The New York Times has surprised me lately by acting like a newspaper. This is so unusual that I didn’t know, at first, what was going on. The investigation of drinking water (one of the great triumphs of the state in the 19th century, now being retracted in the American Imperium as it goes into its tailspin) was the first clue. The story was not really a surprise – in the zona, one expects that the majority of the people will be screwed to the max, through their bones, in their calcium and phosphate ions, by the morally bankrupt demons that reign on Wall Street and in D.C. This is the old news that hasn’t even figured in the newspapers for years. In my lifetime, I’m seeing something vast. The America of my childhood was still, visibly, the slaveowning, Indian killing country of our forefathers. But that America was changed, and even, briefly, became a democracy. Then, of course, it became first an oligarchy, and now it is a joke on a Soviet scale. Beyond the fact that the inhabitants of one of the capitals of one of the states, Charleston West Virginia, couldn’t safely trust themselves to the water in the shower without being burned by the acids and mineral salts in it (from coal companies that no longer have to obey the rules, as they now make them in that thuggish merger of the corporocracy and DC characteristic of the Bush-Obama era), this story was also told as an old fashioned newspaper story. That is, it was not half p.r., half spin, and wholly a lukewarm mélange of viewpoints that crept into a hole of conformity. Rather, it strove to be, my God, truthful. This was a surprise.
This is the NYT. The all purpose driver of the getaway vehicle for the great bank robbery heist of TARP, the invasion of Iraq, the all too numerous schemes of peculation and fraud that have roamed the country in the name of free enterprise, ripping off the mass of the population to gorge the upper 1 percent with blood for the last decade. I had long ago ceased to regard the Times as a newspaper.
And then came the hamburger article, about another catastrophic regression from the civilized norms of the late nineteenth century – which is when the state got into the business of inspecting meat. This was excellent muckraking. It showed the power of the combination of business and government, the gross neglect of the safety of the consumer, and the way in which information, with the full collusion of the state, has been closed off, so that it is difficult to find out anything about the testing of hamburger meat for e. coli. As a bonus, it include a quote from an official in the Obama administration that was wonderful, a description of Obama-ism in action:
“Dr. Kenneth Petersen, an assistant administrator with the department’s Food Safety and Inspection Service, said that the department could mandate testing, but that it needed to consider the impact on companies as well as consumers. “I have to look at the entire industry, not just what is best for public health,” Dr. Petersen said.”
Today the business section –the section for which freshwater economist Casey Mulligan and various George Mason libertarians regularly float their hilarious version of country club mythology, as for instance Mulligan’s idea that the unemployment figures show the sloth of American workers, who are quitting big time to enjoy more leisure, those lucky duckies – had a real story in it today. It was a story about the predators known as Private Equity firms. It describes how they descended upon and destroyed Simmons Mattress company. Yves Smith, the great analyst who runs the Naked Capitalism site, had one criticism: they didn’t call the fucks by their name. The NYT politely avoided the word looting:
“PE firms in risk-blind environment preceding the credit crunch got into the habit of producing good to stellar returns by modifying their usual formula. The traditional model was to buy companies with a ton of debt, then improving their bottom line by a combination of partial asset stripping (selling off ancillary operations), cost cutting, and once a blue moon, actually doing something to improve operational performance. Then the company would be sold, either privately, usually to a corporation, or taken public.
But the PE firms found a much easier approach: just pile on more and more debt, and pay themselves a special dividend. No need to do any work, just keep borrowing until you had recouped your investment and then some. And that way you did not need to care how the company fared. If you destroyed the business, it was of no mind to you and your investors. Other saps were left holding the carcass.
George Akerlof and Paul Romer called that activity looting in a famous 1993 paper and depicted it as criminal:
Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society’s expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.”
Although I am not going to celebrate this newfound interest in what is actually happening in America just yet. The New Yorker, who I love like a family member, saddened me by publishing a Lizza profile of Larry Summers that majorly kissed Summers ass. The elite that rule us are crooked beyond belief, and Summers is a typical product of that venal group. Lizza even omits in his profile Summers amazing luck, after he was canned at Harvard, when instead of having to go into the unemployment line, he received an offer to consult for D.E. Shaw, a wall street firm that was so grateful for his one week of work that they gave him 5 million dollars. How sweet! A fact very kindly remembered by Felix Salmon, although Felix is convinced by that article that Summers did the right thing with the banks – a call I think he will regret.
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