It's Déjà Vu
Oh not again . . .
Despite appearances, contemporary American life has an internal logic. Not surprisingly, Grounded’s publication over the last two years has a thematic coherence. Thinking about this lately, I wanted to identify major themes, or through lines, of analysis that tie together several articles. Here’s one: Grand Larceny. It was perpetuated upon the Body Politic by a wide variety of so-called “white collar” criminals: private equity enterprises, tech bro snake oil salesmen, and social media platforms. Grounded documents these perpetrators’ thievery of individual and public resources by pulling back the curtain of their concealment.
Driven by insatiable greed and their willingness to deceive, these economic behemoths don’t stop; they are hollowing out the US economy, sector by sector. Because they continually gnaw away at our society, I frequently circle back, further researching and revising what I have already written. It’s déjà vu all over again.
Red Lobster is Dead
Renowned financial journalist Gretchen Morgenson reports on the demise of the popular seafood restaurant Red Lobster:
[T]he root of Red Lobster’s woes was not the endless shrimp promotions that some have blamed. Yes, the company lost $11 million from the [all-you-can-eat] shrimp escapade . . .and suffered from inflation and higher labor costs. But a bigger culprit in the company’s problems is a financing technique favored by a powerful force in the financial industry known as private equity.
The technique, colloquially known as asset-stripping, has been a part of retail chain failures such as Sears, Mervyn’s and ShopKo as well as bankruptcies involving hospital and nursing home operations like Steward Healthcare and Manor Care. All had been owned by private equity.
I discussed this technique in my article about the private equity take-over of hospitals:
Private Equity operations work like an auto chop shop, extracting the high-profit components and scrapping the rest. With hospitals, “the rest” is the unprofitable part, like staffing and providing services to patients.
Valuable real estate is what hospitals and restaurants have in common. Great asset, property—a shame if something happened to it.
Luke Goldstein explains how financial pirates boarded, raided, and scuttled Red Lobster:
Golden Gate [Capital, the chain’s private equity owner] crippled Red Lobster by selling off one of its most valuable assets, the real estate it owned, in what’s known as a sale-leaseback, for $1.5 billion. With that sale, Golden Gate nearly made back its $2.1 billion purchase of Red Lobster, while turning the chain into a permanent leaser, adding a massive additional cost in the form of rent that was orders of magnitude bigger than the cost of Endless Shrimp. When commercial leases started going up, Red Lobster was highly exposed, but by then Golden Gate had already sold off its shares to Thai Union, which inherited all the debts Golden Gate stacked on the company.
Asset sell-offs happen in Act One. It’s exposition. The real drama occurs in Act Two with the “dividend recapitalization” gambit.
Joe Nocera and Bethany McLean summarize the rest of the plot:
[First] fold in other companies so it appears as though you’ve got a fast-growing business. Then you can flip it back to the public markets, via an initial public offering, before the problems that inevitably follow a debt-fueled acquisition binge show up in financial reports. . . .
[And then] borrow additional money not to invest in the business but to pay the investors who control it.
What’s left after the looting? With their pockets full of rent, refreshed and recapitalized, the owners sell their moribund business—for cheap—to the back alley guys. These gangsters remove the remaining organs for sale on the black market (metaphorically, of course).
Private Equity is the Killer
AI is Google Suicide
All I know about tech comes from using technology and reading what programmers say to each other. IT experts are disgusted and alarmed by Google’s decision to have millions of (unwitting) users beta-test its AI-enhanced search engine. It’s not going well. The techies at Lifewire sound the alarm:
Google Details Its Plan to Destroy Itself With AI
That's not really what was said, but it certainly looks like that's how it will shake out.
The weirdest and scariest news to come out of Google's I/O conference is that it plans to destroy the web as we know it and somehow not kill itself in the process.
2024's IO keynote contained—surprise—plenty of AI announcements, with some genuinely useful gimmicks and features. But the news with the biggest impact on, well, everyone concerns Google's plans to turn its search engine into an AI portal. This could ruin anyone who uses Google search and anyone who relies on Google-sent traffic for their business, including Google itself.
‘If you're in publisher SEO and the Google IO demos aren't making you consider a new career, you're probably not paying attention,’ says veteran tech journalist Ian Betteridge. . . .
But wait! There’s more . . .
Google's ‘AI Overviews’ feature, also known as SGE (Search Generative Experience), is a raging trash fire that threatens to choke the open web with its stench. Instead of directing you to expert insights from reputable sources, Google is now putting plagiarized and often incorrect AI summaries above its search results. So when you search for medical advice, for example, the AI may tell you to drink urine to get rid of kidney stones, and you'll have to scroll past that ‘advice’ to find links to articles from human doctors.
When AI advises you to drink urine or eat a rock every day, programmers say their Generative Pre-trained Transformer (the GPT in ChatGPT) is hallucinating.
Wha . . . ?? No, really—it’s a thing. According to IBM’S AI resources,
AI hallucination is a phenomenon wherein a large language model (LLM)—often a generative AI chatbot or computer vision tool—perceives patterns or objects that are nonexistent or imperceptible to human observers, creating outputs that are nonsensical or altogether inaccurate.
In colloquial English: About half the time—AI is talking out of its ass.
When Google’s AI Search Summary was introduced, I tested it with a query in my area of expertise. AI Overview’s response was superficial and only slightly misleading. The AI-generated information was in the ballpark. But without citations or reference links to verified sites, it was useless. My “solution” to this problem was to remove Google’s SGE from the Chrome browser (using this tool). And the ads disappeared, too. (Hooray!) For good measure, I added Firefox and DuckDuckGo to my taskbar.
Holding Back the Robot Army
Post.News is Ex-Post
Farewell, Post.News. My favorite social media platform locked the doors and shut off the lights last Friday.
I’m on Bluesky now. ¯\_(ツ)_/¯
All these problems can be solved through government regulation, anti-trust prosecutions, and legislation that redistributes risk, leveling the economic playing field. This is why I focus so much on politics and political mobilization; because the only power sufficient to counterweight powerful corporations and plutocrats is government. And only a government directed by the People has a chance.
And now your moment of . . . civic beautification.
Writing—and reading—about serious subjects can be fairly depressing. Grounded will conclude each week with a lighter story so that you may leave with a bit of joy in your heart.
From decay to dazzling— the Detroit train station that once symbolized decline
Municipal investments and city government reforms encouraged private investment, with beautiful results. Here is the restored interior of the Michigan Central Station:
DETROIT (AP) — The once-blighted monolithic Michigan Central train station — for decades a symbol of Detroit’s decline — has new life following a massive six-year, multimillion-dollar renovation to create a hub for mobility projects in the rebirth of the Motor City. . . .
‘It was always my hope that this project would be a catalyst for moving the city and our industry together into the future,’ Bill Ford, the automaker’s executive chair and great-grandson of its legendary founder, Henry Ford, told The Associated Press. ‘It’s always the future. We’re just getting started . . . .’
Related Grounded articles:
Forget Antifa (May 7, 2024)
Algorithm, Your Silent Partner (April 16, 2024)
Buzz Buzz Buzz (July 11, 2023)
It’s Not the Robots—It’s the Rip-off (June 13, 2023)
Love-Hating Social Media (December 6, 2022)
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Notes:
Jack Brewster, et al., How Copycat Sites Use AI to Plagiarize News Articles.
Luke Goldstein, The Raiding of Red Lobster.
Gretchen Morgenson, How private equity rolled Red Lobster.
Avram Piltch, Bye Bye, AI: How to turn off Google's annoying AI overviews and just get search results
Corey Williams, From decay to dazzling, Ford restores grandeur to Detroit.