The Rich Get Richer …

Last night, I came across a short piece by Robert Reich, whose work I’ve shared here before.  I hadn’t, to the best of my knowledge, heard of Paul Singer before, so after reading Reich’s piece, I did some digging.  Paul Singer is one nasty man … a very wealthy, nasty man.

Robert Reich-4Robert Reich
27 December at 19:40

From time to time, I’m going to write in some detail about how the American oligarchy is shafting Americans by siphoning up the wealth of the nation for itself and corrupting our politics. Please let me know if you find these short summaries helpful.

Today’s example: Billionaire Paul Singer’s Elliott Management hedge fund, which has launched a campaign to lay off workers, sell off key assets, and extract huge short-term profits at AT&T – the iconic $270 billion company with 257,000 employees.Paul SingerSinger wants AT&T to save up to $10 billion a year by outsourcing jobs, closing corporate retail stores and outsourcing to dealers, selling off assets (such as its Puerto Rican network).

And instead of using these savings to invest in better services and high-speed broadband internet, Singer wants AT&T to buy back its stock in order to get higher short-term share prices – a boon to Singer’s hedge fund, which has been buying up AT&T.

If Singer succeeds, he will hollow out a major U.S. employer and critical provider of broadband and wireless services.

Singer’s Elliott Management is a leading vulture capitalist with a track record of destroying jobs, reducing wages, abandoning communities, and pumping up share prices in the short term.

Its wrecking ball is worldwide. One of Singer’s few unsuccessful campaigns, to block a merger within Samsung, eventually led to the impeachment and imprisonment of the South Korean President after Singer’s opponents became so desperate to fend off his attack that they allegedly began bribing government officials.

Singer’s ventures generated average annual returns of almost 14 percent, making him and his executives hugely wealthy. The mere news that Elliott has invested in a company often causes its stock price to go up—creating even more wealth for him and his hedge fund. Singer’s own net worth is $3.5 billion.

Singer has been investing some of his riches in Republican politics. In the 2016 election he contributed $24 million, and continues to donate to the Republican National Committee and to individual Republican congressional candidates. Singer contributed $1 million to Trump’s Inauguration, and the two have met at the White House, at Trump’s request.

Not surprisingly, many policies enacted under Trump and Senate Republicans have benefitted Singer — including corporate tax cuts, the shrinking of governmental agencies, and the aggressive elimination of regulations, particularly in the financial industry.

This is how the American oligarchy works, friends.

And now, let me tell you just a bit more about Mr. Paul Singer …

Singer made a lot of his money by purchasing sovereign debt from financially-distressed countries, usually at a massive discount. Once a country’s economy regained some stability, Singer would bombard its government with lawsuits, until he made his money back with interest. The practice is called vulture capitalism — feeding off the carcass of a dying nation.

Over the past couple of decades, Elliott has made billions by buying large stakes in American companies, firing workers, driving up short-term share prices, and in some cases, taking government bailouts. Bloomberg News has described Singer as “the world’s most feared investor,” which tells you a lot.

Some countries, including the United Kingdom, have banned this kind of behavior. It bears no resemblance to the capitalism we were taught about in school. It creates nothing. It destroys entire cities. It couldn’t be uglier or more destructive. So why is it still allowed in this country? Because people like Paul Singer have tremendous influence over our political process. Singer himself was the second biggest donor to the Republican Party in 2016. He’s given millions to a super PAC that supports Republican senators. You may never have heard of Paul Singer. But in Washington, he’s rock star famous. That may be why he’s almost certainly paying a lower effective tax rate than you or me. Just in case you’re still wondering if the system is rigged.

In October 2015, Singer’s hedge fund disclosed an 11 percent stake in Cabela’s, the sporting goods retailer, and set about pushing the board to sell the company.  Cabela’s management, fearing a long and costly fight with Singer, announced it would look for a buyer. At the time, Cabela’s was healthy. The company was posting nearly $2 billion a year in gross profits, off $4 billion in revenue. There was no immediate need to sell. But they did anyway. One year after Singer entered the equation, Bass Pro Shops announced the purchase of Cabela’s. The company’s stock price surged. Within a week, Singer cashed out. He’d bought the stock for $38 a share. He sold it for $63. His hedge fund made at least $90 million up front, and likely more over time.

