And you thought sub prine was b ad - the ruining of America

[baja]

http://www.msnbc.msn.com/id/33174514...ew_york_times/


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.

Wall Street investment banks also cashed in. They collected millions for helping to arrange the takeovers and for selling the bonds that made those deals possible. All told, the various private equity owners have made around $750 million in profits from Simmons over the years.

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.”

In many ways, what private equity firms did at Simmons, and scores of other companies like it, mimicked the subprime mortgage boom. Fueled by easy money, not only from banks but also endowments and pension funds, buyout kings like THL upended the old order on Wall Street. It was, they said, the Golden Age of private equity — nothing less than a new era of capitalism.

These private investors were able to buy companies like Simmons with borrowed money and put down relatively little of their own cash. Then, not long after, they often borrowed even more money, using the company’s assets as collateral — just like home buyers who took out home equity loans on top of their first mortgages. For the financiers, the rewards were enormous.

Twice after buying Simmons, THL borrowed more. It used $375 million of that money to pay itself a dividend, thus recouping all of the cash it put down, and then some.

A result: THL was guaranteed a profit regardless of how Simmons performed. It did not matter that the company was left owing far more than it was worth, just as many people profited from the mortgage business while many homeowners found themselves underwater.

link to story;

http://www.msnbc.msn.com/id/33174514...ew_york_times/

[Rohirrim]

http://www.orangemane.com/BB/showpos...77&postcount=1

[mhgaffney]

This is what our nation has become -- a playground for corporate raiders and legal skimming rackets.

No wonder there is little, if any, actual investment taking place these days.

The biggest joke of all is the kooky idea it just sort of happened. By chance. Just one of those things.

Right.

[ak1971]

Originally Posted by mhgaffney

This is what our nation has become -- a playground for corporate raiders and legal skimming rackets.

No wonder there is little, if any, actual investment taking place these days.

The biggest joke of all is the kooky idea it just sort of happened. By chance. Just one of those things.

Right.

Its the jews

[baja]

http://www.lifeaftertheoilcrash.net/...October05.html

[L.A. BRONCOS FAN]

Originally Posted by mhgaffney

This is what our nation has become -- a playground for corporate raiders and legal skimming rackets.

And anyone who tries to call them on their malfeasance is derided as a "socialist" by the knuckle dragging right.

[L.A. BRONCOS FAN]

Census Bureau reports 39.8 million Americans live in poverty

Excerpt:

The U.S. Census Bureau released a report on Tuesday, part of the American Community Survey (ACS), that found that the overall poverty rate in the US rose to 13.2 percent in 2008. That statistic represents approximately 39.8 million Americans. See: http://www.census.gov/prod/2009pubs/acsbr08-1.pdf.

This report is the most recent one that measures the impact of the recession on working class families and the poor. Based on the changes between 2007 and 2008, the first full year of the recession, its findings do not reflect increases in poverty and joblessness this year as the consequences of the economic crisis have become even more severe.

When Ben Bernanke said that the recession is ” very likely over,” he must have been referring to his buddies on Wall street and not the average American.

Read more here:
http://www.examiner.com/x-23316-Madison-Independent-Examiner~y2009m9d30-American-Community-Survey-report-finds-398-million-Americans-live-in-poverty