On March 10, Scott Sheffield, the chief executive of Pioneer Natural Resources, a major driller in the Permian Basin, told Bloomberg that U.S. oil output could fall by more than two million barrels per day by next year if prices remain where they are today. Click here to take a moment and familiarize yourself with our Community Guidelines. Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.The title and release date have not yet been determined. The basic reason is that the amount of oil coming out of a fracked well declines steeply after the first year more than 50 percent in year two. David Wallace Wells writes that by one estimate. The SHIELD saliva-based testing is available for all ages. At least 1 in 303 residents have died from the coronavirus, a total of 2,512 deaths. Americas energy independence was built on an industry that is the very definition of dependent dependent on investors to keeping pouring billions upon billions in capital into money-losing companies to fund their drilling. Bethany McLean is a Vanity Fair contributing editor. Here are some tips. Unlike venture capitalists, who provide start-up funds to new companies, private-equity firms generally take over existing businesses, usually by borrowing large sums of money. Americas energy independence was an illusion created by cheap debt. Not only should taxpayer funds not be used to pay management or consulting firms, she says, but companies that take the money should also, for instance, be required to include workers on their corporate boards and gradually increase their minimum wage to at least $15 an hour. FILE - In this Friday, June 12, 2020 file photo, a nurse uses a swab to perform a coronavirus test in Salt Lake City. Which explains why ILPA wrote to Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell last week, arguing that companies backed by private equity should be allowed to access the relief funds provided in the CARES Act. By early 2019, America was the worlds largest producer of crude oil, surpassing both Saudi Arabia and Russia. By signing up you agree to our User Agreement and Privacy Policy & Cookie Statement. Thats because one big source of funding didnt dry up: private equity. She is known for her writing on the Enron scandal and the 2008 financial crisis. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. The socio-economic status of individuals needing . Use of this site constitutes acceptance of our User Agreement and Privacy Policy and Cookie Statement and Your California Privacy Rights. Bethany McLean is a journalist and contributing editor for Vanity Fair. By now, it should be abundantly clear that the current shale oil business model does not work even for the very best companies in the industry, the investment firm SailingStone Capital Partners explained in a recent note. To revisit this article, select My Account, thenView saved stories. On Thursday's show: The job forecast for the region in 2022, lessons from the collapse of Enron, a conversation with the late Stephen Sondheim, and the best new restaurants from the past year. All information these cookies collect is aggregated and therefore anonymous . today. In May 2008, she married attorney Sean Berkowitz, the former Director of the United States Department of Justice Enron Task Force. On March 9, the price of oil plunged by almost a third, its steepest one-day drop in almost 30 years. Workers monitoring a hydraulic fracturing operation near Wink, Texas. The industrys $1.5 trillion in cash on hand is also the highest on recordand more than double what it was five years ago, according to Preqin. Thanks to all the cheap money made available by the Fed, companies owned by private-equity firms could simply refinance their debts at lower rates, thereby getting a fresh lease on life. [citation needed], She authored an article on Enron for the March 5, 2001, issue of Fortune entitled, "Is Enron Overpriced? Fractivism: Corporate Bodies and Chemical Bonds, A Moderate Proposal: Nationalize The Fossil Fuel Industry, https://media.blubrry.com/belabored/dissentmagazine.org/mp3/24HotBothered.mp3. Confirmed case data are from the Department of Public Health's communicable disease surveillance database. COVID-19 in McLean County for the week ending 3-3-23 - New Cases (2-23-23 to 3-1-23):129; New Hospitalizations (2-22-23 to 2-28-23):10 ; McLean Countys COVID-19 Community Level is LOW: When Community Level is LOW: Stay up to date on vaccinations, Get tested if you have symptoms. 2023 Cond Nast. Its still unclear where most of this debt is held. Traders last year at the New York Stock Exchange near the post that trades Anadarko Petroleum and Occidental Petroleum. Thats because some of the major investors in private-equity funds are public pension plans; at Blackstone, roughly one-third of the firms money comes from retirement plans set up to provide for over 30 million working-class Americans, according to someone with knowledge of its portfolio. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Cond Nast. The book was later made into the Academy Award-nominated documentary Enron: The Smartest Guys in the Room. 1 FOR PHARMACISTS PRESCRIBING PAXLOVID: This service is available in all locations, with the exception of those in New Hampshire. 