Mergers Collapse, Bubble Deflates, Debris Hits Hedge Funds

The “arbs” got caught on the wrong side of the M&A collapse.

Hedge funds are getting bloodied in one of their favorite games, after years of a giddy boom in mergers and acquisitions with ever sillier valuations, made possible by an endless flow of easy money from yield-starved investors and fee-hungry banks, under the eyes of regulators who’d conveniently fallen asleep.

But that M&A bubble is now collapsing. And many hedge funds that were into merger arbitrage got caught on the wrong side of the bet.

Merger arbitrage is a bet that an announced acquisition gets completed. With the announcement, the share price of the target company shoots up to somewhere near the bid. If there’s hope that the bid will be raised, the share price might overshoot the bid. Once the target company agrees to be taken over, shares usually trade slightly below the acquisition price until the acquisition is completed. These price differentials can be exploited by merger arbitrage.

These can be huge, leveraged bets on what are expected to be minor price differences. Risks are thought to be low – unless the merger collapses. That’s when these “arbs” can get their heads handed to them.

This is now happening. So far this year just in the US, about $400 billion in deals have collapsed. It already blew past the full-year total of last year’s withdrawn deals of $231 billion and the 5-year average full-year total of $243 billion, according the Dealogic. Even if no more deals are withdrawn this year, the current total would already set a new full-year record.

This hangover from the multi-year merger bubble includes Pfizer’s $160 billion merger with Allergan, “the biggest withdrawn deal on record,” as Dealogic put it. It collapsed “two days after the US Treasury Department announced stricter rules for tax inversions.”

While the Treasury’s efforts to crack down on this tax avoidance scheme have been in the open for a while, the market didn’t think that it was the sole reason why Pfizer would buy Allergan, and that the merger would go through anyway. Turns out, the market was wrong. Tax avoidance was the only reason.

Allergan shares plunged 15% that day to $236.55 a share and have since dropped another 5.8% to $222.69 at the moment, down $100 or 31% from their peak on December 1 shortly after the merger announcement. The fact that shares traded sharply below their December 1 peak even before the deal collapsed shows that serious doubts had crept into the calculus.

Other failed mega deals this year include Halliburton’s $38.7-billion bid for Baker Hughes. It collapsed after the Department of Justice, following a nearly interminable review process, sued to block the deal because of its anti-competitive nature. There were seven such mega deals that burned and crashed this year.

On Tuesday, the barely limping brick-and-mortar retailers Staples and Office Depot, trying to survive in a world with shrinking demand for office supplies, threw in the towel on their $6.3 billion deal after a federal judge sided with the Federal Trade Commission and granted a preliminary injunction. Allowing the only two national office-supply chains to combine would, the judge said, “substantially impair” competition. Their shares plunged.

And more mega deals have scheduled an appointment with doom. The Deal Book:

Energy Transfer Equity, a Dallas-based pipeline operator that initially had to coax a majority of the Williams Companies board to agree to its $38 billion offer in September, was frantically searching for a way out of the deal by springtime.

Things started to look shaky when Williams Companies sued Energy Transfer and its chairman, Kelcy Warren, in mid-April, claiming he had breached the merger agreement.

Then Mr. Warren said several times during the company’s earnings conference call last week that the deal “can’t close” because of a complicated tax opinion. Williams firmly believes it can.

Investors overwhelmingly think the deal, as it was agreed on seven months ago, is doomed. Of about 150 fund managers surveyed by Evercore ISI, 84% do not expect the deal to close in its current form.

Then there is the drug maker Abbott’s $5.8 billion acquisition of Alere, which makes medical diagnostics tests. At the end of April, less than three months after their deal was announced, Alere put out a statement saying that Abbott was trying to terminate their agreement but that Alere had denied the request.

In both cases, lawyers said the merger agreements were impenetrable. Based on all publicly available information, neither Energy Transfer nor Abbott has a clear way out of its deal. Yet the market is treating these situations as if they are practically doomed….

Another tax-inversion pharma-oligopoly deal that is now looking shakier is Shire’s $32-billion acquisition of Baxalta. Shire is headquartered in Irland, Baxalta in Illinois. It would, they said at the time, create the world’s biggest rare-disease drugmaker.

