As more and more of my mother’s house is being taken apart by my sister’s actions to sort, to sell, to ask about or to keep the things here in order to satisfy my Dad’s estate and mine that are wrapped up here together, the more the memories of these things awaken that remind me of why my had them, when she bought them,
and why she had me come over to her house to clean it, organize it for her, to re-order all these things around her and put my time into caring for them whether it was crystal, or antiques, or porcelain collectible dolls, or doll patterns, or books, collectibles or doll making supplies, porcelain doll making molds and cast pieces she had made for baby dolls, or her vast collection of cookbooks and recipes, many of them hand-written or clipped from magazines and newspapers – among other things. She loved buying things and knew the story of how she and Daddy had bought each one, where they went out to eat that time and a story about how she came to find each one even though there are very likely over 200,000 individual items in this house, most of them hers and Dad’s but also a vast number of mine because she took nine households of my things over the years and hoarded it as she called me to get it and then wouldn’t allow me to have it or remove it in the thousands of times across thirty something years, (we’ve lived here 42 years in total with me in and out of this house living here on a number of occasions as well) that I’ve really felt this was my home no matter where else I lived or stayed and coming here staying for weeks at a time over the years to help them fix something, clean something, organize something, do some plumbing, change flooring or whatever needed to be done.
Now, as my sister dismantles it, I feel disdain when she tells me hand-cut leaded crystal is to be sold for 50 cents to a dealer with a lot that is 250 pieces of antique, crystal, collectible and modern pieces of glass mixed together that Mom had collected over the years and had me come over to dust, wash, handle so carefully, occasionally pack up for her impeccably with great care on numerous times she wanted them out of her sight for awhile. Now, the $65 or $120 each value that many of them had and even though still in perfect or nearly perfect condition without a chip on them because of my stewardship of them over the years, they aren’t worth anything in the market according to my sister and when she clinks them together in packing the pieces in a bunch of paper into a plastic tub or as she photos them to sell, I come running at the sound and she thinks that is funny because to her they are not worth anything but a waste of her time and effort as is everything here even as she claims she is trying to get some value for them.
About two dozen Precious Moments dolls in miniature still in their unopened boxes and in the display box from my Mom’s art, antiques and collectibles store she had in the 80’s and 90’s were sitting near the glassware and writing this, I’m wondering where my sister has put those now and whether she will be toting all of them off to a thrift store or listing them for 50 cents each as a lot on Ebay despite their obvious value and still being collectibles today that would easily bring $10 or more apiece.
A large lawn and leaf bag full of Cabbage Patch Kids doll heads for making those dolls is in that room too. Are they worth something or is it something my sister will simply toss since it has no value to her? If an elegant working gramophone in its beautiful wood cabinet is only worth $600 based on her listing it on craigslist with two needles for it and albums and since she expects to not get even that from it and knock down the price, is anything here going to bring any of its real price or value to the estate of my Dad or to be given any time in the marketplace to get that value? My mind reels with the prices I’ve had to pay to get things even on craiglist or Ebay and she seems determined to bring as little as possible from the items believing that will move them faster or from any of it perhaps to prove herself right about none of it being worth anything in the marketplace today and how we need to get rid of it all as quickly as she can while doing it by herself and without our help to do it better and faster.
And, my estate along with all of my property and belongings are here too. As one of two executors of Dad’s estate, my sister says it is illegal for her to pay us (me and my daughter who my Dad asked to live here while this all goes on and until the house is sold and divided properly and equally among the twelve heirs and beneficiaries) – to help her and illegal for her to allow us to list any of it, find buyers for specific items or groups of things or to sell them for the estate and us get a 20% commission or small fee for doing that. I know that isn’t accurate, it can’t be right. We could be administrators for the estate on behalf of the executors – that’s what the law says and Daddy talked about with us, but no – and if an outside company is allowed to make a commission of 50% plus their costs, why couldn’t we be given a commission for selling the things and participate in getting the most money from the specialized things?
So, as my sister selects things to buy from the estate at whatever discounted price she is giving for it – which I’m hoping she is writing down and being above board about – and that she has placed to take home with her and put on her own Ebay and Etsy stores or in her antiques booth at a store where she lives, even though she is an executor of Dad’s estate, we’re not allowed to make sure the estate realizes as much of the market value of these collectibles, antiques and specialized items and collections of things as we could for the estate even though Daddy specifically asked us to do that while living here to keep it secured and to maintain everything until the house is sold. I wouldn’t even be here if he had not personally insisted upon that from me and he asked me that on the phone at least twice a phone call across several months of phone calls before I came and then demanded I say yes to him in person on three different occasions in the last month before he died after I came here – (I was here for his last month alive, and have been here since then because he had me move here and my other family members insisted on me doing that as the right thing to do.) He asked it of my daughter and asked that of me more than once in a way that was obviously very important to him and where saying, “no” wasn’t an acceptable answer from either of us. We both agreed to do that. We have been doing that. We are doing that. Dad thought that the estate would make it possible for us to work with getting the most value from everything here that Mom had bought and invested his money in and had me take care of and had hoarded over the years – collections of things with large numbers of items in them, some of which have real value to collectors and come of which obviously would not. And, now the two executors named among our family members, are not going to do that, nor allow us to effectively participate in making that happen.
And, every part of me is saying, there are over 150,000 items here in anyone’s estimation and the family members agree that is the case. There are likely more like 200K items with a basement and attic filled with antiques from Mom’s shop and other things she collected after that until her death in 2013. Even if the average of $1 is gained from the sale of each item – averaging across the whole total, that is $150,000 – $200,000 that should be available to the estate. And, hundreds if not, thousands of items should get far in excess of $1 since they are antiques like curio cabinets and chairs and collectibles and collections of desirable items collectors seek to have like hundreds of Matchbox and the other brand of little cars which as a group would probably be worth something to people who want to add them to their own collections.
There are also tens of thousands of photos from this particular time in America from the 40’s to the present that Dad took across life in the South and in Florida during the CUban Missile crisis days when we lived there and as the first rockets to the moon were being designed and tested at Cape Canaveral and then called Cape Kennedy – to photos and 8mm films of driving across America several times to go live in California from Georgia and then back again to live in Georgia and back to live in California along with our yearly trek to the Carolinas where our family is from during those years as well.
There are photos specific to the space race that Dad and us were so much a part of because of his work at Lockheed and photos and memorabilia from California in the late 60’s and 70’s when we lived there including a program from the first showing of Hello Dolly at Graumann’s Chinese Theater in Los Angeles where we got to see it because someone had not picked up their tickets at the window during the last few minutes before the show started and Daddy had just come up to ask if there were any as we were having a touristy moment in Hollywood when we lived in the San Fernando Valley. It would seem that would be worth something in the right memorabilia auction or by emailing it somewhere that has a museum of those kinds of things – my sister and my son that is acting as executors are not going to do that because it “takes too much time” in their estimation, but they won’t let me and my daughter do it either.
Not talking about the pictures from calendars of planes that are seen on this wall – There were times Daddy was on the flight line running tests because of his engineering job with Lockheed, loaned out to Boeing and Graumann and back in his days at Martin and McDonnell-Douglas aeronautics that he has photos and film of planes from sitting here.
There are also photos that Mom and Dad got from other family members that show life in the South in original photographs and their negatives of the South from the 30’s to the 50’s with peach farming long before the 50’s in the Piedmont areas of South Carolina and photos from North Carolina where both Mom’s and Dad’s family had lived before that.
This estate of Dad’s also has test reels of new planes flying over the desert sitting back in the room where I had collected up all the family photos and vast numbers of assorted documents from his work along with all these collectibles Mom sought in crystal and dolls, antiques and china, Pfaltzgraff pieces including lots of serving pieces that to replace even one piece of the set would cost well over $35 even if there was a sale at the replacement site online to a large plastic bin tub full of slotcar tracks that my sons had when they lived here and I found up in the attic to rare memorabilia from events including ones in California, a collection of souvenir postcards and old postcards from the 50’s and 60’s from California and Florida as well as across the country where we traveled by car, vast numbers of stamps from different times that were never catalogued but saved such that they weren’t damaged by Dad especially and memorabilia from the LA Museum of Art and other museums and attractions from the 50’s, 60’s and 70’s. Those all should be handled with an intention of getting value from them in the money they should be bringing to the estate but no, it won’t be in the way it is being done now. The photos won’t be digitized as Daddy asked. And as I said, if the estate even received an average of $1 each across all 200K items, that is $200,000 – but not if they’re being given away or drastically discounted.
About CricketDiane –
I’ve been creating nearly every day since I was a kid and that is over 50 years. I’ve created in numerous ways in a range that moves from art to problem-solving to inventing, creating music, sculpting and painting to writing and doing various computer / online based projects.
“It is better to make the effort to move forward and release the flow of ideas to work with them and do things creatively, create things and invent and write and make – I definitely know that by experience.” – cricketdiane, 2018
In the world today, there are probably over fifty-thousand problems or more still in need of solutions and certainly some better ideas. Online there is an explosion of wonderful things, innovations, inventions, discoveries and small business start-ups seeking to solve some of these problems.
And then what happens to them? That is a good question. And in one of these posts, I’m going to try and answer that. But, before I get on a tangent about only 1.9% of women owned businesses getting any venture capital and how start-ups, especially women owned start-ups are ending up with loan packages at 40% interest rates and having to pay off investors at the two or three year mark when the business should be getting established, then taking a hit instead – I’ll cover some of the things still needing solutions.
