The Daily Parker

Politics, Weather, Photography, and the Dog

Eddie Lampert offers to garrote his own company

Longtime readers know how much I loathe Eddie Lampert for what he did to Sears and for how perfectly he demonstrates the dangers of slavishly following a philosophy that owes a lot to the thought processes of adolescent boys.

Well, my longtime predictions seem to be coming true. Lampert has offered to buy the best bits of Sears (i.e., its real estate and Kenmore brand), which would quickly kill the company. Crain's Joe Cahill outlines some of the offal in this awful person's proposal:

It's not clear, however, just what Lampert is willing to pay. The offer letter indicates the transaction should reflect an enterprise value of $500 million for the home improvement and parts businesses, but doesn't put a price on Kenmore or the real estate, beyond confirming Lampert would assume $1.2 billion in real estate debt. The letter further proposes that the asset sale take place in conjunction with offers by Sears to convert some of its debt into equity and buy back or exchange for equity another slug of outstanding debt. Lampert indicates a willingness to "consider participating in such exchange offer and tender offer," which might increase his equity interest in Sears.

The complex and somewhat vague proposal raises questions about Lampert's many hats at Sears—he's the controlling shareholder, CEO, a major creditor, and—if this transaction goes through—a buyer of key company assets. Let's focus on his role as CEO, where his job is to generate maximum returns on company assets, either through business operations or by selling them for the highest possible price. His offer letter implicitly confirms that he's been unable to do either with Kenmore. Yet he evidently believes he could squeeze strong returns out of the brand if he owned it separately from Sears. Otherwise, buying it would make no financial sense for Lampert and any fellow investors in the proposed asset purchase.

Understandably, this disconnect fuels a growing perception that Lampert is cherry-picking company assets ahead of a potential bankruptcy filing that likely would leave Sears shareholders with little or nothing. Already, a real estate investment trust formed by Lampert has acquired many of Sears' store locations with the intention of remarketing them to higher-paying tenants. "There's a very legitimate case to say he's screwed up the company and now he's trying to take the crown jewels," says Nell Minow, a corporate governance expert with Value Edge Advisors.

No kidding. Thanks, Eddie.

What happened to the brand?

Of 19 Trump-branded product lines available in 2015, only 2 remain on the market. One wonders why:

In recent weeks, only two said they are still selling Trump-branded goods. One is a Panamanian company selling Trump bed linens and home goods. The other is a Turkish companyselling Trump furniture.

Of the rest, some Trump partners quit in reaction to campaign-trail rhetoric on immigrants and Muslims. Others said their licensing agreements had expired. Others said nothing beyond confirming that they’d stopped working with Trump. Their last Trump goods are now being sold off, often at a discount: One cologne is marked down from $42 to $9.99 for an ounce.

“Success by Trump,” the website says. And below that: “Clearance.”

“A caricature of what wealth is — as opposed to what real wealth is,” said Milton Pedraza, chief executive of the Luxury Institute, a consultant to luxury brands. Trump sold to those, he said, “who didn’t know the difference,” he said.

However, Pedraza said, Trump began to undermine his own success by “label-slapping” — sticking his name on anything he could, even the farfetched and ridiculous. Emeril Lagasse sold pots. Greg Norman sold golf shirts. Trump sold. . . everything.

“There was no strategy,” Pedraza said.

Seems like a strategy that could work, depending on your audience. Good thing we Americans have strong antibodies against charlatans.

 

Ryan hanging up his skates

House Speaker and Sophomore Class President Paul Ryan has decided he won't run for re-election this year:

The latest and most high-profile departure from Congress, he joins dozens of Republicans who have resigned or retired ahead of the 2018 midterms,according to a Congressional Casualty List. According to an NBC News count, Ryan is the 24th House Republican who has decided not to seek re-election this cycle. His departure had been rumored for months.

Back home in his Wisconsin district, there are already a slew of challengers lined up, including Democrat Randy Bryce, who boasted yesterday of strong fundraising numbers. He cheered Ryan's announcement with a joke about Republican efforts to repeal and replace Obamacare.

In Washington, Ryan's announcement moves the potential battle for House Speaker out of the shadows and gives possible contenders like House Majority Leader Kevin McCarthy, R-Calif., House Majority Whip Steve Scalise, R-La., and others time to gather support for possible bids to lead their conference in the next Congress.

Jennifer Rubin sees another rat (in her own party, take note) leaving the sinking ship:

The political reality is less noble. One can hardly imagine a more obvious signal that Ryan fears the prospect, if not of losing his own seat, than of losing the majority and hence his speakership. In the past, speakers — understanding the demoralizing impact that premature white-flag-waving would have on their troops — had the good sense to wait until after the election to announce that they would exit the leadership of their party. Ryan’s move has several consequences.

First, Democrats (who were heavily spending to defeat Ryan) can declare victory in that race and save the money it would have taken to knock out a sitting speaker.