But in Sidney, Nebraska, it was a very different story. The residents of Sidney didn’t get rich. Just the opposite. Their community was destroyed. The town lost nearly 2,000 jobs. A heartbreakingly familiar cascade began: people left, property values collapsed, and then people couldn’t leave. They were trapped there. One of the last thriving small towns in America went under.

Oh … one last thing … in case you were wondering, Trump applauds Singer’s investment in AT&T, which owns CNN …

Singer-Trump

Still think you’re living in a “democracy”?

41 thoughts on “The Rich Get Richer …

  1. Interestingly, as an aside to this thoroughly nasty story about Paul Singer, I saw a post on FB from a woman in the UK, trying to engage with her son about Climate breakdown and what was the best thing to do in the face of global destruction. He (age 21)answered, “Move to the US, because they have the best resources for survival.”
    I was quite shocked by that answer. He has never been to the US as far as I am aware. It just goes to show that Trump and his fake news ideas from CNN ideas, creating a bad image on the global scene, are just so inaccurate when it comes to the young. I think the world is in a very precarious place right now. We, the people, have to decide what we want from the future. Runaway economic growth at the hands of people like Trump and Singer, will seal the fate of humanity in a spectacular downfall of extinction, both animal and human. Perhaps people like Singer will be able to afford biodomes in which to exist, but the rest of us will be dead. People really need to wake up and really smell the coffee, because it is going bad and it is going to kill us if we do not resist the urge to keep drinking it. We need a massive scale back on our lifestyles. We need to do so much that will be hard to do, but there are no alternatives. It’s them (the top 1%)or us. We need to decide!

    Liked by 1 person

    • I was eating a bowl of rice as I began reading this comment, and I nearly choked, spitting rice on my monitor, when I read of the man telling his mum to move to the U.S.!!! We are the biggest polluter per capita, and the second largest polluter overall, in the entire world. We use deadly chemicals on our crops, throw coal slurry into our streams and rivers, throw plastic into our oceans, and we are not doing a damn thing to fix any of it! Why anybody would want to move to this country for any reason is beyond me! Plus, we have a madman at the helm who is starting the new year off by bombing people and who is going to bring the wrath of Khan down on our heads before long! Sheesh. You’re right, apparently Trump’s propaganda machine is working well across the pond. And, you’re also right about the solution … we are going to need to make some tough choices if we want life on earth to survive. My fear is that all we can do will not be enough if our leaders don’t do their part. And so far, the “leader” of the U.S. is doing the exact opposite and plans to continue to do so, along with his rich cronies. Grrrrrrrrrrrrrrr. Bah humbug!

      Liked by 2 people

  2. I remember when takeovers took place and people lost their pensions. The entire R&D department where my husband worked closed down. That’s when the IRAs began. People also were being let go and temps taking their place. Young people started looking out for themselves. There was no company loyalty anymore. 😦 — Suzanne

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    • Interesting you should say that. The urology group where my daughter works was recently purchased by a private equity group … they offered each of the doctors that owned it $1 million. One of the first things they did was to stop the employee pension plan. By law, they have to pay out what has already been accrued, but there is no longer a pension plan. They make it quite clear that the priority is NOT patient care, and they will turn away any who don’t either have insurance or cash in hand. Sigh. Another sign of the times.

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        • She’s strongly considering it, for you’re right that she will not likely be happy in such an environment. She went into the nursing field because she wanted to help people. She’s actually considering leaving nursing and going into computer programming, for which she earned a second degree a few years back. It’s hard to look for another job, though, when you’re working 60 hours a week.

