Thursday, January 19, 2012

king of bain



kingofbain | Mitt Romney. Was he a job creator or a corporate raider?

That's the question this film answers.

And it’s not pretty.

Mitt Romney was not a capitalist during his reign at Bain. He was a predatory corporate raider. His firm didn't seek to create value. Instead, like a scavenger, Romney looked for businesses he could pick apart. Indeed, he represented the worst possible kind of predator, operating within the law but well outside the bounds of what most real capitalists consider ethical.

He is exhibit number one the left wants to use in the coming election to give capitalism a bad name.

He and his friends at Bain were bad guys. Any real capitalists should disavow Romney's ‘creative destruction’ model that made him wealthy at the expense of thousands of American jobs.

Mitt Romney and his cronies pioneered ‘deindustrialization,’ a process by which they searched out vulnerable companies, took them over, loaded them with debt, and collected obscene fees while doing so. He sent jobs overseas or killed them altogether, and then picked apart the remains - including pension funds - before the companies went bankrupt.

Some might call that the free market. Most of us think its just plain wrong.

If you wonder why America has lost so many manufacturing jobs overseas, look no further than Mitt Romney – the King of Bain.

Think you know Mitt?

Think again . . .

45 comments:

Tom said...

LBO outfits (renamed "Private Equity" after debacles 20 years ago or so) are fraudulent even within the context of unregulated capitalism.  Their target is the lenders who fund most of the acquisition.  Devastating communities and workers is just a side effect of a scheme to take money from unwary banks or bondholders.

Big Don said...

Romney isn't the problem here.  The workers who got screwed should be blaming the original owners of the companies who, by their own *Free_Choice*, sold the companies to Bain...

Tom said...

Are you kidding me?  The owners were the shareholders.  Most of them don't have any free choice about when & to whom "their" company gets sold.

Have we talked about capitalism, BD?  Because I'm an actual capitalist.  And I generally find "libertarians" have less idea than anyone else about how capitalism or business actually work.

Ed Dunn said...

This is not correct and Big Don is right and this is based on me working in the dotcom boom and bust. By the time Bain Capital was even mentioned, the share value wasn't worth the paper it was printed on so the company was going under anyway.

Cannot put it on Bain - it was the original executives who ran the company into the ground. That's like blaming the  short sale buyers for homes going into foreclosure...

Tom said...

Hi, Ed,

Can we talk about a specific company that Bain acquired?  

CNu said...

Gentlemen, my first job out of college was with the Bank of Boston. For the next 18 months after I began there, I learned the ins and outs of corporate finance and accounting while simultaneously interning in various and sundry departments of the bank which at that time consisted of 104 separate business units running the gamut from an actual tiny little Venture Capital subsidiary all the way to Gold Leasing - of which at that time - the venerable Bank of Boston was the largest operation in the U.S. through its control of Rhode Island Hospital Trust.

Corporate banks at that time were all over one another competing for participation in the financing of leveraged buy-outs, thus the term "Leveraged" which means they were lending to investment bankers to finance the takeover by those bankers of going concerns. I was a junior analyst on the due diligence involved with an attempted takeover of Walt Disney Corporation. At that time, the total market value of Walt Disney stock was in the few hundred millions of dollars. Why do you suppose the investment bankers were salivating over the "opportunity" to acquire a controlling interest in Walt Disney?

What do you suppose the fate of Walt Disney Corporation would have been had these investment bankers succeeded in lining up the financing to buy a controlling interest in publicly (institutionally) traded Disney stock?

Tom said...

The acquirers like to put up a tiny slice of down payment, let the lenders take most of the risk, and then try to cash in.  They can cash in by dressing things up to sell, either in real life or on the books; back then sometimes by literally taking dividends out from under the lenders; multiple private-equity firms can trade acquisitions to each other at inflated prices on a wink/nod basis to book fees from their own investors for the "profits" (that was popular 5 years ago).   Not the private-equity partners' money.   When your liability is limited to the money you put in, and that's a tiny fraction of the purchase price, there are lots of ways things can work out favorably.

I'd like to hear.

CNu said...

In the mid-1980's what were Disney's most valuable assets, and, how were these assets reflected in the company's market valuation?

CNu said...

.com had nothing whatsoever to do with Bain and Co.'s core line of business - matter fact - most .com's never have any kind of assets, earnings, or cash flow worth pursuing. For the purposes of a discussion of Bain, .com's are completely irrelevant.

CNu said...

It's important for engineers to diversify their knowledge base outside the rudimentary mathematics and mechanics that comprise their stock-in-trade. Otherwise, engineers run the risk of making the most absurd and preposterous statements reflecting an abject underlying ignorance of the subject matters at hand.

Tom said...

I don't know.    You'd think those old cartoons were worth a hundred million on their own, but I don't know how much Disney had already borrowed against their assets.:

CNu said...

Oh, I also participated in the original due-diligence for HCA way back in the day when it was in the process of acquiring financing to begin buying up hospitals. Does anybody remember what hospitals and healthcare used to be like in the 60's and 70's when they were still operated by modern day hospitaler religious charities? i.e., what hospitals and physicians and drugstores, and that whole essential sector of life was like before it became intensively "for-profit"?

