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106-611: Rock-Tenn bought the company in a $ 3.5 billion deal that closed in May 2011. Rock-Tenn is now known as Smurfit WestRock . SSCC was formed in November 1998, with the merger of Jefferson Smurfit Corporation (JSC) and Stone Container Corporation (Stone). JSC’s roots go back to 1974, when Dublin , Ireland -based Jefferson Smurfit Group (JSG) acquired partial interest in Time Industries, a Chicago-based paper and packaging company. JSG established

212-550: A $ 7,500 investment by his boss, he moved to Baltimore , Maryland . There he managed the J.E. Smith Box & Printing Co. during the day, while running the Southern Box Company, a company he founded in 1936, at night. Using Smith's presses, die-cutters, and other box making equipment during the evening, Morris began servicing two anchor customers who knew him from his Philadelphia days. Only six months after Morris had left Philadelphia, Schoettle came to Baltimore to offer him

318-606: A Canadian packaging company, and $ 189 million cash. SSCC later owned 100 percent of Smurfit-MBI. As a result of this transaction, SSCC focused almost exclusively on the North American market. In May 2008, Smurfit-Stone opened a high-tech corrugated container-producing facility in New Lenox, Illinois. The newer plant was to employ 145 people and supply companies in the pizza, oil lubricants, detergents and household goods, cooking, and health care industries. The firm had naming rights to

424-468: A complete data set – not to declare/measure global recessions according to quarterly GDP data. The seasonally adjusted PPP ‑weighted real GDP for the G20‑;zone, however, is a good indicator for the world GDP, and it was measured to have suffered a direct quarter on quarter decline during the three quarters from Q3‑2008 until Q1‑2009, which more accurately mark when

530-478: A crisis of ideas in mainstream economics and within the economics profession, and call for a reshaping of both the economy, economic theory and the economics profession. They argue that such a reshaping should include new advances within feminist economics and ecological economics that take as their starting point the socially responsible, sensible and accountable subject in creating an economy and economic theories that fully acknowledge care for each other as well as

636-477: A deal valued at about $ 9.2 billion to create the world’s second-largest packaging company. Late 2000s recession The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009. The scale and timing of the recession varied from country to country (see map). At the time, the International Monetary Fund (IMF) concluded that it

742-439: A decade, cost about $ 75 million. By the middle of the 1990s, RockTenn had 59 facilities in 19 states and Canada. Net sales reached $ 705.8 million during 1994, constituting an 11.8 percent compounded annual growth rate for the past decade. Net income came to a record $ 37.5 million. Late in 1995 COO Jay Shuster was named president of RockTenn, with Currey retaining the posts of chairman and CEO. In January 1997, RockTenn consummated

848-576: A disproportionate share of defaults. The Economist wrote in July 2012 that the inflow of investment dollars required to fund the U.S. trade deficit was a major cause of the housing bubble and financial crisis: "The trade deficit, less than 1% of GDP in the early 1990s, hit 6% in 2006. That deficit was financed by inflows of foreign savings, in particular from East Asia and the Middle East. Much of that money went into dodgy mortgages to buy overvalued houses, and

954-984: A high-profile building on Chicago's skyline, until it was re-named the Crain Communications Building in 2012. Adventures in Babysitting with Elisabeth Shue was filmed there. Smurfit-Stone had two reportable business segments. The containerboard and corrugated containers segment accounted for 75 percent of net sales and included the company’s containerboard mills and corrugated container operations. The consumer packaging segment represented 20 percent of net sales and consists of CRB, folding carton plants, and multiwall and specialty bag operations. It also included packaging equipment, flexible packaging, tube, and label plants. Other operations included nonreportable segments, which accounts for 5 percent of net sales and primarily consists of recycling operations, including collection centers and brokerage sales offices. On 15 May 2006,

1060-659: A major presence in the United States with the 1981 acquisition of the Alton Box Board Company and the 1982 acquisition of Diamond International’s packaging operations. In 1983, JSG’s U.S. operations reorganized and the majority of these operations became subsidiaries of JSC. JSC went on to establish a leadership position in the U.S. paper and packaging industry with its 1986 acquisition of 50 percent of Container Corporation of America (CCA) from Mobil Corporation . Morgan Stanley Leveraged Equity Fund II (MSLEF II) purchased

1166-588: A manufacturer of folding and set-up boxes, for about $ 1 million. In 1969, Tennessee Paper acquired wastepaper factories in Knoxville and Atlanta, and in 1972 it built another wastepaper plant in Chattanooga. The merger of Rock City Packaging and Tennessee Paper Mills in 1973 gave Morris, Brown, and others who held stock in the former companies a controlling interest in the new corporation, RockTenn Company. Most Tennessee Paper common stockholders received preferred stock in

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1272-467: A manufacturer of high-density recycled paperboard mainly used in book covers and binders that operated mills in Aurora, Illinois ; and Jersey City, New Jersey . Also in 1997, RockTenn and Sonoco Products Company created a fiber partition joint venture called RTS Packaging, LLC, with RockTenn holding a 65 percent stake and Sonoco the remaining 35 percent. The venture combined RockTenn's eight partition plants with

1378-490: A minimum, there's a little 'froth' [in the U.S. housing market]...it's hard not to see that there are a lot of local bubbles". The Economist , writing at the same time, went further, saying, "[T]he worldwide rise in house prices is the biggest bubble in history". Real estate bubbles are (by definition of the word "bubble") followed by a price decrease (also known as a housing price crash ) that can result in many owners holding negative equity (a mortgage debt higher than