These collapsed and collapsing deals are among the factors ruining the M&A party: through May 4, according to Dealogic, US targeted new M&A volume plunged 21% from a year ago.

But there’s hope for arbs that jump into the game now and that can handle the risk and the anxiety in this post-bubble tumult: the gap between the acquisition price and target-company’s share price has widened substantially, given theprobability that these deals may fall apart too. Arbs that jump in at the right moment and are lucky enough to get into a deal that will actually be completed will pocket a greater return – and a lot more gray hairs to boot.

After a blistering five-year boom of near limitless possibilities, it is suddenly getting tough in another asset class – one that mere commoner millionaires are not invited to play in: the high-dollar art market. Read…  Another Asset Bubble Cracks: Art Sales Plunge

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  70 comments for “Mergers Collapse, Bubble Deflates, Debris Hits Hedge Funds

  1. DanR says:

    I just checked a few merger arbitrage ETFs and mutual funds and do not see a major decline in value. Are the hedge funds approaching this differently?

    • Wolf Richter says:

      The merger arbitrage index, by HFR, for example, declined 0.75% in April. So it’s not a “major decline” like a 30% crash in the stock market, but it’s quite a bit in one month for an arbitrage index that has a 5-year average annual return of only about 2.3%. These things don’t move that much. They’re supposed to be low-risk.

  2. Petunia says:

    After 30 years of M&A can anybody recall a deal that turned out well for the average investor, I can’t. The acquirer is leveraging to the hilt to buy growth it can’t otherwise achieve, resetting its book valuations to change valuations they don’t want their investors to know about, and ravaging the target for parts. You land up with a company full of rich managers, more debt than they can carry, and the carcass of a once productive entity. Let’s keep up the good work guys.

    • NotSoSure says:

      Hei, at least you can’t accuse the Chinese of inventing M&A, Private Equity and other soul sucking “innovations” :)

    • walter map says:

      “After 30 years of M&A can anybody recall a deal that turned out well for the average investor, I can’t.”

      M&A is

      (1) A stock-price-manipulation tactic designed to enrich corporate officers. It’s not supposed to benefit either the average investor or the firms involved.

      (2) A way to avoid the vagaries of internal R&D because it’s so much easier to exploit. “Those who can, do. Those who can’t, prey on those who do.”

    • Chip Javert says:


      The fact you can’t identify any successful M&A transactions says more about your knowledge of M&A than the actual value of M&A. You have fallen into the lazy trap of condemning the entire practice of M&A, not just the bad apples.

      By way of comparison: 1.3M people die annually in globally auto accidents (36,000+ in the USA). Are we going to outlaw cars throughout the world? Definitely not.

      Since you asked, some successful M&A transactions:

      o YouTube
      o BNSF
      o Benjamin Moore
      o The Buffalo News
      o Dairy Queen
      o FlightSafety
      o Fruit of the Loom
      o Johns Manville
      o NetJets
      o Cisco (the corporation) alone has probably done a thousand value-add M&A transactions in the last 20 years.
      o + thousands more

      M&A is a legitimate & powerful business management tool that can be mis-used (by greedy CEO, et al), blows up a company, and gets reported on the front page as yet another shearing of the innocent sheep (all true statements). The question is can M&A be better regulated (hell yes), and if so, why isn’t it? I humbly submit your duly elected representative(s) get lots of “campaign contributions” to ensure the rules stay “loose”, real loose. Hillary, for example, has collected hundreds of millions from Wall Street.

      Please spare me the uninformed crocodile tears.

      • Petunia says:

        I don’t think most of your list turned out that great. Cisco is a basket case in particular. I wasn’t crying about the bad deals, just pointing them out. I still can’t think of one that was a run away success.

        • Petunia says:


          In the interest of full disclosure, I will admit I am still pissed off about Revlon. They turned my favorite line of cosmetics into total crap. I guess I’m still not over it.

        • Chip Javert says:

          Actually all of them turned out very well.