But first, I found this article in my twitter feed and went over to read it –
It describes why the US may have missed out on millions of inventors. Their research indicates that –
WHY IT MATTERS
Innovation has slowed in the U.S., stymying economic growth. To get back on track, the U.S. needs more low-income children, women, and minorities to become inventors — but that won’t be easy.
The research also shows that innovation in the U.S. could quadruple if women, minorities, and children from low-income families became inventors at the same rate as men from high-income families.
Whatever policies are eventually adopted, policymakers need to think in terms of long-term solutions. “You want is to increase the pipeline of people on the supply side who are great inventors,” Van Reenen said. “You want to take the talent that is already in America and get those kids imagining themselves being an inventor or potential inventor. It is not a quick fix, but in the long run it is going to be a more effective policy.”
It is worth going and reading that article, however, I just about hit the ceiling when I read it and even now with a four bullet point list of what I want to say about it – well, angrier about it than I can even express.
There’s a Different Response & Support When A Man Creates Something
When a man, young man, or boy in white upper class America comes up with an invention – what happens next is tremendously different than what happens when someone from any other of those groups, gender or income levels invent or innovate something.
There is more than whether someone can believe themselves to be an inventor. It takes being able to have some help and support, protection from theft of the invention and massive amounts of money and networking to get the invention patented, prototyped and then into investor backing processes. Women and minorities don’t have that.
One of these 50,000 plus problems still in need of good solutions and inventions is a way to take mining tailings out of the water system once they’ve been allowed to get into it. Obviously, that continues to be a problem in the United States and around the world.
What Happens When A Woman Creates Something or Innovates Something
Let’s say I have designed something for this purpose and am a woman without any real support from friends and family to back my idea to fruition. How often that is the case for every woman, every person without a strong financial foundation and most minorities, people that are poor and people who have disabilities specifically.
There are no family members going to network an attorney friend or blueprint maker to any of us as they would if a white male from an upper class family has the idea. There are no instances of getting some family members to financially back having the prototype made or getting the patent process done or pitching it to other people for us as happens for those guys and their idea.
So, when the researchers in this MIT/Sloan study support putting in place programs to help people who are women, who are poor and who are minorities believe we can invent and be inventors, it is very disingenuous.
Women Do Create, Invent Solutions, Innovate and Make Inventions To Solve Problems
We do create, invent solutions, innovate and make inventions that solve real world problems, but without the other components that are obviously available to white men who do it – from family, from friends, from investors, from bankers, from the community at large, from attorneys, from skills in their family’s networks of acquaintances – our inventions are lost to mankind and to our country.
These inventions and innovations either don’t get brought to fruition, are stolen by those who have means as we try to do something with them, or are ignored by companies until the patent we do manage to get doesn’t have the fees paid or runs out – then takes it for nothing.
Families of middle class and below, economically disadvantaged, working poor and outright financially destitute individuals simply are denied the access and equal opportunity for processes of protecting the invention or innovation or idea from inception to realization to be available to us.
Inventing and inventions, innovations and concepts for an innovation that could be brought to the marketplaces are not treated with value in these arenas either because everyone has seen that there is no chance of realizing any rewards from those efforts and bringing it to the marketplace.
Even once the patent is made, prototype created and market analysis is done for some product or invention, there is no money to go forward from that point for people in these groups either. Investors want to see 2 -3 times their money back in short periods of time and see that it can be done without any risk to them whatsoever.
New Things Don’t Have An Existing Track Record and Appear More Risky So They Often Fail To Get Needed Support
No matter what invention or innovation it may be, there is typically no existing track record of what it will do in the marketplace because it is new or a new approach or has not been done that way already or would have to supplant something else in the market that is currently being used for whatever problem it approaches. That makes it appear to be unworthy of the risk involved of backers putting the money with it that the process would take to bring it into the market successfully.
Some investors, angel investors, venture capital investors, banks and sources intended to serve minority run businesses won’t even approach these new ideas without a track record. And, some loans to do it if not denied, have interest rates of 40% which rob the business potential of the idea at every stage. Then, about the time the business with this new invention or innovation are getting established, investors pull their money out – after 2 – 3 years, if anyone from any of these groups even get that far with it. Most often, the access for funding is simply non-existent no matter how many are approached.
This Is What A Male Experiences But Females Don’t – When They’ve Invented Something Or Have A Great Idea For Something
To show the picture a little clearer – if a white male in a family has an idea for an invention, the first thing that happens in his experience with it is to receive respect for his value and the value of whatever he has come up with. Next, family members hook him up with friends of theirs and from their networks of acquaintances, that can help the idea be fleshed out into drawings and plans or they pay for it to be done outright.
Then, family members and business friends hook that guy up with an attorney to write out a non-disclosure agreement so the innovation, invention or idea can be shown to potentially interested companies.
Then, they call their friends and extended family members and pitch the need for backing this idea financially FOR HIM, and line up funds to get the thing going so the patent can be filed and a prototype created.
They might even get drawings or computer work done from a friend or family member or hire it to be done, to show off the idea, invention or innovation so it looks slick when they take it to bankers and friends who have access to invest in it.
An Ad Hoc Army Comes Together From Friends of Family To Help Men Realize Their Invention or Business Idea To Fruition And Success
Then, rather than the person – the white male from an upper class income in this case, having to pitch the idea, invention or innovation through his own efforts, there is already a team of family members, friends of the family, extended family and business acquaintances of the family supporting him, supporting his efforts, supporting his idea or invention, protecting the invention with appropriate legally binding elements, but also pitching it for him, pitching it to funding sources and rounding up money for it – for him.
That is not what happens to women, people who are poor or even middle-class, minorities, disabled people, elderly people, and children of every other group that is not financially well-off.
But, we do hear a lot of “who do you think you are?” and “why should I give any money to you?” As well as, we do get a lot of ideas, inventions, innovations and fully fleshed out prototypes of inventions and marketable products stolen from us that we’ve invented or created, hijacked from us, diverted from us participating in any of the rewards of them despite having created them.
This Failure Of Our Nation To Support Women’s Inventions And Business Concepts Is Costing Our Future And Present Economic Well-Being As a Nation
The stories of that are far and wide, common in so many iterations that the experience of those around me without great financial means match my own in this area.
It is apparently been and continues to be a common practice, to not allow rewards of our inventions, labors, ideas, innovations, new characters, new processes, new possibilities for things to come to us. It must be intentional without those in our society doing it having any understanding of the cost to all of us and our nation’s potential when they do it that way.
About CricketDiane –
I’ve been creating nearly every day since I was a kid and that is over 50 years. I’ve created in numerous ways in a range that moves from art to problem-solving to inventing, creating music, sculpting and painting to writing and doing various computer / online based projects.
“It is better to make the effort to move forward and release the flow of ideas to work with them and do things creatively, create things and invent and write and make – I definitely know that by experience.” – cricketdiane, 2018
The March for Science is going to be on April 14 this year. It is important this year more than ever to stand up for Science and for STEM in the United States as it is all under attack daily throughout our government in its current iteration.
At a time when America needs science and technology to make significant leaps forward to catch up with the rest of the world who has been supporting education, higher education, science, math, technology and engineering with massive efforts, our nation’s leaders have chosen to make war on science at every opportunity and in every agency, every policy, every possible way.
We need education to support STEM now more than ever and to support education for our children and adults to be competitive in a global playing field where we have fallen behind. Now, rather than supporting our nation to be in a leadership role in science, technology, innovation and education, it is being de-funded, demeaned, derided, discredited, dismantled and destroyed.
These actions will set our nation behind by years upon years against other nations’ efforts supporting STEM, higher education and science, in particular. Please join the March for Science – whether you are a scientist or not to show America’s business leaders and political decision-makers that we stand together supporting fact-based and evidence-based decision making, scientific reason and educated thinking.
How would it EVER make sense for me as a company to be required to pay the price I’m charging you for buying me? And, pay the interest on that debt you used to buy me as a company – AND pay you management fees for destroying the company I’ve built that you’re charging me the price of buying – from me – so you can own it?
Why wouldn’t the borrowing that was done to buy Toys R Us belong to the private equity firms who bought it?
What happened to Toys R Us?
Apparently, the company was loaded with debt that came from three private equity firms forcing the company to pay for its own purchase by them back in 2005. Bain Capital, KKR and Vornado Trust Realty bought Toys R Us with the promise they would pay off the $2.3 billion in debt that Toys R Us already had at the time. Then, rather than doing that, these private equity firms added the debt they acquired buying the company and added it to what was already owed by the Toys R Us company.
That meant a debt of $7.2 billion has been owed by the company since that time and each year having to pay to roll it over by servicing the debt and never having paid it off.
Toys R Us was paying $400 million a year to simply service the debt plus paying management fees and making payouts to the private equity firms.
So, despite the toy industry seeing increases across the world in sales and the Babies R Us stores of the chain being profitable AND the 15% share of the entire toy market being enjoyed by Toys R Us which is phenomenal across its 1600 stores in 38 countries – it was forced into complete bankruptcy (Chapter 7 Bankruptcy now).
When Toys R Us sold to Bain, KKR and Vornado, 80 percent of its asking price of the $6.6 billion price tag was paid by Toys R Us and not those acquiring the company – which would be illegal in any other context of finance, loans and buying something.
