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Saturday, December 27, 2008


Vulture capitalism

Capitalism exists for one reason - to maximize profit. Not to provide goods or services. To maximize profit. Just as Republicans and Democrats agree on the goal of overthrowing socialism in Cuba, or seizing control of Iraqi oil, but disagree on details of the strategy and tactics for doing so, so too capitalists have different strategies for maximizing profit. Some are capable of thinking long-term, others have more short-term vision. Others are real vultures, feasting on carrion, and when there is no dead meat (or companies) available, doing their best to create some.

Such is the story laid out today by Cookie Jill over at Skippy the Bush Kangaroo. I'll let her tell the full story, but in a nutshell, it's the story of how a group of "private equity investors" bought Mervyn's from Target, saddling Mervyn's with $800 million worth of debt as such leveraged buyouts often do, then paid themselves $400 million of that in the form of dividends, stripped out Mervyn's valuable real estate, sold premium parcels and leased its own buildings back to the store at exorbitant rates, and guaranteed a big profit for itself and bankruptcy for Mervyn's (which has now come to pass).

And, we're told, the same crowd is in the process of pulling the same operation at Chrysler.

TINA - "There is no alternative"...to socialism (with insincere apologies to Margaret Thatcher).

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