Politics — Mitt Romney

  • How Romney grew rich by plundering companies – Chicago Sun-Times.

    If Mitt Romney wins the GOP nomination for president, the narrative for his 2012 run is pretty clear. He will tout his credentials as a savvy businessman who knows how to create jobs.

    What Romney won’t tell you is that what he really knows how to do is create massive amounts of wealth for himself and his partners.

    Jobs are another matter.

    Romney co-founded the private equity firm Bain Capital in 1984, and owned 100 percent of the firm from approximately 1992 to 2001. During that time, he made a fortune while thousands of employees in some of the businesses Bain acquired lost their jobs.

    The actions of Romney’s firm are detailed in the 2009 book by financial reporter Josh Kosman, The Buyout of America: How Private Equity is Destroying Jobs and Killing the American Economy. The chapter that focuses on Romney and Bain Capital is aptly titled “Plunder and Profit.”

  • The Buyout of America: How Private Equity Is Destroying Jobs and Killing the American Economy by  Josh Kosman — An excerpt from the introduction…

    It is late 2011, months before President Barack Obama will run for reelection. The U.S. economy is gradually recovering from four years of hovering on the brink of disaster. Banks are lending money again, at least to strong companies, and employment is stabilizing.

    President Obama has finally begun to breathe a bit more easily, when the secretary of the Treasury walks into his office one day.

    “You better sit down,” the secretary says. “I’ve got bad news. First Data, the largest merchant credit card processor, has defaulted on $22 billion in loans. Clear Channel Communications, which owns more than twelve hundred radio stations, is on the brink. The other credit tsunami that we knew was out there has begun.”

    The Treasury secretary is talking about private equity. It’s not the private-equity firms themselves but the companies they own that are defaulting. During the boom years of 2001–7, private inves- tors bought thousands of U.S. companies. They did it by having the acquired companies take on enormous loans using the same cheap credit that fueled the housing boom. That debt is now starting to come due.

    “Considering what we have already been through, how bad can it be?” Obama asks.

    “Well,” says the Treasury secretary, “PE firms own companies that employ about 7.5 million Americans. Half of those companies, with 3.75 million workers, will collapse between 2012 and 2015. Assuming that those businesses file for bankruptcy and fire only 50 percent of their workers, that leaves 1.875 million out of jobs.

    “To put that in perspective, Mr. President, NAFTA caused the displacement of fewer than 1 million workers, and only a slightly higher 2.6 million people lost jobs in 2008 when the recession took hold.8 THE BUYOUT OF AMERICA

    “A spike in unemployment will mean more people will lose their homes in foreclosure, and the resulting nosedive in consumer spending will threaten other businesses. The bankruptcies will also hit the banks that have financed LBOs and the hedge funds, pensions, and insurers who have bought many of those loans from them.”

    “Is this bigger than the subprime crisis?”

    “It is similar in size to the subprime meltdown. In 2007, there were $1.3 trillion of outstanding subprime mortgages. As a result of lever- aged buyouts, U.S. companies owe about $1 trillion.

    “Sir, we are on the verge of the Next Great Credit Crisis.” Obama is no longer smiling.

    The picture painted by the Treasury secretary in this imaginary scene, as dire as it is, is not total fantasy, nor is it a worse-case scenario. There are people in the financial world, including the head of restructuring at one of the biggest banks, who predict this outcome. Some knowledge- able observers say the carnage will start sooner. In December 2008, the Boston Consulting Group, which advises PE firms, predicted that almost 50 percent of PE-owned companies would probably default on their debt by the end of 2011. It also believed there would be significant restructur- ing at these companies leading to massive cost cuts and difficult layoffs.

    A rain of defaults is already starting. From January 1 through November 17, 2008, eighty-six companies defaulted globally on their debt. That is four times the number in 2007, and 62 percent of those companies were recently involved in transactions with private-equity firms.

    The tsunami of credit defaults described by the imaginary Treasury secretary is not inevitable. If the U.S. economy manages to recover from the credit crisis that began in the mortgage markets in 2007 before the big PE debts come due, more of the PE-owned companies will be able to refinance their debt. In that case, we won’t see a full 50 percent of them go under. Although if history is any guide, many of them will collapse anyhow, regardless of any easing in the credit markets, thanks to the greed and grossly shortsighted management policies of their private-equity owners.


  • It’s Not A “Dog Whistle” If Everyone Can Hear It « The Reality-Based Community

    I do not understand why so many people are calling the recent racial remarks of several GOP presidential candidates “dog whistles”. In politics, a dog whistle is a coded/oblique remark that sounds inane to most people but is a signal with a particular meaning to others. Teresa Wiltz cuts to the chase:

    Some would call this dogwhistle politicking – the cynical use of code words and phrases to rile up the racist base. That’s what Sarah Palin did back in the 2008 campaign when she famously noted that Barack Obama “is not one of us”. But this goes beyond dogwhistling. These are messages that are coming in loud and clear for all to hear. Gingrich, Santorum and Paul can’t be bothered with prettying things up. It doesn’t matter that they’re spreading lies and misinformation. (For starters, according to the US Census, 59% of food stamp recipients are white, while 28% are black. Poor comes in all colors.)

    They just don’t give a flying fig.

  • Political Animal – Mitt’s mendacity
  • Mitt Romney Lies About Job Creation Record at Bain During ABC Debate | Video Cafe
  • Romney vs. Obama on job creation – The Washington Post

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