1. We could close that, once and for all. Tens of thousands of Texans are being laid off in the Permian Basin and other parts of the state, and the whole industry is bracing for worse. Hours In each of the past four years, according to data-provider Preqin, private-capital managers raised over $500 billion of new money to invest. Then came Covid-19, and, on March 8, the sudden and vicious end to the truce between Saudi Arabia and Russia, under which both countries limited production to prop up prices. McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. By Patrick Semansky/AP Photo (Mnuchin); By Mark Wilson (Pelosi), Jason Alden (Shwarzman), Patrick T. Fallon/Bloomberg (Black), by Johannes EISELE/AFP (stocks), by Christina Horsten (tents), by John Nacion (ambulance); All from Getty Images. [1] It details how the financial crisis bubbled up from a volatile, and bipartisan, mixture of government meddling and laissez-faire. She is a writer, known for Enron: The Smartest Guys in the Room (2005), Independent Lens (1999) and PBS NewsHour (1975). He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. She is the co-author of the 2003 book, "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron," which was the basis for the Academy Award-nominated documentary of the same name. in English and mathematics from Williams College. The book, which she wrote from the couple's home, puts a human face to the crisis. The allies of private equity hope that similar exemptions will soon be forthcoming for their firms.We are in a wait-and-see mode, Chris Hayes, the ILPAs senior policy counsel, told me. Thats a difficult question to answer definitely, writes the Opinion columnist Zeynep Tufekci, because of the lack of adequate research and support for sufferers, as well as confusion about what the condition even is. But that didnt seem to matter, because low interest rates facilitated private equity in another way. McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. 2023 Cond Nast. Americas largest public pension plan, the California Public Employees Retirement System, or CalPERS, put almost $7 billion into private equity during the 2018-2019 fiscal year, according to Institutional Investor. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. Mnuchin is a former Goldman Sachs executive and hedge fund guy; Blackstones Schwarzman has ties to Trump; Jared Kushners family business has gotten loans from Apollo, according to the Washington Post. Previous assignments include editor-at-large, columnist for Fortune, and a contributor to Slate. Because rules for access to this money werent specified in the CARES Act, as ILPA notes, the executive branch will have a fair amount of discretion over who gets access to the moneyand private-equity firms want to take full advantage of that opening. [13][14][15] They divorced in 2020. COVID-19 Guidance for isolation and quarantine, COVID-19 Education and Outreach Materials Page. In the five years ending in April, there were 215 bankruptcies for oil and gas companies, involving $130 billion in debt, according to the law firm Haynes and Boone. You can see how all of this is playing out by looking at Occidental Petroleum. Bill White wants to restore Americas historical proclivity for balanced budgets. Bethany Nesbitt, 20, was found dead in a residence hall at. Coronavirus May Kill Our Fracking Fever Dream, https://www.nytimes.com/2020/04/10/opinion/sunday/coronavirus-texas-fracking-layoffs.html. Sign up for our daily Hive newsletter and never miss a story. In early 2015, the hedge fund manager David Einhorn announced at an investment conference that he had looked at the financial statements of 16 publicly traded shale producers and found that from 2006 to 2014, they spent $80 billion more than they received from selling oil. Portfolio, a Penguin Random House imprint . Get COVID-19 vaccine updates from the CDC. That means public pensions might be forced to dump their holdings in public-backed investments to provide private-equity firms with emergency casha move that could depress the stock market even further. If you need help with the Public File, call 540-512-1558. 500 energy sector fell, questions weve gathered from readers recently, adequate research and support for sufferers, according to the law firm Haynes and Boone. The community level of Covid-19 in McLean County is low based on cases and hospitalizations, according to the most recent update from the C.D.C. Months into the outbreak, no one really knows how well many of the screening tests work, and experts at top medical centers say it is time to do the studies to find out. Bethany McLean is a . Bethany McLean. More than 100,000 people already have died in this country from the virus. If private equity is handed billions in taxpayer money, it could use some of it to pay themselves hefty fees today, then pocket even more of it down the road, when they sell their portfolio companies and collect their 20% of the taxpayer-enabled gains. Given how much of the economy will rise and fall on the investments that private-equity funds manage, we may be forced to let them share the federal handout. The typical fee structure in private equity is the so-called 2 and 20, which means that a fund collects a fee of 2% of the total assets it manages, as well as 20% of any gains on its investments after a certain return is achieved. One is the so-called Paycheck Protection Program (PPP), set up to make $349 billion in government-guaranteed loans available to businesses with fewer than 500 employees. The private-equity industry also wants the companies they have invested in to have access to the $454 billion being doled out through the Treasury, an amount that the Fed said could be leveraged into over $2 trillion. By Bethany McLean Coronavirus May Kill Our Fracking Fever Dream America's energy independence was an illusion created by cheap debt. Restaurants and hotels owned by big chains have already received exemptions granting them access to the relief funds, regardless of how many people their parent companies employ. According to the Institutional Limited Partners Association (ILPA), a lobbying group which represents CalPERs and other public investors, businesses backed by private equity employ more than 8.8 million Americans at over 35,000 companies, accounting for a staggering 5% of the United States GDP. Copyright 2023 WSLS.