The Cause and Consequences of the Retail Apocalypse

...Cities across the country are facing this uncertainty, with over 6,700 scheduled store closings; it’s become known as the retail apocalypse.
...Some point to Amazon and other online retailers for wrestling away market share, but e-commerce sales in the second quarter of 2017 only hit 8.9 percent of total sales. There’s still plenty of opportunity for retail outlets with physical space.
The real reason so many companies are sick, as Bloomberg explained in a recent feature, has to do with debt. Private equity firms purchased numerous chain retailers over the past decade, loading them up with unsustainable debt payments as part of a disastrous business strategy.
Billions of dollars of this debt comes due in the next few years. “If today is considered a retail apocalypse,” Bloomberg reported, “then what’s coming next could truly be scary.” Eight million American retail workers could see their careers evaporate, not due to technological disruption but a predatory financial scheme...
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As Sears closes hundreds of stores and considers bankruptcy, Lampert will likely come out ahead. He enjoyed fees from all the lending to Sears, and he’ll recoup more money in any restructuring, even if Sears has to sell off inventory to do it. As a shareholder of Seritage, Lampert’s hedge funds can profit from higher rents charged to new retail outlets that move into the shuttered Sears locations.
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This is a robbery in progress. Private equity firms borrow massively to buy companies, and use corporate cash reserves to pay themselves back. Workers who supply the value to the business see nothing; in fact, to service the debt, companies usually cut staff. When the retailer collapses under the borrowing weight, all workers lose their jobs. And even when sales go up, like they have by 5 percent annually in the toy sector over the past five years, dominant toy sellers like Toys“R”Us cannot compete because of the debt burden. The company’s profitability was increasingwhen it filed for bankruptcy.

House flippers triggered the US housing market crash, not poor subprime borrowers

Of course, this wouldn't have been possible without the big banks extending so many bad loans. But while poor and elderly people were deliberately targeted with bad loans, the real honey pot was people willing to flip houses.

The grim tale of America’s “subprime mortgage crisis” delivers one of those stinging moral slaps that Americans seem to favor in their histories. Poor people were reckless and stupid, banks got greedy. Layer in some Wall Street dark arts, and there you have it: a global financial crisis.
Dark arts notwithstanding, that’s not what really happened, though.
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Analyzing a huge dataset of anonymous credit scores from Equifax, a credit reporting bureau, the economists—Stefania Albanesi of the University of Pittsburgh, the University of Geneva’s Giacomo De Giorgi, and Jaromir Nosal of Boston College—found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.
As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse. The lowest quartile in the credit score distribution accounted for 70% of foreclosures during the boom years, falling to just 35% during the crisis.
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This set up a dangerous dynamic. The mortgages these prime borrowers were able to secure were much bigger than those taken out by poor homebuyers. Worse, speculators have less incentive to hold onto their extra homes than those who only own one home. So when the housing market started tumbling and the economy soon followed, they were much more willing to default and foreclose, as you can see in the chart below.
This would explain why, as the researchers put it, “the rise in mortgage delinquencies is virtually exclusively accounted for by real estate investors.” The share of single-mortgage borrowers who couldn’t keep up on their loan payments barely budged between 2005 and 2008.

The Motherboard Guide to Not Getting Hacked

For everyone (especially those who may receive a fancy gift this holiday season):

One of the questions we are asked most often at Motherboard is “how can I prevent myself from getting hacked?”
Because living in modern society necessitates putting an uncomfortably large amount of trust in third parties, the answer is often “not a whole lot.”...
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That doesn’t mean it’s hopeless out there. There are lots of things you can do to make it much more difficult for hackers or would-be surveillers to access your devices and accounts, and the aim of this guide is to give you clear, easy-to-follow steps to improve your digital security. There are, broadly speaking, two types of hacks: Those that are unpreventable by users, and those you can generally prevent. We want to help you mitigate the damage of the first and prevent the second from happening.

Yemen: More than 50,000 children expected to die of starvation and disease by end of year

As we are aiding and arming the Saudi-led coalition against Yemen, we are a party to genocide:

Seven million people are on the brink of famine in the country, which is in the grips of the largest cholera outbreak in modern history.
An estimated 130 Yemeni children are dying every day and an estimated 400,000 children will need treatment for acute malnutrition this year, the charity said.

An Honest Approach to Simplifying Corporate Income Taxes

Suppose that instead of paying income taxes each year, corporations were required to turn over a portion of their stock to the government, let’s say 25 percent, in the form of non-voting shares. 
The rule would be that these shares are treated just like other shares of the company’s stock. If the company pays a $2 a share dividend to holders of its regular shares, it also pays a $2 dividend on each of the government’s shares. If the company buys back 10 percent of its outstanding shares at $100 per share, it would also buy back 10 percent of the government’s shares at $10 each. If another company wants to take over the company, buying up shares at $150 each, the company also has to buy the government’s shares at $150 each. 
The only difference between the shares owned by the government and the stock held by other shareholders is that the government would have no voting power associated with its shares. This is not an effort to get government control over the means of production. It is simply an inescapable route to its tax revenue.
This should be a path that both liberals and conservatives can embrace, even if they disagree on the best tax rate. Under the current system, or the Republican proposal, companies can achieve large tax savings by gaming the system. As a result, they spend tens of billions of dollars on tax lawyers and accountants who develop sophisticated schemes to limit their tax liability. 
Everyone agrees this is a complete waste of resources. From an economic standpoint, we don’t want to see highly skilled people waste their efforts trying to find ways to circumvent the tax code. Nor do we want the IRS to have to spend large amounts of resources trying to prevent this sort of gaming. It would be much better if these people’s skills were used towards some productive end that made people’s lives better.

The Water Drain: Same Lake, Unequal Rates

Lake Michigan water rates have been surging throughout the Chicago region in recent years, squeezing low-income residents and leaving them with little, if any, recourse, a Tribune analysis shows.
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And the financial pain falls disproportionately on majority-African-American communities, where residents’ median water bill is 20 percent higher for the same amount of water than residents pay in predominantly white communities, the Tribune’s examination revealed.
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Through it all, little accountability exists, both in the rates they set and how well the communities maintain their systems. In the past two years, two towns — Harvey and Maywood — have been singled out for mismanagement or fraud.
Unlike other utilities such as electricity and natural gas, and unlike other states’ policies, Illinois allows the local officials who collect the water revenue also to set rates.

The First Thing Colleges Must Understand About Antifa: What the Word Means

Good, quick primer.

...We wrote about the slipperiness of often-conflated terms like "antifa," "antifascism," and "black bloc." On college campuses, those terms — and the differences among them — matter. (Consider the amount of money colleges spend on security for an appearance by a far-right speaker: They expect antifascist activists to show up, and they worry about the prospect of black-bloc violence.)
So we asked several scholars, including Mr. Bray, for their definitions.