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
What can you do to add to a fantasy world of one-eyed monsters and talking sponges? Where there are tens of thousands of video games of every type mostly well done, animated and easy to use that work well enough to amuse and entertain just about anyone?
What can you do in a world where outrageous lies and sensationalized half-truths attract large audiences but the truth told factually does not and is not believed nor desirable?
What can you do in a country so covered over in things but few real answers to the real problems facing us individually and collectively?
What can you do when the world of business opportunities supports only a few and nearly never women, disabled or minority run startups and businesses?
What can you do when the investors that are available want a return of 10x’s their investment within 5-7 years taken back out of your business for them to do anything at all?
What can you do when to create something new is required in the marketplace but never supported with adequate funding or resources because it is new and innovative which means it has no track record to prove its value?
CricketDiane Artwork combining my photography with a pastel drawing I did of a ballerina getting ready to dance.
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.
112.311 Legislative intent and declaration of policy.—
(1) It is essential to the proper conduct and operation of government that public officials be independent and impartial and that public office not be used for private gain other than the remuneration provided by law. The public interest, therefore, requires that the law protect against any conflict of interest and establish standards for the conduct of elected officials and government employees in situations where conflicts may exist.
(2) It is also essential that government attract those citizens best qualified to serve. Thus, the law against conflict of interest must be so designed as not to impede unreasonably or unnecessarily the recruitment and retention by government of those best qualified to serve. Public officials should not be denied the opportunity, available to all other citizens, to acquire and retain private economic interests except when conflicts with the responsibility of such officials to the public cannot be avoided.
(3) It is likewise essential that the people be free to seek redress of their grievances and express their opinions to all government officials on current issues and past or pending legislative and executive actions at every level of government. In order to preserve and maintain the integrity of the governmental process, it is necessary that the identity, expenditures, and activities of those persons who regularly engage in efforts to persuade public officials to take specific actions, either by direct communication with such officials or by solicitation of others to engage in such efforts, be regularly disclosed to the people.
(4) It is the intent of this act to implement these objectives of protecting the integrity of government and of facilitating the recruitment and retention of qualified personnel by prescribing restrictions against conflicts of interest without creating unnecessary barriers to public service.
(5) It is hereby declared to be the policy of the state that no officer or employee of a state agency or of a county, city, or other political subdivision of the state, and no member of the Legislature or legislative employee, shall have any interest, financial or otherwise, direct or indirect; engage in any business transaction or professional activity; or incur any obligation of any nature which is in substantial conflict with the proper discharge of his or her duties in the public interest. To implement this policy and strengthen the faith and confidence of the people of the state in their government, there is enacted a code of ethics setting forth standards of conduct required of state, county, and city officers and employees, and of officers and employees of other political subdivisions of the state, in the performance of their official duties. It is the intent of the Legislature that this code shall serve not only as a guide for the official conduct of public servants in this state, but also as a basis for discipline of those who violate the provisions of this part.
(6) It is declared to be the policy of the state that public officers and employees, state and local, are agents of the people and hold their positions for the benefit of the public. They are bound to uphold the Constitution of the United States and the State Constitution and to perform efficiently and faithfully their duties under the laws of the federal, state, and local governments. Such officers and employees are bound to observe, in their official acts, the highest standards of ethics consistent with this code and the advisory opinions rendered with respect hereto regardless of personal considerations, recognizing that promoting the public interest and maintaining the respect of the people in their government must be of foremost concern.
History.—s. 1, ch. 67-469; s. 1, ch. 69-335; s. 1, ch. 74-177; s. 2, ch. 75-208; s. 698, ch. 95-147.
It seems obvious that most, if not all states have laws similar to this as well as the Federal government. Why are these laws meaningless in today’s political environment? I don’t get it. I just happened to pick the Florida law because it was easy to find and well stated.
Today is Earth Day-this is an annual celebration of the environment and take the time to assess the efforts needed to protect the natural gifts of our planet. Earth Day theme this year is “environment and climate literacy”, all over the world will be celebrating this theme. For more information, please visit (in English): http://www.earthday.org/earthday/
The ‘war on science’ doesn’t just hurt scientists. It hurts everyone.
By Jacquelyn GillApril 21 at 3:54 PM
Hundreds of thousands of people will march for science this weekend in cities around the world in what is arguably the largest scientific event in history. This March for Science is a direct response to recent attacks on our scientific institutions — on climate and environmental science in particular (including many of the scientists who do this work) and even on the value of evidence-based decision-making by our elected officials.
[ . . . ]
These discussions are necessary because the “war on science” is, for the most part, really a war on public science — that is, science for everyone. Today, the majority of scientific research in the United States is publicly funded, administered through the National Science Foundation, National Institutes of Health, the Environmental Protection Agency, NASA and other agencies. Much of this research takes place in state and federal institutions, including universities and national laboratories. This taxpayer-funded science has a mandate to support the national interest. It is science of, by and for the people.
A firm, outspoken protest upon such inroads upon intellectual independence as are being made in Germany and other parts of the world today was one of the most important results of the meeting of the American Association for the Advancement of Science at Boston.
The resolution adopted by this principal organization of the nation’s scientists will also be read with significance in some parts of our country where with less openness and without a flying of banners of oppression damaging curtailments of intellectual freedom have been made.