Compare and contrast what has happened to that whole sector since. Did it improve through the free-wheeling application of "market forces"?

CNu said...

Oh, and since I'm on a tear..., how about higher education? Has the quality of higher ed and its deliverable fine young minds improved fivefold over the past 25 years during which college tuition has increased on average over 500%?

Tom said...

Ready to be told I'm wrong on any specifics.   But I have never (so far) met anyone who did capitalism for a living, who trusts the stuff the way armchair libertarians do.   

DD said...

Government is used as the tool to enforce the desires of moneyed interests, hence the push against government instead of capital. Libertarians are no more cartoons than liberals or conservatives. At least they realize that a governmental solution is unlikely to heal what ails them.

CNu said...

Sorry bout that, I wandered off into dreamtime.., nah magne, had nothing whatsoever to do with the cartoons. Disney was sitting on $10 Billion in "underdeveloped" real estate assets in the form of its then amusement parks. The aim of a hostile takeover of Disney in the mid-80's was to acquire the fully written down capital assets and then carve them up and parcel them out to real estate developers, period.

The essence of the LBO was sussing out undervalued assets on a company's balance sheet, which assets could be gotten for a firesale price given a low market valuation (let's say the company was underperforming in the earnings area by then prevailing market standards) and voila!

Rick Perry an'em had it EXACTLY right when they called Willard Mitt Romney a vulture-capitalist.

Oh, and commercial banks which at that time still had Glass Steagall restrictions in place against investment bank type speculation would often serve as eager intelligence agencies, given their uniquely detailed understanding of the collateral situation of entities with whom they did business. Kind of like a joke I heard on comedy radio about how lions always seem to know who the weak zebra is, even though lions and zebras never hang out together. Somebody in the zebra herd snitches out the weakling to the lions. Well, commercial banks had a nasty habit of making asset makeup disclosures in order to get preferred pieces (tranches) of the multi-bank pie lending into the leveraged buyout effort.

None of this is rocket science, but its underlying reality is SO far removed from what our colleagues upthread imagine, as to make their imaginings about the nature of Bain's wratchit "bidnis" ridiculous.

Big Don said...

No.  It was the easy availability of govt insured loans that skyrocketed tuition.  Univ's figgered, hey, if kids can easily get the bread, let's jack up the price.  The real impact of that tends to exclude those that might have most benefited society down the road - those higher-IQ's with the self-discipline and future-time-orientation required to work their way thru college.  Really hard to do that anymore... 

CNu said...

So the loans were unavailable to the higher IQ's with blah, blah, blah...., BD - you are so gottdayyum distorted and illogical that you seem to come right.out.of.a.comic.book....,

Ed Dunn said...

Bain bought several dotcom companies I was working at or invested in during the 2000-2002 period - that was their core and how they actually got started in the industry if I'm correct.

nanakwame said...

good one

Ed Dunn said...

I will answer the question that Bain was never a job creator and was more of a job/economy saver ran privately. Had Bain not stepped in, the community and the jobs and the economic situation would have been far worse.

Ed Dunn said...

I think the core of the argument is one perspective on "creative destruction" which is a necessary process. I would argue 99% of the problems with certain leaders post Civil Rights was the lack of a "creative destruction" to wipe them off to the side and build new entities to further the agenda. What I'm hearing is people crying about the effects of the "creative destruction" with no regard to the fact "total destruction" would have happened instead with wider implications had Bain not stepped in.

Tom said...

DD,

I'm always happy to meet libertarians, liberals, OR conservatives who haven't already made cartoons of themselves.   

The deregulation of the banks and the "Bernanke put" were  put in place for specific people who had specific scams in mind.  Cartoon libertarians unwittingly supported these scams  for shockingly naive reasons.  Libtards and Contards have their own shockingly naive and  disastrous debacles.   

Tom said...

Ed,

FWIW, that's not what I was arguing w/ BD about.  When mgt has already crashed a company, I don't care what the vulture capitalists do to it.    

Bain's business goes back to 1984, and they've  acquired many companies that were not on their last legs at the time ... but those got loaded up with debt by Bain & some later filed for bankruptcy for that reason. 

Tom said...

Good info, thanks.  I also will stick by my opinion that another factor is, in many of those deals the LBO folks were trying to grab a shot at upside while sticking the lenders who provided most of the financing with the downside risk.

Dale Asberry said...

Little Don, some a' your'n precious PRR in Nature says that only 25% of intelligence can be attributed to genetics. The other 75% occurs from you shutting your pie hole.

John Kurman said...

DD,

Hammers can be used to crush skulls or drive nails. There is a movement to get guvmint to work for the people, but it's ongoing and dynamic, just like a Darwinian arms race. I tell you one thing though. Okay, two things. Much easier to root out public graft and corruption than the private version. And power don't disappear just because you dissolve an institution. e.g. less government control = more corporate control. Governments ain't all that hot (re: fallout experiments, involuntary disease experiments, etc. etc. etc.), but do you really want private industry telling what to do? Cheating you out of wages, selling you poisons, shitting in your soup like in the Golden Age of Capitalism? The "We can all just get along" version of libertopia will occur when we all get a global lobotomy.

