The Washington Post apparently doesn’t understand just how toxic Wall Street and its even more rapacious cousin, private equity—not popular in good times—really is now. The paper actually thought it might have been an error for Obama to attack Romney over his Bain Capital days:
It also looked, at first, like a mistake.
Democrats such as former president Bill Clinton, Newark Mayor Cory Booker, former representative Harold E. Ford Jr. (D-Tenn.), and Steven Rattner, who oversaw the president’s bailout of the auto industry, all condemned the ads as unfair to capitalism.
Still others referred to it as Obama’s attempt to “swift-boat” Romney, the tactic of using a perceived strength against a candidate. The term recalled the 2004 presidential race, when Sen. John F. Kerry’s sterling Vietnam War service record was turned into a liability.
Only on K Street (or 15th Street NW) and amongst people who depend on their campaign donations and speaking fees could attacking Romney on Bain have ever looked like a political mistake. Go read Josh Kosman’s book and particularly its chapter on Romney and Bain.
It’s also pretty revealing here that the Post completely flubs the definition of swift-boating.
It’s not “the tactic of using a perceived strength against a candidate.” It’s the tactic of egregiously lying about your opponent’s strength to turn it into a liability. Particularly vile in the Kerry case was that this strength was his decorated military service, and it got turned against him by supporters of a candidate whose avoidance of combat was a longstanding political weakness.
— Steve Forbes, deadbeat tenant?
The Wall Street Journal gets a nifty media scoop, reporting that Forbes has missed at least three rent payments on one of its offices. The lede is pretty great:
Forbes’s well-known motto is Capitalist Tool.
Maybe it should be The Rent is Too Damn High.
It turns out that an investor had a deal to buy the building for $115 million, but will probably back out because of Forbes’s nonpayment, the WSJ writes. It also notes that the landlord is “exploring legal options.”
Never fear, though, you recalcitrant, stick-in-the-mud journos: Forbes’s Chief Product Officer Lewis DVorkin says “content marketing just might be the full employment act for journalists.”
— Here’s one for the Hamster Wheel Hall of Fame. Fortune tweets out a link to this blog post headlined “Paula Broadwell’s Mac.”
It consists of a picture of (oddly dressed down) FBI agents carrying an iMac out of the house of General Petraeus’ biographer/paramour, four sentences of text, and a picture of the specs of a 2009 iMac.
Needless to say, the world is not eagerly anticipating the model number of Paula Broadwell’s computer.
This kind of thing may be SEO gold, but it makes loyal readers slightly less likely to remain loyal readers.
Product placement! In the future, every news story will have to mention some specifically-contracted brand-name thing in context (such as it will be) in order to earn its writer those crucial food pellets.
Keep tapping that bar, my brother.
#1 Posted by edward ericson jr., CJR on Tue 13 Nov 2012 at 08:50 PM
Speaking of Bain and PE, nobody seemed to be talking about private equity when it came to the liquidization of the twinkie. I did a spot on Ripplewood at the bottom of here:
http://www.cjr.org/the_kicker/let_detroit_do_what.php#comments
with their reader's digest acquisition, but the majority of hostess stories mentioned nothing about lex luthor stealing forty pies or the role of management slurping out the creamy bonus filling.
I am disappoint.
Luckily dday and Dean Baker did the grunt work:
http://news.firedoglake.com/2012/11/16/death-by-twinkie-what-the-hostess-liquidation-says-about-labor-and-the-economy/
#2 Posted by Thimbles, CJR on Sat 17 Nov 2012 at 11:44 AM
More work from a former grunt:
http://m.dailykos.com/story/2012/11/18/1162786/-Inside-the-Hostess-Bankery
"What was this last/best/final offer? You'd never know by watching the main stream media tell the story. So here you go...
1) 8% hourly pay cut in year 1 with additional cuts totaling 27% over 5 years. Currently, I make $16.12 an hour at TOP rate of pay in the bakery. I would drop to $11.26 in 5 years.
2) They get to keep our $3+ an hour forever.
3) Doubling of weekly insurance premium.
4) Lowering of overall quality of insurance plan.
5) TOTAL withdrawal from ALL pensions. If you don't have it now then you never will.
Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer.
It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.
That $3+ per hour they steal totaled $50 million last year that they never paid us. They sold $2.5 BILLION in product last year. If they can't make this profitable without stealing my money then good riddance."
Details subject to verification, which is your job, journos. Look into this.
#3 Posted by Thimbles, CJR on Sun 18 Nov 2012 at 03:15 PM
Looks as though the person to read on this story is David Kaplan.
http://management.fortune.cnn.com/2012/07/26/hostess-twinkies-bankrupt/
"To allow Hostess to emerge from bankruptcy in 2009, Silver Point, Monarch, and the other lenders agreed to provide a new secured loan of about $360 million. They also forgave half of the existing $450 million of debt and exchanged the other half -- $225 million -- for payment-in-kind loans, a kind of financing typically used in high-risk situations. The loans had relatively high interest rates of 8% and 5% (reflecting Hostess's above-average default risk after bankruptcy). Thus, at the end of the first bankruptcy, Hostess came away not only with concessions from both lenders and unions but with $490 million of fresh capital ($360 million plus Ripplewood's $130 million) -- and Ripplewood's presumed hands-on operational expertise...
[A]s the company tried to reinvent itself in 2009 and 2010, external currents were running against it. The Great Recession hurt many consumer brands generally, and the prices of the commodities that Hostess relied on -- corn, sugar, flour -- went up, which is the opposite of what's supposed to happen in a downturn. In addition, the bakery industry underwent more consolidation when Sara Lee sold out to Bimbo.
Those fortuities aggravated Hostess's two root problems -- a highly leveraged capital structure that had little margin of safety, and high labor costs... On exiting the first bankruptcy, Hostess's total debt load was nearly $670 million. That was well above what it went into bankruptcy with in the first place...
By late 2011, Hostess was getting, well, creamed. Its sales last year -- $2.5 billion -- were down about 11% from 2008 and down 28% from 2004...Overall, Hostess lost $341 million in fiscal 2011, 2½ times the loss of the prior year -- and by early 2012, primarily because of burgeoning interest obligations, its debt had grown to about $860 million.
As revenue declined, the company continued to burn cash -- in the second half of 2011, the rate was $2 million a week. The liquidity crunch forced Ripplewood in the early spring of 2011 to pump in $40 million more in return for more equity as well as debt that was subordinate to that held by Silver Point and Monarch. In August -- to save a company teetering on the edge of fiscal calamity and forced liquidation -- Silver Point, Monarch, and the group of other lenders put up an additional $30 million to see if a negotiated turnaround was possible.
They turned to the unions and demanded new concessions. But the unions, having three years earlier given up thousands of jobs and millions in benefits, flatly refused...
Ripplewood badly wanted to keep Hostess out of bankruptcy. It pleaded with the lenders to show flexibility, but they were not so inclined. They lenders held superior fiscal hands and had less downside if Hostess failed. In the event of a bankruptcy, given all the assets Hostess owned, the lenders would still walk away with millions.
Silver Point, Monarch, and the other lenders now ponied up another $75 million... The $75 million -- at an interest rate of at least 15% -- was on top of that $860 million ocean of debt (and $1.4 billion of liabilities, compared with less than $1 billion in assets)...This $75 million -- super-secure "debtor in possession" (DIP) financing -- invariably gets paid back because it is on the top of the pile of secured loans."
Worth a read, as well as this punny followup.
http://management.fortune.cnn.com/2012/11/16/the-end-of-hostess/
#4 Posted by Thimbles, CJR on Sun 18 Nov 2012 at 10:51 PM