Headed “A Declaration On Intellectual Freedom,” the pronouncement reads:
“The American Association for the Advancement of Science feels grave concern over persistent and threatening inroads upon intellectual freedom which have been made in recent times in many parts of the world.
“Our existing liberties have been won through ages of struggle and at enormous costs. If these are lost or seriously impaired there can be no hope of continued progress in science, of justice in government, of international or domestic peace, or even of lasting material well-being.
“We regard the suppression of independent thought and of its free expression as a major crime against civilization itself. Yet oppression of this sort has been inflicted upon investigators, scholars, teachers and professional men in many ways, whether by governmental action, administrative coercion, or extra-legal violence. We feel it our duty to denounce all such actions as intolerable forms of tyranny.
“There can be no compromise on this issue for even the commonwealth of learning cannot endure ‘half slave and half free.’
“By our life and training as scientists and by our heritage as Americans we must stand for freedom.”
(Below this article from 1938 is the manifesto that was signed by these scientists and which very well applies today against the current war on science happening from the Trump and GOP administration in power both in the Federal government and in the majority of state governorships and many state legislatures.)
Group of Scientists Issue Anti-Fascist Manifesto – 1938
Three Nobel Prize Winners, 64 Academicians, and 85 College Presidents Among the 1,284 Signers
Counting among its 1,284 signers, three Nobel prize winners, 64 members of the National Academy of Sciences and 85 college presidents, a ringing denunciation of Nazi and Fascist attacks on scientific freedom was issued by a committee of distinguished American men of science.
“We publicly condemn the Fascist position toward science . . . . In the present historical epoch democracy alone can preserve intellectual freedom,” the manifesto states.
Citing ruthless Nazi persecution of scientists – 1600 teachers and scientists had been driven from their posts by the fall of 1936 – the manifesto asserts that “any attack upon freedom of thought in one sphere, even as non-political a sphere as theoretical physics is in effect an attack on democracy itself.”
Persecution of Jews and “racial” theories of science, publication of one of which furnishes the occasion for this document, are condemned in no uncertain terms. “The racial theories which they (the Fascists) advocate have been demolished time and again.”
The three Nobel prize winners who are among the signers are Dr. Irving Langmuir, associate director of the General Electric Research Laboratory and chemistry prize winner in 1932; Prof. Robert A. Millikan, director of the Norman Bridge Laboratory of Physics, California Institute of Technology and 1923 physics award recipient; and Prof. Harold C. Urey, Columbia University physical chemist honored with the 1923 chemistry prize for the discovery of heavy hydrogen.
The signers, who represent 167 universities and research institutes through the country, pledge themselves to bend their efforts to prevent themselves or America from suffering a similar fate.
The sponsoring committee and the list of signers itself are studded with the names of the noted figures of American science, including many present and former presidents of leading scientific societies. Among the signers and a member of the sponsoring committee is Prof. Wesley C. Mitchell, Columbia University economist who is president of the American Association for the Advancement of Science.
Prof. Franz Boas, former president of the AAAS and the dean of American anthropologists, is a member of the sponsoring committee, as is Prof. Urey. Others on the committee are Prof. Karl M. Bowman of New York University and director of the division of psychiatry of the New York City Department of Hospitals; Dr. John P. Peters of Yale University and secretary of the Committee of Physicians which has been battling the American Medical Association on behalf of group medical care. Dr. Henry E. Sigerist, director of Johns Hopkins University’s Institute of the History of Medicine; Prof. D. J. Struik, Massachusetts Institute of Technology mathematician and editor of “Science and Society”; and Dr. Milton C. Winternitz, professor of pathology and former dean of the Yale Medical School.
Besides those named above, some of the prominent signers include Dr. Karl T. Compton, president of the Massachusetts Institute of Technology; Prof. Anton J. Carlson, University of Chicago physiologist; Prof. Clark Wissler, Yale University anthropologist and curator-in-chief of the department of anthropology at the American museum of Natural History; Prof. Edwin G. Conklin of Princeton, past president of the AAAS and president of Science Service; and Prof. Walter B. Cannon of Harvard, co-chairman of the Medical Bureau and north American Committee to Aid Spanish Democracy.
Manifesto by 1,284 Noted U.S. Scientists Denounces Racialism, Fascist Position on Science
December 11, 1938
NEW YORK (Dec. 9)
The fascist position toward science and the racial theory were denounced today in a manifesto signed by 1,284 American scientists, including three Nobel prize winners, which summoned their colleagues to the defense of democracy to avoid the fate of scientists in totalitarian states.
The manifesto was made public by a committee of prominent scientists headed by Prof. Franz Boas, dean of American anthropologists, who said. “The present outrages in Germany have made it all the more necessary for American scientists to take a firm anti-fascist stand. We are sure that the great majority of German scientists and the German people as a whole abhor fascism. The thousands of teachers and scientists who have been exiled since Hitler came to power bear testimony to the incompatibility of Fascism and science.”
“Our manifesto,” Dr. Boas Added, “declares that we scientists have the moral obligation to educate the American people against all false and unscientific doctrines, such as the racial nonsense of the Nazis. The agents of fascism in this country are becoming more and more active, and we must join with all men of good will in defending democracy today if we are to avoid the fate of our colleagues in Germany, Austria and Italy.