1484-576: A monthly salary of $ 350 Morris was expected to manage several hundred employees, some of them more than twice his age. He also traveled along the eastern seaboard, explaining to meat packers his discovery that they could avoid shrinkage of their hot dogs by putting them in Schoettle's boxes instead of stringing them up like bananas. By 1935, Morris was making a salary on which he could comfortably support his wife and four children, but he wanted to go into business for himself. Armed with life savings of $ 5,000 and

1590-495: A net loss for the year of $ 15.9 million. Seven more plants were closed over the next three years, resulting in the loss of 450 more jobs and an additional $ 19 million in charges. Meantime, in February 2000 the company formed a joint venture with Lafarge Corporation called Seven Hills Paperboard, LLC, which was charged with producing gypsum paperboard liner for the U.S. drywall manufacturing plants of Lafarge. RockTenn owned 49 percent of

1696-527: A new CEO, hiring James A. Rubright, who had previously been the head of the pipeline group and energy services business of Sonat, Inc. Currey handed over the chairmanship to Rubright as well in January 2000. Later in 2000, Shuster, having been passed over for the CEO position, left the company. Rubright accelerated the pace of restructuring at RockTenn through the closure of a number of under-performing plants. He also shifted

1802-422: A promotion and a $ 25,000 salary. When Morris refused, Schoettle offered to sell Morris his own majority share of Southern Box for $ 25,000. A bank loan to Morris made the deal possible. He moved to new quarters for $ 200 a month, left day-to-day management to one of his employees, and devoted himself to finding new accounts. In its first year the company made a few thousand dollars on sales of $ 60,000. By 1942, Morris

1908-572: A resolution preventing CFTC from regulating derivatives for another six months – when Born's term of office would expire. Ultimately, it was the collapse of a specific kind of derivative, the mortgage-backed security , that triggered the economic crisis of 2008. Paul Krugman wrote in 2009 that the run on the shadow banking system was the fundamental cause of the crisis. "As the shadow banking system expanded to rival or even surpass conventional banking in importance, politicians and government officials should have realised that they were re-creating

2014-757: A sharp drop in international trade , rising unemployment and slumping commodity prices. Several economists predicted that recovery might not appear until 2011 and that the recession would be the worst since the Great Depression of the 1930s. Economist Paul Krugman once commented on this as seemingly the beginning of "a second Great Depression". Governments and central banks responded with fiscal policy and monetary policy initiatives to stimulate national economies and reduce financial system risks. The recession renewed interest in Keynesian economic ideas on how to combat recessionary conditions. Economists advise that

2120-510: A tool for taking excessive risks. Examples of vulnerabilities in the public sector included: statutory gaps and conflicts between regulators; ineffective use of regulatory authority; and ineffective crisis management capabilities. Bernanke also discussed " Too big to fail " institutions, monetary policy, and trade deficits. There are several "narratives" attempting to place the causes of the recession into context, with overlapping elements. Five such narratives include: Underlying narratives #1–3

2226-413: Is a hypothesis that growing income inequality and wage stagnation encouraged families to increase their household debt to maintain their desired living standard, fueling the bubble. Further, this greater share of income flowing to the top increased the political power of business interests, who used that power to deregulate or limit regulation of the shadow banking system. Narrative #5 challenges

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2332-463: Is the timing. Subprime lending increased from around 10% of mortgage origination historically to about 20% only from 2004 to 2006, with housing prices peaking in 2006. Blaming affordable housing regulations established in the 1990s for a sudden spike in subprime origination is problematic at best. A more proximate government action to the sudden rise in subprime lending was the SEC relaxing lending standards for

2438-503: The American Enterprise Institute , which advocates for private enterprise and limited government, have asserted that private lenders were encouraged to relax lending standards by government affordable housing policies. They cite The Housing and Community Development Act of 1992, which initially required that 30 percent or more of Fannie's and Freddie's loan purchases be related to affordable housing. The legislation gave HUD

2544-478: The Commodity Futures Trading Commission , put forth a policy paper asking for feedback from regulators, lobbyists, and legislators on the question of whether derivatives should be reported, sold through a central facility, or whether capital requirements should be required of their buyers. Greenspan, Rubin, and Levitt pressured her to withdraw the paper and Greenspan persuaded Congress to pass

2650-524: The IMF criteria for being a global recession only in the single calendar year 2009. That IMF definition requires a decline in annual real world GDP per‑capita . Despite the fact that quarterly data are being used as recession definition criteria by all G20 members , representing 85% of the world GDP , the International Monetary Fund (IMF) has decided – in the absence of

2756-590: The U.S. Bankruptcy Court in Wilmington, Delaware . The company's CEO claims Smurfit-Stone was forced to file bankruptcy because of higher operations costs, burdensome debt levels from prior corporate mergers, and weakened demand for packaging caused by a global economic recession . Pending court approval, the company hoped to obtain debtor-in-possession (DIP) financing to continue ongoing business operations, payment of employee wages and benefits, and payment of existing vendor obligations. Rock-Tenn (NYSE: RKT) bought

2862-429: The 19th and early 20th centuries, the current banking panic is a wholesale panic, not a retail panic. In the earlier episodes, depositors ran to their banks and demanded cash in exchange for their checking accounts. Unable to meet those demands, the banking system became insolvent. The current panic involved financial firms "running" on other financial firms by not renewing sale and repurchase agreements (repo) or increasing

