< HOME  Friday, April 28, 2006

Investment Banks - Not Masks - Killed the Miners at Sago

The first thing we did was activate our rescuers, as we had been trained. At least four of the rescuers did not function. I shared my rescuer with Jerry Groves, while Junior Toler, Jesse Jones and Tom Anderson sought help from others. There were not enough rescuers to go around.
--Randal MCloy, Sole Survivor, Sago Mine Disaster
The government denies the charge that the masks weren't working but says the men might not have known how to operate them. But, Randal's description of their immediate struggle to activate their masks "as [they] had been trained" suggests otherwise.
The Mine Safety and Health Administration said tests showed the emergency breathing devices were in working order. However, it was unclear whether the miners knew how to use them.

* * *

"We know that the Bush administration killed a proposal in 2001 that could have required the more frequent replacement of these self-contained, self-rescue units, required more inspection of these units and provided more adequate training on how to use them," California Rep. George Miller said.

MSHA spokesman Dirk Fillpot said the agency was looking into whether the miners were properly trained to use the devices. But he insisted the equipment should have worked.

"Initial testing conducted by MSHA and NIOSH (National Institute for Occupational Safety and Health) on all SCSRs recovered after the explosion at the Sago mine found that those that were activated would have functioned properly," MSHA spokesman Dirk Fillpot said in a statement.
That says nothing about masks that were NOT activated, possibly because they COULD NOT be activated. But, this is beside the point.

Why is the media focused on technical details and political figureheads while nary a peep is said about the investment banker that owns Sago?

Sago is not just about defective masks and inept and corrupt bureaucrats. It's about MONOPOLY and GREED at the heart of our economic and political system. It's time to have a look at the fundamentals that continue to fuel these disasters.

It's time to meet the man behind the mines of West Virginia.
They call him the bottom-feeder king. And, for good reason. Billionaire New York investor, Wilbur Ross, 68, is the chairman of his own private equity investment firm and is "known for buying up failed businesses, turning them around and selling them for huge profits."

He formed International Coal Group (ICG), based in Ashland, Kentucky, in 2004 "to buy coal firms that lacked the capital to maintain their mines." (I wonder why they lack capital?)

BTW, Lexington, Kentucky, where Ashland is located, ranks #2 among American cities as best place to start a business based on cost of doing business; second only to Albuquerque, NM.

Are you beginning to see why they call him a bottom-feeder? I guess he chose Ashland over Albuquerque because of its geographical proximity to West Virginia, the second biggest coal producing state in the country (Wyoming is the first). Spares no expense to be close to what he loves.

What else is in Ashland? The Ashland Oil Company, a huge player and a by-product of the infamous Standard Oil Company. Everything makes sense in context.

Last year, ICG acquired the Sago mine, where the 12 miners were killed, by buying bankrupt Anker Coal Group Inc.
ICG has 11 active mining complexes, in West Virginia, Kentucky, Maryland and Illinois. Its revenues for the first nine months of 2005 totaled $466 million.
Of course. Take a look at energy prices.
The coal company said it would set up $2 million fund for the families of the dead miners and called for donations.
That's less than .4% of their annual revenues. And they have the nerve to "call for donations."
Ross said...the tragedy would not alter company plans to develop coal production at several mines it acquired last year, including the Sago mine.
Back to business as usual. But, what might that be?
[Ross has] parlayed a series of ballsy political and financial gambles on left-for-dead assets—midwestern steel mills, southern textile mills, and Appalachian coal mines—into an empire.

