Business

Nearing 80, she can no longer afford to own Arcadia’s Book Rack — or live in California

Published

11 months ago

March 2, 2024

Press Room

Nearing 80, she can no longer afford to own Arcadia’s Book Rack — or live in California

“Welcome to the Book Rack,” Karen Kropp says, her eyes panning the increasingly sparse shelves inside her bookstore.

“It used to be a lot fuller.”

After 40 years — the last half under Kropp’s ownership — the beloved used-book store tucked between a hot pot restaurant and a chiropractor’s office in Arcadia is closing this week.

Slowed down by the consumer shift to online shopping and further decimated by cratering sales during the pandemic, the shop held on by a thread in the months since Kropp cashed out her life insurance policy to keep it afloat.

Karen Kropp pauses among the increasing empty shelves at the Book Rack, a bookstore she has owned for nearly two decades.

(Dania Maxwell / Los Angeles Times)

“The miracle is coming,” Kropp often assured herself. “When you’re in a bookstore, you have to be a dreamer.”

But the miracle never came, and Kropp, who turns 79 later this year, knew that even if she couldn’t really afford to, it was time to retire.

She plans to live off her monthly Social Security check — around $1,200 after insurance premiums are deducted — and can’t afford to stay in Southern California. Instead, she will move in with her younger sister in Albuquerque once she finishes clearing out the shop.

“When you’re in a bookstore, you have to be a dreamer.”

— Book Rack owner Karen Kropp

“I put everything I had into this place,” she said. “Everything.”

Kropp’s situation mirrors those of many aging small-business owners who, unless they have a relative eager to take over, are faced with complex questions about their legacy and finances.

In January, the owner of Vroman’s, a historic independent bookstore in Pasadena, announced on Instagram that, as his 80th birthday approached, he planned to retire and sell the shop to someone outside his family.

“This was not an easy decision for me,” he wrote, adding that the store had been under his family’s stewardship for more than a century.

People walk by Vroman's Bookstore in Pasadena

Retirement in the U.S. is a patchwork system with “a really big gaping hole” for self-employed people such as Kropp, who never worked for a large employer that offered 401(k) matching contributions, said Nari Rhee, director of the Retirement Security Program at the UC Berkeley Labor Center.

Someone in Kropp’s situation — a single renter living in L.A. County — needs $2,915 a month to cover their basic necessities, Rhee said, citing a figure calculated using the Elder Index, a tool developed by the University of Massachusetts Boston to measure how much older Americans need to cover basic living expenses.

“That is basically twice the average Social Security benefit in California,” Rhee said, noting that, in recent years, more older Californians have fallen into poverty and aged into homelessness.

“It’s a crisis.”

Almost 30 years ago, soon after moving west from Green Bay, Wis., Kropp got a job at the Book Rack, then on Baldwin Avenue, a short drive from the current location.

She started as a clerk, earning around $3 an hour to price and organize books, and adored her boss, Pat Carlson, the shop’s original owner. For someone whose main childhood gripe with the library was that it limited how many books she could check out at once, it felt like a dream that someone paid her to bond with customers over a love of books. (Her favorite is “The Great Gatsby.”)

“Readers are different,” she said. “They’re thinkers.”

The shop eventually moved to the current location and, after Carlson died, the owner’s husband offered to sell it to Kropp, then 60. She purchased it in 2006 for around $100,000, pulling from her savings, as well as some from her daughter and a sum she inherited after her father’s death to cover the down payment.

“It’s been a joy,” she said of owning the store.

A woman hands another woman a bag in a bookstore.

They were often busy in the early years, and she hired local high school students to help run the shop, although she manned it alone most of the time, working 10-hour shifts. They often did more than $10,000 in sales per month back then, but things slowed as customers adjusted to the click-and-receive-in-48-hours model of the Amazon era.

“Everybody wants it now,” she said. “And I can’t do that.”

In the months before the pandemic, Kropp considered selling the shop and moving closer to her children, grandchildren and five great-grandchildren, but she decided to hold on a bit longer.