2968-416: The 19th century. Yet, over the past 30-plus years, we permitted the growth of a shadow banking system – opaque and laden with short term debt – that rivaled the size of the traditional banking system. Key components of the market – for example, the multitrillion-dollar repo lending market, off-balance-sheet entities, and the use of over-the-counter derivatives – were hidden from view, without

3074-537: The FCIC Republican minority dissenting report also concluded that U.S. housing policies were not a robust explanation for a wider global housing bubble. The hypothesis that a primary cause of the crisis was U.S. government housing policy requiring banks to make risky loans has been widely disputed, with Paul Krugman referring to it as "imaginary history". One of the other challenges with blaming government regulations for essentially forcing banks to make risky loans

3180-521: The Federal Reserve has been widely discussed, the main point of controversy remains the lowering of the Federal funds rate to 1% for more than a year, which, according to Austrian theorists , injected huge amounts of "easy" credit-based money into the financial system and created an unsustainable economic boom. There is an argument that Greenspan's actions in the years 2002–2004 were actually motivated by

3286-416: The Federal Reserve. Further, American International Group (AIG) had insured mortgage-backed and other securities but was not required to maintain sufficient reserves to pay its obligations when debtors defaulted on these securities. AIG was contractually required to post additional collateral with many creditors and counter-parties, touching off controversy when over $ 100 billion of U.S. taxpayer money

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3392-704: The Morris companies. A new 30,000-square-foot warehouse was added to the Norcross facility in 1960. Each of the Morris companies operated as a separate and virtually autonomous profit center. Rock City opened not only small set-up and folding carton plants but also facilities in Livingston and Milan, Tennessee, to meet the packaging needs of shirtmakers. A set-up box division was established in 1955. Rock City Waste Paper Co. collected, sorted, and baled wastepaper for sale to paper mills. Other Morris companies and plants sprouted throughout

3498-514: The South. Sales grew from $ 8 million in 1959 to $ 12.9 million in 1967, when all the companies were consolidated into Rock City Packaging, Inc. Morris became chairman of the board and a son-in-law, Worley Brown, became president. Sales volume reached $ 23 million in 1972. Meanwhile, in order to meet the competition, Tennessee Paper began buying customers to assure continued markets for its paperboard products. In 1964, it acquired Knoxville Paper Box Co., Inc.,

3604-738: The Summit on Financial Markets and the World Economy," dated November 15, 2008, leaders of the Group of 20 cited the following causes: During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in

3710-494: The US, from $ 106,591 to $ 68,839 between 2005 and 2011. The US Financial Crisis Inquiry Commission , composed of six Democratic and four Republican appointees, reported its majority findings in January 2011. It concluded that "the crisis was avoidable and was caused by: There were two Republican dissenting FCIC reports. One of them, signed by three Republican appointees, concluded that there were multiple causes. In his separate dissent to

3816-645: The United States, Canada , Mexico , Chile , Argentina and China . RockTenn Company was formed in 1973, the product of a merger between Tennessee Paper Mills Inc. and Rock City Packaging, Inc. Its origins date back to 1898, when the Rock City Box Company of Nashville , Tennessee , was founded. Among its customers in the mid-1940s were a local boot factory, a local candy manufacturer, a hosiery company, and several shirt manufacturers. The owners, Joe McHenry and A.E. Saxon, who also operated several other business ventures, wanted to sell out and retire. Rock City

3922-478: The United States, and 21% in Denmark. Household defaults, underwater mortgages (where the loan balance exceeds the house value), foreclosures, and fire sales are now endemic to a number of economies. Household deleveraging by paying off debts or defaulting on them has begun in some countries. It has been most pronounced in the United States, where about two-thirds of the debt reduction reflects defaults." The onset of

4028-526: The West Coast through this acquisition, gaining a manufacturer of folding cartons for the fast-food, in-store deli, and gift box markets. In 2010–2011, RockTenn made a successful bid for Smurfit-Stone Container , the world's-largest producer and recycler of paperboard. The acquisition deal closed in May 2011, making the combined company North America's second largest producer of containerboard . Rock-Tenn Co. agreed to acquire U.S. rival MeadWestvaco Corp. in

4134-560: The academic definition, the recession ended in the United States in June or July 2009. Journalist Robert Kuttner has argued that 'The Great Recession' is a misnomer. According to Kuttner, "recessions are mild dips in the business cycle that are either self-correcting or soon cured by modest fiscal or monetary stimulus. Because of the continuing deflationary trap, it would be more accurate to call this decade's stagnant economy The Lesser Depression or The Great Deflation." The Great Recession met

4240-639: The acquisition would allow RockTenn to capture about one-fourth of the partition market, raise annual revenue to more than $ 200 million, and increase production of recycled paperboard to 235,000 tons. In 1989, net sales had reached $ 515.9 million, and net income was $ 31.1 million. The following year the company dedicated to Chairman of the Board Finley a 33,000-square-foot office building behind its headquarters in Norcross. In 1990, RockTenn acquired Allforms Packaging Corp. of Long Island, New York , and Box Innards Inc. of Orange, California . The next year it purchased

4346-460: The bailout measures started under the Bush administration and continued during his administration as completed and mostly profitable as of December 2014 . As of January 2018 , bailout funds had been fully recovered by the government, when interest on loans is taken into consideration. A total of $ 626B was invested, loaned, or granted due to various bailout measures, while $ 390B had been returned to

