NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. What the Theranos trial says about the blurred lines between visionaries and frauds. 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. Think of private-equity firms as the banks of the corona crisis: They are, for better or worse, too big to fail. By early 2019, America was the worlds largest producer of crude oil, surpassing both Saudi Arabia and Russia. Recent and archived work by Bethany McLean for The New York Times. Exclusive: Inside the S--tshow That Was the Trump-Biden Transition. Use of this site constitutes acceptance of our User Agreement and Privacy Policy and Cookie Statement and Your California Privacy Rights. Copyright 2020 The Associated Press. Fractivism: Corporate Bodies and Chemical Bonds, A Moderate Proposal: Nationalize The Fossil Fuel Industry, https://media.blubrry.com/belabored/dissentmagazine.org/mp3/24HotBothered.mp3. 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. Here are some tips. Best-selling author Bethany McLean reveals the true story of fracking's impact - on Wall Street, the economy, and geopolitics. It once seemed utterly unattainable until the advent of fracking, which unleashed a torrent of oil. 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. (AP Photo/Rick Bowmer), (Rick Bowmer, Copyright 2020 The Associated Press. 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. But with super-low interest rates, investors in search of yield were still willing to buy debt. The private-equity industry also wants the companies they have invested in to have access to the $454 billion being doled out through the Treasury, an amount that the Fed said could be leveraged into over $2 trillion. Check out the full Hot & Bothered archive here. 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. Her two books are the The Smartest Guys in the Room: The Amazing. Private-equity managers won the financial crisis, as Bloomberg put it last fall. 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. If you need help with the Public File, call 540-512-1558. The Times is committed to publishing a diversity of letters to the editor. Archive Wall Street Too Big to Fail, COVID-19 Edition: How Private Equity Is Winning the Coronavirus Crisis April 9, 2020 From the. Tens of thousands of Texans are being laid off in the Permian Basin and other parts of the state, and the whole industry is bracing for worse. From 2015 through 2019, private equity firms raised almost $80 billion in funds focused mostly on shale production, according to Barclays. And North American oil and gas drillers have almost $100 billion of debt that is set to mature in the next four years. By Patrick Semansky/AP Photo (Mnuchin); By Mark Wilson (Pelosi), Jason Alden (Shwarzman), Patrick T. Fallon/Bloomberg (Black), by Johannes EISELE/AFP (stocks), by Christina Horsten (tents), by John Nacion (ambulance); All from Getty Images. Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. Is there any chance this could lead to prison time? The active outbreak list is intended to inform the public of the current COVID-19 outbreaks in Los Angeles County. 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. According to the CARES Act, companies can only receive loans from the Small Business Administration if they commit to preserving jobs. That means public pensions might be forced to dump their holdings in public-backed investments to provide private-equity firms with emergency casha move that could depress the stock market even further. We asked three experts two immunologists and an epidemiologist to weigh in on this and some of the hundreds of other, Thats a difficult question to answer definitely, writes the Opinion columnist Zeynep Tufekci, because of the lack of. FILE - In this Friday, June 12, 2020 file photo, a nurse uses a swab to perform a coronavirus test in Salt Lake City. In May 2008, she married attorney Sean Berkowitz, the former Director of the United States Department of Justice Enron Task Force. Pension funds that have poured money into private equity firms may take a hit soon, too. This is late 80s bad, a close observer of the industry says. The Wuhan Institute of Virology, the cutting-edge . Ad Choices. McLean was born in Hibbing, Minnesota on December 12, 1970. Blackstones Schwarzman has ties to Trump. Bethany McLean is a Vanity Fair contributing editor. 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. As a subscriber, you have 10 gift articles to give each month. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. [10][11] They subprimed the American energy ecosystem, says a longtime energy market observer. Blame Congress for the meltdown, not Goldman Sachs. So why should they be permitted to raid the federal Treasury in a time of crisis? Copyright 2023 WSLS.