A recession is when your neighbor loses his job. A depression is when you lose yours. What's it called when conditions are so bad that most people lose their jobs - something worse than a depression?
A recession is when your neighbor loses his job. A depression is when you lose yours. What's it called when conditions are so bad that most people lose their jobs - something worse than a depression?
TEOLAWKI. Anarchy, dictatorship, revolution, or civil war (or some combination of the above).
The Russians invading.
The main obstacle to that would be the quote often attributed to Admiral Yamamoto Isoroku:
"Behind every blade of grass is an American with a gun."
While no evidence suggests he actually said it (and it does not appear in his writings), that doesn't change the fact that the US has a shedload of guns and people who would be willing to use them.
Hyperinflation.
Neither you not neighbor don't necessarily lose jobs, but last month's pay would barely cover food a month from now. So you spend everything as fast it comes in, for whatever junk you can buy, before the money loses value. And can is a key word here, as store shelves are likely mostly empty. But the main problem is, employers are interested to hold back pay as long they can get away with it, and so do businesses between themselves. Small community transactions switch to mostly barter. Easily hoarded items becomes reserve currency, like, sugar, alcohol, fuel, maybe even flour.
Easily hoarded items becomes reserve currency, like, sugar, alcohol, fuel, maybe even flour.
Salt and honey should be in that list. Flour, not so much, it goes rancid fast. Grains such as wheat last considerably longer if you don't crack the bran. Doing so allows the endosperm and germ to interact. That sets off a chemical reaction in which it goes rancid.
The rest are viable proven barter items.
Flour, not so much
That surprises me. I found a 20yo bag of flour in a little-used storage space and it seemed fine. Porridge oats seem to last indefinitely.
AJ
The reason for the limited shelf life is the fatty acids of the germ, which react from the moment they are exposed to oxygen. This occurs when grain is milled; the fatty acids oxidize and flour starts to become rancid.
In Europe white wheat flour is usually milled without bran and germ giving it a far longer shelf life. About 40 years ago a major German mill ("Aurora") switched fully to flour including the germ, propagated as healthier.
Nowadays they offer two versions: with and without germ.
HM.
Nowadays they offer two versions: with and without germ.
We grind our own flour here, so it's not an issue. In the states, there is no option I'm aware such as you mentioned there.
I also roast my own coffee. A coffee bean once cracked, will not be palatable six months later.
Taste of either is definitely improved by doing it yourself. I purchase in bulk and store both. Along with other grains.
The part they got right is, it is healthier for you with the bran and germ, but shelf life suffers. The later is mitigated by grinding it or in the case of coffee beans, roasting them yourself.
We grind our own flour here, so it's not an issue. In the states, there is no option I'm aware such as you mentioned there.
I believe something equivalent is available in the US. Here they call in whole wheat flour.
Whole wheat is just that, whole wheat. Bran, germ etc.
ETA: I'm not trying to convince anyone of anything, but for me and mine, we will grind our own. YMMV
Flour, not so much, it goes rancid fast
For some definitions of fast maybe.
https://www.healthline.com/nutrition/does-flour-go-bad#shelf-life
How it's stored makes a huge difference.
https://bakinghow.com/store-flour/
It would be a bad idea to trust that in the states.
At issue is the delivery systems. You have no idea how long it stood in a warehouse before going to the store. Nor do you have any idea what temperature it was stored at or shipped in.
There's an expiration date on the bag of flour, but the real way to tell if it's gone bad is to smell it. If it smells slightly "off," it won't hurt you, but won't bake correctly.
The expiration date susposedly takes into account shipping factors.
Detecting the off smell is no guarantee of a safe product. Not baking properly is a clear sign it's gone bad. No such product should be eaten.
What's it called when conditions are so bad that most people lose their jobs - something worse than a depression?
Venture capitalism.
AJ
Venture capitalism.
How can it be bad when a private firm tries to help other people start their companies?
Venture capital (VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth (in terms of number of employees, annual revenue, scale of operations, etc). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the firms they support will become successful. Because startups face high uncertainty,[1] VC investments have high rates of failure. The start-ups are usually based on an innovative technology or business model and they are usually from high technology industries, such as information technology (IT), clean technology or biotechnology.
How can it be bad when a private firm tries to help other people start their companies?