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4452-517: The bailouts. In 2008, TARP allocated $ 426.4 billion to various major financial institutions. However, the US collected $ 441.7 billion in return from these loans in 2010, recording a profit of $ 15.3 billion. Nonetheless, there was a political shift from the Democratic party. Examples include the rise of the Tea Party and the loss of Democratic majorities in subsequent elections. President Obama declared

4558-428: The board while remaining chief executive officer. Finley moved to senior chairman of the board. Morris remained chairman of the executive committee until his death in January 1985. Currey later became RockTenn's chairman (in 1993) and CEO (in 1989) as well as its president. In 1982 RockTenn's sales volume reached $ 133 million and its production of recycled paperboard peaked at 180,000 tons, most of which it used itself in

4664-722: The combined voting power of Class A and B common stock after the offering. In December 1993, RockTenn paid $ 35 million for Les Industries Ling, a Canadian company that used recycled paperboard to make folding cartons. The newly acquired plant, which was to serve as the principal supplier of recycled clay-coated paperboard for RockTenn's Vermont mill, became the company's second largest folding carton facility. A year later, RockTenn agreed to acquire Olympic Packaging, an Illinois-based manufacturer of folding cartons, and Alliance Display and Packaging Co. of Winston-Salem, North Carolina , maker of corrugated displays. The purchases, which boosted RockTenn's acquisitions of manufacturing operations to 17 in

4770-610: The company in a $ 3.5 billion deal that closed in May 2011. Rock-Tenn RockTenn was an American paper and packaging manufacturer based in Norcross , Georgia . In 2015, it merged with MeadWestvaco to form the WestRock company. It was one of North America's leading producers of corrugated and consumer packaging and recycling solutions, with annualized net sales of approximately $ 10 billion. The company employed approximately 26,000 people and operated more than 245 facilities in

4876-472: The company was "more soundly financed than many in its field," noting that long-term debt of $ 51.6 million was only one year's cash flow. Although calling the offering somewhat pricey at $ 16.50 a share, it noted that "RockTenn's emphasis on recycling makes it well-suited to customers wishing to appear environmentally responsible, and could also prove profitable if use of woodlands is restricted." Officers and directors of RockTenn still controlled about 71 percent of

4982-508: The company's emphasis away from the slow-growing recycled paperboard side and toward the areas with higher growth potential: the folding carton and plastics packaging businesses, as well as the burgeoning merchandising display operation, which by the early 2000s was the U.S. leader in point-of-purchase displays. During 2000, RockTenn closed one laminated-paperboard products plant and three folding carton plants, resulting in 550 employee terminations and charges of $ 61.1 million – and

5088-574: The crisis and exposed other risky loans and over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan market. There was the equivalent of a bank run on the shadow banking system , resulting in many large and well established investment banks and commercial banks in the United States and Europe suffering huge losses and even facing bankruptcy, resulting in massive public financial assistance (government bailouts). The global recession that followed resulted in

5194-668: The crisis) and vulnerabilities (i.e., structural weaknesses in the financial system, regulation and supervision) that amplified the shocks. Examples of triggers included: losses on subprime mortgage securities that began in 2007 and a run on the shadow banking system that began in mid-2007, which adversely affected the functioning of money markets. Examples of vulnerabilities in the private sector included: financial institution dependence on unstable sources of short-term funding such as repurchase agreements or Repos; deficiencies in corporate risk management; excessive use of leverage (borrowing to invest); and inappropriate usage of derivatives as

5300-442: The current value of the property). Several sources have noted the failure of the US government to supervise or even require transparency of the financial instruments known as derivatives . Derivatives such as credit default swaps (CDSs) were unregulated or barely regulated. Michael Lewis noted CDSs enabled speculators to stack bets on the same mortgage securities. This is analogous to allowing many persons to buy insurance on

5406-564: The depository system yet was not subject to the same regulatory oversight, making it vulnerable to a bank run . US mortgage-backed securities , which had risks that were hard to assess, were marketed around the world, as they offered higher yields than U.S. government bonds. Many of these securities were backed by subprime mortgages, which collapsed in value when the U.S. housing bubble burst during 2006 and homeowners began to default on their mortgage payments in large numbers starting in 2007. The emergence of subprime loan losses in 2007 began

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5512-517: The downturn. In advanced economies, during the five years preceding 2007, the ratio of household debt to income rose by an average of 39 percentage points, to 138 percent. In Denmark, Iceland, Ireland, the Netherlands, and Norway, debt peaked at more than 200 percent of household income. A surge in household debt to historic highs also occurred in emerging economies such as Estonia, Hungary, Latvia, and Lithuania. The concurrent boom in both house prices and

5618-608: The economic crisis took most people by surprise. A 2009 paper identifies twelve economists and commentators who, between 2000 and 2006, predicted a recession based on the collapse of the then-booming housing market in the United States: Dean Baker , Wynne Godley , Fred Harrison , Michael Hudson , Eric Janszen , Med Jones Steve Keen , Jakob Brøchner Madsen , Jens Kjaer Sørensen, Kurt Richebächer , Nouriel Roubini , Peter Schiff , and Robert Shiller . By 2007, real estate bubbles were still under way in many parts of

5724-405: The economic headwinds that slowed the recovery: On the political front, widespread anger at banking bailouts and stimulus measures (begun by President George W. Bush and continued or expanded by President Obama ) with few consequences for banking leadership, were a factor in driving the country politically rightward starting in 2010. The Troubled Asset Relief Program (TARP) was the largest of