Second, this is a flashing light to donors and candidates on both sides. For Republican money-men, the message is: Don’t throw away cash trying to save the House. (One wonders whether Ryan, previously a strong fundraiser, will still be able to get donors to open their wallets when he’s abandoning ship.)

Third, this will be seen in some quarters as a sign that Ryan cannot bear defending the president from potential impeachment. It has been a chore to act as Trump’s lead apologist, ignoring Trump’s outbursts and justifying his zigzags.

I'm very much looking forward to a Democratic 116th Congress. Apparently so is Paul Ryan.

Congratulations, Senator!

For the first time in the institution's 229 years, a sitting U.S. Senator—from my own state, no less—has given birth:

Sen. Tammy Duckworth (D-Ill.) gave birth Monday to a baby girl, the first time a sitting senator has delivered a child and one of just 10 female lawmakers to bear a child while serving in Congress.

Duckworth, 50, and her husband, Bryan Bowlsbey, named their daughter Maile Pearl Bowlsbey after Bowlsbey’s great aunt. Pearl Bowlseby Johnson was an Army nurse during World War II. Duckworth is a double amputee from her service in the Iraq War as an Army helicopter pilot, getting shot down in 2006. The senator said that she and her husband consulted with former senator Daniel K. Akaka of Hawaii, who died last week, about the choice of name, just as they did with the birth of their first daughter, Abigail, four years ago.

Wait, she's 50? Wow. I can't decide which is more impressive, her age or her first-ever record. Either way, it's pretty cool.

The Thick of It is now

In a column last summer, UC Berkeley professor Ned Resnikoff saw Armando Ianucci's British sitcom The Thick of It as a warning:

As scathing as The Thick of It can be in its depiction of craven, self-interested political behavior, it’s difficult to imagine any of its protagonists engaging in criminality on a scale equal to what Trump’s inner circle may have committed.

Nor can The Thick of It capture the dizzying instability of American politics in 2017, though it has occasionally gotten close. The conventions of the sitcom genre usually demand that, for all the frantic activity in one episode or another, very little ever really changes; the prime minister might get ousted and the opposition may become the governing party, but the political system itself remains static. It’s barely five years later that we understand just how fragile that apparent stasis was all along.

Indeed, one can imagine a contemporary version of The Thick of It in which its starring hacks cross the murky boundary between unethical behavior and blatantly illegal acts,the usual unprincipled goons suddenly finding themselves locked into a partnership of convenience with committed racists; and in which the collateral damage they wreak has expanded to institutional and geopolitical dimensions. While that show does not yet exist, one can see the seeds of proto-Trumpian government-as-PR-crisis in old Thick of It episodes, like a warning we all failed to heed.

Yes. We're longing for the halcyon days of Malcolm Tucker. Welcome to the Trump Administration.

City approves $8.5 bn airport ordinance

The Chicago City Council on Wednesday approved a massive package to restore O'Hare to its former glory as the busiest airport in the world:

With legal approvals in hand and O'Hare's tenant airlines scheduled to formally sign new lease deals later today, the path appears clear to implementing a plan that, if all goes as scheduled, will add 3 million square feet of terminal space and 30 to 35 additional gates for planes to load passengers, up from 185 now, by 2026.

City aviation officials say doing so will attract an additional 20 million passengers a year to O'Hare (up a quarter from today), many of them arriving on lucrative international flights, an area in which O'Hare has fallen behind competitors such as Los Angeles International and Atlanta's Hartsfield. And if those targets are reached, the plan sets the stage for further terminals in the future.

With American Airlines having dropped its earlier opposition to the deal, the last potential obstacle melted away when African-American and Latino aldermen agreed to set up a working group, or commission, that will regularly monitor activity and report back to aldermen on whether minority businesses and workers are receiving an adequate piece of construction and related legal and financial contracts.

The gate expansion follows a decade in which O'Hare added or lengthened several runways and converted many of them from a diagonal configuration to six east-west parallel runways. Most of that work already has been completed, with more expected soon.

O'Hare's mostly-complete runway project vastly increased the number of operations (takeoffs and landings) the airport could handle, well beyond the capacity of the terminals. The new terminals and gates should alleviate that.

Passengers will also finally have the ability to change from international arrivals to domestic departures without collecting their luggage, which right now makes O'Hare a real pain in the ass for inbound international travelers.

This guy again

Longtime readers know how much I loathe Eddie Lampert, who represents to me everything that is wrong with the adolescent philosophy emitted years ago by Ayn Rand.

Well, in next month's Vanity Fair, William Cohan sits down with the child king of hedge funds and hears him out:

[Lampert's] triumphs are largely obscured by his worst mistake: the 2005 merging of Sears, the iconic retailer whose doorstop mail-order catalogue was once a fixture in nearly every American home, with the downmarket Kmart chain, which he had brought out of bankruptcy in 2003. Twelve years on, this blundering into retail has made him a poster boy for what some people think is wrong with Wall Street and, in particular, hedge funds. Under his management the number of Sears and Kmart stores nationwide has shrunk to 1,207 from 5,670 at its peak, in the 2000s, and at least 200,000 Sears and Kmart employees have been thrown out of work. The pension fund, for retired Sears employees, is underfunded by around $1.6 billion, and both Lampert and Sears are being sued for investing employees’ retirement money in Sears stock, when the top brass allegedly knew it was a terrible investment.