Then, by putting this debt load on the company, it assured that money coming into the company could not be used in a vast array of other ways to upgrade and maintain their stores, increase their online presence, hire more sales people, or even to keep the sales staff they had that were already familiar with their stores and products, among other things.
Effectively, after buying KB toys which had been the second biggest toy retailer in the US, the same private equity group robbed that company of its cash resources to operate as well, even before the Toys R Us brand was bled dry of cash by the same pattern of destructive acquisition.
After buying KB Toys in 2000, Bain and its co-investors had the retailer borrow $85 million to pay the firm and its co-investors a dividend — a move that left the chain, which had been generating steady earnings, strapped for cash as deepening price cuts at Walmart lured more shoppers away from malls.
In that case, Bain’s cash grab left it with a profit on its investment, despite the fact that 86-year-old KB Toys got liquidated in 2008.
It looks like Toys R Us, that was built from 1948 into a mammoth successful and very profitable toy stores, wasn’t bought for $6.6 billion. It was bought for $1.3 billion in equity by the three firms, Bain Capital, Vornado Realty Trust and KKR.
This article said that the fees and interest on the debt from that buyout was costing Toys R Us $470 million a year in service. It also says that the price for the company during the buyout was $7.3 billion. Of which, the private equity firms put up what? Obviously, not cash. I’m going to look that up.
Bain, KKR, Vornado Suffer Wipeout in Toys ‘R’ Us Bankruptcy
The three firms and their co-investors sank $1.3 billion of equity into the takeover of the Wayne, New Jersey-based toy company, financing the rest with debt, according to company filings. The debt included senior loans in which they held a stake.
Partly offsetting the loss is more than $470 million in fees and interest payments that Toys “R” Us awarded the firms over time.
And from this article, it describes briefly, the typical method involved in these types of buyouts which follow a pattern of destroying the assets of the company’s operations while stealing resources (legally) at every point along the way.
It would be as if I gave someone $3 to own something that cost $2,000 and had someone else responsible for paying the entire amount, and giving me back several thousand dollars for having put up $3 in the first place.
I’d almost bet the $3 they used in the form of $1.3 billion wasn’t even cash or real assets.
Toys R Us and why the retail downturn is all about debt
“Leverage just means you’re using lots of debt,” said Eileen Appelbaum, co-director of the Center for Economic and Policy Research.
If a private equity firm wants to buy a company, it’ll put up a small portion of the money. Then it’ll go to the bank and borrow the rest.
The key? “They put the debt on the company they buy,” Appelbaum said.
In other words, the firms take out these loans, buy a company and then make that company pay the loans back.
Despite having 15% of toys sales in the marketplace and a heavier shopping season last Christmas with shoppers spending $800 billion during the holiday season, according to FT (see below for article), Toys R Us was facing massive loan payment costs that put it into liquidation status.
Toys ‘R’ Us Has 15% of the Toy Market And It’s Still Going Under. Here’s Why.
Fifteen percent of U.S. toy revenue. With that kind of market share, Toys ‘R’ Us should be in a comfortable position, not on the ropes.
The pattern followed by Toys “R” Us is typical in private equity takeovers. Management is bought off: John Eyler, CEO of Toys “R” Us, was compensated $65.3 million upon the buyout’s completion. Employees have no say in the matter. Then come the layoffs, debt transfers and shortsighted asset sales. Funds are earmarked to pay down debts—Toys “R” Us was spending more annually on debt payments than it was on its website and stores—even as cash reserves are depleted.
US retail’s turbulent relationship with private equity
DECEMBER 29, 2017
FT research shows many of the largest leveraged buyouts in the sector over the past decade have either defaulted, gone bankrupt or are in distress
At least 50 US retailers — including Toys R Us, children’s retailer Gymboree, shoe store Payless and jean maker True Religion — have filed for bankruptcy this year, the most in six years, with analysts describing it as a “day of reckoning”, for companies that rolled over their debt refinancing for years.
Observers warn that the distress is likely to accelerate in 2018 with nearly $6bn in high-yield retail debt set to mature.
The swift unraveling of the toy seller, at $6.9bn the third-largest retail bankruptcy in history, jolted vendors, who are critical to a retailer’s health.
There was some respite for bricks-and-mortar retailers this week with US shoppers spending more than $800bn in the holiday season, a 3.8 per cent rise from last year,
Looking at the article below, it occurred to me that possibly, the private equity firms own some of the debt made to the companies required to pay for their own buyouts by someone else.
Then the fees for those loans are also being paid to the private equity or investment firms holding them, on top of the management fees and other dividend payments, plus other payouts they’re are finagling from the company.
And, all of it providing a stream of resources to the investment funds that should legally belong to the company for its operation, sustenance, growth and as a prudent cash reserve against changes in the market.
The retail apocalypse is being fueled by private equity firms adding to debt loads
Nearly every retail chain caught up in the brick & mortar meltdown is an LBO queen – acquired in a leveraged buyout by a private equity firm either during the LBO boom before the Financial Crisis or in the years of ultra-cheap money following it. During a leveraged buyout, the PE firm uses little of its own capital. Much of the money needed to buy the retailer comes from debt the retailer itself has to issue to fund the buyout, which leaves the retailer highly leveraged.
The PE firm then makes the retailer issue even more junk bonds or leveraged loans to fund a special dividend back to the PE firm. Come hell or high water, the PE firm has extracted its money.
Then the PE firm charges the retailer hefty management fees on an ongoing basis.
A lot of times, these PE firms acquire part of the bonds before bankruptcy of their portfolio company for cents on the dollar. For example, Bain Capital bought significant amounts of Gymboree bonds. This gives PE firms more control during the bankruptcy proceedings, and they win again.
Why do institutional investors fund asset-stripping associated with LBOs and special dividends? Some of the answers are in Wall Street’s culture where fee extraction is everything, and one firm helps another. And too, they’re chasing yield in a world where central banks have repressed yield. Which turns out to be a costly chase.
Sports Authority is Another Loss to Our Country Caused By Leveraged Buyout Nightmare
A number of retailers have suffered this buyout process whereby the company being acquired is forced to pay for itself to be bought out by loading the profit making retailer (or other types of companies) with massive debt and extra costs to pay off cash to those who “bought” it.
But, since when do you or I get to buy something for nothing but a promise of 10% on the cost of it and then enslave the operation to pay off the rest for that purchase while streaming most of its available cash to us in fees and dividends?
From this article describing the process that took apart Sports Authority –
Leveraged buyouts saddle retailers with debts they can’t repay
April 29, 2016
But Englewood-based Sports Authority was loaded with at least $643 million in debt, a hangover from the $1.4 billion leveraged buyout in 2006 by investors led by Leonard Green & Partners.
Sports Authority’s bankruptcy plan initially included closing 140 of its 463 stores. But lawyers for the chain said in court last week that the company now is pursuing liquidation, leaving workers jobless and shopping centers across America anchorless.
In the fast-evolving world of retail, where the one constant is the need for investment, retailers laboring under heavy debt are at a disadvantage.
“Doing it right is very expensive,” said Raya Sokolyanska, an analyst with Moody’s Investor Service in New York. “Limited financial flexibility has been a reason why a lot of these retailers haven’t been able to fight back and position themselves correctly for growth.”
Private equity firms have been connected to a rash of retail bankruptcies in recent years, including Gymboree, Payless ShoeSource, The Limited Stores, True Religion Apparel, and most recently, Toys “R” Us.
(. . . )
But Toys “R” Us wasn’t pushed into court because of terrible sales — it recorded nearly $1 billion in online sales in 2016, according to a spokesperson, and had earnings before interest, taxes, depreciation, and amortization of $792 million. Rather, the company was struggling to pay down its staggering debt load — for which it could thank its 2005 leveraged buyout. Bain Capital Private Equity and KKR & Co. teamed up with real estate investment trust Vornado Realty Trust to acquire the company for approximately $6.6 billion, including $5.3 billion of debt secured by the company’s assets.
Why Private Equity Firms Like Bain Really Are the Worst of Capitalism
Here’s what private equity is really about: A firm like Bain obtains cheap credit and uses it to acquire a company in a “leveraged buyout.” “Leverage” refers to the fact that the company being purchased is forced to pay for about 70 percent of its own acquisition, by taking out loans. If this sounds like an odd arrangement, that’s because it is. Imagine a homebuyer purchasing a house and making the bank responsible for repaying its own loan, and you start to get the picture.
O.K., but what about this much more virtuous business of swooping in and restoring struggling companies to financial health? Well, that’s not a large part of what private equity firms do, either. In fact, they more typically target profitable, slow-growth market leaders. (Private equity firms presently own companies employing one of every 10 U.S. workers, or 10 million people.)
And that’s when the fun starts. Once the buyout is completed, the private equity guys start swinging the meat axe, aggressively cutting costs wherever they can – so that the company can start paying off its new debt – by laying off workers and cutting capital costs.
This process often boosts operating profit without a significant hit to the business, but only in the short term; in the long run, the austerity approach makes it difficult for companies to stay competitive, not least because money that would otherwise have been invested in expansion or product development – which might increase revenue down the line – is used to pay off the company’s debt.
It takes several years before the impacts of this predatory activity – reduced customer service, inferior products – become fully apparent, but by that time the private equity firm has generally resold the business at a profit and moved on.
The next article reminded me of how much is at stake for vendors, toy manufacturers, shippers, shopping malls and strip mall groups that have used Toys R Us to stock their shelves with products, rent large anchor properties and draw traffic to other stores nearby. All of these will be suffering hits, possibly causing layoffs beyond those being caused directly by the bankruptcy of Toys R Us as it closes 2600 stores.