Then, during the shutdowns, sales dropped to almost zero. Bills still came due, as did the shop’s rent and the fee for a storage unit where she kept overflow books, which together cost about $2,000 a month.

A woman rings up a customer at a bookstore.

Sales eventually crept back up but never fully recovered; now, she said, it sometimes takes two days before sales hit $200.

After the hardest times, a bright spark always followed — a busy week, a special interaction between customers. After one such spark in late 2022, she cashed out her $50,000 life insurance policy, receiving only $5,000 even though she’d paid $18,000 into it.

She put the payout toward bills, rent and payroll. For the first time in 20 years, her passion started to feel like a job. She realized that she had left no part of herself for herself — every spare second and thought had gone into the shop.

It was time.

On a recent morning, Kropp sat behind the counter, next to a gift basket with peanut M&Ms dropped off by a customer and stacks of books she planned to donate if they didn’t sell by the official closing date, Feb. 28. (She has a personal policy: No book ends up in the trash unless it’s moldy or there’s evidence an animal has been living inside.)

A man steadying himself with a cane walked through the door and she greeted him.

“Boy, I’m sorry to hear you guys are leaving,” he said.

“Yes,” she said, nodding.

As was often the case, books triggered memories and he began to tell her about how, in his 20s, he traveled California in a camper van reading novels by the mystery writer John D. MacDonald. He was looking for one of his books called “The Long Lavender Look.”

Kropp nodded and her friend Peter Tran, who sometimes volunteers at the shop, took off toward the back of the store, quickly locating a yellowing copy. With the liquidation sale discount, the customer paid $1.10 for the paperback.

A painting of a storefront and palm trees.

Danielle Rosaria Nahas, a customer who lives down the street, walked in with her daughter. An artist, Nahas was carrying a painting of the storefront she had made for Kropp.

“Thank you, sweetie,” Kropp said, her emerald eyes dampening with tears. “This is beautiful.”

Nahas had written the family’s address on the back of the wood frame.

“So if you ever miss us,” she said, “you could write to us.”

Nahas doesn’t have family in the area, she said, and her children had come to think of Kropp as a grandma. Her family created a home library with books from the shop during the pandemic and Kropp, she said, had always made her and her daughter, Amy Rose, 8, who has autism, feel so welcome.

The little girl sprinted toward the children’s section, twirling.

“Books, books, read,” she said aloud.

A few minutes later, a woman arrived with a list of several titles. She was putting together an auction item with a T-shirt that said “I’m with the banned,” as well as some commonly banned books.

Kropp squinted at the list, noticing it didn’t include authors’ names, which is how the store is organized. She closed her eyes for a moment, conjuring a name.

“Oh, Cisneros!” she said to herself, as she walked to snag a copy of “The House on Mango Street.”

“My brain has always been my computer,” she said.

After the customer left, the shop got quiet and Kropp and Tran reminisced. Then they got quiet too.

“The end of the chapter,” he said softly.

“But,” Kropp said, smiling, “it was a long chapter.”

Business

Scott Bessent, Trump’s Billionaire Treasury Pick, Will Shed Assets to Avoid Conflicts

Published

5 hours ago

January 11, 2025

Press Room

Scott Bessent, Trump’s Billionaire Treasury Pick, Will Shed Assets to Avoid Conflicts

Scott Bessent, the billionaire hedge fund manager whom President-elect Donald J. Trump picked to be his Treasury secretary, plans to divest from dozens of funds, trusts and investments in preparation to become the nation’s top economic policymaker.

Those plans were released on Saturday along with the publication of an ethics agreement and financial disclosures that Mr. Bessent submitted ahead of his Senate confirmation hearing next Thursday.

The documents show the extent of the wealth of Mr. Bessent, whose assets and investments appear to be worth in excess of $700 million. Mr. Bessent was formerly the top investor for the billionaire liberal philanthropist George Soros and has been a major Republican donor and adviser to Mr. Trump.

