Americas energy independence was an illusion created by cheap debt. Until the capital markets began to get suspicious, private equity investors could flip companies they had funded to larger, public companies, making a profitable exit regardless of whether or not the underlying business was making money. Thanks to all the cheap money made available by the Fed, companies owned by private-equity firms could simply refinance their debts at lower rates, thereby getting a fresh lease on life. But among those angling for a federal handout is one of the wealthiest sectors of the American economy: private equity. In each of the past four years, according to data-provider Preqin, private-capital managers raised over $500 billion of new money to invest. In 2019, the American Investment Council (AIC), a lobbying group which represents private-equity giants like Blackstone, the Carlyle Group, Apollo Global Management, and KKR, declared that in order to continue to provide the benefits they guarantee, pensions must continue to invest in private equity.. Bethany McLean is a contributing editor at Vanity Fair and the author of "Saudi America: The Truth About Fracking and How It's Changing the World." The Power Law Venture Capital and the . The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Cond Nast. There are several pots of federal money that the private-equity industry is lobbying to access. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. The industry also quietly helps itself to yet more money by having portfolio companies pay fees for consulting and financing services provided by, of course, their private-equity backers. Some of it may be on bank balance sheets. Increasingly desperate to boost the portfolios of retiring workers, they too turned to private equity as their saviorurged on by private equitys promises that it alone could deliver the necessary returns. Never mind that they often overpaid for the companies they acquired, and loaded them up with so much debt that even a mild economic downturn could make it nearly impossible for those companies to repay their loans, as Fortune put it. A college student in Indiana died in her dorm room after testing positive for the coronavirus, school officials and her family said. As for Pelosi, she doesnt want to see companies backed by venture capital excluded from federal relief, given her Silicon Valley constituents. At least 1 in 303 residents have died from the coronavirus, a total of 2,512 deaths. Traders last year at the New York Stock Exchange near the post that trades Anadarko Petroleum and Occidental Petroleum. Tar Heel, North Carolina, United States. FILE - In this Friday, June 12, 2020 file photo, a nurse uses a swab to perform a coronavirus test in Salt Lake City. All rights reserved. If you like the episode and want to hear more, sign up as a monthly member at patreon.com/hotbotheredclimate today. The title and release date have not yet been determined. She has suggestions for how to approach the problem. Check out the full Hot & Bothered archive here. Unfortunately, there isnt really an alternative to providing private equity with federal funds. The Next Financial Crisis Lurks Underground, Coronavirus May Kill Our Fracking Fever Dream. McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. We need private equity, we need more of it, and we need it now, chief investment officer Ben Meng said in early 2019right before CalPERS hired a former private-equity guy, who began his career at Goldman Sachs, to head its private-equity efforts. [citation needed] She began as a contributor to Slate's Moneybox column, in 2010 and "The Bulldog" column in Fortune. Pension funds that have poured money into private equity firms may take a hit soon, too. The value of West Texas Intermediate crude, a U.S. benchmark, dipped below zero for a few hourstrading as low as negative $40 a barrel. Bethany McLean, a contributing editor at Vanity Fair, is the author of "Saudi America: The Truth About Fracking and How It's Changing the World." The Times is committed to publishing a. McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. FILE - In this Friday, June 12, 2020 file photo, a nurse uses a swab to perform a coronavirus test in Salt Lake City. She is a writer, known for Enron: The Smartest Guys in the Room (2005), Independent Lens (1999) and PBS NewsHour (1975). By Bethany McLean Coronavirus May Kill Our Fracking Fever Dream America's energy independence was an illusion created by cheap debt. Seventy-one members of the Bethany Slavic Missionary Church near Rancho Cordova or people associated with congregation members have been afflicted with the virus, county officials say, making. She resides in Chicago with her children. According to the CARES Act, companies