The other members of the committee making public the manifesto are professors Karl M. Bowman, New York University psychiatrist; Wesley Clair Mitchell, Columbia University economist; John P. Peters, Yale University medical scientist; Dr. Henry E. Sigerisy, John Hopkins University medical scientist; D. J. Struik, Massachusetts institute of technology mathematician; Harold C. Urey and Milton C. Winternitz, Yale Pathologist.
UREY, MILLIKAN, LANGMUIR AMONG SIGNERS
The three Nobel Prize winners signing the manifesto are prof. Urey, Columbia University chemist; Prof. Robert A. Millikan, California institute of technology physicist, and Dr. Irving Langmuir, chemist. The signers include 64 members of the National Academy of Sciences.
The manifesto follows:
“In an article entitled ‘the pragmatic and dogmatic spirit in physics,’ which appeared in the April 30 issue of nature (with strong editorial disapproval), wide publicity is given to the official nazi position on science and scientific research. In essence, the article is an attack on all theoretical physics, and, by obvious implication, on scientific theory in general. It introduces the official racialism of the Nazis to divide physicists into good, i.e. non-theoretical and ‘Aryan,’ and bad, i.e., theoretical and Jewish. Similar notions have appeared in many popular magazines and scientific journals in Germany, in the addresses and writings of the Minister of education, of university rectors and deans, of scientists and non-scientists. apart from racial theories, furthermore, science and art are subject to ruthless political censorship. These ideas have found concrete expression in the dismissal and persecution of over 1,600 teachers and scientists (By the fall of 1936) from German Universities and research institutes (and now Austria and Italy too), and in the restriction of higher education to students having the ‘proper’ political and racial qualifications.
GOAL OF SCIENCE STRESSED
“American scientists, trained in a tradition of intellectual freedom, hold fast to their conviction, that, in the words of the resolution adopted by the American association for the Advancement of Science, ‘Science is wholly independent of national boundaries and races and creeds and can flourish only when there is peace and intellectual freedom.’ If science, to quote the AAAS resolution again, is to ‘continue to advance and spread more abundantly its benefits to all mankind — and who can attack that goal — then the man of science has a moral obligation to fulfill. He must educate the people against the acceptance of all false and unscientific doctrines which appear before them in the guise of science, regardless of their origin. only in that way can he insure those conditions of peace and freedom which are essential for him and for the progress of all mankind.
“It is in this light that we publicly condemn the fascist position towards science. The racial theories which they advocate have been demolished time and again. We need only point to the work of Heinrich hertz in physics, fritz Haber and Richard Willstatter in chemistry, Ludwig Traube, Paul Ehrlich, and August Wassermann in biology and medicine, all German Jews and all empirical scientists. The charge that theory leads ‘to a crippling of experimental research’ is tantamount to a denial of the whole history of modern physics. From Copernicus and Kepler on, all the great figures in western science have insisted, in deed or in word, upon the futility of experimental research divorced from theory.
“We firmly believe that in the present historical epoch democracy alone can preserve intellectual freedom. Any attack upon freedom of thought in one sphere, even as non-political a sphere as theoretical physics, is in effect an attack on democracy itself. When men like James Franck, Albert Einstein, or Thomas Mann may no longer continue their work, whether the reason is race, creed, or belief, all mankind suffers the loss. they must be defended in their right to speak the truth as they understand it. If we American scientists wish to avoid a similar fate, if we wish to see the world continue to progress and prosper, we must bend our efforts to that end now.”
The workshops were expressed as scientists pitching their science and were intended to help communicate more effectively with non-scientists. The one I attended of the three scheduled times was an interesting round table style event with great information and ideas.
As I was there to understand how to more effectively communicate to scientists, the science community, engineers, architects, scholars, researchers, academics and applied science fields, why they should get out and march for science – the ideas that shaped my thinking from the workshop are stunning, to say the least.
I discovered that many people engaged in these fields live in something of a bubble but not because the information about people around them isn’t there, but because it is ignored. Maybe I don’t know how many scientists and engineers that I know or meet, or my neighbors know or meet every day or within our daily lives – neither do scientists and engineers know that beyond the few people they are interacting with daily assumed to know science – they’re ignoring the multitude of people they see and come in contact with – who don’t.
That is a problem.
If I see 50 people today, and 43 of them don’t know much of anything about science or haven’t really made the connection between their own lives and the science / engineering & technologies making it possible around them, then what is the true reality of the situation? Am I really in a bubble because I’m only interacting with the seven of the 50 who had common ground with me? Or only the 3 of those 7 that I already knew? It is an interesting question and I discovered that scientists and engineers / architects and academics may be living in self-constrained bubbles not realizing that the rest of us are here too, didn’t study those specialties and may very well not understand them but need to or want to. Or, at the very least, to we may want and need to understand how those sciences and engineering disciplines are valuable to us, enhance our lives, and that, in fact, we are relying on and using the advantages of them every day.
Without the understanding of the physics of combustion, our cars don’t go anywhere. Without getting the dynamics of that combustion harnessed appropriately, not only do our cars not go, but they become a dangerous combination rather than an effective one for transporting us where we want to go. We marvel at helium balloons for celebrations and birthday parties with its lighter than air quality, but never think about the discoveries from science and engineering that developed them and shaped things we could use from those discoveries. Scientists and engineers can point out those things to us in our interactions with them because they do think that way about it and do know – but they’re not.