If confirmed as Treasury secretary, Mr. Bessent, 62, will steer Mr. Trump’s economic agenda of cutting taxes, rolling back regulations and imposing tariffs as he seeks to renegotiate trade deals. He will also play a central role in the Trump administration’s expected embrace of cryptocurrencies such as Bitcoin.

Although Mr. Trump won the election by appealing to working-class voters who have been dogged by high prices, he has turned to wealthy Wall Street investors such as Mr. Bessent and Howard Lutnick, a billionaire banker whom he tapped to be commerce secretary, to lead his economic team. Linda McMahon, another billionaire, has been picked as education secretary, and Elon Musk, the world’s richest man, is leading an unofficial agency known as the Department of Government Efficiency.

In a letter to the Treasury Department’s ethics office, Mr. Bessent outlined the steps he would take to “avoid any actual or apparent conflict of interest in the event that I am confirmed for the position of secretary of the Department of Treasury.”

Mr. Bessent said he would shutter Key Square Capital Management, the investment firm that he founded, and resign from his Bessent-Freeman Family Foundation and from Rockefeller University, where he has been chairman of the investment committee.

The financial disclosure form, which provides ranges for the value of his assets, reveals that Mr. Bessent owns as much as $25 million of farmland in North Dakota, which earns an income from soybean and corn production. He also owns a property in the Bahamas that is worth as much as $25 million. Last November, Mr. Bessent put his historic pink mansion in Charleston, S.C., on the market for $22.5 million.

Mr. Bessent is selling several investments that could pose potential conflicts of interest including a Bitcoin exchange-traded fund; an account that trades the renminbi, China’s currency; and his stake in All Seasons, a conservative publisher. He also has a margin loan, or line of credit, with Goldman Sachs of more than $50 million.

As an investor, Mr. Bessent has long wagered on the rising strength of the dollar and has betted against, or “shorted,” the renminbi, according to a person familiar with Mr. Bessent’s strategy who spoke on condition of anonymity to discuss his portfolio. Mr. Bessent gained notoriety in the 1990s by betting against the British pound and earning his firm, Soros Fund Management, $1 billion. He also made a high-profile bet against the Japanese yen.

Mr. Bessent, who will be overseeing the U.S. Treasury market, holds over $100 million in Treasury bills.

Cabinet officials are required to divest certain holdings and investments to avoid the potential for conflicts of interest. Although this can be an onerous process, it has some potential tax benefits.

The tax code contains a provision that allows securities to be sold and the capital gains tax on such sales deferred if the full proceeds are used to buy Treasury securities and certain money-market funds. The tax continues to be deferred until the securities or money-market funds are sold.

Even while adhering to the ethics guidelines, questions about conflicts of interest can still emerge.

Mr. Trump’s Treasury secretary during his first term, Steven Mnuchin, divested from his Hollywood film production company after joining the administration. However, as he was negotiating a trade deal in 2018 with China — an important market for the U.S. film industry — ethics watchdogs raised questions about whether Mr. Mnuchin had conflicts because he had sold his interest in the company to his wife.

Mr. Bessent was chosen for the Treasury after an internal tussle among Mr. Trump’s aides over the job. Mr. Lutnick, Mr. Trump’s transition team co-chair and the chief executive of Cantor Fitzgerald, made a late pitch to secure the Treasury secretary role for himself before Mr. Trump picked him to be Commerce secretary.

During that fight, which spilled into view, critics of Mr. Bessent circulated documents disparaging his performance as a hedge fund manager.

Mr. Bessent’s most recent hedge fund, Key Square Capital, launched to much fanfare in 2016, garnering $4.5 billion in investor money, including $2 billion from Mr. Soros, but manages much less now. A fund he ran in the early 2000s had a similarly unremarkable performance.

Business

As wildfires rage, private firefighters join the fight for the fortunate few

Published

5 hours ago

January 11, 2025

Press Room

As wildfires rage, private firefighters join the fight for the fortunate few

When devastating wildfires erupted across Los Angeles County this week, David Torgerson’s team of firefighters went to work.