can only receive loans from the Small Business Administration if they commit to preserving jobs. Airlines, hotels, and restaurantsall of whose revenues have cratered in the wake of sweeping stay-home ordershave engaged in Hunger Gameslike lobbying to cash in on the CARES Act, making their case for a share of the disaster relief. The politics dictating whether the private-equity industry will get its wishes are surprising. According to the Institutional Limited Partners Association (ILPA), a lobbying group which represents CalPERs and other public investors, businesses backed by private equity employ more than 8.8 million Americans at over 35,000 companies, accounting for a staggering 5% of the United States GDP. 2023 Cond Nast. Bethany McLean is a Vanity Fair contributing editor. So the era of low interest rates, which began with former Federal Reserve chairman Alan Greenspan and continues to this day, has been a huge boon to private-equity firms. 1 FOR PHARMACISTS PRESCRIBING PAXLOVID: This service is available in all locations, with the exception of those in New Hampshire. Bethany McLean is a Vanity Fair contributing editor. Veuer's Tony Spitz has the details. https://www.cdc.gov/coronavirus/2019-ncov/your-health/covid-by-county.htm January 12, 2022 COVID Update Update on Bethany College COVID Response Think of private-equity firms as the banks of the corona crisis: They are, for better or worse, too big to fail. MCHD offers free COVID-19 (PCR) testing every Tuesday and Wednesday from 9am-12pm inside the McLean County Health Department building, 200 W. Front Street in downtown Bloomington, Room 400E. By signing up you agree to our User Agreement and Privacy Policy & Cookie Statement. Americas largest public pension plan, the California Public Employees Retirement System, or CalPERS, put almost $7 billion into private equity during the 2018-2019 fiscal year, according to Institutional Investor. The fracking boom that drove a decade of record U.S. oil and gas production was never really profitable to begin with. The industrys boosters argue that technological gains, such as drilling ever bigger wells, and clustering wells more tightly together to reduce the cost of moving equipment, eventually would lead to a gusher of profits. No food or drink for one hour prior to testing. But they wont fix its fundamental problem with profitability. Bill White wants to restore Americas historical proclivity for balanced budgets. [citation needed], She authored an article on Enron for the March 5, 2001, issue of Fortune entitled, "Is Enron Overpriced? All thats left to tally is the damage. Bethany McLean is a journalist and contributing editor for Vanity Fair. The promised profits havent materialized. We asked three experts two immunologists and an epidemiologist to weigh in on this and some of the hundreds of other questions weve gathered from readers recently, including how to make sense of booster and test timing, recommendations for children, whether getting covid is just inevitable and other pressing queries. Stopping that will require a creative effort to increase and sustain high levels of vaccination. Workers monitoring a hydraulic fracturing operation near Wink, Texas. But with super-low interest rates, investors in search of yield were still willing to buy debt. Click here to take a moment and familiarize yourself with our Community Guidelines. As a group of scientists who study virusesexplains, Theres no reason, at least biologically, that the virus wont continue to evolve.From a different angle, the science writer David Quammen surveys some of the highly effective tools and techniques that are now available for studying Covid and other viruses, but notes that such knowledge alone wont blunt the danger. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. Bethany College will continue to adapt and collaborate as needed to encourage vaccines and boosters for staff and students. [16] McLean resides in Chicago with her children. The community level of Covid-19 in McLean County is low based on cases and hospitalizations, according to the most recent update from the C.D.C. This location, as with the other County contracted medical sheltering sites, will accept individuals from the local community that are referred through DPH. More than 100,000 people already have died in this country from the virus. Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.The title and release date have not yet been determined. COVID-19 Origins: Investigating a "Complex and Grave Situation" Inside a Wuhan Lab. But that didnt seem to matter, because low interest rates facilitated private equity in another way. In early 2015, the hedge fund manager David Einhorn announced at an investment conference that he had looked at the financial statements of 16 publicly traded shale producers and found that from 2006 to 2014, they spent $80 billion more than they received from selling oil. Exclusive: Inside the S--tshow That Was the Trump-Biden Transition. Waters, in her letter, argues for placing even more strings on the money taken by private-equity-backed companies. On March 9, the price of oil plunged by almost a third, its steepest one-day drop in almost 30 years. According to Dan Rasmussen, the founder of Verdad Advisers, private-equity firms typically double the amount of debt relative to profits on a companys balance sheet. Its still unclear where most of this debt is held. (Many of the companies owned by mammoth private-equity firms like Blackstone are too big on their own to qualify for this bucket of money.). She was previously married to Christopher Roberts Wilford. [1] In 1992 she received a B.A. Thanks to the $2 trillion bipartisan bailout bill, the industrys coronavirus losses will belong to all of us. Occidental is just one piece of the puzzle. After Enron's rapid collapse later in 2001, McLean co-authored the book The Smartest Guys in the Room (2003) which detailed the corrupt business practices of Enron officials. In this episode, McLeanwho has tracked the industrys shaky footing for yearstraces the ups and downs of the industry from the 1970s to 2008 to today, and assesses whether a new recession will speed the transition away from fossil fuelsor hand oil barons a life raft. Bethany Nesbitt, 20, was found dead in a residence hall at. Its essential that we do the same today. [1] It details how the financial crisis bubbled up from a volatile, and bipartisan, mixture of government meddling and laissez-faire. The fear, of course, is that private equity will do what private equity does best, which is pocket the money themselves rather than devoting it to the businesses theyve invested in. If private equity is handed billions in taxpayer money, it could use some of it to pay themselves hefty fees today, then pocket even more of it down the road, when they sell their portfolio companies and collect their 20% of the taxpayer-enabled gains. Bethany McLean is a . We could also limit the deductibility of interest payments for tax purposes even more than President Donald Trumps new tax law already did, so companies arent encouraged to load up on debt. [7][8] The Washington Post selected it as one of the best nonfiction books of 2015. It once seemed utterly unattainable until the advent of fracking, which unleashed a torrent of oil. How Screwed Are Donald Trump and His Adult Children, and Other Questions You Might Have About the Staggering Fraud Lawsuit Against Them. Bethany McLean. Its thanks to those who are able to contribute that were able to make the podcast free for anyone to listen to. We could go even further. . The 42 Best Romantic Comedies of All Time, The 25 Best Shows on Netflix to Watch Right Now. Colombias Amazing Race to Build a $1,000 Ventilator Frontline Doctors Race to Learn the Mysteries of Coronavirus How Dr. Anthony Faucis Media Strategy Is Revolutionizing Coronavirus Messaging Can Americas Crowd-Driven Spectacles Return for the Fall Season? From the Archive: Following the Psychological Contagion That Fed the 2014 Ebola Outbreak. The fracking boom that drove a decade of record U.S. oil and gas production was never really profitable to begin with. Paying members will get access to perks like a monthly happy hour with Kate, Daniel, and friends, a free ebook of A Planet to Win: Why We Need a Green New Deal by Kate Aronoff, Alyssa Battistoni, Daniel Aldana Cohen, and Thea Riofrancos, and much more. All thats left to tally is the damage. You can see how all of this is playing out by looking at Occidental Petroleum. They have two children. Novavax Inc said on Thursday it would require six months to produce a COVID-19 vaccine designed to match whichever coronavirus variants are circulating for an annual immunization program each fall . [13][14][15] They divorced in 2020. Wed like to hear what you think about this or any of our articles. Beleaguered pension funds, which suffered big losses in the financial crisis, could no longer count on decent returns from fixed investments, given how low interest rates have been kept by the Fed. All rights reserved). Ad Choices. In the Season One finale of Making A Killing, Bethany brings back her friend, colleague and co-author Joe Nocera (Bloomberg Opinion columnist and creator of The Shrink Next Door podcast) to bookend the season with a lively analysis of the former head of Nissan Motor Co. and Renault S.A., Carlos Ghosn. All the Devils Are Here: The Hidden History of the Financial Crisis is a nonfiction book by authors Bethany McLean and Joseph Nocera about