As far libertarians are concerned, I've noticed that 90% of the internet version are cartoons, and really more adherents of a cult rather than reasoning individuals. They are Un-Communists. The seem to suffer from what I call Platonic Derangement Syndrome (marxists too, as an example: "The Soviet Union was not a real communist society". "America would be much better if it had a real free market". Excuse me? They are as fucking real as it gets!). These types of people have the wrong priorities regards to how people deal with each other, and confuse/favor ideal conditions with/over real world empirical examples. They also seem to succumb a lot to the excluded middle fallacy.

And the "no force or fraud" crowd never seems to recognize that any commercial transaction involves both force and fraud (through a whole slew of contingencies in the real word, ranging from lack of access (implied monopoly) to withholding of information (arbitrage)). But then again, I notice it's not an exclusive or, so maybe the combination is OK in their eyes!

Big Don said...

It is not "IQ-160" to graduate college with so much debt you can never pay it off - the situation in which so many of today's graduates are now finding themselves.  Many smarter folks especially won't take that risk.  In prior times, it was not necessary to so jeopardize one's future....

Big Don said...

The true % has been suppressed, 25% was the highest number they dared assign to it.  Politically incorrect authors risk their professional future - nobody wants to be the next Jensen, Rushton, Lynn, etc.  Today's Asian IQ-160  http://www.cbsnews.com/8301-18563_162-57358994/calif-hs-student-devises-possible-cancer-cure/?tag=pop;stories

CNu said...

They are Un-Communists. The seem to suffer from what I call Platonic Derangement Syndrome

John Birch Society Randian Objectivist Skoussonian "true-believers"....,

CNu said...

There are a number of fallacies larded into this doctrine of "creative destruction" vs total destruction - which is why I most selectively used Disney as the perfect example of a company with decades more of huge unrealized value - that was intensely vulnerable to market predation and hostile total destruction - and whose actual future value to its shareholders, employees, etc..., would have been imprudently parasitized and destroyed had angel investors not taken it private and preserved the company as a going concern for future generations.

CNu said...

In "prior times" the indisputable fact of the matter is that there was welfare and affirmative action for white folks in the form of the GI Bill and other direct subsidies which allowed for the development of an educated baby-boomer middle-class in the U.S.  - everything else you're prattling about is just so much self-reinforcing conjectural jibberish...,

CNu said...

I would argue 99% of the problems with certain leaders post Civil Rights
was the lack of a "creative destruction" to wipe them off to the side
and build new entities to further the agenda.


You'll get no argument whatsoever from me on this point right'chere!

John Kurman said...

throw in climate change denial, evolution skepticism, anti-reproductive rights, and just a general strong anti-science head bending, and you got yourself a Ron Paul.

Dale Asberry said...

Ok, jackass, it is PRR or it is not. The results are verifiable or they are not. The methodology is verifiable or it is not. This is PRR - the data, results, and methodology are known. There is no conspiracy WITH THIS STUDY. You can't dismiss it simply because you don't like it.

So, what exactly does one instance have to do with a "tendency"? Didn't you complain about that to me not long back?

You're making a mess with your nocturnal emissions all over your keyboard.

Big Don said...

That's really funny.  The less politically correct Aussies PRR just announced that it was 40%.  
http://news.xinhuanet.com/english/health/2012-01/21/c_131372356.htm
Bottom line is, if you ain't got it genetically, no amount of environment/nurture/money will fix it....

nanakwame said...

I would agree with, yet; education by 13 years; eco; and no dominance of mental illness by 30 years old, it is all on the self - whatever that may be.

CNu said...

lol&smdh....,

On topic, you logically and factually double-clown and get put in check, yet somehow or another, you insinuate your silly religion into the mix and manage to threadjack and lead a couple of cats down your smelly and purely conjectural little rabbit-hole one-mo-time-agin.

What is it with these humans who insist on playing make-believe with you and wrangling over the number of angels that can dance on the head of a pinhead's pin?

Dale Asberry said...

Lol, I'm just playing with him like a cat! Dangling that little string in front of him... he can't help himself.

CNu said...

He's been very intentionally at these shenanigans since the days of soc.culture.african.american...,

Dale Asberry said...

So, why does he hang around here?

CNu said...

penis-envy...,

Big Don said...

BD is here because Subrealism posted something
disparaging about White people  back in 2007/8 that came up in a daily BD automated search.  BD defends against these misguided assaults.  The Black dislike problem is not mean bigoted White people (although they exist), it's common sense rational decision making based on the data . And the common denominator in all that data is Defective Genes.  When those with the right genes can become CEO's, POTUS, First Lady,etc,  then there are no individualo limits to success, other than genetic.  Accusations of bigotry are just a cop-out (Asian-Americans have seen the same hatred).

Gotta run now, the latest *data* convenience store flash mob ripoff and 2AM hip-hop club shooting are on the Evening News...

CNu said...

penis-envy...,

Big Don said...

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