How $5 billion of debt caught up with Toys ‘R’ Us
SEPTEMBER 20, 2017
But the company’s ability to kick the can down the road had been exhausted. The bankruptcy filing was the culmination of an unsuccessful seven-month effort by Toys “R” Us to find relief from its $5.2 billion debt pile, according to bankruptcy court filings and people familiar with the deliberations.
The advisers that Toys “R” Us hired to fix its capital structure explored at least two deals with some of its creditors to raise money that would have helped the company stave off bankruptcy before the key holiday shopping season, avoiding a supply chain disruption stemming from vendor fears about repayment, a bankruptcy filing shows.
Once the company realized that it could not secure financing to get through the holiday season, the objective became “let’s get it done as quick as possible so it does not interrupt the holidays,” Toys “R” Us Chief Executive Officer David Brandon told Reuters in an interview. Filing for bankruptcy allowed the company to secure financing to continue to operate its stores.
Given that “we successfully obtained our debtor-in-possession financing today, we can assure our lenders that we are in a good position to accept shipments on a normal basis and they have great assurance they will be paid,” Brandon said.
Like other retailers that own their stores, Toys “R” Us tried last month to tap its vast real estate portfolio to raise money in a sale-leaseback transaction, according to court filings. Sale-leaseback deals allow retailers to raise cash by selling real estate they own and then renting it back from the new owner. (which didn’t work, my note.)
More Layoffs for Retailers Already Having Massive Store Closings and Layoffs
Jobs everywhere! Except at stores
January 5, 2018
Record numbers of store closings and a surge in retail bankruptcies, as well as the shift to online shopping, have forced retailers to slash jobs even as other employers scramble to find qualified workers.
The sector lost a total of 66,500 jobs in 2017.
General merchandise stores, the segment that includes department stores, were hit the hardest, losing 90,300 jobs, according to the Friday’s December jobs report from the Labor Department. Clothing stores cut another 28,600 jobs. Drug stores lost 18,400.
So the job losses in the sector are likely to continue said Nicholas. In 2017, 7,000 store closings were announced, a record that was more than triple 2016’s number. And the trend will undoubtedly continue in 2018. Sears Holdings (SHLD), owner of both Sears and Kmart, said Thursday it plans to close more than 100 additional stores.
According to BLS data, the number of retail openings in February slumped to 541,000, down by 40,000, its worst performance since 2015. (U.S. News)
BLS data also showed retail layoffs and discharges climbed 37% in February and reached a total of 212,000 – its highest level in nearly two years. (U.S. News)
Unlike in 2008, Americans today are shopping more than ever.
While the last spike in retail bankruptcies during the Great Recession was clearly a byproduct of consumer stress, this time around consumers are actually spending more than ever. According to Gallup, February 2017 marked the highest average in consumer spending since 2008, with no signs of slowing.
The US retail industry is hemorrhaging jobs – and it’s hitting women hardest
January 13, 2018
As the retail landscape undergoes a dramatic transformation, analysis finds 129,000 women lost jobs last year while men actually gained positions.
Between November 2016 and November 2017, the sector fired 129,000 women (the largest loss for any industrial sector for either sex) while men gained 109,000 positions, according to an analysis by the Institute for Women’s Policy Research (IWPR). In the whole labour force women gained 985,000 jobs over the year, while men gained 1.08m jobs.
(also from this article – )
Major retailers shut shops across the US last year. A record 6,700 stores shut in 2017, according to Fung Global Retail & Technology, a retail thinktank. Macy’s alone closed 68 stores and shed 10,000 jobs. Drugstore chain Walgreens closed 600 locations.
A comment in this article says a lot of what I’ve been thinking. And, why is it that Bain, KKR and Vornado didn’t have to pay the loan payments they took out to buy Toys R Us? Shouldn’t that debt belong to the buyers, not the company they’ve bought? (This article also lists a number of the retail bankruptcies from 2017, including Radio Shack.)
Big Wall Street banks are not likely to blow the whistle on asset-stripping scams in the private equity world. They are frequently involved in collecting fees for advising on the LBOs. Then they reap more huge windfalls in fees when they underwrite the bond offerings that load up the company with debt it can’t service on a long term basis.
So the overarching question in all of this is: where is the Securities and Exchange Commission, the so-called cop on the beat that is supposed to be policing the publicly traded corporate bonds involved in these deals?
In April, Aisha Al-Muslim, a reporter for Newsday, the Long Island, New York newspaper, found the following after an in-depth review of court documents and data from top research firms like S&P Global Market Intelligence:
“…43 large retail or supermarket companies, which owned chains with 10 or more locations, have filed for bankruptcy in the United States since January 2015. The 43 companies controlled 52 brick-and-mortar chains.
“Of those 43 companies, 18 — more than 40 percent — were owned by private equity firms. The remainder were public or private companies or owned by a hedge fund.”
When 40 percent of insolvent large retail companies got this way at the hands of the so-called turnaround experts at private-equity firms while huge amounts of money moved from the coffers of the company to the pockets of the “experts,” it’s time for Federal regulators to get involved.
Private equity firms bled the company dry to turn a profit, and now mass layoffs are imminent.
Upon closer examination, however, this analysis doesn’t hold up. First, the global toy industry isn’t in decline. In fact, it’s been growing consistently over the past five years. Physical toys may be less popular in the United States than they once were, but internationally—particularly in Asian and Latin American countries—the play business is booming. And most of Toys “R” Us’s profits actually come from its Babies “R” Us affiliate which sells not just toys but also health, safety and educational tools for infant care.
Yet most importantly, this analysis fails to account for how Toys “R” Us wound up so deeply in debt in the first place. In 2005, as the company’s stock was regularly losing value due to mediocre sales, management decided to sell the company in a leveraged buyout to a trio of buyers, real-estate-investment trust Vornado Realty Trust and private equity firms KKR and Bain Capital.
This trio played a critical role in the downfall of Toys “R” Us, through imposing massive debt obligations on the company and requiring it to pay back its debts so that its buyers could turn a profit. Meanwhile, the finances of the company were thrown into disarray and employees were hit with wave after wave of layoffs.
Vornado Realty Trust, KKR and Bain Capital financed 80 percent of the purchase of Toys “R” Us, so while the company sold for $6.6 billion, the trio only contributed $1.3 billion. As part of the purchase agreement, the companies also agreed to take responsibility for all of Toys “R” Us’s long-term debt obligations, which at the time totaled $2.3 billion. Once Toys R Us was taken over, however, the debt Vornado Realty, KKR and Bain used to acquire it was pushed back onto the company, skyrocketing its debt obligations to $7.6 billion.
Toys “R” Us has been paying $400 million a year to service these debts. This money could have been used to lower prices or improve the company’s website—not to mention raising pay to its employees—but instead went to paying off creditors. Last year, the company reported a loss of $29 million. If it weren’t for these debt payments, Toys “R” Us would have run a substantial profit.
In both instances, critics say Bain and its private-equity partners left the chains vulnerable by saddling them with heavy debt loads as they took them private, crippling their capacity to compete in brutal price wars that have dogged the industry.
A leveraged buyout (LBO) is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company’s cash flow is the collateral used to secure and repay the borrowed money.
(also – KKR appears in the history of corporate raiding during the 80’s and beyond – plus this, of interest)
The inability to repay debt in an LBO can be caused by initial overpricing of the target firm and/or its assets. Over-optimistic forecasts of the revenues of the target company may also lead to financial distress after acquisition. Some courts have found that in certain situations, LBO debt constitutes a fraudulent transfer under U.S. insolvency law if it is determined to be the cause of the acquired firm’s failure.
The outcome of litigation attacking a leveraged buyout as a fraudulent transfer will generally turn on the financial condition of the target at the time of the transaction – that is, whether the risk of failure was substantial and known at the time of the LBO, or whether subsequent unforeseeable events led to the failure. The analysis historically depended on “dueling” expert witnesses and was notoriously subjective, expensive, and unpredictable. However, courts are increasingly turning toward more objective, market-based measures.
Private equity typically refers to investment funds organized as limited partnerships that are not publicly traded and whose investors are typically large institutional investors, university endowments, or wealthy individuals. Private equity firms are known for their extensive use of debt financing to purchase companies, which they restructure and attempt to resell for a higher value. Debt financing reduces corporate taxation burdens and is one of the principal ways in which private equity firms make business more profitable for investors.
Leveraged buyout, LBO or Buyout refers to a strategy of making equity investments as part of a transaction in which a company, business unit or business assets is acquired from the current shareholders typically with the use of financial leverage. The companies involved in these transactions are typically mature and generate operating cash flows.
Private equity firms view target companies as either Platform companies which have sufficient scale and a successful business model to act as a stand-alone entity, or as add-on or tuck-in acquisitions, which would include companies with insufficient scale or other deficits.
Leveraged buyouts involve a financial sponsor agreeing to an acquisition without itself committing all the capital required for the acquisition. To do this, the financial sponsor will raise acquisition debt which ultimately looks to the cash flows of the acquisition target to make interest and principal payments.Acquisition debt in an LBO is often non-recourse to the financial sponsor and has no claim on other investments managed by the financial sponsor. Therefore, an LBO transaction’s financial structure is particularly attractive to a fund’s limited partners, allowing them the benefits of leverage but greatly limiting the degree of recourse of that leverage. This kind of financing structure leverage benefits an LBO’s financial sponsor in two ways: (1) the investor itself only needs to provide a fraction of the capital for the acquisition, and (2) the returns to the investor will be enhanced (as long as the return on assets exceeds the cost of the debt).
