Leveraged to Death 0

The Journal-Register Company, holder of a number of local newspapers, files for Chapter 11.

Revenue had declined 20 percent since 2006, the company said. Moreover, it carried a huge debt load, the legacy of a business strategy of buying daily and weekly newspapers in suburban areas. In recent months its stock traded at pennies a share.

I think we would all be better served if the fancy three-syllable word “leverage” were retired in favor of the short, pithy, accurate word, “debt.”

The fancy-smancy “investment bankers” have made a trade of buying companies, mortgaging them to the hilt, keeping the money, and leaving the companies in an Addams Family episode the lurch.

The “investment bankers” get rich, the companies, their executives, and their employees get screwed.

Witness the Chicago Tribune.

All that debt was not there until Sam Zell purchased the company and sucked it dry.

And then tossed it out the back door onto his trash heap.

Without his Zellmanship, the company would not be in the trouble it’s in. It would be in Little Trouble, not Big Trouble.

In the Olden Days, when I was a young ‘un, a company in overwhelming debt was a bad thing.

So now it’s called “leverage.” That way, no one but the cognoscenti will know it is, in fact, crippling debt.