The thousands of city, county and state firefighters dispatched to battle the blazes went wherever they were needed. The crews from Torgerson’s Wildfire Defense Systems, however, set out for particular addresses. Armed with hoses, fire-blocking gel and their own water supply, the Montana-based outfit contracts with insurance companies to defend the homes of customers who buy policies that include their services.

It’s a win-win if the private firefighters succeed in saving a home, said Torgerson, the company’s founder and executive chairman. The homeowner keeps their home and the insurance company doesn’t have to make a hefty payout to rebuild.

“It makes good sense,” he said. “It’s always better if the homes and businesses don’t burn.”

Torgerson’s operation, which has been contracting with insurance companies since 2008 and employs hundreds of firefighters, engineers and other staff, highlights a lesser-known component of fighting wildfires in the U.S. Along with the more than 7,500 publicly funded firefighters and emergency personnel dispatched to the current conflagrations, which have burned more than 30,000 acres and destroyed more than 9,000 structures, a smaller force of for-hire professionals is on the fire lines for insurance companies, wealthy individual property owners or government agencies in need of additional hands.

Their presence isn’t without controversy. Private firefighters hired by homeowners directly have drawn criticism for heightening class divides during disasters. This week, a Pacific Palisades homeowner received backlash for putting a call out on X, the social media site formerly named Twitter, for help finding private firefighters who could save his home.

“Does anyone have access to private firefighters to protect our home in Pacific Palisades? Need to act fast here. All neighbors houses burning,” he wrote in the since-deleted post. “Will pay any amount.”

“The epitome of nerve and tone deaf!” someone replied.

In 2018, Kim Kardashian and Kanye West credited private firefighters for saving their $60-million home in the Santa Monica mountains during a wildfire. But those who serve wealthy clients make up only a small fraction of nonpublic firefighters, according to Torgerson.

“Contract firefighters who are hired by the government are the vast majority,” he said. The federal government has been hiring private firefighters since the 1980s to support its own forces. According to the National Wildfire Suppression Assn., there are about 250 private sector fire response companies under federal contract, adding about 10,000 firefighters to U.S. efforts.

Some private firefighting companies, including Wildfire Defense Systems, are known as Qualified Insurance Resources and are paid by insurance companies to protect the homes of their customers. Wildfire Defense Systems refers to its on-the-ground forces as private sector wildfire personnel.

Wildfire Defense Systems only works with the insurance industry, but other privately held firefighting companies contract with industrial clients such as petrochemical facilities and utility providers. Wildfire Defense Systems declined to disclose company revenue or what it charges for its services.

Allied Disaster Defense, a company that has sent personnel to the fires in Los Angeles, offers services to both property owners and insurance companies. Its website says its services will “enhance the insurability of properties” and “contribute to reduced claims.”

The website also has a page dedicated to services for private clients, which include emergency response and assistance with insurance claims for “high net-worth and celebrity” customers. The company does not list prices for its services and has nondisclosure agreements with its private clients.

Several other private firefighting companies are based in California, including Mt. Adams Wildfire, which contracts with government agencies, and UrbnTek, which serves Los Angeles, Orange County and San Diego among other areas. Along with spraying fire retardant on trees and brush to stop an advancing fire, the company offers “a double layer of protection by wrapping a structure with our fire blanket system.”

Torgerson, a civil engineer with 34 years in emergency services, said he has been struck by the speed of the current wildfires. While typically it takes two to 10 minutes for a fire to sweep through a home, he said, the Palisades fire is traveling at higher speeds.

“It’s moving so fast, it’ll likely take one to two minutes for these fires to pass over the properties,” he said.

He said his company responded to all 62 of the wildfires that threatened structures in California in 2024 and didn’t lose a property.

Business

As Delta Reports Profits, Airlines Are Optimistic About 2025

Published

15 hours ago

January 11, 2025

Press Room

As Delta Reports Profits, Airlines Are Optimistic About 2025

This year just got started, but it is already shaping up nicely for U.S. airlines.

After several setbacks, the industry ended 2024 in a fairly strong position because of healthy demand for tickets and the ability of several airlines to control costs and raise fares, experts said. Barring any big problems, airlines — especially the largest ones — should enjoy a great year, analysts said.