As a percentage of the purchase price for a leverage buyout target, the amount of debt used to finance a transaction varies according to the financial condition and history of the acquisition target, market conditions, the willingness of lenders to extend credit (both to the LBO’s financial sponsors and the company to be acquired) as well as the interest costs and the ability of the company to cover those costs. Historically the debt portion of a LBO will range from 60%–90% of the purchase price, although during certain periods the debt ratio can be higher or lower than the historical averages. Between 2000–2005 debt averaged between 59.4% and 67.9% of total purchase price for LBOs in the United States.
Simple example of leveraged buyout
A private equity fund say for example, ABC Capital II, borrows $9bn from a bank (or other lender). To this it adds $2bn of equity – money from its own partners and from limited partners (pension funds, rich individuals, etc.). With this $11bn it buys all the shares of an underperforming company, XYZ Industrial (after due diligence, i.e. checking the books). It replaces the senior management in XYZ Industrial, and they set out to streamline it. The workforce is reduced, some assets are sold off, etc. The objective is to increase the value of the company for an early sale.
The stock market is experiencing a bull market, and XYZ Industrial is sold two years after the buy-out for $13bn, yielding a profit of $2bn. The original loan can now be paid off with interest of, say, $0.5bn. The remaining profit of $1.5bn is shared among the partners. Taxation of such gains is at capital gains rates.
Note that part of that profit results from turning the company around, and part results from the general increase in share prices in a buoyant stock market, the latter often being the greater component.
Often the loan/equity ($11bn above) is not paid off after sale but left on the books of the company (XYZ Industrial) for it to pay off over time. This can be advantageous since the interest is typically offsettable against the profits of the company, thus reducing, or even eliminating, tax.
Most buyout deals are much smaller; the global average purchase in 2013 was $89m, for example.
The target company (XYZ Industrials here) does not have to be floated on the stockmarket; indeed most buyout exits are not IPOs.
Buy-out operations can go wrong and in such cases the loss is increased by leverage, just as the profit is if all goes well.
The application of the Freedom of Information Act (FOIA) in certain states in the United States has made certain performance data more readily available. Specifically, FOIA has required certain public agencies to disclose private equity performance data directly on their websites.
In the United Kingdom, the second largest market for private equity, more data has become available since the 2007 publication of the David Walker Guidelines for Disclosure and Transparency in Private Equity.
How would it EVER make sense for me as a company to be required to pay the price I’m charging you for buying me?
And, pay the interest on that debt you used to buy me as a company – AND pay you management fees for destroying the company I’ve built that you’re charging me the price of buying – from me – so you can own it?
In what world does any of that make sense as anything but theft and embezzlement whether legal or not?
Can you imagine what it would take to start a company today and garner 15% of the toy market? And yet, here is a company that already has that which is being decimated by a very corrupt business practice of Wall Street investment firms – to the detriment of America.
Again, we have had a horrific shooting at a school in America. There are a lot of people screaming their thoughts about it today and every day since it happened.
I know that people want to help. And, it is easy to say that because of a gun, because it was an assault rifle, because people can buy these weapons – that is what must change.
It might help and it might not, but long before that, people need to know that there will then be other weapons, other ways to do it.
And, there are people screaming right now about mental health or mental disorders being the problem or “issue”. But, what if it isn’t that, considering how many people with those issues either get some help for them or find other constructive and non-harmful ways to resolve those mental “issues” without shooting or hurting anyone. There are millions of people doing that, in fact.
But, what if the real reason these young men are stepping off the edge of reason and sanity to find a gun and equip it with thousands of rounds of ammunition has nothing to do with being able to get the gun nor the mental health industry who has many times been serving these same young men who’ve committed these mass shootings?
What if it is something else that indicates an underlying massive real cause of pushing many people including these men into a desperate anger and frustration that makes it seem to them that they have nothing to lose and can’t stand feeling that way another moment? Or, that they must get even and take it out on others to fix it and make those feelings and thinking change or go away, be satisfied that they’ve done something about it no matter how wrong they know it to be in doing it that way?
Our society in America has completely disenfranchised entire groups of our nation’s people. Most of us don’t do this as our reaction to that fact, but not everyone’s reaction is going to be the same.
Have we been throwing money at mental health programs hoping some psych drugs and a therapist can get people including these young men okay with never being anything but poor, or ever to be able to accomplish anything, or for their entire lives to experience being excluded and rejected from fully participating in having things and doing things with their lives?
Is it really right to believe that some mental health approach is going to fix it all and there will no longer be any responsibility on ourselves, in our communities and in our nation towards people who are never going to live out the expectations of the American Dream for themselves the way things are now?
When there are no jobs available to them but those which won’t pay the support of living independently and doing well for themselves? When there are no real ways to build friendships that are stable and rational nor to have healthy relationships with a girlfriend or boyfriend blossom into the kind of real relationship everyone has seen and read about where couples build their lives together?
When there are no opportunities to have a home, to have a network of supportive and encouraging people they know or to have opportunities to make money, build to have their dreams realized as once was possible in this country?
When there is obviously no way for the principles of fairness and equal opportunities to all Americans to be practiced in this environment of all the resources and opportunities being isolated and available to only a few at the top rungs of our society?
Across this country for years now, our young men especially, have been reaching out to extremist groups from criminal ones to religious ones to white supremacist and racially charged groups to massive underground subcultures to find there – a sense of belonging, acceptance, purpose and value for who they are.
It is obvious they didn’t get that from us as a community or as a nation, otherwise these young men and others would not have sought to find it there in extremist groups. And, the groups know that their members are becoming weapons in their own arsenal for whatever purposes and agendas these groups serve. None of it is a building, constructive, strengthening lives and communities agenda either.
Every time there is a mass shooting or horrific crime of this magnitude, we ask ourselves again about access to guns and suggest mental illness has made this happen. Maybe this time it is finally a moment to take a look at, why is it happening in our country and what we can do to form options that leave guns and going crazy over all this stuff wrong in people’s lives from being the only choices left for them.
Guns, Gun Violence, Mental Health and Disenfranchisement
My note – it is the math and surface area it provides that could be both strength and air cleaning in a massive way for cities. It inspired me and so I looked up things about the pollution neutralizing paints and materials / concrete / cement – which I’ve added the things that stood out to me down this list.
An even grander project, the Palazzo Italia, will use similar materials over 13,000 square meters across six floors when it opens in Milan in 2015. Dutch scientists have also adapted the system to roads, claiming this can reduce pollution by 45%.
The material is not prohibitively expensive — adding as little as 4-5% to construction costs. But the impact of such buildings has been limited to their immediate location, and efforts to develop the concept have led to more novel, personalized solutions.
The paint is formulated on a base of polysiloxane, a polymer consisting of silicon. The active ingredients are tiny spherical nanoparticles made up of calcium carbonate and titanium dioxide (TiO2). This polysiloxane base is porous enough to allow nitrous oxides to diffuse through it and effectively stick to the nanoparticles. In turn, sunlight provides the energy to convert the nitrous oxides into nitric acid which is either disposed of by rain or neutralized by the alkaline properties of calcium carbonate and converted into carbon dioxide, calcium nitrate, and water. These profound chemical transformations are triggered by the ultraviolet radiation absorbed by the nanoparticles.
Millenium Inorganic Chemicals, a British R&D firm has developed what they intended to appropriately name “Ecopaint.” This paint utilizes the same photo catalytic process of the anti-smog cement developed and under going testing in Italy.
NASA-designed Airocide neutralizes indoor air pollution
Called Airocide, this technology “clears the air of virtually 100% of Volatile Organic Compounds (VOC’s) – the harmful gasses emitted by products you have around your home, like aerosol sprays, cleaning supplies, disinfectants, hobby supplies, dry-cleaned clothing, building materials, paints and paint thinners, strippers, pesticides and even air fresheners. This FDA approved device also completely eliminates all mold, pollen, fungi, viruses and bacteria (all major causes of allergy symptoms) that enter the chamber,” according to the Airocide website.
Gizmag reports, “Each Airocide unit incorporates a reaction chamber that contains thousands of tiny glass rings coated inside and out with titanium dioxide (TiO2). With the help of a high-intensity light, the TiO2 produces hydroxyls. When airborne organic molecules are drawn in and make contact with those hydroxyls, the carbon bonds in those molecules are broken.”
This process renders any organic compound inert. The hydroxyls cannot escape the chamber and no cleaning is needed, though the chamber does have to be replaced every year. The Airocide is currently priced at $799 and replacement chambers go for $99.
The technology has actually been used in places we’ve been visiting for quite some time now. Because ethylene gas causes accelerated ripening, supermarkets, florists and food packers have been using the technology since 1998, and in 2003, Airocide was introduced to hospitals, medical offices and daycare centers to prevent the spread of airborne disease.
Dust suppressants consist of calcium magnesium acetate, which is expected to glue particles to the carriageway to stop them re-circulating in the air. TfL will first sweep and jet wash the roads, then apply the solution using a modified winter gritting machine with a fine sprinkler-like system attached.