          90% of the examples I cite are from Berkshire Hathaway. The fact you slam the whole class absolutely zero evidence (other than your favorite lipstick has gone missing) yet again demonstrates you have a tenuous understanding of M&A.

          You are certainly entitled to your opinions, but uninformed opinions are, well, you know, meaningless.

        • Chip Javert says:


          Exactly which ones on my list have turned out bad?

          You made the accusation, please provide the evidence.

        • Chip Javert says:

          Cisco is a basket case ? Why? What’s your measurement?

          Since 1992, except for a couple years during the 2000 bubble (Cisco stock briefly hit $73/share), the stock seems to have peaked at $26/share.

          Exactly how’s that a basket case?

          BTW, what is your idea of a “run away success”?

      • Tim says:

        Going way back, there seems to have been lots. Like in autos. They were successful for many decades, like GM earlier and mid 20th century. Other big industries, I can think of some others. And then in mining also. But then M&A didn’t used to be quite the way it has been recently.

        • Tim says:

          Going way back, there was the era of corporate concentration. The bad old days. Lots of road kill, but real powerhouses of production emerged, when America’s real industrial power emerged.

      • walter map says:

        “some successful M&A transactions”

        Well, maybe not.

        Warren Buffett: Berkshire’s railroad BNSF ‘disappointed’ in 2014 …

        Fruit of the Loom to close Jamestown plant, lay off all 600 workers …

        Now At Dairy Queen: The Worst Food Safety Record In The Industry!

        Cisco is still over 20% off it’s peak stock price.

        Berkshire has been losing billions on Johns-Manville asbestos claims for years.

        Netjets is regularly sued for back taxes.

        The Buffalo News consistently suffers from declining circulation.

        At least 90% of M&As result in investor losses. You could have mentioned that, but you didn’t.

        • Chip Javert says:


          (sigh) so you incorrectly GOOGLED a lot of subjects – but you forgot to read the text. (sigh). So I will help you:

          o BNSF was a disappointment in terms of customer satisfaction (not earnings & nobody lost a job). Berkshire Hathaway is investing billions (and new jobs) addressing the issue.

          o I found the (single) skanky website regarding Dairy Queen – can’t find any other corroborating evidence. Don’t know what to say.

          0 Fruit of the room – Berkshire Hathaway bought it out of bankruptcy, saving about 10,000 USA jobs that were about to vanish. I have no idea what happened with the 600 in Kentucky.

          o Johns Manville was bought by Berkshire out of bankruptcy WITHOUT THE ASBESTOS LIABILITY (Berkshire is not liable for a dime of the pre-bankruptcy asbestos settlement). Jobs were saved.

          o NetJets is not regularly sued for taxes, it was sued once by the IRS and the IRS lost the case (

          Walter, you are so wrong you’d have to die to get better.

        • Chip Javert says:


          Please provide a (credible) cite for you statement “…At least 90% of M&As result in investor losses…”

        • walter map says:

          “Don’t know what to say.”

          Which never slows you down, does it?

          “NetJets is not regularly sued for taxes, it was sued once by the IRS and the IRS lost the case”

          IRS got only a partial victory. Berkshire is regularly sued for tax evasion.

          The point is, Netjets is in no way the successful acquisition you claim it is:

          According to Bloomberg, NetJets has been a constant cause for concern since Berkshire Hathaway purchased the company in 1998 for $725 million.

          During the 2009 financial crisis, Buffett was quoted saying that if not for Berkshire Hathaway’s deep pockets, NetJets would be destined for bankruptcy, Bloomberg reported.

          “I have no idea what happened with the 600 in Kentucky.”

          Of course not. Better to pretend it didn’t happen, eh?

          “Berkshire is not liable for a dime of the pre-bankruptcy asbestos settlement”


          • Dozens of lawsuits allege the Berkshire-owned companies wrongfully delay or deny compensation to cancer victims and others to boost Berkshire’s profits.
          • Multiple rulings of “bad faith” against Berkshire subsidiary Resolute Management Inc. say the company intentionally deceived policy-holders or acted unfairly.

          ‘Please provide a (credible) cite for you statement “…At least 90% of M&As result in investor losses…”’

          Why do up to 90% of Mergers and Acquisitions Fail?