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Cond Nast. A college student in Indiana died in her dorm room after testing positive for the coronavirus, school officials and her family said. After nearly bringing down the economy in 2008, how is it possible that Fannie Mae and Freddie Mac are still around? [9], In September 2018, she published Saudi America: The Truth about Fracking and How It's Changing the World which examined the "fracking revolution" and U.S. energy independence. As a result, the stocks that make up the S.&P. She was previously married to Christopher Roberts Wilford. Bethany Lee McLean (born December 12, 1970) is an American journalist and contributing editor for Vanity Fair magazine. Think of private-equity firms as the banks of the corona crisis: They are, for better or worse, too big to fail. That, too, is ending, as investors in such funds have become disillusioned. This location, as with the other County contracted medical sheltering sites, will accept individuals from the local community that are referred through DPH. More than 100,000 people already have died in this country from the virus. Whats more, the Milken Institute reported, even by mid-2018, private equity owned more companies than the number of businesses listed on all of the U.S. stock exchanges combined, and have accounted for a more significant source of financing than initial public offerings in many recent years. No food or drink for one hour prior to testing. There are several pots of federal money that the private-equity industry is lobbying to access. James Glassman says his seven-year-old prediction that the Dow Jones industrial average will rise to 36,000 wasn't wrong, just early. NEW YORK (AP) Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. The Wuhan Institute of Virology, the cutting-edge . Private equity financiers typically get a 2 percent management fee on funds they can raise, so they are incentivized to take all the money that pension funds, desperate for returns to shore up their promises to retirees, have been willing to give them. The Times is committed to publishing a diversity of letters to the editor. According to the CARES Act, companies can only receive loans from the Small Business Administration if they commit to preserving jobs. The fear, of course, is that private equity will do what private equity does best, which is pocket the money themselves rather than devoting it to the businesses theyve invested in. The fracking boom that drove a decade of record U.S. oil and gas production was never really profitable to begin with. The title and release date have not yet been determined. The promised profits havent materialized. She co-authored a book on the 2008 financial crisis titled All the Devils Are Here. To revist this article, visit My Profile, then View saved stories. Some of it has been packaged into so-called collateralized loan obligations, pieces of which are held by hedge funds. Vanity Fair may earn a portion of sales from products that are purchased through our site as part of our Affiliate Partnerships with retailers. Certainly, President Trump, who has staked so much on the American shale industry, wants to save it. Thats because oil fracking has never been financially viable. More than 100,000 people already have died in this country from the virus. New revelations about how one Trump staffer helped preserve the transfer of powerfrom the forthcoming book on the Biden White House, COVID-19 Origins: Investigating a Complex and Grave Situation Inside a Wuhan Lab. Like so many other facets of the COVID-19 crisis, however, this unprecedented crash exposed long-running cracks in the facade. And North American oil and gas drillers have almost $100 billion of debt that is set to mature in the next four years. The 42 Best Romantic Comedies of All Time, The 25 Best Shows on Netflix to Watch Right Now. In reality, the dream was always an illusion, and its collapse was already underway. According to Dan Rasmussen, the founder of Verdad Advisers, private-equity firms typically double the amount of debt relative to profits on a companys balance sheet. The Next Financial Crisis Lurks Underground (Bethany McLean, New York Times), Coronavirus May Kill Our Fracking Fever Dream (Bethany McLean, New York Times), Are Crude Oil & Natural Gas Prices Linked? The fracking boom that drove a decade of record U.S. oil and gas production was never really profitable to begin with. The reason is as simple as it is galling: while great private fortunes, such as that of Blackstones Stephen Schwarzman (net worth: $17.5 billion and Apollos Leon Black ($7.5 billion), have been made from private equitys march through the world, its losses, to a remarkable degree, will belong to all of us. We asked three experts two immunologists and an epidemiologist to weigh in on this and some of the hundreds of other questions weve gathered from readers recently, including how to make sense of booster and test timing, recommendations for children, whether getting covid is just inevitable and other pressing queries. We need private equity, we need more of it, and we need it now, chief investment officer Ben