The Twinkie Debacle

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Since I was not a fan of Hostess brand pastries (especially the twinkie, which to me tasted like sugar coated cardboard), I was not paying much attention to what was going on the the bankruptcy. I heard there was a couple of hedge funds involved, which explained to me why they went into bankruptcy in the first place (it was probably deliberate, because they could make more money loading up the company with debt and selling off assets than actually producing something). However, since the bankruptcy, I have read nothing but commentary blaming the union, and the “exorbitant” demands they were making on the company.  In reality, the union was not making “demands”, they just weren’t willing to give up what they already had. Apparently, the hedge fund masters of the company, after paying themselves massive bonuses, found that they could no longer honer the union contract, so it was either take less, or we liquidate the company. The union said no, and that was that.

It just so happens I have an acquaintance who works (make that worked) for the company. He was not a member of the bakers union, he was a delivery driver. He lives a moderately comfortable middle class lifestyle. He will likely get another job, which may or may not pay the same. Some of the people losing their jobs will be better off, most will probably be about the same, and some will have trouble getting back to where they were, but you can bet nobody working in those hedge funds are going to be sweating this at all. Somebody will buy up the assets (and possibly revive the brand),  the debt will be discharged in bankruptcy, and the new company will be non union. And the hedge funds will move on to the next company ripe for the same treatment. Somehow, that does not seem like the free enterprise system that our forefathers set up, it sounds more like a racket the Mafia would dream up. It’s no surprise to me that the financial media, both mainstream and otherwise, likes it: anything that busts unions and drops the living standards of the average American worker is just fine with them. 

2012-11-22 21:13:34

Source: http://samuraitrader.blogspot.com/2012/11/the-twinkie-debacle.html