In the workshop, I also learned that scientists are apologetic about their intelligence and studying to enhance it – to reach for genius within themselves and within their lives where many of us have not thought that important enough to us to do. I’m ashamed that scientists, engineers, researchers, academics or anyone would need to feel that way. Maybe I’m alone in being proud of them working to bring their mind to greater capacity to learn and to understand what is known, to discover beyond those things to develop things that can be done with it all and to strive for greater use of their intelligence and intellectual faculties. It is more than admirable, it is what we should want as a nation and as a community, for every individual to strive to excellence, to learn, to enhance their mind’s capacity to learn and to grasp what science and engineering has already discovered – and to move that beyond where we are today. It should be cherished and supported – every kind of genius and brilliance, not shamed. And, yet it is shamed in our society and I wish that were not so. It could be celebrated rather than shunned.
So, our science community, scientists, intellectuals, academics, engineers, architects and applied scientists may not be interacting with the solid communities of support around them in real daily life, because we don’t act very supportive when they talk and we feel stupid. Or because we know how smart they are and feel stupid when we as fellow community members come into contact with them. But to me, I’m inspired by them to accept that we are all stupid, including me – on so many things and so many levels with many things yet to learn all the time, and it helps me to want to put the time, the work, the effort and the perseverance in that it takes for me to be smarter, learn and think with greater capacity. And, yes – it still makes me feel stupid, but that’s okay.
The workshop helped the group of people who came to understand how to communicate science and engineering to non-scientists and the public. I heard suggestions that were brought into real terms, like describing the warming and more acidic oceans as a place the fish who live there can’t leave simply because conditions become untenable. Well, they didn’t put it quite like that, but the analogy was perfect for communicating the real problems of changes to our oceans. And, I discovered that the science community has many efforts to try and engage with the public but are not getting the audiences that need to engage with them from the general public and communities within it.
Also, I discovered that scientists don’t understand how many of us just don’t get it when it comes to scientific and engineering things. And, across disciplines – many of the scientists and engineers I’ve met including at the workshop and sign making event, don’t get the science and engineering from the other disciplines around them – whether it is that cooking is literally chemistry, or that people are using technology when they turn the key in their car and it works.
The March for Science on April 22 is hosting a lot of groups that are making efforts to engage the public about why science is important and in support of evidence-based facts, rather than alternative facts altered by the political agenda or business needs of the moment. In the workshop, when I said “evidence based facts”, several scientist laughed and the moderator said, “has it really come to that – we have to call it evidence based?” And, I thought – where have you been that you don’t know that?
It is time for scientists and engineers of all disciplines to take a hard look at what is happening in the real world around them, because it is far more pervasive a problem than budget cuts to science funding. Entire areas of research are being denied, excluded or altered for political purposes and business needs of the short term. Areas and specifics where statistical data had been collected in various forms are being changed to suit making the numbers look better, demographics look better, economic outlooks appear better or to redefine groups of information and statistics entirely.
Not only climate research and ocean research are being de-funded, but allowed focuses of study are being put in place to deny much of the possible research yielding facts that would be unsettling to the current political agenda or to the businesses and corporate interests supporting them. Scientific policy is being made by non-scientists, many of whom do not value science or engineering – even as their lives and business interests rely on them without realizing it. Forensic science tools, programs and research are being discarded in favor of other methods more politically motivated than factual.
And, the US population at a time when to be competitive – must be well educated to a college level or above and have a solid understanding of math, physics, science, scientific method, reasoned and critical thinking, technology, finance, economics, basic engineering, computer coding and business how-to, is lagging behind nearly every other nation in the world. The adult population in the US from elderly to working adults to young adults just entering the job market require these levels of education and skills to be competitive, employable and have the global opportunities that exist in order to survive with a basic sustenance to support living. But, the vast majority of Americans – do not have even the most modest level of those skills, education and applied use of them. And, yet we could – and our science communities can help because they know how important it is.
March for Science / Science March – April 22, 2017
On the whole, Trump has never been viewed more negatively on matters of truth. A Quinnipiac University poll this week found that 60 per cent of Americans think he is dishonest, a new high. Time ran a cover story on Trump with the headline “Is truth dead?” The Wall Street Journal editorial board, long Trump-friendly, accused him of damaging his presidency with a “seemingly endless stream of exaggerations, evidence-free accusations, implausible denials and other falsehoods.”
Yet Trump has also managed a remarkable feat: maintaining a reputation among millions of Americans as a man of rare honesty at the same time as he launches an unprecedented daily barrage of Oval Office lies.
[ . . . ]
Charlie Sykes, the Trump critic and former conservative talk radio host in Wisconsin, says there is an “alternative reality bubble” within the right, created in part by conservative media. Trump, he said, is both developing and exploiting this “post-truth environment,” elevating once-fringe conspiracy theorists and propagandists who will then amplify his lies.
Well worth going over and reading the entire article – explains it very well with quotes from people expressing why they believe Trump even though they know he is lying.
These articles from 2010 and 2014 are examples of the right wing war on facts that has been ongoing for decades. An alternative fact bubble has not only been created but maintained that now alters what many Americans perceive as the facts about various subjects including science, history, the value of education and academics, economics, among many others.