5830-423: The financial crisis was the result." In May 2008, NPR explained in their Peabody Award winning program " The Giant Pool of Money " that a vast inflow of savings from developing nations flowed into the mortgage market, driving the U.S. housing bubble. This pool of fixed income savings increased from around $ 35 trillion in 2000 to about $ 70 trillion by 2008. NPR explained this money came from various sources, "[b]ut

5936-425: The firm reported the definitive sale for $ 1.04 billion in cash of its Consumer Packaging division to Texas Pacific Group . In early January 2009, The Wall Street Journal announced that Smurfit-Stone had hired lawyers to plan for a potential bankruptcy filing – which caused an 83% collapse of Smurfit-Stone's stock price. On January 27, 2009, Smurfit-Stone filed petitions for reorganization under Chapter 11 in

6042-450: The following recovery weaker. Robert Reich claims the amount of debt in the US economy can be traced to economic inequality , assuming that middle-class wages remained stagnant while wealth concentrated at the top, and households "pull equity from their homes and overload on debt to maintain living standards". The IMF reported in April 2012: "Household debt soared in the years leading up to

6148-974: The former Specialty Paperboard Inc. mill in Sheldon Springs, Vermont , and Ellis Paperboard Products Inc. of Scarborough, Maine , a manufacturer of folding cartons and solid-fiber partitions. The Ellis purchase included its Canadian subsidiary, Dominion Paperboard Products Ltd. With these additions RockTenn controlled 60 manufacturing and distribution operations, including eight mills with a total annual production capacity of 607,000 tons of recycled paperboard products. RockTenn now ranked sixth among U.S. producers of recycled paperboard, with market share of 5.7 percent. Net sales rose from $ 564.1 million in 1991, ending September 30, 1991, to $ 655.5 million in 1992, but dipped to $ 650.7 million in 1993. Net income rose from $ 25 million in 1991 to $ 33.2 million in 1992 before dipping to $ 25.5 million in 1993. The 1993 figure included unusual after-tax expenses of $ 5.8 million. Production in 1994

6254-402: The founders originally planned to make board from wheat straw, they turned instead to wastepaper as the primary raw material; thus Tennessee Paper became the first recycled paperboard mill in the South. To reduce its electric bill, the company installed its own steam generating plant in 1926. Paperboard production averaged 20 tons a day in the early years, reaching an average of 56.77 tons in 1930,

6360-540: The industry average of 71 percent. In 1941, it operated a record 305 days. Sales volume exceeded $ 1.7 million in 1945. A second papermaking machine doubled the mill's capacity in 1949. Beginning in 1954, however, Tennessee Paper began losing customers to companies manufacturing lower-cost folding cartons and corrugated and plastic containers. The trend in the business was toward vertical integration. Many paperboard companies acquired – or merged with – their customers. Typically profits were made at

6466-533: The kind of financial vulnerability that made the Great Depression possible – and they should have responded by extending regulations and the financial safety net to cover these new institutions. Influential figures should have proclaimed a simple rule: anything that does what a bank does, anything that has to be rescued in crises the way banks are, should be regulated like a bank." He referred to this lack of controls as "malign neglect". During 2008, three of

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6572-568: The largest U.S. investment banks either went bankrupt ( Lehman Brothers ) or were sold at fire sale prices to other banks ( Bear Stearns and Merrill Lynch ). The investment banks were not subject to the more stringent regulations applied to depository banks. These failures exacerbated the instability in the global financial system. The remaining two investment banks, Morgan Stanley and Goldman Sachs , potentially facing failure, opted to become commercial banks, thereby subjecting themselves to more stringent regulation but receiving access to credit via

6678-506: The largest acquisition in its history, purchasing Waldorf Corporation for $ 239 million in cash and the assumption of $ 170 million in debt. Based in St. Paul, Minnesota , Waldorf operated six folding carton plants and three paperboard mills in Illinois, Massachusetts, Michigan, Minnesota, North Carolina and Wisconsin; the firm had revenues of $ 377 million during 1996. The acquisition propelled RockTenn into

6784-530: The main headline is that all sorts of poor countries became kind of rich, making things like TVs and selling us oil. China, India, Abu Dhabi, Saudi Arabia made a lot of money and banked it." Describing the crisis in Europe, Paul Krugman wrote in February 2012 that: "What we're basically looking at, then, is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe." Another narrative about

6890-462: The majority and minority opinions of the FCIC, Commissioner Peter J. Wallison of the American Enterprise Institute (AEI) primarily blamed U.S. housing policy, including the actions of Fannie and Freddie , for the crisis. He wrote: "When the bubble began to deflate in mid-2007, the low quality and high risk loans engendered by government policies failed in unprecedented numbers." In its "Declaration of

6996-505: The manufacture of folding cartons and containers and corrugated boxes. Its many customers included Coca-Cola , DuPont and Kentucky Fried Chicken , which it serviced from facilities in Alabama, Arkansas, Georgia, Maryland, Massachusetts, North Carolina, Ohio, Tennessee, and Texas with a workforce of 1,700 people. In a 1983 Atlanta Constitution interview, Currey attributed the decade-old company's growth to "luck, chance, and circumstance ... but

7102-516: The mill level, by selling boxes virtually at cost. The effect on boxmakers was so severe that by 1957 Tennessee Paper was extending credit and loans to its customers in order to keep their accounts. One of these customers was Rock City. Its consumption of Tennessee Paper's board grew from about 1,000 tons in 1944 to about 37,000 tons in 1972, when it took 44 percent of Tennessee Paper's total boxboard production. Between 1965 and 1968 Tennessee Paper bought 29.5 percent of Rock City's common stock, preparing