the 2008 financial crisis. As a result, private equity is now wound into the very fabric of our economy. I dont think any of us can really believe what we saw today, one industry analyst told AP. To revisit this article, visit My Profile, thenView saved stories. The reason is as simple as it is galling: while great private fortunes, such as that of Blackstones Stephen Schwarzman (net worth: $17.5 billion and Apollos Leon Black ($7.5 billion), have been made from private equitys march through the world, its losses, to a remarkable degree, will belong to all of us. on March 2.Read more about the C.D.C . Coronavirus outbreaks were reported by the Merced County Department of Public Health at New Bethany Residential Care retirement home in Los Banos and Dutch Bros Coffee. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. Thats a difficult question to answer definitely, writes the Opinion columnist Zeynep Tufekci, because of the lack of adequate research and support for sufferers, as well as confusion about what the condition even is. Hot & Bothered is produced by Colin Kinniburgh. But there are ways to make it work better. Use of this site constitutes acceptance of our User Agreement and Privacy Policy and Cookie Statement and Your California Privacy Rights. TDD: (800) 526-0844 Ms. McLean is the author of Saudi America: The Truth About Fracking and How Its Changing the World., Ever since the oil shocks of the 1970s, the idea of energy independence, which in its grandest incarnation meant freedom from the worlds oil-rich trouble spots, has been a dream for Democrats and Republicans alike. A hydraulic fracturing site in Denton, Texas. A loophole in the tax code currently allows private-equity financiers to pay taxes on their returns at the lower rate for capital gains, rather than the higher rate for personal income. New revelations about how one Trump staffer helped preserve the transfer of powerfrom the forthcoming book on the Biden White House, COVID-19 Origins: Investigating a Complex and Grave Situation Inside a Wuhan Lab. This kind of rewrites the economics of oil trading.. Restaurants and hotels owned by big chains have already received exemptions granting them access to the relief funds, regardless of how many people their parent companies employ. This week, Ms. McLean begins promoting her new book, "All the Devils are Here," about the current financial crisis. The technology of fracking in shale rock - particularly in the Permian Basin in Texas - has transformed America into the world's top producer of both oil and natural gas. BLOOMINGTON A total of 208 new COVID-19 cases have been reported by the McLean County Health Department from Jan. 27 through Friday. All rights reserved. Contents 1 Early life and education 2 Career Private equity, of course, came of age in the 1980s, when greed was good and private-equity titans like KKRs Henry Kravis first burst into the limelight by taking over famed American manufacturers like RJR Nabisco. And President Trump reveled in the rhetoric: We hadnt merely achieved independence, his administration said, but rather energy dominance.. (AP Photo/Rick Bowmer), Connect with the definitive source for global and local news. Nocera and McLean writing book on U.S. coronavirus response By The Associated Press June 24, 2020 NEW YORK (AP) Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. All information these cookies collect is aggregated and therefore anonymous . If private equity suffers, the blow will reverberate throughout the entire economy. All that's left to tally is the damage. On March 10, the company announced that it would slash its dividend for the first time since the early 1990s, when Saddam Husseins invasion of Kuwait sent oil prices plummeting. Americas energy independence was built on an industry that is the very definition of dependent dependent on investors to keeping pouring billions upon billions in capital into money-losing companies to fund their drilling. Copyright 2020 The Associated Press. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Cond Nast. Policymakers who wanted to tout energy independence disregarded all this, even as investors were starting to lose patience. The man who shot his girlfriend and five relatives at a birthday celebration had "control issues". Bethany McLean is a Vanity Fair contributing editor. Because rules for access to this money werent specified in the CARES Act, as ILPA notes, the executive branch will have a fair amount of discretion over who gets access to the moneyand private-equity firms want to take full advantage of that opening. Even before the COVID crisis, there were questions about how well private-equity investments were actually performing. On April 20, oil prices did something theyve