“I think it’s going to be pretty blue skies,” said Tom Fitzgerald, an airline industry analyst for the investment bank TD Cowen.

In recent weeks, many major airlines upgraded forecasts for the all-important last three months of the year. And on Friday, Delta Air Lines said it collected more than $15.5 billion in revenue in the fourth quarter of 2024, a record.

“As we move into 2025, we expect strong demand for travel to continue,” Delta’s chief executive, Ed Bastian, said in a statement. That put the airline on track to “deliver the best financial year in Delta’s 100-year history,” he said.

The airline also beat analysts’ profit estimates and said it expected earnings per share, a measure of profitability, to rise more than 10 percent this year.

Delta’s upbeat report offers a preview of what are expected to be similarly rosy updates from other carriers that will report earnings in the next few weeks. That should come as welcome news to an industry that has been stifled by various challenges even as demand for travel has rocketed back after the pandemic.

“For the last five years, it’s felt like every bird in the sky was a black swan,” said Ravi Shanker, an analyst focused on airlines at Morgan Stanley. “But it appears that this industry does have its ducks in a row.”

That is, of course, if everything goes according to plan, which it rarely does. Geopolitics, terrorist attacks, air safety problems and, perhaps most important, an economic downturn could tank demand for travel. Rising costs, particularly for jet fuel, could erode profits. Or the industry could face problems like a supply chain disruption that limits availability of new planes or makes it harder to repair older ones.

Early last year, a panel blew off a Boeing 737 Max during an Alaska Airlines flight, resurfacing concerns about the safety of the manufacturer’s planes, which are used on most flights operated by U.S. airlines, according to Cirium, an aviation data firm.

The incident forced Boeing to slow production and delay deliveries of jets. That disrupted the plans of some airlines that had hoped to carry more passengers. And there was little airlines could do to adjust because the world’s largest jet manufacturer, Airbus, didn’t have the capacity to pick up the slack — both it and Boeing have long order backlogs. In addition, some Airbus planes were afflicted by an engine problem that has forced carriers to pull the jets out of service for inspections.

There was other tumult, too. Spirit Airlines filed for bankruptcy. A brief technology outage wreaked havoc on many airlines, disrupting travel and resulting in thousands of canceled flights in the heart of the busy summer season. And during the summer, smaller airlines flooded popular domestic routes with seats, squeezing profits during what is normally the most lucrative time of year.

But the industry’s financial position started improving when airlines reduced the number of flights and seats. While that was bad for travelers, it lifted fares and profits for airlines.

“You’re in a demand-over-supply imbalance, which gives the industry pricing power,” said Andrew Didora, an analyst at the Bank of America.

At the same time, airlines have been trying to improve their businesses. American Airlines overhauled a sales strategy that had frustrated corporate customers, helping it win back some travelers. Southwest Airlines made changes aimed at lowering costs and increasing profits after a push by the hedge fund Elliott Management. And JetBlue Airways unveiled a strategy with similar aims, after a less contentious battle with the investor Carl C. Icahn.

Those improvements and industry trends, along with the stabilization of fuel, labor and other costs, have created the conditions for what could be a banner 2025. “All of this is the best setup we’ve had in decades,” Mr. Shanker said.

That won’t materialize right away, though. Travel demand tends to be subdued in the winter. But business trips pick up somewhat, driven by events like this week’s Consumer Electronics Show in Las Vegas.

The positive outlook for 2025 is probably strongest for the largest U.S. airlines — Delta, United and American. All three are well positioned to take advantage of buoyant trends, including steadily rebounding business travel and customers who are eager to spend more on better seats and international flights.

But some smaller airlines may do well, too. JetBlue, Alaska Airlines and others have been adding more premium seats, which should help lift profits.

While he is optimistic overall, Mr. Shanker acknowledged that the industry was vulnerable to a host of potential problems.

“I mean, this time last year you were talking about doors falling off planes,” he said. “So who knows what might happen.”