7208-662: The need to take the U.S. economy out of the early 2000s recession caused by the bursting of the dot-com bubble : although by doing so he did not avert the crisis, but only postponed it. Another narrative focuses on high levels of private debt in the US economy. USA household debt as a percentage of annual disposable personal income was 127% at the end of 2007, versus 77% in 1990. Faced with increasing mortgage payments as their adjustable rate mortgage payments increased, households began to default in record numbers, rendering mortgage-backed securities worthless. High private debt levels also impact growth by making recessions deeper and

7314-460: The new company that earned them triple the dividends they had been receiving. Some shareholders, however, opted for cash instead. The president of Tennessee Paper, W. Max Finley, and his immediate family, received common stock in the new company. Finley was elected chairman of the board and Brown became president and chief executive officer. Reorganization did nothing to slow down expansion. The Crescent Box & Printing Co. of Tullahoma, Tennessee ,

7420-518: The number two position among producers of folding cartons in North America and also made the company the leading manufacturer of recycled paperboard in the United States. RockTenn followed up with two smaller deals in mid-1997, adding Wright City, Missouri -based Rite Paper Products, Inc., a producer of laminated recycled paperboard products primarily for the furniture industry, and the Davey Company,

7526-535: The obligation and defaulted; U.S. taxpayers paid over $ 100 billion to global financial institutions to honor AIG obligations, generating considerable outrage. A 2008 investigative article in The Washington Post found leading government officials at the time (Federal Reserve Board Chairman Alan Greenspan , Treasury Secretary Robert Rubin , and SEC Chairman Arthur Levitt ) vehemently opposed any regulation of derivatives. In 1998, Brooksley E. Born , head of

7632-484: The origin has been focused on the respective parts played by public monetary policy (notably in the US) and by the practices of private financial institutions. In the U.S., mortgage funding was unusually decentralised, opaque, and competitive, and it is believed that competition between lenders for revenue and market share contributed to declining underwriting standards and risky lending. While Alan Greenspan's role as Chairman of

7738-887: The other half of CCA. JSC restructured as a privately held company in 1989, jointly owned by JSG and MSLEF II. As part of the restructuring, JSC acquired the remainder of CCA. In 1994, JSC recapitalized as a publicly traded company. Stone Container was founded in 1926 as J.H. Stone and Company. In 1945, it incorporated under the name Stone Container Corporation. In the 1950s, Stone expanded outside of Chicago, buying and building corrugated container plants in Pennsylvania, Ohio, Indiana, and Michigan. The company acquired facilities from Continental Group in 1983 and acquired additional facilities from Champion International in 1986 and Southwest Forest Industries in 1987. Stone Container sold its forest products division to management in 1996. The merger of JSC and Stone in 1998 brought together two leaders of

7844-623: The paper-based packaging industry. In conjunction with the merger closing, JSG purchased 20 million shares of JSC’s stock from MSLEF II and certain other investors. In May 2000, SSCC acquired St. Laurent Paperboard, Inc. In September 2002, the company acquired MeadWestvaco ’s Stevenson, Alabama , containerboard mill and related operations. That same month, JSG privatized and distributed its stake in SSCC. Later, neither JSG nor MSLEF II were stockholders of Smurfit-Stone. In March 2003, SSCC exchanged its European assets for JSG’s 50 percent ownership of Smurfit-MBI,

7950-588: The planet. Though no one knew they were in it at the time, the Great Recession had a significant economic and political impact on the United States. While the recession technically lasted from December 2007 – June 2009 (the nominal GDP trough), many important economic variables did not regain pre-recession (November or Q4 2007) levels until 2011–2016. For example, real GDP fell $ 650 billion (4.3%) and did not recover its $ 15 trillion pre-recession level until Q3 2011. Household net worth, which reflects

8056-405: The popular claim (narrative #4) that subprime borrowers with shoddy credit caused the crisis by buying homes they couldn't afford. This narrative is supported by new research showing that the biggest growth of mortgage debt during the U.S. housing boom came from those with good credit scores in the middle and top of the credit score distribution – and that these borrowers accounted for

8162-512: The power to set future requirements. These rose to 42 percent in 1995 and 50 percent in 2000, and by 2008 a 56 percent minimum was established. However, the Financial Crisis Inquiry Commission (FCIC) Democratic majority report concluded that Fannie & Freddie "were not a primary cause" of the crisis and that CRA was not a factor in the crisis. Further, since housing bubbles appeared in multiple countries in Europe as well,

8268-410: The protections we had constructed to prevent financial meltdowns. We had a 21st-century financial system with 19th-century safeguards. The Gramm–Leach–Bliley Act (1999), which reduced the regulation of banks by allowing commercial and investment banks to merge, has also been blamed for the crisis, by Nobel Prize –winning economist Joseph Stiglitz among others. Peter Wallison and Edward Pinto of

8374-657: The purchase of Cartem Wilco Group Inc., a privately held Canadian maker of folding cartons and specialty packaging, for $ 65.3 million. The deal accelerated RockTenn's expansion into the growing pharmaceutical and health and beauty packaging market. Cartem Wilco, which operated plants in Montreal and Quebec City, also produced folding cartons for food packaging and consumer products. In August 2003 RockTenn paid about $ 16 million for Pacific Coast Packaging Corp., located in Kerman, California . RockTenn secured its first folding carton operation on