never done before. From 2015 through 2019, private equity firms raised almost $80 billion in funds focused mostly on shale production, according to Barclays. The typical fee structure in private equity is the so-called 2 and 20, which means that a fund collects a fee of 2% of the total assets it manages, as well as 20% of any gains on its investments after a certain return is achieved. The half decade from 2013 to 2018 saw the most private-equity deals over any five-year period in American history. She is known for her writing on the Enron scandal and the 2008 financial crisis. Fractivism: Corporate Bodies and Chemical Bonds, A Moderate Proposal: Nationalize The Fossil Fuel Industry, https://media.blubrry.com/belabored/dissentmagazine.org/mp3/24HotBothered.mp3. Was Tiffany involved? David Wallace Wells writes that by one estimate, 100,000 Americans could die each yearfrom the coronavirus. We could close that, once and for all. The big banks emerged from the financial crisis victorious, but also subject to a host of new regulations designed to reduce leverage and stabilize the economy. Is there any chance this could lead to prison time? Monday - Friday She is the co-author of the 2003 book, "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron," which was the basis for the Academy Award-nominated documentary of the same name. Getting the government out of the housing market would mean saying goodbye to the 30-year mortgage. As a result, fracking stocks badly underperformed the market. McLean was born in Hibbing, Minnesota on December 12, 1970. Copyright 2023 WSLS.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. Energy independence was a fever dream, fed by cheap debt and frothy capital markets. The active outbreak list is intended to inform the public of the current COVID-19 outbreaks in Los Angeles County. The key issue is the parent child problem. When wells are clustered tightly together, with so-called child wells drilled around the parent, the wells interfere with one another, resulting in less oil, not more. (AP Photo/Rick Bowmer), (Rick Bowmer, Copyright 2020 The Associated Press. sure to go down in history as one of the wildest business stories ever. Driven partly by public pensions, the private-equity industry has mushroomed. The industrys lack of profits wasnt exactly a secret. Dylan Hollingsworth for The New York Times. Almost everything thats happened since 2008 has tilted in their favor. When will the pandemic end? Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. Fracking, they said, was just manufacturing, in which process and human intelligence could reduce costs and conquer geology. 2 FOR DRIVE-THRU TESTING RESULTS: Lab samples are sent to an off-site laboratory and results may take 1 to 2 days or even longer in some instances or in times of peak demand. Since that time, Oxys stock has plummeted almost 80 percent in part due to fears that the Anadarko acquisition is going to prove so wildly unprofitable that it sinks the company. The socio-economic status of individuals needing . This is late 80s bad, a close observer of the industry says. Confirmed case data are from the Department of Public Health's communicable disease surveillance database. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. Its a rich history of a company, and a case study in how a corporate culture can turn toxic. What the Theranos trial says about the blurred lines between visionaries and frauds. Use of this site constitutes acceptance of our User Agreement and Privacy Policy and Cookie Statement and Your California Privacy Rights. She is also a columnist at Yahoo Finance and a contributor to CNBC. How concerning are things like long covid and reinfections? A deal, and higher oil prices, might help the industry. The Wuhan Institute of Virology, the cutting-edge . Thats because one big source of funding didnt dry up: private equity. The industrys $1.5 trillion in cash on hand is also the highest on recordand more than double what it was five years ago, according to Preqin. [9], In September 2018, she published Saudi America: The Truth about Fracking and How It's Changing the World which examined the "fracking revolution" and U.S. energy independence. (Adila Mchich, CME Group), Fractivism: Corporate Bodies and Chemical Bonds (Sarah Ann Wylie), The Fracktivists (Colin Kinniburgh, Dissent), Kate: A Moderate Proposal: Nationalize The Fossil Fuel Industry (The New Republic), This week, Kate and Daniel talk to Bethany McLean, author most recently of, Saudi America: The Truth about Fracking and How Its Changing the World, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, If you like the episode and want to hear more, sign up as a monthly member at. To revisit this article, select My Account, thenView saved stories. In reality, the dream was always an illusion, and its collapse was already underway. As a result, the stocks that make up the S.