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
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.
Singer 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 …
Still think you’re living in a “democracy”?
By Ross Douthat, Opinion Columnist