8480-402: The recession have been described as a symptom of another, deeper crisis by a number of economists. For example, Ravi Batra argues that growing inequality of financial capitalism produces speculative bubbles that burst and result in depression and major political changes . Feminist economists Ailsa McKay and Margunn Bjørnholt argue that the financial crisis and the response to it revealed

8586-572: The recession took place at the global level. According to the U.S. National Bureau of Economic Research (the official arbiter of U.S. recessions) the recession began in December 2007 and ended in June 2009, and thus extended over eighteen months. The years leading up to the crisis were characterized by an exorbitant rise in asset prices and associated boom in economic demand. Further, the U.S. shadow banking system (i.e., non-depository financial institutions such as investment banks) had grown to rival

8692-488: The recovery was that both individuals and businesses paid down debts for several years, as opposed to borrowing and spending or investing as had historically been the case. This shift to a private sector surplus drove a sizable government deficit. However, the federal government held spending at about $ 3.5 trillion from fiscal years 2009–2014 (thereby decreasing it as a percent of GDP), a form of austerity . Then-Fed Chair Ben Bernanke explained during November 2012 several of

8798-461: The repo margin ("haircut"), forcing massive deleveraging, and resulting in the banking system being insolvent. The Financial Crisis Inquiry Commission reported in January 2011: In the early part of the 20th century, we erected a series of protections – the Federal Reserve as a lender of last resort , federal deposit insurance, ample regulations – to provide a bulwark against the panics that had regularly plagued America's banking system in

8904-496: The same house. Speculators that bought CDS protection were betting significant mortgage security defaults would occur, while the sellers (such as AIG ) bet they would not. An unlimited amount could be wagered on the same housing-related securities, provided buyers and sellers of the CDS could be found. When massive defaults occurred on underlying mortgage securities, companies like AIG that were selling CDS were unable to perform their side of

9010-448: The same year that the company produced a record 15,557 tons of product. This figure would not be matched for some time because of the Great Depression; production dropped to 11,995 tons in 1934. The company remained profitable, however, although only modestly so. As the nation's economy slowly recovered, Tennessee Paper's volume of business increased to meet renewed demand. During 1939 the factory operated at 85 percent capacity, compared with

9116-498: The seven that had been owned by Sonoco. Although the purchase of Waldorf pushed RockTenn's revenues past the $ 1 billion mark for the first time in 1997, difficulties in the integration process resulted in a depressed profit figure of $ 16.1 million. Some of the profit shortfall was attributable to costs stemming from plant closings, and the company closed additional plants in the next two fiscal years as profit levels recovered somewhat. In October 1999, RockTenn went outside its ranks for

9222-518: The stimulus measures such as quantitative easing (pumping money into the system) and holding down central bank wholesale lending interest rate should be withdrawn as soon as economies recover enough to "chart a path to sustainable growth ". The distribution of household incomes in the United States became more unequal during the post-2008 economic recovery . Income inequality in the United States grew from 2005 to 2012 in more than two thirds of metropolitan areas. Median household wealth fell 35% in

9328-649: The stock market meant that household debt relative to assets held broadly stable, which masked households' growing exposure to a sharp fall in asset prices. When house prices declined, ushering in the global financial crisis, many households saw their wealth shrink relative to their debt, and, with less income and more unemployment, found it harder to meet mortgage payments. By the end of 2011, real house prices had fallen from their peak by about 41% in Ireland, 29% in Iceland, 23% in Spain and

9434-529: The success of any company depends on its people." He added that the company had gone to great lengths "to make sure the workers know that we care" – a group of senior executives took a month each year to travel to each of the company's facilities in order to talk to employees and present service awards. RockTenn made its biggest acquisition yet in 1983, when it paid $ 40 million to buy 11 Clevepak Corporation plants, seven of which were making partitions to protect glass and plastic containers. Currey said

9540-542: The system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions. Federal Reserve Chair Ben Bernanke testified in September 2010 before the FCIC regarding the causes of the crisis. He wrote that there were shocks or triggers (i.e., particular events that touched off

9646-492: The top investment banks during an April 2004 meeting with bank leaders. These banks increased their risk-taking shortly thereafter, significantly increasing their purchases and securitization of lower-quality mortgages, thus encouraging additional subprime and Alt-A lending by mortgage companies. This action by its investment bank competitors also resulted in Fannie Mae and Freddie Mac taking on more risk. The financial crisis and

9752-515: The value of both stock markets and housing prices, fell $ 11.5 trillion (17.3%) and did not regain its pre-recession level of $ 66.4 trillion until Q3 2012. The number of persons with jobs (total non-farm payrolls) fell 8.6 million (6.2%) and did not regain the pre-recession level of 138.3 million until May 2014. The unemployment rate peaked at 10.0% in October 2009 and did not return to its pre-recession level of 4.7% until May 2016. A key dynamic slowing

9858-729: The venture. RockTenn also beefed up its merchandising display business, its fastest-growing segment, through two acquisitions costing a total of $ 25.4 million. In November 2001, Advertising Display Company, a producer of both temporary and permanent point-of-purchase displays, was acquired. In March of the following year RockTenn bought Athena Industries, Inc., a Burr Ridge, Illinois , manufacturer of permanent point-of-purchase displays, with an emphasis on wire displays. On December 20, 2001, RockTenn Company announced revised historical segment operating income results, because it had changed its presentation of certain segment operating income data for fiscal 2002. Acquisition activity continued in 2003 with