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          • This is where mama lends a hand. She gets all Chris’s info and designs two resumes for her, one pointed toward nursing and one pointing toward programming. (How long ago was the programming degree? Does she need an update?) Then mama and daughter spend a few hours together selecting places she might like to work. She writes basic cover letters for each, and someone posts them on jobsite websites, or sends them direct to particular organizations/perspective employers. Then cross fingers and toes.
            Meanwhile, on another front, you should snark at me because I gave you wrong info last week. Ukrainian xmas, also known as Orthodox xmas, happens on Jan 7th, not the 6th as I told you. That was a senior moment courtesy of yours truly.

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            • Mamà will be happy to do all of that, but she has to decide that she is ready to make a move. Right now, she is considering it, but vacillates because she really likes her staff and the people she works with, plus she is making a decent salary. Once she decides, I’ll definitely jump in and put some of my skills to use. Her programming degree was completed just over a year ago, but in that field, things change so fast that it’s hard to keep up. However, she does, for she is taking a couple of online courses to help.

              Ahhhh … well, if you hadn’t told me, I wouldn’t have known the difference! Meanwhile, you will be pleased to know that my tree is still up … as of this moment, anyway.

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              • Gail is cheering for Saturday, Jan. 11, when you have both girls to help take it down, after Ukrainian xmas. Even though neither of us are Ukrainian, it was the Ukraine that helped Trump get impeached, so this year all Dem-leaning Americans should become honorary Ukrainians and celebrate the Orthodox holiday. (My major European roots are in Poland/Germany/Russia/whatever other European nation has owned Poland in the past two centuries, and there are a lot.)
                As for Chris, and her co-workers, if this company is as money-hungry as it sounds, the workplace will become hell and people will start to walk away. Nursing is more than “just a paycheque”!

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  3. I have known since 9/11 that our democracy was gone, never to be seen again. But it has been dying a slow death since Reagan’s presidency. Aided to its end by the two Bushes & Clinton. & certain predatory congressmen.

    The trouble with Americans is that we’ve seen too many B&W WWII movies & we think the end comes with columns of goose-stepping armies marching down our city streets & through the suburbs. This is not how it’s happened in America; this is how it was able to happen.

    The end is now. This is it. It’s already happened. We didn’t even get to kiss it goodbye.

    Liked by 2 people

    • Well, to an extent I agree with you, but I would argue that we are standing at the edge, teetering, but that we could, in theory anyway, still pull back from the abyss. Will we? Of that, I’m not so certain, and if we don’t wake up quickly and do something about climate change, it may not much matter in the coming decades. Sigh.

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  4. Sadly capitalism has morphed into this. The power of the hedge fund is greater than the ballot box now. We left the EU for three reasons really. 1 A Numpty called David Cameron, 2 The EU is bringing in increased controls on the flow of capital 3 Hedge Fund profits. The new elite wanted to avoid the controls on how they abuse their financial position and the banked on Britain leaving to make quick mega profits. The X Files always got lambasted for its conspiracy theory of shadowy groups taking control of governments. It’s not that far fetched…..

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  5. Jill, this is a new vintage of what occurred in the 1980s in its hey day, but is as old as time. CEOs chase cheap labor. A CFO was quoted in the book “The Rich and the Rest of us,” as he said “companies would get by with no employees if they could,”

    These vulture capitalists are the new Gordon Gekkos, using the movie character. Buy a company, wring it out, then sell it. Sadly, people are hurt.

    These are not creators. They are leeches. Keith

    Liked by 2 people

    • True … it isn’t new, but … it seems even more … what? Calculated? Vicious? Destructive? Totalitarian? Are We the People to be reduced to the proletariat? I didn’t see “Wall Street”, but am familiar with the character Gordon Gekko, and it’s a fair analogy. Sigh. I still say that the Citizens United ruling was the biggest contributor to this corruption.

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      • Jill, the 1980s saw an abundance of offshoring, outsourcing, downsizing, rightsizing, technological gains, etc. Right now, we do 4X the manufacturing as then with fewer people.

        Trump has sold this is an immigration problem, which is way down the list. The two primary drivers are 1) the pursuit of cheap labor and 2) technology gains.