Apologies, I missed the target somewhat.
I should have said 'takeover by a Private Equity investors', of which Venture Capitalist investors are a subset.
AJ
Still wrong. Companies that are well run and profitable don't go looking for PE investors. The ones that do will fail without the cash and expertise provided by the PE investors.
PE saves companies and jobs.
The ones that do will fail without the cash and expertise provided by the PE investors.
PE saves companies and jobs.
There are predatory PE investors out there who meet what AJ is suggesting, they are called Vulture Capitalists.
A vulture capitalist is an investor who purchases troubled companies whose prices have been severely depressed in the market.
Aggressive action is taken to revive the company and boost profits, usually via hefty cost-cutting exercises like job layoffs.
If they don't succeed in this goal, vulture capitalists will find other ways to line their pockets, such as engaging in asset stripping to make money.
ETA: The Vulture Capitalist's goal isn't to make the companies they buy successful, it's to make them temporarily profitable on paper without spending any extra money so they can re sell the company at a profit.
Just the name: vultures feed on the dead and dying. One accurate thing in that piece is that they invest in dying firms. They are a last ditch effort to save companies that would be in bankruptcy without them. I think that's a good thing - it gives those companies and jobs chances to survive.
I think that's a good thing - it gives those companies and jobs chances to survive.
Very few companies that attract a vulture capitalist ever recover.
A vulture capitalist is never interested in investing more money in a firm after the initial purchase.
Virtually no firms which attract Vulture Capitalists survive.
There are, however, quite a few examples of companies which faced sustainable short-term crunches, sold out to Vulture Capitalists, and were destroyed by them, when they would have survived without the setup.
Indeed, Vulture Capitalists want to buy companies which are fundamentally sound. The business model works like this:
1) Get control of company X (which needs a cash infusion but is fundamentally solid and profitable).
2) Load company X up with as much debt as lendors will provide.
3) Issue press releases about how well-funded company X is and how great the rebuilding will be.
4) Use that capitol to buy companies Y, Z, P, D, and Q.
5) Short stock in company X.
6) Company X declares bankruptcy and shuts down.
Rinse and repeat. Variations of that happen over and over again.
Note that no part of that allows Company X a chance to survive. Their collapse is foreordained at the time of purchase.
If it were fundamentally sound and profitable the company wouldn't need PE investment.
And shorting the stock wouldn't be possible.
Give me one real life example where that happened.
We're splitting hairs, because of course for some definitions of 'fundamentally sound and profitable' every company isn't.
Sears is one. While retail was and is challenging, Sears was fine and would have continued for years until vulture capitalists took it over and ran it into the ground.
Toys R Us is another.
Here's an article about a similar case:
https://www.theguardian.com/us-news/2021/jul/18/hufcor-factory-janesivlle-wisconsin-opengate-capital
There are others. It's not that hard to find. And I have no idea why you think shorting the stock wouldn't be possible.
Both Sears and Toys R Us would have failed years before if not for private equity.
I know a number of people who worked in management at TRU headquarters (it was a local company) and they were expecting the ax to fall longer before it went private. It was horrible mismanagement for 20+ years before it went under.
Both Sears and Toys R Us would have failed years before if not for private equity.
Not all private equity is created equal.
Some seek to help startups become successful.
Some seek to rescue troubled companies and make them successful.
Some are predatory and seek to profit from buying companies with out doing anything to make those companies more successful. This approach tends to do a lot of damage to the companies it preys on.
Both Sears and Toys R Us would have failed years before if not for private equity.
I strongly disagree, and so do many sources.
https://theweek.com/articles/801927/how-vulture-capitalists-ate-sears
https://www.cnn.com/2018/10/16/investing/retail-sears-private-equity
https://prospect.org/economy/vulture-capitalism-killed-sears/
https://www.thenation.com/article/archive/sears-toys-r-us-hedge-funds-bankruptcy-retail-workers/
https://www.vox.com/the-goods/2020/1/6/21024740/private-equity-taylor-swift-toys-r-us-elizabeth-warren
I'm going to bow out of further replies in this area. You are welcome to your opinion, of course. However, mine is hardly out of the mainstream, and there's a lot of evidence that it's correct.