          Some are still failing, of course, and have yet to be counted.

          “takeovers by large firms have destroyed $226 billion of shareholder wealth over 20 years. In contrast, small firms, defined as companies whose market capitalization is equivalent to the smallest 25 percent of companies listed on the NYSE in each year, created $8 billion of shareholder wealth through their transactions.”

          $226 billion in losses, $8 billion in gains means greater than 90% losses.

          Naturally, you have zero evidence to the contrary. You do whine well though.

      • GatoHead says:

        As a 9-year veteran M&A Banker who thankfully got out with my soul intact a dozen years ago, I agree far more with Petunia’s assessment.

        • Chip Javert says:

          Explaining why you are out of the business.

          Am I the first to explain all transactions don’t have to be crooked? Didn’t your mama tell you this?

    • EVENT HORIZON says:

      This very same game was played in the early years of 1900. They were called “pools”.

      A few rich buddies would get together, pick a company, and artificially boost the price while they accumulated shares. Then, when word got “out on the street” that “RCA” was rising, they would sell.

      This is the game Joseph Kennedy played and made over 100 million. He also shipped in Whiskey from Canada and England as well.

      William Rockefeller,(brother of the original John Davidson Rockefeller, St.) also played this game. He played it so much that John got mad at him.

      Don’t invest in the stock market. Don’t invest in the bond market. Invest in YOURSELF, your home, your own property.

  3. Chicken says:

    Brought to you by the makers of Looseners, The draino for pension funds. “No, you can’t!”

  4. walter map says:

    Top 25 hedge fund managers earned $13bn in 2015 – more than some nations

    The old heads-I-win-tails-you-lose scenario.

    Can we tax them now?

    • Chip Javert says:


      Good job. You’ve identified the salary for the top 25 hedge fund managers. There are 11,000 hedge funds in the USA. The top 25 equals 0.2% of the total.

      Oh, and you forgot to identify which ones you believe are over paid, or crooked. You just dumped the “top 25” on us – like we should assume since you identified them THEY MUST BE CROOKS.
      you didn’t even take the time to research the question.

      Senator Joe McCarthy used to do this all the time…

      • Petunia says:


        The reason I mentioned Revlon was because it is the average case of most M&A activity. They purchased the primer cosmetic company of the day, the top department store brand, and turned it into a drug store brand of extremely bad quality. The brand still exists as a shadow of its former self. This is the typical outcome of M&A. The company is still around and it makes money but it would have been a much better investment if left as it was.

        As a customer of Fruit of the Loom I can say it used to be much better quality than it is now. The same thing with Dairy Queen, the quality is not as good and they don’t always have the menu items either.

        As for Cisco, the stock price has been dead in the water since the 90’s. I lost interest 10 years ago out of sheer boredom.

        I could continue but I’m going to start charging for my analysis. Notice, because I disagree with you doesn’t mean I attack you personally, it is discourteous, and unprofessional.

      • walter map says:

        “You’ve identified the salary for the top 25 hedge fund managers.”

        They sure give themselves nice raises when they lose tons of money. Don’t they?

        “Oh, and you forgot to identify which ones you believe are over paid, or crooked.”

        Oh, I’m sure they’re all really swell guys.

        Why so defensive, Chip? Money problems?

        • Wolf Richter says:

          Walter, I think everyone thinks that everyone thinks that this back-and-forth has gone on long enough. So let’s have a cold one and talk about something else.

      • EVENT HORIZON says:

        Joe McCarthy was correct, by the way.

    • d says:


      You wish to tax heavily, out of envy.

      Therefore, you, are worse, than them.

      Flat tax is the only fair tax.

      • At the very least tax at regular income, not capital gains rates.

        Given the decoupling of the financial sector for the real economic sector, a strong case exists for elimination of the capital gains tax preference on profits for sale of stocks [other than perhaps IPO shares], bonds, commodity futures contracts, derivatives, etc., as the bulk of these transactions are in the secondary markets, and provide no investment into productive activity, which was the rationale used to justify the preference.