An idea that has been promoted as well, is that facts are a matter of opinion and that one’s opinion changes what the facts are. In application, this means we have, in America, radio stations, right-wing controlled cable news / entertainment shows that have been telling Americans that facts are not only open to interpretation as to their value and meaning, but also that the facts themselves are based in opinion or essentially no more than an opinion and consequently, not facts at all.
Obviously, whether a person decides by opinion that rain is occurring – rain is nonetheless a fact and without some protection from it and good judgment based on that fact, that rain will continue as a fact with whatever dangers it represents. The only real thing that will happen considering rain that is occurring to be only an opinion, is for the person believing that to put themselves in unnecessary and predictable difficulties of getting wet, driving too fast for conditions and maybe harming their life and health or that of others – as a result.
In the two articles below, there are indications of this thrust to change facts, alter facts that are available concerning subject matter and erase the substantive value of facts as a critical foundation of reasoning and judgment. In climate science, the removal of the subject from text books, policy, agencies, websites, government research – does not change the facts about its impacts and dangers. It only makes our country less capable of mounting successful efforts to either positively influence those changes or to mitigate damages and harms that will occur as a result.
In economics and macro-economics, the same is true when the facts are deleted, altered, dismissed, discredited or denied. And, facts in every other arena and focus tend to the same result when treated as mere opinion rather than substance of reality.
Even the course on world history did not escape the board’s scalpel.
Cynthia Dunbar, a lawyer from Richmond who is a strict constitutionalist and thinks the nation was founded on Christian beliefs, managed to cut Thomas Jefferson from a list of figures whose writings inspired revolutions in the late 18th century and 19th century, replacing him with St. Thomas Aquinas, John Calvin and William Blackstone. (Jefferson is not well liked among conservatives on the board because he coined the term “separation between church and state.”)
“The Enlightenment was not the only philosophy on which these revolutions were based,” Ms. Dunbar said.
[ . . . ]
Mavis B. Knight, a Democrat from Dallas, introduced an amendment requiring that students study the reasons “the founding fathers protected religious freedom in America by barring the government from promoting or disfavoring any particular religion above all others.”
The Board of Education will approve new history textbooks for the state’s 5-plus million public school students in November. But it heard hours of complaints about 104 proposed books during a sometimes heated public hearing.
[ . . . ]
Debates over academic curriculum and textbooks have for years thrust Texas’ Board of Education into the national spotlight, sparking battles over issues such as how to teach climate change and natural selection. Many publishers sell books created for Texas to school districts in other states.
In 2010, while approving the history curriculum standards that this year’s round of new books are supposed to follow, conservatives on the board required that students evaluate whether the United Nations undermines U.S. sovereignty and study the Congressional GOP’s 1994 Contract with America.
Kathleen Wellman, a history professor at Southern Methodist University, said many books give Moses – the biblical Hebrew leader who received the Ten Commandments from God – credit for influencing the U.S. Constitution, so much so that Texas students might believe “Moses was the first American.”
“Moses shows up everywhere doing everything,” Wellman said.
[ . . . ]
A group of experts convened by the left-leaning advocacy group Texas Freedom Network has objected to some proposed books’ overemphasizing the influence of the Ten Commandments and other Christian tenants on the American Revolution.
“There are more than 100 pages of errors,” said Kathy Miller, Freedom Network’s president. Board member David Bradley, a Beaumont Republican, noted that some of the academics doing reviews for Miller’s group were paid . . .
Go see this – a wonderful innovation in removing oil spills effectively that needs to be commercialized and brought into the marketplace for use in oil and gas companies’ required cleanup plans. – cricketdiane
White House is calling Tuesday’s exec order the “energy independence executive order.”
Jennifer Jacobs added,
BIG: @POTUS@realDonaldTrump will sign the new Energy Independence EO to end the war on coal & usher in a new era of #AmericanEnergyhttps://twitter.com/thisweekabc/status/845998022198644736…
As Trump targets energy rules, oil companies downplay their impact
Thursday, 23 Mar 2017 | 11:08 AM ET
President Donald Trump’s White House has said his plans to slash environmental regulations will trigger a new energy boom and help the United States drill its way to independence from foreign oil.
[ . . . a discussion from oil industry financiers that regulation change doesn’t impact them]
Refiners have also long complained that environmental regulations have stymied attempts to build new refineries and that they have borne the brunt of costly rules requiring them to blend biofuels into their gasoline.
Still, some energy analysts and regulation experts point out that the biggest drivers for these industries, too, tend to be supply and demand — not regulation.
The abundance of cheap natural gas is seen as the biggest obstacle to reviving coal country, since both fuels compete for space in the furnaces of U.S. power plants. For refiners, the key driver for profitability is the differential between the price of their raw material, crude oil, and the fuels they make with it.
“Supply and demand are the fundamental forces driving markets,” said Coglianese, the University of Pennsylvania law professor. “Regulation is relatively trivial.”
The order is expected to end a de facto ban on building new coal power plants in the country, a moratorium on coal mining and the end of far-reaching climate regulations on states.
According to a draft copy of the “Energy Independence” executive order reviewed by the Washington Examiner, the first target on the menu will be the Environmental Protection Agency’s Clean Power Plan and New Source standard for power plants.