Smog-eating cement first made headlines back in 2007, when it was introduced in the U.S. by the Italian company Italcementi, whose R&D center is pictured below. The cement is called TX Active and the magic ingredient is titanium oxide. When exposed to sunlight, titanium oxide can neutralize some pollutants—basically the toxins are oxidized when they come into contact with the cement. For instance, nitrogen oxide and sulfur oxide gasses are made harmless when they are turned into nitrates or sulfates. Without the catalyst of titanium oxide, the nitrogen and sulfur oxide break down in the atmosphere creating smog and ground level ozone.
The concrete is made up of traditional cement mixed with titanium dioxide. This unique mixture allows air to pass through while simultaneously capturing nitrogen-oxide particles, a main component of smog. Titanium dioxide functions as a catalyst to the chemical reaction which is activated by UV light. Not only does it filter the air, but the collected smog residue washes off with a light rainfall. Don’t worry about the residue, it’s made up of inert salts that have no effect on the surrounding environment.
In total, it took 2,000 metric tons of the bio dynamic concrete to construct the building and it’s creators at Italcementi claim that it is stronger than the equivalent of regular concrete. This added strength allowed the architects and engineers to create the stunning linear shapes seen on the building’s facade with ease.
CHK this site to see a photo of the building – absolutely stunning and it eats air pollution.
Chinese activist-artist raises awareness by sucking up smog into bricks
As the latest coal-fuelled “airpocalypse” engulfed northern China this week and world leaders gathered in Paris to debate the fight against climate change, Nut Brother hit the streets of Beijing hoping to raise awareness of his country’s deadly smog crisis.
For the last 100 days, the activist, whose real name is Wang Renzheng, has used the industrial appliance to extract dust and other lung-choking pollutants from the city’s atmosphere before transforming them into a dark brown “smog brick”.
He ordered a vacuum cleaner from a manufacturer in Shanghai and began taking it on four-hour sorties across Beijing’s urban sprawl, gobbling up pollutants as he went. Photographs published in the Chinese media this week showed him pushing his vacuum cleaner past some of Beijing’s most celebrated landmarks.
“You can’t tell if it is night or day!” Liu Haishan, 38, a taxi driver, complained on Tuesday afternoon as he attempted to navigate through the gloom.
Wanting to write about the terrorist possibilities with nuclear materials, but a part of me wants to believe that our authorities and agencies responsible for these materials have them well secured. Time and time again, it becomes evident that there are lapses in both the security of facilities and nuclear materials as well as lapses in common sense in handling events that occur.
If a few simple things were done, security would certainly be better at anyplace housing, using, storing or creating electricity with nuclear materials.
Is to make sure all security cameras are far removed from access by a person wanting to simply turn them away.
Is to make sure that all security personnel and workers of every kind at any facilities with nuclear materials have been well vetted beyond a normal random check done for other types of businesses.
Is to make sure that all ID badges used by facility personnel of any kind, any contractors, any plumbers that come out to fix something, any technicians, any company executives inclusively – have RFID tracking on the badges.
Is to make sure that local constabulary, police supervisors, police and fire chiefs, and whoever else might make stupid or egotistical decisions locally about any event at a nuclear materials using facility – knows to immediately inform appropriate intel and counter-terrorism agencies about any and all irregular events concerning the plant. That would include murders of any personnel that works there, any loss of materials, any stuck valves that are made to look like they weren’t done intentionally though proof is visible that intentionality was likely, AND any bizarre occurrences out of the ordinary, such as having all the oil drained from a pump expected to be lubricating the turbines that causes significant damages, etc., etc., etc.,
IS TO MAKE SURE that every country using nuclear materials for civilian uses and any other uses understands that the international community will not accept pretense about these materials because of their inherent dangers to us all.
When TEPCO executives made statements straight out of a playbook of damage control for public consumption, they first downplayed the incidents and their dangers even as those events were unfolding and they knew the magnitude of the disaster. This is not an acceptable path for executives, decision-makers, industries, industry spokespeople, industry pr firms, politicians or even local officials to take when events can unfold quickly and impact such a massive swath of humanity and civilization for years to come.
This is to say, that as our leaders meet for the Nuclear Security Summit, the greatest danger we face is to watch events unfold concerning nuclear materials and it be a week later before some local executive or supervisor at the facility or other business using those materials actually tells somebody who can do concrete measures to fix it. Or, in the case of terrorist use of those materials, to tell a group of agencies from Interpol to counter-terrorism and national security agencies that the materials are missing in a timely and effective manner.
The same is true for local police jurisdictions in areas near nuclear and other chemical industry facilities. It cannot be up to them to say a matter is no more than criminal when in fact, it could be very likely tied to terrorism or a terrorist network intending greater harm. That information needs to be in the hands of those who are collecting it, analyzing it, interpreting its connectivity to other known information about terrorists operations and then acted upon appropriately. That can’t happen when the information is circumvented by jurisdictional ego building tactics.
There, I’ve had my say about it. But, I do want to believe that our authorities and security / intel agencies have it all well in hand. And, they’ve thwarted countless terrorist plans, prepared events of terrorism and some really incredibly stupid stuff that would’ve been massively dangerous to us all. So, maybe. Maybe with the addition of just a few simple things – it can be made safer. I hope so.
At the same plant where these jihadists once worked, an individual who has yet to be identified walked into the reactor No. 4 in 2014, turned a valve and drained 65,000 liters of oil used to lubricate the turbines. The ensuing friction nearly overheated the machinery, forcing it to be shut down. The damage was so severe that the reactor was out of commission for five months.
In the past few days, I’ve heard things from family members and friends that are very disturbing about the tornadoes that have devastated the nation over the weeks of April this year.
It is unacceptable. The ideas presented to me were plainly wrong. There were over 300 people whose lives were lost in the tornadoes that blasted across Alabama, and other states of the South just two days ago. The days and weeks before that have shown all of us, homes that were leveled, towns decimated and lives lost and shattered. There is no excuse for it to be that way. It is 2011.
One of the excuses I heard is that it is “2012 when the world ends that is here early in 2011” and to fight it would be senseless. Another idea repeated to me from three different people, is that there is no way to control winds, storms, things like the jet stream and tornadoes – that to do so we would have to be God. Other ideas explained to me were repeated from various broadcasts of the am radio talk shows and other online information sources who say there is no way that anyone can do anything about any of these things since it is part of the “end times” and can be expected to get worse, not better. And, along with explanations on many business shows, business journals, business and financial blogs and tv broadcasts – there are a multitude of quotes to explain how America is falling and that we cannot expect to stand up again as number one in the world. Now, wait a minute . . .
Just hold the gd phone.
Back it up and rewind that entire set of conversations. I don’t know who told these family members and friends that to do something is to not accept our place as human beings and try to do what only God can do. I don’t know exactly, although I have a pretty good idea, where these people in my life got these lines of thinking which say there is nothing that anyone can do about all this and nor should we make the effort to do so. I don’t know how the excuse that “it is the end of the world anyway,” means we are all supposed to throw up our hands and tend to our own momentary satisfactions without seeking to do much else about anything. And, I don’t care, either – where these people got these ideas. I do know they are wrong.
When it rains, we put an umbrella over our heads. We don’t just stand out there in the rain without doing anything about it simply because “God” sent rain. We make lightning rods to go on our homes and businesses, which were designed by a brilliant man in our nation’s history who saw a problem and found a way to provide a naturally based principled solution. It has saved lives, homes, families, businesses and communities where people at one time in history believed that there was no way to stop lightning – that it was what amounted to an “act of God” which no human could expect to change, alter or do anything to provide safety against. Those people were not considering even finding a way to do something about it, but one man did and now we have lightning rods on damn near every single building, structure, skyscraper, and everything else that is built to withstand the natural elements.
The building industry has known for well over a thousand years, that the basic protection for people’s lives during storms with tornadoes forming and reeking havoc, is for structures, homes, buildings, restaurants, malls, schools, hospitals, and living spaces to have a basement or storm cellar. It is not rocket science. It is a known quantity which works. At some point, the building industry, cities and towns policy makers, developers and other decision makers decided to not require basements and storm cellars for every single home and every single structure built in their communities. Well, that was wrong.
We put dams and levees up to control flooding. We don’t just sit back and say – well, if the place floods, then it was meant to be. That is called, “engineering” and is why we have those multitudes of engineering disciplines to this day. We have architectural and structural engineering disciplines that create to a better standard than throwing up a few sticks and calling it a house. And, the homes in these recent tornadoes yielded NO real harbor or safety from the storms. They acted as what they’ve become, pasteboard and brittle sticks rather than a reinforced, flexible and safe structure to protect the families and lives housed within them. That is unacceptable.
And, I don’t know what we’ll have to do – if it is to incorporate some type of polymer dip for the framing wood to give them more strength and flexibility, add re-bar to the core of brick facades which are held together by unreinforced masonry, create better building methods generally to withstand these types of extreme events, or find a way to cut those tornadoes in half and dissipate them in some manner before they get on the ground tearing up the place – but I do know that requiring basements and storm cellars to be built into every single structure is a known successful defense against loss of life.
I do know that we could do that everywhere in short order – retrofitting existing structures with storm cellars and below ground level basements – including homes, businesses, county buildings, schools, industrial plants, everything. And, I do know it isn’t just required in Kansas anymore – which has been evidenced for a long, long, long time. Why these 300 lives were lost a couple days ago, within seconds as their homes were obliterated – is no longer an acceptable excuse. And, the world has ended at least 8 or 9 thousands times according to various religious predictions across history. It isn’t an excuse to sit idly by while solutions could be applied to save lives, communities and families from known dangers with known outcomes by using either known solutions or engineering new ones that work.
