SOMEONE Sure Wants to Change the Subject . . .
Willard Mitt’s awesomely bad July continues to roll along. Apparently realizing that bellowing “Heeeeeerrres CONDI”! was not a sufficient distraction to keep people calling on him to release his tax returns already, he first slaps up a new ad with Obama singing (such original thinking) while he is accused of getting donations from donors and then shoveling big bucks their way. I attempted to embed this video but any attempt to even play it now results in the message that “this video is no longer available due to a copyright claim by BMG_Rights_Management”. (Here is a YouTube link so you can see for yourselves.) Hmmmm. Maybe they’ve been paying attention to certain people pointing out that Candidate Willard will not even release the names of his fund raising bundlers which puts him in the glass house and stones position pretty big time.
Instead I will embed the awesome video put out by the Obama campaign which was their FU reply to Willard going on every teevee station who would take him to demand that Obama apologize for being so mean to him or he WAS GOING TO TELL!!! Enjoy:
Satisfying, no? Sorry I quit smoking all those years ago.
Anyway to further try skipping stones and pitching shiny objects there are no less than three (3) major articles up today about three (3) absolutely possible, totally short listers that Willard and his crew are ferociously vetting so that Willard can make an announcement sometime between now and the convention! And who are the subjects of this breathless anticipation? Well they leaked John Thume’s name to The Hill. The NYT got Tim Pawlenty (and boy did they have to work to sound excited about that) and the WaPo got Bobby Jindal (see NYT comment). Such excitement and anticipation! Way to beat back that news cycle, amirite? If one potential VP pick doesn’t distract them, try three!
And what did they find out?
Romney touts his business acumen and job-creation record as a key qualification for being the next U.S. president.
What’s clear from a review of the public record during his management of the private-equity firm Bain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors. When some of the investments went bad, workers and creditors felt most of the pain. Romney privatized the gains and socialized the losses.
That’s interesting. How did he do this?
Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy.
Romney’s deals have been characterized by many as vulture capitalism. I prefer another description that I read recently - parasitic capitalism. The basic mechanism consisted of investing in profitable businesses using a relatively small outlay of cash. The majority of the purchase price was debt financed. Once in control Bain would slash costs, frequently cutting way back on research and development costs (which companies use to develop new product lines and innovations) as well as profit sharing plans for employees and gutting pension plans. Virtually all of the company’s cash would be paid out to the Bain investors as dividends. Additionally Bain would load the company up with debt, using its healthy balance sheet at the time of acquisition as collateral. The proceeds of that debt would again be siphoned off as dividends. Eventually the company would be sold off and forced to try and pay down the debt with what remained of its cash flow. As noted above, not all of them made it. Hence Bloomberg’s description that Bain socialized their losses. The creditors and banks who made the loans had to absorb the losses along with the government who had to bail out pension plans in some cases.
Unsurprisingly Bloomberg concludes that:
Enriching investors by taking leveraged bets isn’t a qualification for a job requiring long-term vision and concern for public welfare. It is appropriate to point that out to voters.
And, to repeat, all of this occurred before Willard *retired* from Bain. He needs to own it. Press on Obama campaign!