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America's Biggest Milk Producers Are Going Bankrupt

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Re: America's Biggest Milk Producers Are Going Bankrupt

#221

Post by eldavido »

L_Rahman wrote: post #210
eldavido wrote: post #129

Earlier quoted context omitted.

Have you or any of your friends ever worked in a non-tech, non-finance business? Many of them are incredibly poorly run. Bad hiring practices, little/no investment in operations or process, etc. All I'm saying is, you have to look case by case at what's going on. Sometimes the PE firm does basically loot the business. In others, entrenched management has been there decades with little board or investor oversight, is…

Tech and finance businesses are also horribly run. There's no evidence suggesting managerial or process excellence in technology companies. The reason finance and technology companies are profitable has everything to do with the nature of the product they create and the leverage it has in our society today. Finance is famous for making people sitting at their desks all day waiting to get a deck at 11AM to put in logo…

No. They're better run because they're more competitive and only the best-run firms survive. There is more pressure toward excellence, and pay reflects this.

Can you name me the 10th-best PC operating system maker? No, you can't, because there isn't one. Whereas I'm sure the management practices of a typical small-town pizza shop aren't great.

I'll grant that perhaps companies get lazy if they're monopolies but that doesn't last forever. I just think it's silly to suggest that companies in cutthroat, competitive industries are less high-performance than average, smaller firms.

Re: America's Biggest Milk Producers Are Going Bankrupt

#222

Post by eldavido »

LatteLazy wrote: post #147
eldavido wrote: post #132

Earlier quoted context omitted.

I take the status quo as my starting point. McClatchy just had pension trouble. So does my home state of Illinois. So does this company, apparently. You seem to think it's possible to just magic a large-scale change in human behavior into existence. It isn't. I think DC+social security is a pretty fair compromise. You're never going to starve if you totally screw up. There's also Medicare to help pay medical expenses…

I strongly agree about the "mix of the two". Though social security is just a defined benefit scheme that's bankrupt and replying on a political bailout so I'm not sure I'd include it. The big issue here though is how to make either work for the average person? A defined benefit scheme where the employer is fiddling the books will fail. A defined contribution scheme where the management company is charging fat fees a…

I think DC is about 85% of the way there. All we need are slightly better defaults in how money is invested. Fidelity already does this, I remember signing a big stack of forms to "take the safeties off" to be able to trade it as a raw brokerage account. 401(k) custodians are fiduciaries, btw.

Whereas DB, it seems like every place and in every time, there are always incentives to underfund, to cheat, to push liabilities around, to misrepresent them, to dump them on taxpayers. These things are closer to immutable human nature and won't change, IMO.

The bigger issue that is NOBODY can really afford to retire given how long people are living, escalating medical costs, and low rates of return. The DC people are just ahead of the DB folks in realizing this, because they're relying on bailouts there isn't enough money anywhere to fund. Illinois is a case in point.

Re: America's Biggest Milk Producers Are Going Bankrupt

#223

Post by dmix »

throwaway5752 wrote: post #173
dmix wrote: post #146

Earlier quoted context omitted.

There have been studies showing private equity does more good for dying businesses than bad. Congress attacked them heavily during the 2008 crisis and they were the first companies called in to congress to answer "tough questions". But it turns out they didn't cause the crisis and that more companies are better off after PE acquisition (ie, they got turned around for the better and created greater economic production…

They do really awful things, too, and they are rewarded outrageously for it with very little personal risk. Taking a 10x levered loan to pay for a company, transferring the debt to them, and cutting the company loose after paying yourself a dividend that more that covers your loan principal has nothing noble about it at all. I don't want to be acquired by them, but I have much more respect for shops like Thoma Bravo…

I personally don't care much for defending shitty Wall St companies nor LBOs, I just wanted to point out that a lot of FUD surrounding Private Equity is simply that, FUD.

There are a lot of bad players or stupid businessmen and politicians in municipalities who have given it a bad name by making dumb exploitative deals. Which I do not condone or wish to defend.

But PE has still done a lot of good turn arounds and has been proven via plenty of data to be a net-gain in terms of its economic contribution to society, saving plenty of jobs and American companies that were headed for certain death.