And, there is no excuse whatsoever for anyone living in a mobile home or trailer staying in it believing there is some protection from a severe storm, extreme or damaging winds, and tornadoes. Especially in these housing types and their mobile home parks, on their individual private property where mobile home owners have set up housekeeping, and in mobile home communities – there absolutely has to be an enforceable code by every town, city and county requiring a storm cellar be added on site. For mobile home parks and communities, central community storm shelters in an underground basement at their community clubhouse or something must be required of those community owners with enough storm cellar or basement space to protect all of the people with all of their family members who live there. It has to be close enough to walk to it and get into it within a couple minutes – not sitting hundreds of yards away from significant portions of the residents’ homes.
The attitudes expressed to me over the past few days demanding that none of us give a damn about all this and insisting that no one can or should try to do anything about this – are attitudes commonly repeated and still wrong. They are based in someone not thinking through what they were saying – we do have homes because they were engineered solutions to our need as humans for protection from the elements. We did not – “just not give a damn about it” and sit out in the fields and woods never making something of a solution to protect ourselves as a species. We did, in fact – create many solutions to it and meshed solutions from many different people to have more than nature gave us in the first place. Or else we would all still be standing out in the rain without an umbrella or house in existence at all.
AND – people need to vote with their dollars by NOT BUYING any house or business structure that doesn’t have a basement, cellar or storm cellar in it.
When that happens, builders will start adding basements to protect people’s lives and building inspectors / county codes will require either basements or storm cellars in every structure and home in America as it should’ve been in the first place knowing what we know about tornadoes, storms, hurricanes and extreme wind events.
From what I can tell, the homeowners’ associations in many communities could have made a central storm safe space available – most have expensive clubhouses that are rarely used by anybody. They’ve paid for swimming pools – they’ve charge association fees. Surely they could add something more useful along with it – like public announcements throughout the neighborhood when tornado spawning storms are coming – or at the very least, provide a basement for people in the neighborhood to come and have some protection from those events.
But, sooner or later – there are still two parts which need serious workable solutions – one is to stop the tornadoes from spawning in the first place or after the conditions have developed to make them likely. And, as much as I appreciate the magnitude of these forces – we, as a people have changed all kinds of things in the landscape – which could just as easily also be changed to provide “wind breaks,” special heating or cooling zones in the landscape to help dissipate the storms’ power or alter them, some kind of lateral slicing through the tornado kind of thing that would act the same way as sticking a hand laterally through a whirlpool in the bathtub when the drain makes one, and/or sculptured land planning in the same manner as the buildings and heat zones of and altered air foils of cities with their skyscrapers, parking lots, freeways, streets and buildings change the likelihood of storms producing tornadoes.
Although cities are hit with tornadoes from time to time, it is far less frequently and with less running distance of damage that is somehow changed by virtue of the ways cities are constructed and contain heat or alter wind patterns and wind shear. Maybe the tall buildings force eddies in the air currents which change the dynamic or push them down or around in dividing ways – that principle which is working around cities could be used and applied for tornado development zones. But, not just in Kansas – the dust bowl thinking of people stuck in 1930 something has got to stop. The Southern States have suffered inordinately high numbers of tornadoes for many years with the recent outbreaks of weather patterns differing in the severity and multiple development fronts. There is no reason that any state of the South should have any homes without basements in this day and age. There is no reason they couldn’t apply the massive knowledge our scientists and universities have discovered into tangible solutions – whether wind breaks or satellite looks at re-interpreting some parts of the landscape to dissipate these damaging winds when they do get started.
These things could be done.
The second thing that needs to be done – is to make our houses into safe harbors for human lives. They are not that now. It is inexcusable that our homes have become (and that includes apartments, condos, workplaces, some buildings, shopping areas, and large industrial workspaces under thin metal sheeting, etc.) – nothing but pasteboard and brittle sticks – no matter what they seem to look like on the outside. That is unacceptable.
Every structure needs to be retrofit in some way to be substantially safer along with adding basements or storm shelters/ storm cellars to all of them.
There are Geotextiles now and polymer / carbon nano fiber based fabrics that never existed before. There is a man who designed homes for hurricane prone areas which are glued and screwed rather than to allow the wind getting up into the structure tearing it apart as it goes. There are new types of cement and retrofitting systems to make unreinforced masonry into reinforced, strong but flexible structures. There are building materials, knowledge, science, engineering, materials science, structural engineering knowledge and research which 30 years ago, didn’t even exist.
Strides have been made in collecting data and information, analyzing the data and understanding the results. It has been public information available to everyone. Out of all that – it is far past the time to take it and weave new practical solutions from it to apply throughout our nation for the safety of families, children, people, young lives and old – there is no excuse for what has just happened to take these lives from all of us and from our communities by tornadoes damaging structures which weren’t much more protection than a cardboard box would’ve been. It is not acceptable for it to keep being that way.
And, where building techniques were known a hundred years ago or in 1930 something which worked to keep lives safe, but in our modern world were abandoned – those need to be brought forward and used as well.
That includes – if a house doesn’t have a basement or storm cellar – don’t buy it. Life is too precious to put up with it – there are no savings financially by getting a house or business without a basement. Dead or maimed from a tornado because there was nowhere in the house safe from it – is not a financial advantage no matter how good that house looks on the outside.
President Obama visits Alabama’s storm ravaged areas today – (CNN)
Tuscaloosa, Alabama (CNN) — President Barack Obama arrived in Alabama on Friday, the hardest-hit of six states ravaged by a series of storms and tornadoes that killed nearly 300 people and left entire neighborhoods in ruins.
Obama was scheduled to meet with families affected by the storms as well as government officials.(etc.)
Photos: Nightmare scenes in Alabama after deadly storms sweep South – (CNN)
Today, there are derivatives being created and sold in the hundreds of millions of dollars in value. Today there are financial derivatives and exotic financial instruments being created (manufactured). Today stocks and bonds are being sold, traded. purchased every single minute by the the hundreds of millions of dollars in value. In total, all of it is being swapped, traded, bought, sold and manufactured as well as exported and imported across nations. I would say that in and of itself, starting now – would solve the deficit problems.
And, just as we pay taxes on milk when it is bought, there are other taxes on the suppliers which are paid, on the retailers which are paid, on the properties housing it which are paid, on the truckers that deliver, on the gas they buy to deliver it, on the farms and farmers which produce it and sell it in the first place. So, why in the world wouldn’t these tremendously expensive products being created every minute of every day not be taxed in the same way with the same sales taxes, manufacturing taxes, product taxes, VAT and ad valorem taxes, export and import duties, and state taxes?
Today, there are well over $600 Trillion in credit derivatives, not to mention the other financial products being created, bought, sold and swapped. Out of all of them – every minute of every day, there are sales of these products happening. If I can’t buy a gallon of milk or a gallon of gas without it being taxed, then why can they sell $40 million in stocks without paying sales tax?
Thanks for taking a look at it. I hope we are right. It will solve the problem immediately by simply applying the tax laws that already exist for every other product to them. Retroactively applying the law wouldn’t even be required. It would simply need to be started today, in the same way that every other product, sale, purchase, trade and property and manufactured good is taxed. They can remit those revenues to our Federal government, State governments and other nations’ governments starting today – and the problems are solved. They have accountants – they can do that.
I do want to say one other thing –
The corporations as well as the financial industries like the stock markets and hedge funds have used our infrastructure without fair support of it for long enough. We have had to hire people to inspect them, regulate them, monitor them and generally keep up with their damn shenanigans in every single industry, in every single business and corporation. We paid for the streets they use, the highways that deliver their products, for the utility systems that carry the electricity to them, the communications systems they are using including sending up and repairing the satellites that are orbiting to carry their signals.
We have provided labor, and the oversight of labor, worker safety and workplace safety, food safety so they didn’t end up getting poisoned on the things they were producing or eating. We watched over the restaurants where they eat and supplied the building materials and technology for the buildings they are using. There isn’t one part of what they are doing that tax dollars and the American public (along with its marketplace) haven’t provided. That infrastructure doesn’t come for free. We’ve paid for it – they can now put in their fair share to pay for it. And, I mean, now.
This comment was a response to a comment on my previous blog post which was written a few minutes ago.
And, I want to add this –
In the commodities markets there are speculators who are buying contracts for the purchase of later delivery on goods who are also not paying sales taxes on those physical contracts which represent a notational value in the hundreds of thousands and sometimes, millions of dollars. They don’t pay a fee to play that goes to the state, the government or the nation when they purchase them, sell them or swap them. And, they don’t pay any of various other taxes, import and export duties, either on each of those dollars being spent, traded, swapped, bought in speculative contracts on goods. Those contracts represent a product. It was manufactured. It physically exists. It has a value. It is traded. It is purchased. It is accounted. It is sold.
Therefore, it should have the same taxes applied to it that I would have to pay as a manufacturer of original goods of any kind which must be subjected to any of a number of different taxes, including sales tax, VAT if it is re-sold, state fees and taxes, federal taxes for manufacturing of goods, interstate commerce taxes – and any of a number of other business taxes as in the case of the taxes I would have to pay just to insure any of it on the insurance policies. I pay the phone taxes, the cellphone taxes, taxes on my cable bill – and these jackasses get to trade in billions of dollars in goods without being taxed on every single transaction. I do not think that will work anymore.