        Indeed, the imposition of a small transaction [Tobin] tax in addition to the elimination of the capital gains tax preference is indicated to reduce speculation and short-term trading/speculation, while having minimal effect on “normal” investment.

  5. Mark says:

    I will be crying crocodile tears for “poor” fund managers.

  6. Paulo says:

    Petunia said: After 30 years of M&A can anybody recall a deal that turned out well for the average investor, I can’t.

    Can anyone recall it working out for the employees who built the company? Of course I am one of those misguided souls who believe that employees are and should be an asset, and that most people want to do a good job and simply need the tools and management to flourish/rise to their potential.

    • Chip Javert says:


      Just because you are in the same uninformed boat as Petunia regarding M&A (see my above reply to Petunia), don’t get mau maued into the rookie mistake of tarring all M&A as bad.

      The trick is to get elected officials to pass meaningful laws that quickly get bad guys tossed into jail for egregious behavior.

      NOTE: all presidential candidates (except Bernie, if news reports are true) get millions from Wall Street. Meaningful regulation in this environment simply can’t happen.

      • walter map says:

        You’re contradicting yourself:

        ” …the rookie mistake of tarring all M&A as bad.”

        “Meaningful regulation in this environment simply can’t happen.”

        If meaningful regulation can’t happen, tarring M&A as bad cannot be a rookie mistake.

        And the evidence clearly shows a wide majority of M&A activity is in fact bad.

        takeovers by large firms have destroyed $226 billion of shareholder wealth over 20 years. In contrast, small firms, defined as companies whose market capitalization is equivalent to the smallest 25 percent of companies listed on the NYSE in each year, created $8 billion of shareholder wealth through their transactions.

        • Bigfoot says:

          I don’t have any statistics to site but there have been hundreds of M&A’s that have occurred to the benefit of all those involved. You would probably not know about them from anything other than an industry related publication as they are small entities & not newsworthy to the general public. We only hear about these large adventures & they mostly have the same theme, saddle the “new” company with debt, capture great deal of this debt equity, & ride off into the sunset as the new ship is sinking.

          As Chip mentioned, proper oversight is required. For all of our differences of opinion, which I find healthy, I believe I have learned something from every regular poster here. I believe the common thread amongst the majority here is that proper oversight does not currently exist so corruption has become rampant. Feel free to correct me. These mega deals that eventually go sour are always under the spotlight so it’s easy to conclude all M&A is corrupt. How we get to a point of proper & honest oversight is a whole different matter.

          Relative to Allergan, they just OK’d a $10 billion stock buyback.


        • walter map says:

          “I don’t have any statistics to site but there have been hundreds of M&A’s that have occurred to the benefit of all those involved.”

          Except for the fired employees, who are pretty much always the majority of people involved in any M&A activity. M&As invariably result in headcount reductions and loss of institutional continuity and internal synergies, not to mention critical data losses.

          “As Chip mentioned, proper oversight is required.”

          Chip also mentioned that proper regulatory oversight is at present probably impossible.

          Get back to us when you can cite some actual data. Gut feelings are notoriously unreliable and some have been discredited by data already cited.

          I’ve successfully predicted the failure of a number of M&As years before the M&As were even pursued. If you think about it they’re really not all that difficult to anticipate, but still, not bad for an elderly art critic.

        • Bigfoot says:

          “I’ve successfully predicted the failure of a number of M&A’s years before the M&A’s were even pursued.”

          And then there are those posts that fall into the realm of the psychic paranormal. I’ll put yours in that file. “Get back to us when you can cite some actual data.” – Not worth my time!

          Please tell me where the S&P will be one year from today using your clairvoyant abilities. Perhaps I’ll get back into option trading.

        • Bigfoot says:

          Hey Walter, I’m back. It took me all of 4 minutes to find this.
          From June 2014 – June 2015 there were over 12,200 M&A transactions just in the US. Yes, 12.2 K in ONE YEAR. Like I said, we do not hear about these but the reality is they are the backbone of business. -Carry on with your rant.

        • walter map says:

          “Please tell me where the S&P will be one year from today using your clairvoyant abilities.”

          There is no such thing as magic, but research and analysis can often pass for same.