I am generally in favor of both private equity and venture capitalism. They've helped a large number of companies grow. However, there absolutely are vulture capitalists whose goal is to purchase slightly troubled companies (which can be as little as a temporary debt crunch or the need for cash to modernize facilities) and loot them for everything they're worth while racking up debt, and bailing out before the plates come crashing down.
Note that it's absolutely legal (barring things like short selling, which may or may not be depending on a host of factors). It's just (in my opinion) a very destructive way to make money.
slightly troubled
Not even 'slightly troubled', just open to opportunism.
By sector, the P/E ratios on the UK stock exchange are far lower than in the US markets, sometimes as low as half. That means US Private Equity companies can make unsolicited bids on healthy UK companies in excess of their UK market values.
AJ
You are welcome to your opinion, of course. However, mine is hardly out of the mainstream, and there's a lot of evidence that it's correct.
I'd like to congratulate Grey Wolf for disagreeing without being disagreeable. He didn't call the opposite viewpoint idiotic or moronic and didn't tell the other person to shut up.
Aside from the fact that stock manipulation would wind up with people in jail, it doesn't make any sense.
The PEs aim is to increase the value of the business and realize that appreciation. Depressing the stock price does just the opposite.
No, the PE's aim is to take all of the value out of the business in advance. Shorting the stock is just a little extra on top. The appreciation has already been realized.
You're assuming that the PE's aim is to increase the value of the business. For vulture capitalists, that's not the goal at all.
The people who bought Sears made a fortune. The business itself never increased in value. Ditto Toys R Us.
The UK is a particularly attractive target for predators because its share prices are relatively low in world terms. A large number of High Street names have disappeared in the past couple of decades, having been private equitied into bankruptcy :-(
AJ
The goal is to increase the value of the business so that it can be sold and money made on the sale.
If you look at the two cases you mentioned, in both the PE firms took massive losses - even counting on the fees and interest income they made. In both, the subject company would have failed much, much earlier without PE capital infusion.
Indeed, Vulture Capitalists want to buy companies which are fundamentally sound.
Your description is actually what the worst examples of private equity investors do.
They target decent companies with a temporarily depressed share price.
Shareholders naively accept a price that is above the current market price but significantly undervalues its actual assets and prospects.
Any parts attractive to other other companies are immediately sold off.
Any property assets are sold and leased back.
Staff numbers are decimated, particularly in customer service, management and logistics.
The rump of the company is loaded up with massive amounts of debt.
The Private Equity investors empty the company's coffers capital by paying themselves huge dividends.
The Private Equity investors then market the company as lean and efficient because it appears to be making a good-sized profit despite its reduced size.
The Private Equity investors either sell-on the company or refloat it.
The illusion crumbles. The company may struggle on as a zombie for a while but eventually it folds.
AJ
A vulture capitalist is an investor who purchases troubled companies whose prices have been severely depressed in the market.
That's not exactly true.
There can be many reasons why a company's market valuation is cheap that don't involve it being a 'troubled' company, including currency fluctuations and temporary glitches (like Russian neo-nazis invading Ukraine, or container ships getting stuck in the Suez Canal).
Several large, well-run UK companies have been gobbled up by rapacious private equity firms recently, and a few are currently only resisting such challenges by the skin of their teeth or national security considerations (although the current government doesn't seem to care too much about the latter, as witnessed by takeovers of world leading companies in air-refuelling, low-orbit satellites, underwater submarine detection, chip manufacturing etc).
AJ
What's it called when conditions are so bad that most people lose their jobs - something worse than a depression?
Some folks would call that FUBAR.
"Hyper-Inflation" when currency loses its value.
"Anarchy" when LEOs (Law Enforcement Officers) lose their jobs (not long after you are likely to lose your property, and maybe your Life!)
"Revolution" when the POTUS or King (etc.) Loses his Job, and possibly His Head!
"Failed State" when government and the economy collapses and Warlords squabble over the remains of the "corpse" and the neighbors or other nations show up to aggrandize themselves.
(Sometimes a nation or group of nations may occupy to contain the chaos. Croatia and Slovenia of the former Yugoslavia in the 1990's, and several African nations propped up by the French Foreign legion come to mind. The British did this in the "Malay Emergency" Vietnam in Cambodia in the 1980's and 90's, and the USA in the Philippines and Honduras; as a few examples.