General Growth Properties. Greedheads destroy another company

Fresh on the heels of the bankruptcy filing by the Tribune after Sam Zell bought it, took it private with mountains of debt, then carefully tried to destroy any quality journalism that still survived, comes news of another once-healthy company driven to its knees by greed and incompetence.

General Growth Properties
(GGP) owns large numbers of shopping malls. The Bucksbaum family that controlled it though, wasn’t content with just a few billion, so the company started taking huge, insane risks. Rather than borrow money from a bank, they took out short-term mortgages and used the money to buy more properties. Which works until credit dries up. Then you are screwed. Some of the management also leveraged personally on buying stock in the company (they borrowed money to buy the stock.)

Are you getting the picture? Buy more properties. This (temporarily) pumps up earnings which in turn pushes the stock price higher. So, seems to me, they were primarily beholden to themselves, not to the stockholders and certainly not to their employees or those companies renting space from them. Irresponsible, reckless, and selfish, is what I’d call it.

So, when the inevitable drop in the stock happened, their financial wizard, Bernie Freibaum, found himself facing huge margin calls on company stock he’d bought on leverage. Goodness, can’t let word of that slip out. So CEO and family member John Bucksbaum lent him and others $100 million from the family trust to make the margin calls. Didn’t help. GGP stock continued cratering and now the company may well cease to exist. Oh, the board pretended to spank John Bucksbaum, but he’s still chair.

The Bucksbaums have their billions. Their company will probably file bankruptcy soon. So many of their employees will lose jobs, and the ripple effect could effect those employed by tenants in their malls. Truly, this is capitalism at its sickest. Devoid of ethics, concerned only with short-term profit for oneself, and screw everyone else.

  • DJ

    “Devoid of ethics, concerned only with short-term profit for oneself, and screw everyone else.”

    That ain’t capitalism. It’s not even a system– just a feeding frenzy. It’s Wall Street Meets Las Vegas– addiction overcomes common sense, and though a handful get rich, everyone else goes home broke (and has to explain it to those who depend on them).

  • Ace Armstrong

    This appears to be a classic Ponzi Scheme.
    Coursing through the Republican rhetoric for the last thirty years is this mystical notion that capitalism and christianity are twin handmaidens serving the prosperity of the citizenry with the best of intentions.
    As the dominant preachers of theocracy strut their silk threads across the stage of cultural correctness, the big boys are busy fleecing the mesmerized masses.
    How can people who claim to put so much stock into the Ten Commandments, deny that capitalism need not be regulated?

  • Capitalism needs to be eliminated. It just doesn’t work.

    As is my wont, I often ponder complex systems as they manifest themselves in perpetual motion machines, feeding frenzies if you will, bound by The Laws of Nature to fail (physics, afterall, is everything). Notable amongst feeding frenzies are the Piranha, who in their bloodlust turn upon and consume each each other.

  • Steve

    Well, you may not know this, but Thomas Friedman of the NYT is married to a Bucksbaum. What goes around, comes around. I feel so sorry for them…. NOT.

  • arthur ober


  • DJ

    “Capitalism needs to be eliminated. It just doesn’t work.”

    Capitalism springs eternal. You have what I want and I’m willing to trade for it. That’s the foundation– and no silly central government can stamp that out (hard as some have tried).

    But capitalism goes a step beyond that: markets must be regulated to prevent abuse, wealth must be redistributed to prevent abject poverty, and we must ALWAYS consider the health of the system because our wellbeing (and everyone else’s) depends on it. These are fundamental principles of Adam Smith that our current crop of greedheads seems to have forgotten (or never learned).

    What we have here is (if it’s possible to use these words together) government-sponsored anarchy.

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