          For example, In 1995 it was very reasonable to expect that Daimler would in time acquire Chrysler. It wanted into the U.S. mid-price market and cheaper U.S labor, and Chrysler was as much as it could afford and had engineering capabilities. It was also very reasonable to expect the acquisition would fail because their operating modes were too substantially different.

          I don’t give investment advice. I’m an art critic.

        • walter map says:

          “Like I said, we do not hear about these but the reality is they are the backbone of business.”

          Mostly useless, I’d say, in view of how honest statistics show the U.S. has been in recession since 2005:

          So it’s unsurprising to know that most M&A activity results in investor losses:

          Why do up to 90% of Mergers and Acquisitions Fail?

          “Yes, 12.2 K in ONE YEAR.”

          Clearly, the triumph of hope over experience, despite the wreckage.

        • Chip Javert says:


          Just because you can enumerate all the M&A that has got wrong (and I’d probably agree with most of it) does not mean ALL M&A is crooked. You seem to be blind to this possibility. You do not see to understand how much M&A actually takes place.

          M&A is a legitimate and powerful tool; undoubtedly it can and has been used incorrectly. GET YOUR LOCAL ELECTED REPRESENTATIVE TO CHANGE THE LAW & THROW BAD GUYS IN JAIL.

          Have you tried that? I doubt it.

        • Chip Javert says:


          How is pointing out the you are making ” …the rookie mistake of tarring all M&A as bad” and my statement that “Meaningful regulation in [a corrupt] environment simply can’t happen” contradictory? I’m not understanding that logic.

          Another way of saying it: the vast majority of M&A transactions produce value; those that are unethical or immoral should be regulated out of existence. Until politicians who accept campaign contributions (Hillary Clinton, Ted Cruz) change the regulations, bad M&A deals will continue.

        • walter map says:

          “I’m not understanding that logic.”

          No surprises there either.

          “Another way of saying it: the vast majority of M&A transactions produce value.”

          Problems with reality too.

          I’ve already cited sources flatly discrediting your claims. Ignoring them in favor of wishful thinking hardly constitutes any refutation.

        • Chip Javert says:


          Regarding your statement”…I’ve already cited sources flatly discrediting your claims. …” please provide one claim you have made that I have not refused in this prolonged discussion.

          I promise I will fill in the gaps.

        • Chip Javert says:

          refused – refuted; whatever.

          It doesn’t matter how hard Walter believes in the tooth fairy – until people hold their elected representatives accountable, this crap will never change.

          Walter and I agree on the crime being committed; we differ on the solution.

        • Bigfoot says:

          From your cited link above.

          “Small companies that make acquisitions create value for their shareholders.”

          Referring to the data set from your link – ” They limit the sample to completed transactions worth at least $1 million.” So even this data doesn’t reflect all small business. Thank you Walter for citing this. Too bad you excluded this data from your response. Easy to cherry pick, eh. But, I learned something from the link so that’s good.

          Did you even read my initial post?—– ” proper oversight does not currently exist so corruption has become rampant” Did you miss that? It’s an acknowledgement of problems with big M&A!!!
          I then show you the thousands of mergers (12,200+) & mention small businesses & that they are the backbone of the economy but we don’t hear about these. You then decide to dismiss this as “mostly useless.” Here is how “useless” it is—-

          Let’s recap, try to focus, un-fog your glasses
          1. Large M&A lose shareholder value more than they gain-check
          2. Small M&A adds shareholder value more than they lose-check
          3. Small businesses are the backbone of the economy-check
          4. Small M&A generally does not make the news.-check

          I’m sorry you can’t recognize or acknowledge the importance of small business & the thousands of M&A’s that take place every year that add value to the shareholder & the economy. The entire world is not corrupt Walter although there is no shortage of corruption out there.

      • walter map says:

        “The trick is to get elected officials to pass meaningful laws that quickly get bad guys tossed into jail for egregious behavior.”

        That would be a trick, when the bad guys buy up the elected officials.

        As if you didn’t know. How disingenuous can you get?

