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Hedge fund forced Cabela's merger, decimated jobs in Sidney, Nebraska - YouTube
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if you spend any time driving around
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America recently you may have noticed
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that an awful lot of the country seems
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to have shriveled up and died take a
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trip on route 2 in Maine sometime and
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count the boarded up paper mills and
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abandoned houses you see we're headed
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down Route 23 in Michigan or Ohio and
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consider the empty factories ringed with
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barbed wire you'll see a lot of them
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outside the coastal cities scenes like
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this are everywhere this is your country
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now shuttered car dealerships next to
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defunct restaurants across street from
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thrift stores and methadone clinics
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that's America community after community
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desiccated empty husks with nothing left
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huge swaths the United States look like
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that now so what happened well a lot of
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things happen some of them are
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complicated and hard to change but one
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of the big factors in the slow-moving
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disaster is the utter transformation of
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the way our leaders think about the
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American economy during the last Gilded
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Age 125 years ago America's ruling class
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may have been ostentatiously rich and
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they were go to Newport Rhode Island for
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proof if you like but it was still a
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recognizably American class tycoons
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accumulated fortunes but they also felt
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some obligation to the country around
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them steel kite tycoon Andrew Carnegie
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famously built stone libraries around
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the country for the edification of
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people beneath him john d rockefeller
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and many others so-called robber barons
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set aside huge portions of their wealth
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and in some cases their property to make
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this country better
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Yellowstone Acadia National Park etc
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maybe most significantly in January of
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1914 Henry Ford more than doubled the
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prevailing factory wage - with then
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remarkable $5 for an eight-hour day Ford
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didn't have to do that but his company
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was succeeding any thought he should
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some historians trace the creation of
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the American middle-class to that
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decision either way it is nearly
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impossible to imagine a big company
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doing anything like that today attitudes
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are just too different your average
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finance mogul looks at workers merely as
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cost to be reduced or eliminated
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entirely private equity isn't building a
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lot of public libraries these days
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instead the model is ruthless economic
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efficiency by a distressed company out
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sorts the jobs liquidate
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the valuable assets fire middle
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management and once the smoke is cleared
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dump what remains to the highest bidder
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often in Asia it's happened around the
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country it has made a small number of
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people phenomenally rich one of them is
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a new york-based hedge fund manager
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called Paul singer according to forbes
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has amassed a personal fortune of more
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than three billion dollars how was
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singer made that money we made a lot of
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it by purchasing sovereign debt from
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financially distressed countries
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countries that were in trouble usually
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at a massive discount once the country's
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economy regains some stability singer
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would bombard its government with
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lawsuits of a massive public relations
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campaign originating here in Washington
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sometimes until he made his money back
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with interest the practice is called
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vulture capitalism feeding off the
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carcass of a dying nation in some ways
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it's not so different from what singer
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and his firm Elliott management have
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done in this country and to this country
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over the past couple of decades Elliott
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management has been billions by buying
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large stakes in American companies then
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firing workers driving up short-term
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share prices and in some cases taking
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government bailouts insult to injury
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Bloomberg News once described singer as
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quote the world's most feared investor
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and that tells you a lot no one's even
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pretending Paul singers tactics are good
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for anyone but Paul singer and his fund
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consider the case of Delphi the
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automotive parts supplier during the
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last financial crisis a consortium of
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hedge funds including singers Elliott
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Management purchased Delphi with singer
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and the other funds at the helm the
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company took billions of dollars in
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government bailouts paid for by you
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Obama's autos are compared those tactics
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to extortion but they continued anyway
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once they had the bailout money the
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funds moved most of Delphi jobs overseas
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and then either cut retiree pensions
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entirely or shifted the cost to
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taxpayers with later financial
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commitments at home and cheap factories
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abroad Delphi stock soared
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according to investigative reporter Greg
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Palast of the twenty-nine Delphi plants
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and operational in the hedge fund
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started buying Delphi his debt only four
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we're still operating in the United
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States by 2012 that means tens of
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thousands of unionized and white-collar
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workers lost their jobs
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Paul singer's hedge fund cashed out for
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more than a billion dollars
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see how that works well some countries
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including the United Kingdom have banned
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this kind of behavior it bears no
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resemblance whatsoever to the capitalism
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we were promised in school
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it creates nothing it destroys entire
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cities
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it couldn't be uglier or more
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destructive so why is this so allowed in
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the United States
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the short answer because people like
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Paul singer have tremendous influence
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over our political process singer
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himself was the second largest donor to
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the Republican Party in 2016
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he's given millions to a super PAC that
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supports Republican senators you may
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never have heard of Paul singer which
