It is said to be a Chinese curse: "May you live in interesting times." And why this would be considered a curse is now becoming evident to us. These times of global financial upheaval and disappearing wealth certainly are interesting, and scary to boot. It's been close to 80 years since our society has experienced the economic freefall and attendant feeling of powerlessness that we are enduring today.
But that feeling has been experienced by segments of the larger society through the years. It visited the Rust Belt during the '80s, when whole industries contracted and thousands of workers had to rebuild lives. And it visited Kimberly, Wis., more recently, when the local paper plant was bought by a faceless outsider, then shuttered, devastating a town.
"The Paper Chase," our cover story this week, tells the story of one town's continuing struggle to restore the way things used to be, with good-paying jobs and a secure future. It may be that that status quo is disappearing for all of us, but it has already gone for Kimberly, and the people of the town don't know why. Correspondent Roger Bybee, who has written many times for Isthmus on labor matters, tells the story. His sympathies most assuredly lie with the Kimberly folk, but knowing the story, who can blame him?
The reader will wonder if the Kimberly situation is somehow related to what began as the sub-prime mess but which has spread beyond the mortgage market. A team of Nobel Prize-winning economists could probably not give you a definitive answer; the vision is a little murky in the higher economic regions. It is interesting to note that behind the Kimberly paper plant debacle is the private equity firm Cerberus. "Private equity" signifies that the firm operates under minimal regulation and scant scrutiny. These are the guys who snapped Chrysler Motors off the Daimler scrap heap for a song.
Private equity transactions do mirror some of the worst excesses of the mortgage debacle. They often involve buying firms with little cash down and loading them with debt. In the process they suck the available liquidity out of the firm (read "borrow against equity" in the mortgage analogy). In the end they'll sell what's left of the company to someone who really wants to operate it.
Interesting, isn't it.