Our government debt and interest can be paid off right now by doing it this way, simply apply these tax structures and revenue streams required from the rest of us to the above financial instruments, speculative commodities trading and other business activities of the stock markets and derivatives.
Simple. Done. Solved.
That is – “Sol-ved.”
And immediately yields – Solvency for the US, for the States, for New York State and New York City, for Atlanta and the State of Georgia, for Texas and Ohio, and Chicago – which is in Illinois. It probably won’t do anything to help Wisconsin but they brought that mess on themselves and they need to fix it.
The national budget deficits of the UK, the European Union and every single nation of the European Union can be solved immediately this way. And, that is the goal of these entire budget cutting shenanigans, isn’t it? None of which, I might add – will actually pay off any of the debts nor even come close to paying off the interest on these debts even as they weaken the entire economy, the complete social fabric of these nations (including ours) and gut the existing infrastructure that supports them.
But, to use the plan as I’ve proposed – these budgets can be brought into solvency immediately, their debts completely paid off, the interest due now completely paid, have a healthy prudent reserve to cushion these budgets and no cuts would have to be made whatsoever – in fact, increases to education funding could be provided rather than destroying the opportunities for educating an entire three or four generations of students, children and adults.
Total Public Debt Outstanding (United States March 2011)
(and one penny.)
Plus interest compounded upon interest again compounded upon the debt.
(see chart above on how that works out over 25 years on $1,000 and amplify that times the above numbers. America won’t be in business unless we do this now by taxing fairly everything being produced and sold in America – and the UK – and in the EU – because we are intimately tied together economically and their debt influences us and our debt influences them and all of it influences me and my fellow citizens and our families.)
Now, a note to Washington and our state governments – you’ve mismanaged this mess. You fix it.
Let’s do the math –
What is 20% of $600 Trillion dollars in credit derivatives?
Meanwhile, Gaddafi’s government asked the UN Security Council to suspend the sanctions it imposed against Libya a week ago, insisting that “no opposition has been raised to peaceful, unarmed demonstrators”.
From the UN Charter – (there’s more, of course – link follows it)
The Security Council shall determine the existence of any threat to the peace, breach of the peace, or act of aggression and shall make recommendations, or decide what measures shall be taken in accordance with Articles 41 and 42, to maintain or restore international peace and security.
In order to prevent an aggravation of the situation, the Security Council may, before making the recommendations or deciding upon the measures provided for in Article 39, call upon the parties concerned to comply with such provisional measures as it deems necessary or desirable. Such provisional measures shall be without prejudice to the rights, claims, or position of the parties concerned. The Security Council shall duly take account of failure to comply with such provisional measures.
The Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures. These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations.
Should the Security Council consider that measures provided for in Article 41 would be inadequate or have proved to be inadequate, it may take such action by air, sea, or land forces as may be necessary to maintain or restore international peace and security. Such action may include demonstrations, blockade, and other operations by air, sea, or land forces of Members of the United Nations.
Members of the United Nations which have or assume responsibilities for the administration of territories whose peoples have not yet attained a full measure of self-government recognize the principle that the interests of the inhabitants of these territories are paramount, and accept as a sacred trust the obligation to promote to the utmost, within the system of international peace and security established by the present Charter, the well-being of the inhabitants of these territories, and, to this end:
to ensure, with due respect for the culture of the peoples concerned, their political, economic, social, and educational advancement, their just treatment, and their protection against abuses;
to develop self-government, to take due account of the political aspirations of the peoples, and to assist them in the progressive development of their free political institutions, according to the particular circumstances of each territory and its peoples and their varying stages of advancement;
to further international peace and security;
to promote constructive measures of development, to encourage research, and to co-operate with one another and, when and where appropriate, with specialized international bodies with a view to the practical achievement of the social, economic, and scientific purposes set forth in this Article; and
to transmit regularly to the Secretary-General for information purposes, subject to such limitation as security and constitutional considerations may require, statistical and other information of a technical nature relating to economic, social, and educational conditions in the territories for which they are respectively responsible other than those territories to which Chapters XII and XIII apply.
Members of the United Nations also agree that their policy in respect of the territories to which this Chapter applies, no less than in respect of their metropolitan areas, must be based on the general principle of good-neighbourliness, due account being taken of the interests and well-being of the rest of the world, in social, economic, and commercial matters.
Venezuelan President Hugo Chavez and Libyan leader Muammar Qaddafi called for the creation of a southern hemisphere alliance mirroring the North Atlantic Treaty Organization, to counteract the influence of the U.S. and Europe.
They spoke yesterday at the second South America-Africa Summit in Venezuela, where Chavez brought together 30 heads of state including Luiz Inacio Lula da Silva of Brazil, Zimbabwe’s Robert Mugabe and Algeria’s long-time leader Abdelaziz Bouteflika.
“For African countries it’s closer to visit our brothers in South America and we share the same interests of liberation and revolutionary ideals,” Qaddafi said. “Colonialism humiliated us, insulted us and robbed us of our riches.”
My Note – (as I posted on facebook a few minutes ago about this – )
[The above article] is from 2009 – as Qaddafi has been trying for a number of years to create a southern hemisphere NATO like coalition to engage equal force against what he has considered “imperialism” of the northern hemisphere nations. Now he demands that the UN sanctions be lifted despite killing thousands of unarmed protesters (who are now poorly armed with Qaddafi’s own stores of old equipment) – and continuing to have his troops drag people out of their homes to be beaten and arrested in Tripoli.
And, his friend Chavez is gathering other Latin American leaders to form a coalition backing Qaddafi to fight for a “peace process” as defined by Qaddafi and Chavez which intends no real consequences for his actions. That would not serve the people of Libya very well, not the nations of the world, nor the rest of the world’s populations that have been terrorized by this man and his evil crew of criminals and terrorists.
About the International Court – (from the UN Charter) – ChapterXIV
This is the part in Chapter II – that Libya’s leadership defiled, defied and consummately refused to adhere to –
Membership in the United Nations is open to all other peace-loving states which accept the obligations contained in the present Charter and, in the judgment of the Organization, are able and willing to carry out these obligations.
The admission of any such state to membership in the United Nations will be effected by a decision of the General Assembly upon the recommendation of the Security Council.
A Member of the United Nations against which preventive or enforcement action has been taken by the Security Council may be suspended from the exercise of the rights and privileges of membership by the General Assembly upon the recommendation of the Security Council. The exercise of these rights and privileges may be restored by the Security Council.
A Member of the United Nations which has persistently violated the Principles contained in the present Charter may be expelled from the Organization by the General Assembly upon the recommendation of the Security Council.
Not only are there thousands of eyewitness accounts, there is also video recordings from the journalists and cameras there along with cellphone videos and evidence of the harms done, maiming and killing of the Libyan people through the facts determined by doctors who treated them and the people who buried their loved ones after being slaughtered by Qaddafi’s forces. So, it appears that the only one who does not know this is Senior Qaddafi, King of the Southern Hemisphere and all of Africa as he thinks he is.
Or, maybe he has just been hanging around with liars for too long. It probably doesn’t pay to tell him that there are people in his country that don’t like him and despise the barbarity of his wealth mongering brutality.
It was written in the information about Qaddafi’s daughter that she served as a defense attorney for Saddam Hussein. I’m not sure if that is true or not.
It is interesting though.
Qaddafi is going to stop. He’s going to stop because it is in his nature, not because he cares about Libya nor the people of Libya. He is going to stop because someone is going to be intelligent enough to stop him and to stop his regime. And, he is going to stop because his nature is human, not some invincible demigod. That being so, he will stop or be permanently defused, disarmed. and his ability to cause harm utterly destroyed.
Freedom is not a four-letter word. “Kill” is a four-letter word. That seems to be the only word Qaddafi knows to tell his people to do, not prosper, not to share the wealth of his nation with his nation’s people, his intention is to “kill” the West, “kill” what he considers imperialists, “kill” the people who disagree with him, and “kill” his nation’s future.
Why should ten people be allowed to do that?
Qaddafi and his top ten to twenty people are the only ones running this horror upon Libya, and after drawing mercenaries from Africa’s neighboring citizenry those horrors are being perpetrated upon them as well. He has drawn the entire world in this and won’t be happy until the entire Southern Hemisphere Coalition he believes he heads up is engaged in a civil war with the rest of the world. (with him at the center of it.)
That is way too much power for any one man to wield and his family has apparently never learned the word, “no,” except when they are using it. Now is time they learn what “no” means in the hands of others.
One other item from the UN site of interest particularly – (and this includes the oil companies, engineering companies and others doing business in Libya and other firms) –
It is called the Global Compact –
From their page –
What is the Global Compact?
The United Nations Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.
Our international businesses have agreed to do the best they could do on these things and they know how important it is. They have sent decision-makers to learn more about it and have agreed that the costliness of not doing the right thing in these matters is far more expensive, far more unfair to their own business goals and far more unpredictable in the long run.
Business assets are put at risk, human lives are put at risk, opportunities to do business are put at risk and business investments are undermined when human rights violations are rampant, the environment destroyed and corrupt governments are let run without consequences.
I would hope that businesses will cooperate fully with the UN and world leaders as they work to support the goals of the Global Compact, the UN Charter and their underlying principles, both in Libya and elsewhere. It will make the world safer for people and better for business at the same time.
Our goals are the same. Together we can make a difference.