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. How exactly did the alleged illegal activity go down? on March 2.Read more about the C.D.C . By now, it should be abundantly clear that the current shale oil business model does not work even for the very best companies in the industry, the investment firm SailingStone Capital Partners explained in a recent note. Which explains why ILPA wrote to Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell last week, arguing that companies backed by private equity should be allowed to access the relief funds provided in the CARES Act. Free COVID-19 testing is available at the McLean County Health Department from 9 a.m. to noon every Tuesday and Wednesday in Room 400E of the MCHD building at 200 W. Front St. in Bloomington. Unlike venture capitalists, who provide start-up funds to new companies, private-equity firms generally take over existing businesses, usually by borrowing large sums of money. Not only should taxpayer funds not be used to pay management or consulting firms, she says, but companies that take the money should also, for instance, be required to include workers on their corporate boards and gradually increase their minimum wage to at least $15 an hour. McLean is a contributing editor at Vanity Fair and co-author of the Enron book "The Smartest Guys in the Room." Nocera. How concerning are things like long covid and reinfections? Policymakers who wanted to tout energy independence disregarded all this, even as investors were starting to lose patience. Well continue to work with the administration and Congress to request that federal programs support all businesses, regardless of ownership structure, and their workers, says the AICs CEO, Drew Maloney. All thats left to tally is the environmental and financial damage. The basic reason is that the amount of oil coming out of a fracked well declines steeply after the first year more than 50 percent in year two. TDD: (800) 526-0844 Ad Choices. About Bethany McLean is a contributing editor at Vanity Fair. Jack Ewings Faster, Higher, Farther is more than the story of a scandal. 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. (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. . BLOOMINGTON A total of 208 new COVID-19 cases have been reported by the McLean County Health Department from Jan. 27 through Friday. Contents 1 Early life and education 2 Career [4], In 2005, McLean got into a spat with then-CEO of Overstock.com Patrick M. Byrne after she wrote a negative article about Overstock and him.[5][6]. 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. Are Crude Oil & Natural Gas Prices Linked? Fracking, they said, was just manufacturing, in which process and human intelligence could reduce costs and conquer geology. Americas energy independence was an illusion created by cheap debt. 2023 Cond Nast. 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. Waters, in her letter, argues for placing even more strings on the money taken by private-equity-backed companies. 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. In 2019, Oxy, as its known, topped a competing bid from Chevron and paid $38 billion to take over Anadarko Petroleum, which is one of the major shale companies. Bethany McLean. No food or drink for one hour prior to testing. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Cond Nast. 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 as well as the bestselling The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, with Peter Elkind. Portfolio, a Penguin Random House imprint . We could close that, once and for all. 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.. 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. There are several pots of federal money that the private-equity industry is lobbying to access. Dont hesitate: sign up on Patreon today. Energy independence was a fever dream, fed by cheap debt and frothy capital markets. All rights reserved. In September 2015, she published Shaky Ground: The Strange Saga of the U.S. Mortgage Giants which examines the governance and financial situation of Fannie Mae and Freddie Mac seven years after the 2008 financial crisis. James Glassman says his seven-year-old prediction that the Dow Jones industrial average will rise to 36,000 wasn't wrong, just early. Sign up for our daily Hive newsletter and never miss a story. As a result, the stocks that make up the S.&P. All information these cookies collect is aggregated and therefore anonymous . . McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. I dont think any of us can really believe what we saw today, one industry analyst told AP. The Next Financial Crisis Lurks Underground, Coronavirus May Kill Our Fracking Fever Dream. Get COVID-19 vaccine updates from the CDC. 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. Thats because some of the major investors in private-equity funds are public pension plans; at Blackstone, roughly one-third of the firms money comes from retirement plans set up to provide for over 30 million working-class Americans, according to someone with knowledge of its portfolio. Hours So if Blackstones investments crater, the teachers, firefighters, and health care workers who are counting on those investments to generate the returns necessary to pay their pensions will suffer. (And not all private-equity firms care equally about all of the programs.) 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. 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. 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. So private equity is pushing to waive those rules, arguing that small firms should not be penalized for having been bought out by big investors. This location, as with the other County contracted medical sheltering sites, will accept individuals from the local community that are referred through DPH. [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. The book, which she wrote from the couple's home, puts a human face to the crisis. Certainly, President Trump, who has staked so much on the American shale industry, wants to save it. 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.