        It is not worse, it is just more visible. Venture capitalists serve a role, so they are not all vampires, but too many are. One area where I have concerns are investors buying apartments and mobile home parks and raising rents a lot every year. Keith

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  6. Great work Jill! I’ve vaguely heard of this guy, but I sure know a lot more thanks to your due diligence. The United States of Corporate America strikes again! I seem to remember that Mitt Romney’s Bain Capital did some of this kind of stuff too. Why is it that these corporate raiders and vulture capitalists are allowed to thrive in American? You made the point, and you made it well……They freaking own politicians. They invest a few million of their wealth into some politicians, and look at the return they get? It’s worth it to them.
    Until we stop this crap Jill? You know the answer…..nothing will change!

    Liked by 2 people

    • Things will change, but only for the worse–if you are part of the 99.9% of people not wealthy enough to be called rich. What men like Singer refuse to acknowledge is that if the 99.9% of the population lose their purchasing power, the economy will bottom out and all the money in the world will become worthless. This is but one more threat to the survival of the world as we know it.

      Liked by 3 people

    • Thanks Jeff! The deeper I dug, the nastier this guy got! But, what’s really scary is that there are more just like him that are making our voices mute in our government. How is it, you ask, that these corporate raiders and vulture capitalists are allowed not only to exist, but to thrive in the U.S., while even the UK has seen the light? And that brings us back full circle to that which we’ve talked about so often … Citizens United. Look how much money Paul Singer has contributed to both Trump and the GOP … that never could have happened before 2010 when SCOTUS sold We the People upriver. More and more, I think this was the decision that stamped “PAID” to any democratic principles in this nation. And half the nation cannot even see that they are being molded and manipulated. 😥 Let’s get busy and wake up the people of this country, Jeff! We must! We cannot let 2020 be a repeat of 2016!

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      • Nope…no way Jill. The quicker we get a nominee…the quicker we can get behind he or she. He’s going to cheat. We know that. Only overwhelming turnout will overcome the voter suppression..cheating…etc. If we can’t get the people to come out and get this moron out of office? New Zealand is looking better and better! LOL

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  7. I don’t think we’ve been living in a democracy for a long time now.

    You know I have a dim outlook on the future precisely because of people like this and trump and the republican enablers.

    Liked by 3 people

    • No, we have actually never been a true democracy, but in the beginning, we were a democratic republic … we cannot even claim to be that anymore. Yes, I know you have a dim outlook, and to a large extent, so do I, but I figure that if I give up now, then I’ll never know what might have been accomplished. Sigh.

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  8. I do wish more of tRumpsky’s supporters would attend less political campaign rallies and instead spend some time reading about people like this. While many of them are barely making ends meet (yet still manage to drive several miles to a rally and buy MAGA hats), they have been persuaded to support a man who’s is FAR more interested in filling his own pockets than he is in helping them.

    But they won’t because to them it’s all “fake news.” Instead they will continue to repeat the well-worn Republican keywords, criticize the “socialist liberals,” and refuse to watch any news source besides Fox News.

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    • Reading, you say? I think half of them haven’t read a book since high school. Their priorities, their values, are different than mine and yours, Nan. They worry more about keeping their own race and religion in power than they do about the future of mankind. They are ignorant, even those with college degrees, for they refuse to look beyond their own backyard, their own church, their own culture, and see that there is a big world out there … way beyond their ken. Sigh.

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  9. This article was terrifying. I’d never heard of ‘vulture capitalism’ before, but excesses like these will eventually trigger a backlash against small ‘c’ capitalism, and ultimately democracy itself. I truly fear what the US will become when this happens, especially as it will likely start a cascade of destruction in democratic countries world wide. 😦

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    • I agree 100%! I had never heard of ‘bulture capitaism’ either, but on researching for this post, I find it has been around for a while and it is … nasty. It feeds the rich and starves the poor, and it is sanctioned by the likes of Donald Trump, Vladimir Putin, and others. Democracy, as we once knew it, is dying all too quickly. The world is stepping backward … far too rapidly. I shudder to think what the western world will look like a century from now, if humankind even still exists then.

      Liked by 1 person

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