The draft order states that the power plan would cost $39 billion a year, based on a previous industry-funded study by NERA Consulting that the draft order cites to justify ending the Obama administration’s version of the plan,
[ . . . ]
The order also looks to rein in the New Source power plant standard, which the coal industry refers to as EPA’s de facto ban on building new coal plants. The regulation requires that all new coal plants be outfitted with expensive carbon capture technology, which the industry argues is cost prohibitive and makes building new coal plants next to impossible.
But since both climate rules are being reviewed in federal court, the Trump order also directs the attorney general to request all courts reviewing the climate rules to hold the cases in abeyance, or remand them back to EPA while the administration reviews them.
In addition, the order directs the Interior Department to lift its moratorium on issuing new coal leases to open up mining again.
It also calls for an interagency working group to “reconsider” the Social Cost of Carbon, which is the metric the Obama administration used to justify the cost of its regulations, while directing the White House Council on Environmental Quality to rescind an agency-wide directive by the Obama administration to include climate change in all environmental reviews of projects.
The White House intends to unravel the Clean Power Plan without providing a replacement, according to a source briefed on the issue.
An executive order expected to be released next week also instructs the Justice Department to effectively withdraw its legal defense of the climate rule in the U.S. Court of Appeals for the District of Columbia Circuit. The move aligns the White House with about two dozen Republican state attorneys general who are challenging the way the rule restricts greenhouse gas emissions at power plants.
The result, if successful, would mean the case is “frozen in place,” the source said, preventing the D.C. Circuit, which has six judges appointed by Democrats and four by Republicans, from issuing an opinion this spring . . .
[ . . .]
That raises questions about whether EPA would fail to satisfy legal requirements to regulate carbon dioxide and other climate pollutants.
The agency in 2009, responding to the Supreme Court, determined that greenhouse gases endanger human health. That requires EPA to regulate emissions, and the agency did that by promulgating the Clean Power Plan.
“I think, as a matter of law, that carbon is a pollutant has been settled,” said Christine Todd Whitman, who served as EPA administrator under President George W. Bush. “EPA has to act once you have that kind of a finding.”
[ . . . ]
The administration anticipates that. The executive order instructs EPA to “revise or rescind” the Clean Power Plan, wording that’s meant to comply with the Administrative Procedure Act by letting EPA, not the White House, determine the fate of the rule.
The agency will then go through the long rulemaking process. But rather than promulgating a new rule, it will terminate an existing one. It will post notice and take comments and then put out a proposed rule. After accepting more comment, the action will be finalized. Then the administration is “off to the races in court,” the source said.
Solve for ‘X’: Trump’s war on facts extends to undermining key federal statistics
How do you run an economy without statistics? Poorly, that’s how. But that’s what we’re in for if we muzzle and starve the agencies that gather this context — a fate that seems likely under the current management.
By MIKE MEYERS
FEBRUARY 24, 2017 — 6:28PM
How tempting to gauge reality by self-fashioned yardsticks. Economists rightly worry that the Republican-led Congress and the Trump administration will do just that.
For years, Congress has been slashing budgets for gathering economic statistics — blithely acting as if calculating mass layoffs, worker pay and benefits, exports and imports, or income disparity between regions is a boondoggle.
A new president averse to facts he doesn’t like could further vandalize honest portraits of economic performance.
[ . . . ]
The consequences could be a federal government that ignores warnings of economic distress and makes misguided policy choices that leave millions of Americas the poorer for it. Calculated chaos — or, rather, chaos born of miscalculation.
Just this month, the Trump administration has embarked on distorting economic reality.
The White House privately has pondered changing the way trade balances are measured — to artificially balloon the size of U.S. trade deficits, the Wall Street Journal reported. Like magic, a $63.1 billion trade deficit with Mexico last year would become a $115.4 billion deficit.
Fabricated fears would be a call to arms for extreme policies on trade favored by the White House.
A spokesman for the White House said last week that the federal government was no longer going to “waste money” on climate research. Money to maintain even existing climate satellites is disappearing. NASA has been told to stop worrying about our home planet and focus on Mars.
[ . . . ]
Which means that the rest of us need to add our weight to the political balance. Upset by EPA chief Scott Pruitt and his assertion that carbon dioxide isn’t driving global warming? Scared by Trump’s insistence that climate change is a Chinese hoax? Inspired by the plucky local officials determined to try and keep the fight alive? Then show up in Washington on April 29, for the next great mobilization of the cresting resistance. More than 100,000 people have already RSVP’d for the People’s Climate March — it’s our chance to say we won’t stand silently by as the planet melts.
A few things that happened this week: one set of researchers announced that February was the planet’s fourth-warmest month on record, which is especially bad news since the El Niño that produced last year’s record-breaking heat is over and we’re supposed to be cooling a little.
Another group of scientists published data showing that, for the third year in a row, Arctic ice has set a new record winter low. Still other statisticians showed that, to date, this has been by far the worst wildfire season on record in the United States — two million acres burned against an average of 200,000.
In Peru, last fall’s record drought has given way to record flooding, with dozens dead and 100,000 homes damaged. In Namibia, the worst flooding in history . . . I could go on.
For years, some scientific data was classified as businesses, corporations, oil companies, politicians and the Republican Party pursued a war on information about climate change, ecology, pollution, pollutants, harm from pollutants, health and community damage from specific pollutants and pollution, climatology, sea level rise, arctic and glacial ice loss, CO2 levels, smog, rivers and ocean pollution, global warming, and resource removal damages from mining and drilling to refining and shipping / transportation of those natural resources.