    • EVENT HORIZON says:

      Since I was 18, I read ATLAS SHRUGGED every 10 years. Every time I re-read the book I gain more and more insight into the stupidity of humans,the average idiots on this planet, and the corruption of politicians (all of them)

      I finally figured out why every single company in her book is owned by the founder, or the family of the founder. Why? Because this is the way it should be for honesty, fairness and love of life.

      When you own your own companies (like I do) and IF you love your children (like I do), then you want to pass on to them the only creations and proof that you lived (other than your children).

      The concept of the “stock corporation” or “limited liability corporation” is the source of corruption. If your name is on the building (pull up late 1800 street views) then you care. You will support and honor your employees and you will take the long term view.

      Long term view is the “Secret of Happiness” (Yes, I am a genius).

  7. Time for the taxpayers to again “rescue” the “masters of the universe.” What acronym will it be this time?

    • polecat says:


      All The Sh!t That’s Fit To Float

      would that suffice??

    • walter map says:

      “Time for the taxpayers to again “rescue” the “masters of the universe.”

      Standard procedure for confiscating the world’s wealth and sending it to the top of the food chain. They’ve been doing it for centuries and have gotten very good at it, and somehow the masses never catch on.

      These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.

      – Abraham Lincoln

      It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

      Henry Ford

      That money doesn’t all just evaporate, you know. Although it does seem to disappear.

      • Chip Javert says:


        Abe Lincoln lived about 150 years ago; have you noticed how much faster the Venezuela socialists have ruined the entire country?

        Hell, at least it took the communists 75 years to blow up the USSR.

        Just saying.

      • EVENT HORIZON says:

        Henry Ford spent 10 years and about $10 Million dollars researching the history of banking, etc.

        For this he was hated.

        He also wrote a book, or two, explaining banking and money.

        For this he was hated.

        “They” tried to put him out of business but he came up with a brilliant plan. He required his dealership network to finance their inventory, rather than him. So, he was able to keep “selling” his cars to his dealers, who then owned them, and thus not be shut out by the “bankers” who hated him for his Dearborn Independent research and article.

        This is why car dealerships are independent of the brand they sell. They actually buy and own the cars from the manufacturers. They have to “finance” and pay all “flooring” charges, etc. It is why the manufacturers can not own the dealerships (why TESLA is having one hell of a battle).

        The “bankers” tried to shut down FORD so as to shut him up, and in the end we have the dealership network. Don’t worry. The war is not over and soon the Chinese will be selling cars directly inside Wal-Mart.

        Henry Ford was a country hick, but one hell of clever country hick who took on the Bankers. This is why he is hated by certain “people”.

        • Wolf Richter says:

          You’re wrong at least about the “have to” part. Dealers do NOT have to finance their cars with Ford. That “floorplan” is available to them, if they want it. It’s convenient. For new vehicles it’s generally the lowest cost financing available. But some banks are eager to do floorplan financing, and if the dealer wants to, they can switch the floorplan over to a bank. Some dealers have enough cash to where they don’t have to finance their inventory at all, but that may not be a financially smart thing to do, given the enormous value of the inventory and low cost of floorplan financing these days.

        • d says:

          Henry ford did some good.

          Henry Ford was a good big picture business man and, a great innovator. He went bankrupt several times, due to his inability to control fiances.

          Post WWII when McNamara went to work at Ford. They were still estimating their due creditors invoices value.

          By weighing the total number of invoices due. And as McNamara proved, Still not making money. Which is why he went bankrupt so many times.

          Henry Ford was also a Racist and an anti Semite (As in Jew, Muslims are also semite’s).

          The Racist Anti Jew, anti Banker Fiction’s he had published, are just that.

          Citing them and Quoting them today, is like quoting the “Elders of Zion”, A racist fictional slur forged in Russia. And will get your papers failed in many places.

          Only racist and Anti banker zealots quote Fords works, or the elders today.

          No Banker (Code for Jew), tried to put ford out of Business.

          He just though they did, as they would not give him money, on his ridiculous terms, with his ridiculous untenable financial management practices.

          Ford was the Only Big Three Manufacture that did not need Government/Tax payer aid in the last US implosion .

          Edsel stood up, At The Detroit Motor, just prior to that event, and said. We all have to start making what they want to buy, not what we want to make.