&P. By Bess Levin . Bethany McLean was born on 12 December 1970 in Hibbing, Minnesota, USA. David Wallace Wells writes that by one estimate. More than 100,000 people already have died in this country from the virus. Following the trail of evidence, Louisiana Senator: Our Maternal Death Rates Are Only Bad If You Count Black Women, If you correct our population for race, were not as much of an outlier as itdotherwise appear.. Sign up for our daily Hive newsletter and never miss a story. More than 100,000 people already have died in this country from the virus. Jack Ewings Faster, Higher, Farther is more than the story of a scandal. In April, the Energy Information Administration cut its forecast for U.S. oil production, estimating that it will fall both this year and next suggesting that the days of huge growth in production from shale are over. These firms not only have a record $1.5 trillion in cash on the sidelines, waiting to be invested, but their CEOs are among Americas richest executives. The Next Financial Crisis Lurks Underground (Bethany McLean, New York Times), Coronavirus May Kill Our Fracking Fever Dream (Bethany McLean, New York Times), Are Crude Oil & Natural Gas Prices Linked? She is known for her writing on the Enron scandal and the 2008 financial crisis. Infuriatingly enough, the financial crisis in 2008 might even have saved private-equity firms from their sins. Best-selling author Bethany McLean reveals the true story of fracking's impact - on Wall Street, the economy, and geopolitics. Some of it has been packaged into so-called collateralized loan obligations, pieces of which are held by hedge funds. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. Like so many other facets of the COVID-19 crisis, however, this unprecedented crash exposed long-running cracks in the facade. Actually, no. "Dow 36,000" co-authors stand by book's premise. If you need help with the Public File, call 540-512-1558. All thats left to tally is the environmental and financial damage. Dec 2020 - Apr 20221 year 5 months. McLean graduated from Hibbing High School in 1988. "[3] The article noted some irregularities in Enron's financial documents that were available to the public, suggesting the company's then-record high stock price was unjustified but she did not at that point suspect fraud at Enron. In May 2008, she married attorney Sean Berkowitz, the former Director of the United States Department of Justice Enron Task Force. A journalist profiles the developers and devotees who have aided the rise of cybercurrency. That, too, is ending, as investors in such funds have become disillusioned. Dont hesitate: sign up on Patreon today. The Wuhan Institute of Virology, the cutting-edge biotech facility at the center of swirling suspicions about the pandemics onset, was far more troubled than previously known, explosive documents unearthed by a Senate research team reveal. Given how much of the economy will rise and fall on the investments that private-equity funds manage, we may be forced to let them share the federal handout. Has its bubble finally burst? McLean is a contributing editor at Vanity Fair and co-author of the Enron book "The Smartest Guys in the Room." Nocera. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. Blame Congress for the meltdown, not Goldman Sachs. Music: Mercurias Meet Victor Rice, Carregar (Instrumental), courtesy of Total Running Time. The book was later made into the Academy Award-nominated documentary Enron: The Smartest Guys in the Room. If you need help with the Public File, call (713) 778-4745. The problem is, existing rules at the Small Business Administration, which is overseeing the program, have been widely interpretedas excludingloaning money to most mom-and-pop businesses that are controlled by large parent companiesincluding private-equity firms. On the surface, it appears that two unforeseeable and random shocks are threatening our dream. In 2019, Mclean launched a podcast titled Making a Killing on Luminary. If you need help with the Public File, call 540-512-1558. So why should they be permitted to raid the federal Treasury in a time of crisis? There were rumblings that shale companies would seek a federal lifeline. On Thursday's show: The job forecast for the region in 2022, lessons from the collapse of Enron, a conversation with the late Stephen Sondheim, and the best new restaurants from the past year. Private equity has made multibillionaires of executives like Blackstones Steve Schwarzman (net worth: $17.5 billion) and Apollos Leon Black ($7.5 billion).
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