Yes, disinformation and sequestering of scientific data created harm during the decades when this war on science occurred in the United States and around the world where US political and business leaders got their way. Today, we face the same disinformation efforts on a massive scale that threaten to sidetrack, derail and even to decimate data and research that have been collected as well as to alter those facts beyond recognition in pursuit of invalidating their merit in order to support a political and business agenda.
Unfortunately, when these political and business agendas are served this way, as we have seen before – the facts do not change. The basis of the facts do not change. The reality suggested by the facts do not change. Good sound reasoning that would have been based upon those facts does not change, but that reasoning and the judgments for actions that would come from it cannot be adequately and appropriately made when facts are altered to suit, or when facts are deleted or withheld.
Inasmuch as that is the purpose of political and corporate interests to call lies as facts and facts as lies – without realizing it, they are causing immediate and long-term harm to themselves, their businesses and efforts as well as to others, to our country, our world and to future generations. Without accurate data and research openly available, it is not only science that cannot reasonably make sound research and discoveries, but also that every applied science will err and pursue unsound practices as well – from engineering, civil engineering, structural engineering, materials engineering to architects, builders, developers, academics, teachers, professors, project managers, and every kind of scientist and scientific discipline or focus.
Businesses and corporations along with their products and services being offered in the marketplace rely on these disciplines whether they are truly aware of it or not.Without accurate demographics and financial data or only part of it in order to make the picture look better, businesses will be hindered as they will also fail when their buildings are not built on sound principles of structural engineering based upon real and complete scientific data, scientific research and peer reviewed for accuracy.
When a politician looks at a smokestack pouring pollutants into the surrounding communities and says it is not pollution, or it is not happening, or that those are not the facts, altering scientific data or withholding scientific data or preventing the collection of that data – does not change the facts about those pollutants coming into the air, water, soil, surrounding communities and the people who live there. But, that is what politicians and businesses are trying to do and currently making a war on science once more to try and accomplish their short term agenda without understanding the consequences.
In a small way, it is obvious where harm has been done and lives damaged or lost by denying facts whether it is to see people drown when they drive across flooded streets rushing with water, or pretend that a windchill of two degrees and an air temperature of twelve doesn’t make any difference running for the subway to go to work. The facts were the same regardless of how they were interpreted to be something different than they were in each case. In more massive ways, efforts that could have been made for very small amounts of money to diminish the level of pollutants in streams, rivers, the ocean, the air, the soil – were not made because facts were altered and withheld for decades that indicated those pollutants. It didn’t change the harms being done nor did it change the need to fix it – but doing it that way certainly made fixing it and those harms done into a much more massive problem with an exponentially greater price tag and necessity.
Jul 17, 2009 – U.S. releases unclassified spy images of Arctic ice … A satellite image released by the Interior Department shows ice on the East Siberian Sea in 2000. … The images were derived from classified images made as part of the ..
1960’s satellite imagery of polar ice discovers “enormous holes” in the sea ice
NSIDC has announced the discovery and recovery of space footage of Earth’s polar icecaps, dating back to 1964.
With funding from NASA, the researchers located and made operational an old film reader that could digitize the images. The team figured out how to determine geographic location for each image, given the orbit of the satellite. And they’ve now made more than 250,000 images public.
In the Arctic, sea ice extent was larger in the 1960s than it is these days, on average. “It was colder, so we expected that,” Gallaher said. What the researchers didn’t expect were “enormous holes” in the sea ice, currently under investigation. “We can’t explain them yet,” Gallaher said.
“And the Antarctic blew us away,” he said. In 1964, sea ice extent in the Antarctic was the largest ever recorded, according to Nimbus image analysis. Two years later, there was a record low for sea ice in the Antarctic, and in 1969 Nimbus imagery, sea ice appears to have reached its maximum extent earliest on record.
Many people in the United States today that I meet, do not understand the importance of science. They believe they’re not using science everyday and seem to feel it is something far beyond where they live. Many times, people tell me they did not do well in science (meaning, in school) so therefore they don’t do any of that “science stuff”.
But, the same people every day, use science without realizing it and are very, very good at it. They cook their food which is a vast array of chemistry knowledge to do it successfully, along with using math and scientific methods. They use scientific knowledge generally to make calculations about things from rolling a ball across the floor to their child – to getting ready for work without scalding themselves in the shower – to running for the bus or subway and getting seated on it without flying into the windows or walls.
When they make change to buy their coffee and bagel, they’re use of both science and math is in action without a thought and using no more than seconds to calculate their caloric needs, the temperature of the coffee, the time it takes to get it all and still get to work on time and what will be required to get across the street without spilling it all over their nice work clothes (among other things from wind and temperature and surface footing of the sidewalk and roadway, and timing and conditions and the basic physics of it all.)
Scientific facts underlie all of these things and all of the actions listed above along with many others in our every day use now – science and engineering have provided materials that allow our foods to be kept longer, to get to us, to be stored safely, to be nutritionally adequate, among many other aspects that it takes for our supply chain to get it to us.
People who believe they are not using science or that it doesn’t mean anything important – or that engineering it something “out there” beyond their daily experience simply fail to grasp the reality they are engaging every single moment as they go about their daily life.