Companies within all industries always vary in quality, but I think it's silly and dangerous to define entire industries merely by a small group of it's worst players - like the way people have been trying to pin the entire Silicon Valley industry to Ubers and Theranos, or Google/FB acting poorly, despite is otherwise countless success stories.

This sort of thinking, political spin, and media coverage is what creates destructive gov policies aimed at the few small minority of big bad guys but often ultimately just harms the other 90% of mostly harmless good guys with needless hoop jumping or straight up banning of otherwise useful contributions to society (which there have been countless examples of such self-destructive - but of course well intentioned - policies driven by similar emotional reactionaryism).

PE has been a punching bag for a long time. My only wish is that it is done rationally and using an evidence based approach. Politics has a habit of stirring up hysteria with stuff like this, disconnecting it from the reality on the ground, which LBOs and PE certainly has a longstanding legacy of, which you can see thoroughly in this thread. It's hardly new. But yes of course it is an industry notorious for its leeches and one that should be treated carefully, not with white gloves.

Just remember the worst stories take up 90% of the headlines, the countless successful ones often happen quietly, or in less read retrospectives or books. The stuff that rarely tops Reddit or HN, so it's easy to assume that all companies doing LBO are evil blood sucking monsters if you don't pay close attention.

Re: America's Biggest Milk Producers Are Going Bankrupt

#224

Post by RobLach »

bluntfang wrote: post #219
RobLach wrote: post #8

Earlier quoted context omitted.

Given that milk consumption has only gone down 1% / year over the last 5 years, which isn't dire, I believe it.

the direness of a 5% consumption loss over 5 years really depends on margins.

That's definitely true if you've bet on consumption increases and preempted meeting that demand, but milk prices are pretty volatile, jumping +/- $4/cwt throughout the year, which makes me think that COGs are padded enough to give you plenty of time to react.

Gut feelings though.

For comparison, red meat consumption in the US has fallen 15% in the last 10 years and Tyson stock$ is near it's 5 year high.

Re: America's Biggest Milk Producers Are Going Bankrupt

#225

Post by specialist »

gimmeThaBeet wrote: post #193
specialist wrote: post #88

Earlier quoted context omitted.

Pensions are just deferred compensation, part of the total benefits package (salary, health insurance, etc). They're not entitlements, giveaways, lottery tickets, whatever. Maybe the most insidious side effect of transition to 401k was tricking people without pensions that somehow pensioners are unfairly compensated.

I disagree with a lot of that. Defined benefit plans make all the sense in the world sort of empirically or like maybe narratively(?), but the problem is that risk isn't handled equitably. 'Unfair' feels like it has more connotations than my liking, but the main source of that feeling imo is that pensions have frequently made implied rates of return that had little to no chance of realization. It's easy to thumb your…

You disagree with honoring commitments?

Pensioners should accept the looting or chronic under funding because something something balance sheets?

Re: America's Biggest Milk Producers Are Going Bankrupt

#226

Post by throwaway5752 »

dmix wrote: post #223
throwaway5752 wrote: post #173

Earlier quoted context omitted.

They do really awful things, too, and they are rewarded outrageously for it with very little personal risk. Taking a 10x levered loan to pay for a company, transferring the debt to them, and cutting the company loose after paying yourself a dividend that more that covers your loan principal has nothing noble about it at all. I don't want to be acquired by them, but I have much more respect for shops like Thoma Bravo…

I personally don't care much for defending shitty Wall St companies nor LBOs, I just wanted to point out that a lot of FUD surrounding Private Equity is simply that, FUD. There are a lot of bad players or stupid businessmen and politicians in municipalities who have given it a bad name by making dumb exploitative deals. Which I do not condone or wish to defend. But PE has still done a lot of good turn arounds and has…

I don't entirely disagree with you and I'm not trying to score points by dunking on an unpopular boogieman. There are certainly poorly structured and operated companies, and acquisitions by companies that improve their management and capital structure are good. I just think that - in paricular, with the debt market we have right now, that leveraged buyout firms are on the net bad. I think it's maybe as much or more a consequence of poor yield options and gutted regulations, structured products are like buying sausage in the days of Upton Sinclair. There is too much capital out there, I hate to say. There is a lack of discrimination on the fixed income market that would have put brakes on lousy LBO operators, and there are enough of them because the funding is available. That is magnified by engineered bankruptcies and pension haircutting/offloading, which goes beyond the destructive business outcomes I see lately.