Meng said in early 2019right before CalPERS hired a former private-equity guy, who began his career at Goldman Sachs, to head its private-equity efforts. Was Tiffany involved? All that's left to tally is the damage. All rights reserved. Airlines, hotels, and restaurantsall of whose revenues have cratered in the wake of sweeping stay-home ordershave engaged in Hunger Gameslike lobbying to cash in on the CARES Act, making their case for a share of the disaster relief. How exactly did the alleged illegal activity go down? COVID-19 Origins: Investigating a "Complex and Grave Situation" Inside a Wuhan Lab. We could also limit the deductibility of interest payments for tax purposes even more than President Donald Trumps new tax law already did, so companies arent encouraged to load up on debt. 500 energy sector fell 20 percent, marking the sectors largest drop on record. But there are ways to make it work better. If you need help with the Public File, call 540-512-1558. Bethany McLean is a Vanity Fair contributing editor. By Bethany McLean. Getting the government out of the housing market would mean saying goodbye to the 30-year mortgage. Latest trends. A loophole in the tax code currently allows private-equity financiers to pay taxes on their returns at the lower rate for capital gains, rather than the higher rate for personal income. And heres our email: letters@nytimes.com. To keep growing, companies have to keep plowing billions back into the ground. Paying members will get access to perks like a. by Kate Aronoff, Alyssa Battistoni, Daniel Aldana Cohen, and Thea Riofrancos, and much more. Americas energy independence was an illusion created by cheap debt. The big banks emerged from the financial crisis victorious, but also subject to a host of new regulations designed to reduce leverage and stabilize the economy. All we know for sure is that fracking company executives and private equity financiers have made a fortune by touting the myth of energy independence and they wont be the ones who have to pick up the pieces., Bethany McLean, a contributing editor at Vanity Fair, is the author of Saudi America: The Truth About Fracking and How Its Changing the World.. The industrys boosters argue that technological gains, such as drilling ever bigger wells, and clustering wells more tightly together to reduce the cost of moving equipment, eventually would lead to a gusher of profits. These firms not only have a record $1.5 trillion in cash on the sidelines, waiting to be invested, but their CEOs are among Americas richest executives. Never mind that they often overpaid for the companies they acquired, and loaded them up with so much debt that even a mild economic downturn could make it nearly impossible for those companies to repay their loans, as Fortune put it. Until the capital markets began to get suspicious, private equity investors could flip companies they had funded to larger, public companies, making a profitable exit regardless of whether or not the underlying business was making money. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. Investors in the equity of these companies have already seen the value of their holdings decimated. These cookies are used to collect information on how users interact with Chicago Booth websites allowing us to improve the user experience and optimize our site where needed based on these interactions. Daily updates from Washington, Wall Street, and Silicon Valley. Fracking, they said, was just manufacturing, in which process and human intelligence could reduce costs and conquer geology. We really need Trump to do something or hes going to lose all the energy states in this election, Mr. Sheffield told CNBC in late March. McLean is a contributing editor at Vanity Fair and co-author of the Enron book "The Smartest Guys in the Room." Nocera. Recent and archived work by Bethany McLean for The New York Times. If private equity suffers, the blow will reverberate throughout the entire economy. Blackstones Schwarzman has ties to Trump. Vanity Fair may earn a portion of sales from products that are purchased through our site as part of our Affiliate Partnerships with retailers. (And not all private-equity firms care equally about all of the programs.) All thats left to tally is the environmental and financial damage. This material may not be published, broadcast, rewritten or redistributed without permission. The Wuhan Institute of Virology, the cutting-edge biotech facility at the center of swirling suspicions about the pandemics onset, was far more troubled than previously known, explosive documents unearthed by a Senate research team reveal. How Screwed Are Donald Trump and His Adult Children, and Other Questions You Might Have About the Staggering Fraud Lawsuit Against Them. This week, Kate and Daniel talk to Bethany McLean, author most recently of Saudi America: The Truth about Fracking and How It's Changing the World as well as the bestselling The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, with Peter Elkind. What could endemic Covid look like? In 2019, Mclean launched a podcast titled Making a Killing on Luminary. This is late 80s bad, a close observer of the industry says. Exclusive: Inside the S--tshow That Was the Trump-Biden Transition. Copyright 2023 WSLS.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. Is there any chance this could lead to prison time? sure to go down in history as one of the wildest business stories ever. Create a Website Account - Manage notification subscriptions, save form progress and more.
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