This morning I checked my Blackberry for interesting news from The New York Times. Usually I skim the titles and rarely find anything interesting, but this morning I took a different route.
Reading is one of the most efficient ways to keep up with the world, so I have decided to read at least one article a day. However, what I read today shed a whole new light on my life.
Throughout this recession, scandals and frauds have been popping out of the woodworks. The article today was about
Simmons, the large mattress manufacturer. The company plans to file for bankruptcy, but the catchy part is why... Check this out:
The company has been primarily owned by private firms, all seeking to maximize their profits. Therefore, they issued lots of bonds and took out tons of loans. This made the company seem profitable, when really they were floating in debt. The stockholders put up little to nothing of their own money to keep Simmons running smoothly, however they issued ridiculous amounts of dividends to themselves and stopped making the interest payments to the bondholders.
Now, doesn't that sound corrupt to you? Someone starts a company with $5 of their own money, and borrows money from their friends to keep the large company running. They promise their friends that they'll pay them interest on the money they invest, and all of a sudden they stop making payments. Then they issue large sums of money to themselves and fail to repay their friends. That's pretty iffy to me!
It makes me second guess my decision to try out corporate America. Although I know that this issue is only one of the many, but how do you really know what companies are good or bad? Do you just take your chances?
What do you guys think?