Unfortunately, as politicians and people generally, denigrate the importance and value of science then make decisions about science and scientific policy or funding it – or today, de-funding science, research, engineering and scientific advances, they may not realize the damage of their choices until it is too late as it impacts their lives in obvious, immediate and harmful ways.
That effect has happened for instance, when infrastructure funding has been removed, de-funded, or arbitrarily and summarily cut, or vastly insufficient to the tasks and projects required of it. At some point, infrastructure failures occur which were preventable and often, lives lost or permanently maimed as a result. The facts were still the facts. Political interpretation of the facts did not change the reality and once the damage was obvious in immediate and harmful ways, people could see where the choice to swing those funds into something else rather than support infrastructure was not a sound judgment based upon the real facts.
How the Science of “Blue Lies” May Explain Trump’s Support
They’re a very particular form of deception that can build solidarity within groups
“People condone lying against enemy nations, and since many people now see those on the other side of American politics as enemies, they may feel that lies, when they recognize them, are appropriate means of warfare,” says George Edwards, a Texas A&M political scientist and one of the country’s leading scholars of the presidency.
If we see Trump’s lies not as failures of character but rather as weapons of war, then we can come to see why his supporters might see him as an effective leader. From this perspective, lying is a feature, not a bug, of Trump’s campaign and presidency.
[. . . ]
For millions and millions of Americans, climate change is a hoax, Hillary Clinton ran a sex ring out of a pizza parlor, and immigrants cause crime. Whether they truly believe those falsehoods or not is debatable—and possibly irrelevant. The research to date suggests that they see those lies as useful weapons in a tribal us-against-them competition that pits the “real America” against those who would destroy it.
[ . . . ]
What can the rest of us do in the meantime? We must make accuracy a goal, even when the facts don’t fit our emotional reality. We start by verifying information, seeking out different and competing sources, cultivating a diverse social network, sharing information with integrity—and admitting when we fail. That’s easy. But the most important and difficult thing we can do right now, suggests this line of research, is to put some critical distance between us and our groups—and so lessen the pressure to go along with the herd.
There was a time in the US when satellite images of the polar regions were classified and not available for scientific study and comparison. If they had continued to be classified, the understanding we are gaining today could not be accurately made.
During the years predating this article, a great deal of climate change, ecological data and research, global warming and sea level rise, CO2 data and global sea current changes data along with the science being done with any of it – was actively being derided and publicly devalued. Many scientists were denigrated to the point of losing their careers in this war on science. As information became available, the evidence of global changes became obvious to the extent that denying those changes bordered on delusion. Today, we have the same fight for facts and truth again, for science and scientific inquiry to be held in high regard and protected rather than denigrated by some political pursuit of power over public opinion.
I found this page from 1999 when the satellite photos from polar icecaps was made available by the Clinton administration such that science could utilize them –
Clinton Releasing Antarctica Images Associated Press, September 14, 1999
President Clinton, warning that global warming could bring cataclysmic consequences, announced the release Wednesday of classified satellite images of part of Antarctica to help scientists chart world climate changes. He said the two sets of images taken 10 years apart were “one small contribution” to the understanding of climate change studies. “The overwhelming consensus of world scientific opinion is that greenhouse gases from human activity are raising the Earth’s temperature in a rapid and unsustainable way,” the president said in a speech at the International Antarctica Center. “The five warmest years since the 15th century have all been in the 1990s.” “Unless we change course,” Clinton said, “most scientists believe the seas will rise so high they will swallow whole islands and coastal areas. Storms like hurricanes and droughts both will intensify. Diseases like malaria will be borne by mosquitoes to higher and higher altitudes and across borders, threatening more lives, a phenomenon we already see today in Africa.”
The data include seven previously classified images taken by US spy satellites in the mid-1970s and 1980s of the so-called Dry Valleys environment. Satellite pictures traditionally are classified because they reveal US intelligence-gathering capabilities. The new images are intended to give scientists a baseline for environmental studies, including the monitoring of the Antarctic ozone hole and the West Antarctic ice sheet. “Together with data gathered on the ground, the newly released images will help scientists better understand ecological dynamics in this extreme environment and their response to climate change,” a White House statement said. …
The pristine areas of Antarctica are closely watched because scientists expect climate changes to be more significant in the polar regions. Moreover, the Antarctic ice sheet helps regulate the climate of the entire Earth, and preserves a climate history going back more than 400,000 years. The pictures released by Clinton, taken by military satellite, show a detailed view of the Dry Valleys region of the Transantarctic Mountains, a 1,900-foot-long range that splits the east and west regions of Antarctica. The region pictured is near the US McMurdo Station, an observatory for the international global positioning system. The newly released pictures are modified versions of fine-resolution images taken by spy satellites. … Last month, Gore announced the declassification and release of 59 satelllite images of the Arctic to help scientists study the interaction between polar ice caps and global warming.
Constant warmth punctuated by repeated winter heat waves stymied Arctic sea ice growth this winter, leaving the winter sea ice cover missing an area the size of California and Texas combined and setting a record-low maximum for the third year in a row.
“I have been looking at Arctic weather patterns for 35 years and have never seen anything close to what we’ve experienced these past two winters,” Mark Serreze, director of the National Snow and Ice Data Center, which keeps track of sea ice levels, said in a statement.