and Christmas parties with paternalistic CEOs that treat all their employees like a part of one big happy family. We're just going in circles right now so it's not really worth the continued argument.
 
[quote name='depascal22']I'm in my 30s and know for a fact that the companies don't always buy the tickets. They take credit for it but there are usually several fundraisers and things on the side that pay for things like that. Very few employee perks like that come directly from the company.

I agree it's a win-win that employees get treated better. I'm just saying take off the rose colored glasses that make you see the past as something that was inherently good because some employees got to go to a picnic that had the company name on it. For some reason, you equate a couple picnics and Christmas parties with paternalistic CEOs that treat all their employees like a part of one big happy family. We're just going in circles right now so it's not really worth the continued argument.[/QUOTE]

I'm not pinning this on Xmas parties.


I pointed to Henry Ford, and three examples of his paternalistic employee policies.
  • Shortened work week from 48 hours to 40 hours.
  • More then doubled the pay of his workers.
  • Profit sharing for employees provided they remained in good social standing. (this one is so literally paternalistic it even sounds like allowance)
That's objective fact. You said he fired workers once they hit 50. OK, never heard that one before, but I would be interested if you could back it up with a source.

Ford was roundly criticized by Wall Street when he made the moves cited above, but he made them anyway because it was the right thing to do, both business-wise and morally. Today it wouldn't happen. The only group CEOs cower before is Wall Street, for if the stock price falls then their compensation falls. Today I can think of very few CEOs who would be willing to buck the trend and get punished by a short-term stock price dip even if it made perfect business sense.

Depascal, I think we basically agree about the current state of things and we're debating a historical point here, but I think it's an important point. If CEOs used to be a better class of people, even if only marginally, it points to a systemic combination market/ethics problem that at least has the potential to be fixed.

If you have the time I highly suggest reading a book about the corruption of the 80s, the S&L crisis, junk bonds, etc. A good one that I liked was "Barbarians at the Gate". You might be surprised at the kind of scum that tends to rise to the top ever since the dawn of all the fancy modern financial instruments.
 
[quote name='speedracer']The CEO probably already isn't holding dollars anymore. The thought that inflation will eat these guys up is laughable. The voraciousness you describe as these people aren't simply satiated by having the biggest pot of gold. They're going to defend it with your government if need be.

Cause that's what capitalism does.[/QUOTE]

I don't know where you learned what capitalism is, but it's not what you describe. You may argue that people are doing it and it sucks (I agree), but it's definitely not capitalism for Democrats and Republicans in government to favor their rich friends.
 
[quote name='elprincipe']I don't know where you learned what capitalism is, but it's not what you describe. You may argue that people are doing it and it sucks (I agree), but it's definitely not capitalism for Democrats and Republicans in government to favor their rich friends.[/QUOTE]
Just like it wasn't actually communism in Russia, right?
 
[quote name='speedracer']Just like it wasn't actually communism in Russia, right?[/QUOTE]

Look, I understand your argument. In theory, no, the USSR didn't have a communist system. It had many of the trappings of one. However, we all know from history that communist systems, due to the nature of reality and the nature of human beings, have pretty much without fail turned into disasters a la the USSR. You mean to make the same assertion about the situation described and capitalism.

I disagree with that assertion. I think there can be a capitalist system without it being a government-corrupted crony-capitalist system full of rentseekers and quid pro quos. I think history will also show that I am correct, at least during the times when our leaders were brave and honest enough to keep corruption at bay. Our current leaders, being neither brave nor honest (and having loyalty more to their political friends than the nation as a whole), have utterly failed to keep said corruption out of our system, with disastrous results.
 
[quote name='elprincipe']Look, I understand your argument. In theory, no, the USSR didn't have a communist system. It had many of the trappings of one. However, we all know from history that communist systems, due to the nature of reality and the nature of human beings, have pretty much without fail turned into disasters a la the USSR. You mean to make the same assertion about the situation described and capitalism.[/quote]
You again. I hate it when we do this because I have to end up respectfully disagreeing.

I disagree with that assertion. I think there can be a capitalist system without it being a government-corrupted crony-capitalist system full of rentseekers and quid pro quos.
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There's that word again. Why did you use the word rentseeker? I'm just curious where you first heard it. I had never heard it used in this context before about a week or two ago and you're the third person in that span to use it that way. Ya'll have the same political leaning so I figured ya'll hit the same media.

To your point, I agree 100%. I also think there could be a communist system without it being a government-corrupted crony-communism system full of rentseekers and quid pro quos. Not that I'm arguing for that, I just don't think you're off the analogy hook yet. ;D

I think history will also show that I am correct, at least during the times when our leaders were brave and honest enough to keep corruption at bay. Our current leaders, being neither brave nor honest (and having loyalty more to their political friends than the nation as a whole), have utterly failed to keep said corruption out of our system, with disastrous results.
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I agree. And I would say more regulation, you would say enforce the regulation on the books. I would say taxes to make up for the endemic quid pro quo gains, you would say root it out and tax more fairly.

Someone else with a less reasonable position want to debate this?
 
[quote name='speedracer']You again. I hate it when we do this because I have to end up respectfully disagreeing.[/quote]

But it's the best kind of disagreement!

[quote name='speedracer']There's that word again. Why did you use the word rentseeker? I'm just curious where you first heard it. I had never heard it used in this context before about a week or two ago and you're the third person in that span to use it that way. Ya'll have the same political leaning so I figured ya'll hit the same media.[/quote]

Good question. I hit a lot of different media expressing opinions from various sides of debates (i.e. left-leaning publications and right-leaning ones). I wouldn't be surprised if I saw the term in the same place as someone else. More to the point, I've seen the term in quite a few different articles over the past year or so to describe companies attempting to outwit the competition by influencing government to give them an unfair advantage.

[quote name='speedracer']To your point, I agree 100%. I also think there could be a communist system without it being a government-corrupted crony-communism system full of rentseekers and quid pro quos. Not that I'm arguing for that, I just don't think you're off the analogy hook yet. ;D[/quote]

I don't think there can be a communist system like that in the foreseeable future due to the current nature of mankind. It just doesn't work, at least until we get into a Star Trek kind of future.

[quote name='speedracer']I agree. And I would say more regulation, you would say enforce the regulation on the books. I would say taxes to make up for the endemic quid pro quo gains, you would say root it out and tax more fairly.

Someone else with a less reasonable position want to debate this?[/QUOTE]

:lol: Bottom line is I would say take back our government from those who control it now. If anything was made clear by TARP, it's that our representatives are more concerned with corrupt scumbags on Wall Street being taken care of than the average American.
 
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