The vultures are circling, waiting for Lampert to throw in the towel so they can try to make money by buying Sears’s discounted debt. But Lampert continues to claim that’s not going to happen if he can help it.

Treasury secretary Steven Mnuchin “has been a shareholder and a member of the board of directors of Sears Holdings from the day that the combined company was formed [until becoming Treasury secretary], so he spent 11 years at Eddie’s side. . . . [With] all of Trump’s focus on jobs, job preservation, job creation, somebody ought to ask his secretary of the Treasury what his involvement has been for 11 years in the destruction of well over 100,000 jobs at Sears.” (A spokesman for Mnuchin declined to comment.)

Cohan treats Lampert fairly, I think. I didn't learn a lot, though. And Lampert still runs Sears, and still will find some way to make back most of the money he, personally, has invested in it. Too bad not enough of the right people think what he did to Sears and its employees is criminal.

Not that this is news

In addition to crapping on the norms of office that have kept our Republic functioning for centuries, the Trump Administration has lowered the bar for standard written English in politics:

Amid all the chaos in the White House — including West Wing personnel drama, the Stormy Daniels scandal and Mueller’s Russia investigation — some wayward spellings and inaccurate honorifics might seem minor. But the constant small mistakes — which have dogged the Trump White House since the president’s official Inauguration Day poster boasted that “no challenge is to great” — have become, critics say, symbolic of the larger problems with Trump’s management style, in particular his lack of attention to detail and the carelessness with which he makes policy decisions.

On Monday, for example, the White House rolled out an executive order from Trump aimed at cutting off U.S. investment in Venezuela’s digital currency as a way to pinch strongman Nicolás Maduro’s regime. But in the headline on the public news release, the White House wrote that Trump was taking action to “address the situation in America.”

“Freudian slip????” wondered Rosiland Jordan, a reporter for Al Jazeera.

Liz Allen, who served as White House deputy communications director under President Barack Obama, said in an interview that the press office under the 44th president sought to be as rigorous as possible. Releases typically were proofread for accuracy and content by at least four or five people. Announcements that dealt with domestic policy issues and foreign affairs were vetted by experts at federal agencies and the National Security Council, she said.

“We felt a burden and responsibility to get it right,” Allen said. “We were acutely aware of the integrity of our platform. We took it seriously. No one should meet a higher bar than the White House. They are the ultimate voice.”

Read through to the punchline.

But Allen makes the main point, I think. The Administration's written communications reflect a deeper antipathy to "getting it right." They just don't care. And our allies and adversaries alike have noticed.

What really was the Cuban sonic weapon?

About a year ago, a number of American diplomats and their families in Cuba were injured by what our military speculated might be a sonic weapon. A sonic weapon directs sonic energy at a target to disable, but not necessarily permanently damage, the person. Over a few months, people reported "blaring, grinding noise," hearing loss, speech problems, nausea, disequilibrium...exactly what a sonic weapon could cause.

Via Bruce Schneier, a team at the University of Michigan working in association with the IEEE has published a paper speculating on the variety of weapon how it might have worked:

On the face of it, it seems impossible. For one thing, ultrasonic frequencies—20 kilohertz or higher—are inaudible to humans, and yet the sounds heard by the diplomats were obviously audible. What’s more, those frequencies don’t propagate well through air and aren’t known to cause direct harm to people except under rarefied conditions. Acoustic experts dismissed the idea that ultrasound could be at fault.

Then, about six months ago, an editor from The Conversation sent us a link to a video from the Associated Press, reportedly recorded in Cuba during one of the attacks.

To make the problem tractable, we began by assuming that the source of the audible sounds in Cuba was indeed ultrasonic. Reviewing the OSHA guidance, Fu theorized that the sound came from the audible subharmonics of inaudible ultrasound. In contrast to harmonics, which are produced at integer multiples of a sound’s fundamental frequency, subharmonics are produced at integer divisors (or submultiples) of the fundamental frequency, such as 1/2 or 1/3. For instance, the second subharmonic of an ultrasonic 20-kHz tone is a clearly audible 10 kHz. Subharmonics didn’t quite explain the AP video, though: In the video, the spectral plot indicates tones evenly spaced every 180 Hz, whereas subharmonics would have appeared at progressively smaller fractions of the original frequency. Such a plot would not have the constant 180-Hz spacing.

Of course, to this day, no one knows exactly why the attacks occurred, and even to say "attacks" makes a reasonable but not certain assumption.

Tuesday link round-up

Late afternoon on Tuesday, with so much to do before the end of the week, I can only hope actually to read these articles that have passed through my inbox today:

And now for something completely different tonight: Improv and Arias. Which is why I wonder whether I'll actually get to read all of the articles I just posted about.