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tells you a lot in itself but in
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Washington he is rock star famous and
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that may be why he's almost certainly
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paying a lower effective tax rate than
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your average fireman just in case you're
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still wondering if our system is rigged
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oh yeah it is tonight we want to tell
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you a little more about how Paul singer
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does business the story begins in a
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small town called Sidney Nebraska
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population 6282
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two hours outside Denver say Sydney is
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the longtime home of the sporting goods
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retailer Cabela's which sells fishing
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and hunting gear in October of 2015
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singer's hedge fund disclosed an 11
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percent stake in Cabela's instead about
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pushing the board to sell the company
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Cabela's management apparently fearing a
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long and costly fight with singer
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announced it would look for a buyer now
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at the time Cabela's was a relatively
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healthy company it was posting nearly
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two billion dollars a year in gross
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profits off four billion dollars in
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revenue there didn't seem to be any
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immediate need to sell but Cabela's sold
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anyway after being pushed so one year
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after singer entered the equation Bass
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Pro Shops announced the purchase of
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Cabela's the company's stock price
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surged within a week literally a week
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Paul singer cashed out he bought the
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stock for $38 a share he sold it for 63
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dollars a share his hedge fund made at
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least 90 million dollars upfront and
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likely more over time but in Sidney
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Nebraska it was a very different story
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the residents of Sidney did not get rich
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know just the opposite
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their community was devastated destroyed
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the town lost nearly 2,000 jobs a
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heartbreakingly familiar cascade began
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the left property values collapsed and
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then people couldn't leave they were
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trapped there
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one of the last thriving small towns in
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this country went under we recently sent
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two producers to Sydney Nebraska to
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survey the wreckage there and to
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consider what happened our producers
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talked to more than a dozen former
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Cabela's employees almost all of them
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refused to speak to us on camera fearful
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of legal retribution from the famously
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vicious Paul singer but off-camera they
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told us their story here it is
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Sydney is it's a great place to be this
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is Sydney Nebraska a small town two
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hours outside of Denver for decades a
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sporting goods retailer the Bellas kept
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its headquarters in
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as the company grew more prosperous so
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did the town Cabela's was the Keystone
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employer our model forever was
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small-town values big time opportunities
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but that motto was turned on its head
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when Elliott Management Corporation
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that's a new york-based hedge fund
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managed by billionaire Paul singer took
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an ownership stake in Cabela's when we
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got the news this company is coming in
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from New York City and buying a huge
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stake in Cabela's that shakes things up
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at the time Cabela's was making more
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than a billion dollars of the year but
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Paul singer's firm sensed it could make
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a quick buck by driving up the stock
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price by forcing a merger once thriving
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town of Sydney lost everything that's
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how a longtime Cabela's employee reacted
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to news that she was losing her job
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probably looking at around 2000 jobs
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2,000 jobs gone yeah Sydney was
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devastated a good American town and just
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destroyed it
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Tim O'Connell runs the town's lumberyard
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before the merger business was great we
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were just buried you know with with
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business now his customer base has
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collapsed how many new homes have been
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built since Cabela's and Bass Pro merged
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in the city limits here there
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one house before Paul singer's hedge
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fund put Cabela's in its sights
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Sydney was experiencing a building boom
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we're gonna build a new housing
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subdivision to meet housing needs all
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these great things are happening and
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instead we are working our tails off to
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try to figure out a way to survive
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for the people of Sydney it's been a
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disaster those who want to leave Sydney
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can't go housing values have collapsed
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tethering them there for those who want
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to stay it's almost impossible to find a
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job how long does it take you to find a
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new job as Sydney collapsed Wall Street
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cashed in Paul singers hedge fund sold
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out before the merger was even complete
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the fund made nearly a hundred million
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dollars Paul singer is proud of what he
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did if money is that big of a god - it
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was pretty secular being well as we were
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doing that story we were warned
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repeatedly by people around Washington
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don't criticize Paul singer that's not a
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good idea and as that package played I
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got the following text from a very
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well-known person in Washington holy
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smokes I can't believe you're doing this
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I'm afraid of Paul singer we'll see what
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happens meanwhile Ben Sasse and this may
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point to the point the texture was
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making Ben Sasse is the US Senator
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represents the state of Nebraska Sydney
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of course isn't that large but you might
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think the death of a town in his state
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would be of concern to Ben Sasse again
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u.s. senator from Nebraska but so far it
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doesn't seem like he's ever commented on
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what's happened to Sydney we looked hard
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then we called sasses office to see if
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they could point to a time where he
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commented on the destruction of Sydney
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or simply supply a statement to us
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about what happened there the Ben sasses
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office didn't even respond to our
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producers huh
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that's odd but then here's one possible
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explanation for that
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during his Senate run Ben Sasse received
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the largest possible donation from Paul
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singer
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