9964-478: The way for the eventual merger of the two companies. By then Rock City owed Tennessee Paper more than $ 4 million in loans. Morris's burgeoning industrial empire grew both by acquisitions and by establishing new companies. Among the former was the Parks Box & Printing Co., located on a leased 11-acre tract in Norcross, Georgia. This land was purchased in 1957 and gradually became the focal point for management of all

10070-453: The word "recession" exist: one sense referring definitively to "a period of reduced economic activity" and ongoing hardship; and the more allegoric interpretation used in economics , which is defined operationally , referring specifically to the contraction phase of a business cycle , with two or more consecutive quarters of GDP contraction (negative GDP growth rate) and typically used to influence abrupt changes in monetary policy. Under

10176-660: The world, especially in the United States , France, the United Kingdom , Spain , the Netherlands, Australia, the United Arab Emirates, New Zealand , Ireland , Poland , South Africa , Greece , Bulgaria , Croatia , Norway , Singapore , South Korea , Sweden , Finland , Argentina , the Baltic states , India , Romania , Ukraine and China . U.S. Federal Reserve Chairman Alan Greenspan said in mid-2005 that "at

10282-549: Was 700,000 tons of recycled paperboard, of which 182,000 tons was clay-coated recycled paperboard. The first public offering of RockTenn stock, amounting to about 14 percent of the shares outstanding, was made in March 1994. A handful of shareholders offered about 3.6 million shares of Class A common stock, while the company itself offered about 900,000 shares. An analysis in Barron's described RockTenn's balance sheet as "attractive" and said

10388-452: Was A.M. Sheperd of Vincennes, Indiana , a boxboard manufacturer. Tennessee Paper Mills was incorporated in 1917 with Stagmaier as president, Tomlinson as vice-president, and Sheperd as general manager. With $ 300,000 raised from stock offerings, the three men established a paperboard factory in Chattanooga, where operation began in July 1918. By the end of the year the new company had made a net profit of $ 23,367 on sales of $ 165,799. Although

10494-662: Was able to accurately predict the advance of this recession, except for minor signals in the sudden rise of forecast probabilities, which were still well under 50%. The recession was not felt equally around the world; whereas most of the world's developed economies , particularly in North America, South America and Europe, fell into a severe, sustained recession, many more recently developing economies suffered far less impact, particularly China , India and Indonesia , whose economies grew substantially during this period. Similarly, Oceania suffered minimal impact , in part due to its proximity to Asian markets. Two interpretations of

10600-463: Was acquired in 1973 and Clevepak Corporation's Conway, Arkansas, folding carton plant in 1974. By 1976 the company had 29 divisions. Sales in 1974, the first fiscal year after the merger, reached $ 47.7 million. In 1978 Bradley Currey, Jr., a veteran officer of the Trust Company of Georgia who had helped effect the merger, became president and chief operating officer of RockTenn. Brown became chairman of

10706-460: Was attractive to Arthur Newth Morris, owner of the Southern Box Company, not least for its bank account of $ 60,000. Morris purchased the company in 1944 for $ 200,000, making a cash down payment of $ 50,000. The 25-year-old Morris had been a printer and part-time Presbyterian minister when he went to work in 1926 for Edwin J. Schoettle, a Philadelphia , Pennsylvania , industrialist who owned a group of box and printing companies that bore his name. For

10812-421: Was called the subprime mortgage crisis . The combination of banks being unable to provide funds to businesses, and homeowners paying down debt rather than borrowing and spending, resulted in the Great Recession that began in the U.S. officially in December 2007 and lasted until June 2009, thus extending over 19 months. As with most other recessions, it appears that no known formal theoretical or empirical model

10918-466: Was doing well enough to open a corrugated box plant and to buy another Baltimore enterprise, the King Folding Box Co., where he installed a corrugated sheet cutter. Morris sold corrugated partitions to major glass companies, which needed them to separate the bottles and glasses they shipped. The following year the name of his enterprise was changed to Newth Morris Box Company. In 1944, another branch

11024-685: Was opened in Jacksonville, Florida, where the company produced cardboard anti-radar devices for World War II American troops and popcorn boxes for movie theater owners. Following Morris's purchase of Rock City Box Co. that same year, he changed the name of Newth Morris Box Co. to Rock City Box Sales Company. Morris's purchase of Rock City Box Co. put him in contact with one of its suppliers and his future merger partner: Tennessee Paper Mills. Andrew M. Tomlinson and John Stagmaier, two of Tennessee Paper's three founders, were Athens, Tennessee , businessmen who already owned box factories. The company's third founder

11130-407: Was paid out to major global financial institutions on behalf of AIG. While this money was legally owed to the banks by AIG (under agreements made via credit default swaps purchased from AIG by the institutions), a number of Congressmen and media members expressed outrage that taxpayer money was used to bail out banks. Economist Gary Gorton wrote in May 2009 Unlike the historical banking panics of

11236-571: Was the most severe economic and financial meltdown since the Great Depression . The causes of the Great Recession include a combination of vulnerabilities that developed in the financial system, along with a series of triggering events that began with the bursting of the United States housing bubble in 2005–2012. When housing prices fell and homeowners began to abandon their mortgages, the value of mortgage-backed securities held by investment banks declined in 2007–2008, causing several to collapse or be bailed out in September 2008. This 2007–2008 phase

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