Ross’s funds now control 1.2 billion tons of coal reserves and what may soon be the country’s last-standing denim mill.
Who is this guy?!!
Thumbnail bio: Born in Weehawken, New Jersey, 1937, the son of a schoolteacher and a lawyer ... Attended a Jesuit military school, Yale, and Harvard Business School ... Worked for money-management firms and investment banks.
Surprise, surprise.
Spent 24 years at the New York office of Rothschild, Inc. Ran Rothschild’s bankruptcy-restructuring advisory practice.
Goodness, this just gets better and better.
Tenacious [negotiator.] In late nineties, started a $200 million fund at Rothschild to invest in distressed assets. As the U.S. bubble began to burst, Ross decided he wanted to invest more and advise less.
This guy is full of surprises.
On April Fools’ Day 2000, the 62-year-old banker raised $450 million to plunge into fallen companies. Excellent timing. [indeed] The 2000–1 rolling stock-market crash, 9/11, and a globally synchronous recession pushed scores of companies into bankruptcy.
Coincidence? I don't think so. This guy knows exactly when and where the money flows--or will NOT flow.
[Down went] Old Economy stalwarts in industries like steel and textiles—victims of excess capacity, global competition, and generous union contracts.
Toe your line elsewhere. We know better.
[M]ost professional investors regard bankrupt industrial firms as toxic piles ... [b]ut Chapter 11 allows those with an eye for damaged goods to gain control of assets on the cheap.

Why? Busted companies can reject leases, WALK AWAY from DEBT, terminate health-care promises, and punt pension plans onto the federally sponsored Pension Benefit Guaranty Corporation. Such debt purges can suddenly make crappy business models seem brilliant.
Now, we're getting somewhere. It's the debt, STUPID! But, wait. It gets even better.
In 2001, when LTV, a bankrupt steel company based in Cleveland, decided to liquidate, Ross was the only bidder.
Go figure.
Ross suspected that President Bush, a free trader, would soon enact steel tariffs on foreign steel, the better to appeal to prospective voters in midwestern swing states. So in February 2002, Ross organized International Steel Group and agreed to buy LTV’s remnants for $325 million.
And, lo and behold...
A few weeks later, Bush slapped a 30 percent tariff on many types of imported steel—a huge gift.
But, they hadn't agreed beforehand, or anything like that, HONEST!
“I had read the International Trade Commission report, and it seemed like it was going to happen,” said Ross. “We talked to everyone in Washington.” (Ross is on the board of News Communications, which publishes The Hill in Washington, D.C.)
And so the story goes. American industry is systematically gutted:
A year later, Ross performed the same drill on busted behemoth Bethlehem Steel. Meanwhile, between the tariffs, China’s suddenly insatiable demand for steel, and the U.S. automakers’ zero-percent financing push, American steel was suddenly red hot.
Suddenly? There is nothing sudden about ZERO-financing. It's all part of the master plan.

[In October 2003,] Ross set about doing the same with ... Burlington Industries, a large textile company that failed in late 2001.

In March 2004, he snapped up Cone Mills, which, like Burlington, was based in Greensboro, North Carolina, and bankrupt.

As with the steel companies, the PBGC took over some of the pensions, the unions made concessions, and thousands of laid-off workers were recalled.

Most important, debt was slashed. Today, International Textile Group has just about $50 million in debt, LESS THAN the two companies were paying in INTEREST a few years ago.

What a crafty SOB! He orchestrates the whole disaster with his banking buddies; gets unions to make concessions (which makes the unions look like they were asking too much to begin with); and then rehires thousands of laid-off workers, becoming the town hero, even though (I'm certain) workers are getting less pay and fewer benefits than they were before bankruptcy.

And, the town is not alone. Ross has other fans.
“I really think the future of domestic manufacturing is people like Wilbur Ross,” says Bruce Raynor, head of UNITE HERE, a union that includes thousands of garment workers.
Now that's the type of leadership union workers can really depend upon -- to get them SCREWED.

So, there you have it, folks. The mastermind behind the mines of West Virginia. And who does he have his eye on next? "Distressed auto parts businesses."

Look out Delphi and friends! Ross is on a roll! A steamroll, that is.
Indeed, since I wrote that piece, Ross has made significant inroads into auto parts.

Investment banks - NOT MASKS - lie at the heart of the tragedy of Sago. Not only are they responsible for the deaths at Sago, but they pose the single most deadly threat this nation has ever faced - not so much for their power, but because they stand UNOPPOSED.


At Friday, April 28, 2006, Blogger borkafatty said...




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