Re: America's Biggest Milk Producers Are Going Bankrupt

#227

Post by philwelch »

pacerwpg wrote: post #212
Accujack wrote: post #199

Earlier quoted context omitted.

...who nonetheless has solid journalistic methods.

I believe he's the face of journalists behind the scenes who do all the heavy lifting work.

See this is where John Oliver (and before him, Jon Stewart) are really duplicitous. They talk about the news in a certain way that implies that they have done their research and are delivering useful information, but they crack wise as they are doing so, in such a way that obviously fits in with whatever narrative or reaction they're trying to sell. And then when they get called out for being dishonest or biased, they say, "wait a minute, I'm just a comedian!"

Re: America's Biggest Milk Producers Are Going Bankrupt

#228

Post by LatteLazy »

eldavido wrote: post #222
LatteLazy wrote: post #147

Earlier quoted context omitted.

I strongly agree about the "mix of the two". Though social security is just a defined benefit scheme that's bankrupt and replying on a political bailout so I'm not sure I'd include it. The big issue here though is how to make either work for the average person? A defined benefit scheme where the employer is fiddling the books will fail. A defined contribution scheme where the management company is charging fat fees a…

I think DC is about 85% of the way there. All we need are slightly better defaults in how money is invested. Fidelity already does this, I remember signing a big stack of forms to "take the safeties off" to be able to trade it as a raw brokerage account. 401(k) custodians are fiduciaries, btw. Whereas DB, it seems like every place and in every time, there are always incentives to underfund, to cheat, to push liabilit…

I think there is a more fundamental question here with DC models: human nature.

If you tell people to shut up and pay and we'll assure the outcome, they can do that. Thats DB.

If you give people an "account" (even with good default investments), people have to manage that. They have to fill it up when they have a bad year, with actual cash from their current accounts. They have to ignore their brother in laws who put all the money in enron and made a bomb and tells you you're an idiot for sticking low fees. They have to pay attention and watch out for changes to fees or laws. And they have to start moving the money to lower risk items and plan 5+ years ahead to retire. And even then, that's just getting the index fund strategy right. The strategy may fail. They have to put money in when a market goes down and take it out when a market goes up.

I doubt very much that people will succeed at that. That's the core flaw in the DC model.

Personally I think that sort of work is better done centrally.

Re: America's Biggest Milk Producers Are Going Bankrupt

#229

Post by JTon »

fmakunbound wrote: post #217
JTon wrote: post #184

Earlier quoted context omitted.

More or less weird than eating the flesh of another species?

Definately more weird. Apart from humans, do any other species drink milk from another species?

A house cat has no qualms drinking cows milk when given the opportunity. I think the answer to your question reveals more about capabilities than it does about specific tastes.

Re: America's Biggest Milk Producers Are Going Bankrupt

#230

Post by mcv »

Bartweiss wrote: post #216
saiya-jin wrote: post #176

Earlier quoted context omitted.

Is this still true for majority of the US working force? As an European I find it ridiculous that your pension could be wiped out like that, and not be completely separated from employer either managed by state, or dedicated pension fund manager (what I prefer but citizens have no say in this, you have to move state to change this). Companies go bankrupt all the times, small or big. If it gets wiped out, what happens…

Does this not happen in Europe also? It's rare for US employees to lose everything , but fairly common for pensions to be reduced to (Although I just looked, and apparently Maersk's move was specific to a UK division; perhaps this is another case where UK law sits halfway between the US and Europe? https://www.telegraph.co.uk/finance/personalfinance/2831055/... )

I don't know about other European countries, but in Netherland, it's a major cause for national alarm when a major pension fund is 10% short. This is something that happened after the mortgage crisis (because the money had been invested, and the stock market was way down), and there was a big discussion about whether people should pay extra, or pensions should be cut, or something else.

It's certainly not common, and rules were immediately changed to prevent this from happening again.

The employer doesn't have access to it unless it's the pension of the single owner of the company. In that case: it's your money, and you can fuck it up if you like. But allowing other people to fuck up your pension is considered to be a terrible idea.

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