          Gm and Chrysler Laughed. Then GM cost the US Tax payer over 10 Billion dollars in losses on stock deals.

          I like a lot of pre 69 US Fords, and the company. Henry did have many Faults ,but the ones he had, were bad, and huge.

          In reality. Ford should be the only US auto manufacturer still around today.

          Bankers aren’t, and have never been, against Ford.

          The US left, with O bummers pet UAW, is another matter.

        • Bigfoot says:

          Yes, & then there is this

          Ford Werke employed slave labor during WWII. Both GM & Ford were given financial compensation in the millions from the US government for the bombing of their subsidiary plants in Germany. Both companies have tried to downplay their roles in Nazi Germany. When one digs into it, the picture becomes much clearer.

          James Mooney, a former president of GM is another figure to check into. Indeed, as Smedley Butler wrote, “War is a racket.”

        • d says:

          It’s not like Henry was alone.

          If you haven’t, and do read that, you will probably never look at any Nation state Questionnaire the same way again.

          FDR, IBM, and J Edgar Hoover.

          Knew what was going to happen, long before it started.

        • Bigfoot says:

          I am aware. Thanks just the same.

    • d says:


      The Oligarchs said so.

      Without campaign funding reform, America is doomed.

  8. OutLookingIn says:

    Time please.

    All accounts to be settled by the end of business day.

    Margin call. Leverage is such a bother when your bet goes south!

    More so-called “assets” coming onto the market – cheap!
    Need cash to pay obligations? The sharks are circling.

  9. Merlin says:

    Wolf – may need some moderation here. Commenters monopolizing this forum for tete a tete are a bore.

    • Chip Javert says:


      Mea culpa. Didn’t mean to inject facts into a discussion.

      I quit.

    • walter map says:

      You don’t need to tell me twice to shut my stinkin’ pie hole. Perhaps I’ll comment again iff specifically invited to do so.

      Ne plus ultra.

  10. TheDona says:

    Only time will tell how all of the M&As will play out. All I know is from the 80s on; once prestigious regional stores, quality clothing/shoe labels, personal care brands, and specialty grocery stores/food products have been stripped of any semblance of their former glory. Everything has been Walmartized.

    Personally…Macy’s is the worst offender:
    Many United States department store chains and local department stores, some with long and proud histories, went out of business or lost their identities between 1990 and 2005 as the result of a complex series of corporate mergers and acquisitions that involved Federated Department Stores and The May Department Stores Company with many stores becoming units of Macy’s, Inc..

    For Petunia: In 1984 Pantry Pride acquired Devon Stores, a home improvement store, and the 400-store Adams Drug Company, which operated in the northeastern United States. The owner of Devon Stores, who obtained about 10.4% of the merged company, then sought an ouster of the Pantry Pride Board of Directors. In 1985, using junk bonds via Michael Milken, 38% of Pantry Pride was acquired by investor Ronald Perelman. This was enough to acquire control, and Perelman liquidated their assets but kept the losses on the books to offset profits from MacAndrews and Forbes, which he had previously acquired. Perelman used Pantry Pride as a vehicle to acquire other companies, in particular Revlon. By 1986, the name of Pantry Pride was changed to Revlon Group.

    I know there is some good M&A strategy, such as vertically integrating the supply chain or such as Disney and Pixar, which is a perfect match. But as an outsider looking in…the majority of it is just stripping assets and leaving a bloated carcass.

    • EVENT HORIZON says:

      That’s their job. They are supposed to MAXIMIZE profits for their investors. They are not paid to think of the employees, customers, etc. They are NOT hired for that reason.

      Want to end this? End “corporation” laws. End “stock holders”.

      One owns the company or one does not.

      (Don’t worry, this will never happen until after the collapse)

      • TheDona says:

        It was just my observation and personal experience that this massive M&A spree since the 80s has left us with minimal choice, poor quality and no service. Good for these idiotic investors in companies who are left with 80 IQ employees on public assistance to make ends meet (the taxpayers) and no customers. Sounds like a real win and a great future for them (heavy sarcasm).

Comments are closed.