Romney a Lock - You Can Put it On the Board YESSSS!!

And by the time W. was ready to stop drinking and actually do something, his dad was VP.

 

Right. As I said, "when they started their careers." Mitt is trying to sell that he got to Harvard by himself, got two degrees by himself and got his consulting job by himself. You're buying it. Most people aren't.

 

The Bush family was much wealthier and better connected back through history than the Romneys.

George Romney is a great American success story. Mitt is not.

 

George Romney was on the way to winning the GOP nomination until that stupid brainwashing comment. That's pretty high profile. Yes, Mitt was born on third.

 

. . . and compared to his son's Tea Party-position associations, he was a flaming liberal on social issues.

The party base would flip him the bird and get the tar and feathers ready, today.

 

If he does a good job as vice president, that means no one knows he exists. Vice presidential effectiveness is measured much the same way as quality of referees and umpires.

 

If you define "on the way" as being "in the race," this is true. He was never truly in the race, a fact confirmed by Nixon putting him in the cabinet ... a token of appreciation for clearing the path. Nixon, with all of his pathologies and resentments, would NEVER have put someone in the cabinet that he'd ever considered a true threat.

 

That it has been noted many times doesn't make it true.

 

Interesting that you refer to it as "pilfering money off existing companies' bottom line" when most of what they were involved with involved troubled (i.e., undervalued) companies with unhealthy bottom lines.

 

I have posted this previously on other threads, but this New Yorker column is a great -- and not very long -- explanation of how private equity makes its money.

http://www.newyorker.com/talk/financial/2012/01/30/120130ta_talk_surowiecki

In a typical deal, a private-equity firm buys a company, using some of its own money and some borrowed money. It then tries to improve the performance of the acquired company, with an eye toward cashing out by selling it or taking it public. The key to this strategy is debt: the model encourages firms to borrow as much as possible, since, just as with a mortgage, the less money you put down, the bigger your potential return on investment. The rewards can be extraordinary: when Romney was at Bain, it supposedly earned eighty-eight per cent a year for its investors. But piles of debt also increase the risk that companies will go bust.

This approach has one obvious virtue: if a private-equity firm wants to make money, it has to improve the value of the companies it buys. Sometimes the improvement may be more cosmetic than real, but historically private-equity firms have in principle had a powerful incentive to make companies perform better. In the past decade, though, that calculus changed. Having already piled companies high with debt in order to buy them, many private-equity funds had their companies borrow even more, and then used that money to pay themselves huge “special dividends.” This allowed them to recoup their initial investment while keeping the same ownership stake. Before 2000, big special dividends were not that common. But between 2003 and 2007 private-equity funds took more than seventy billion dollars out of their companies. These dividends created no economic value—they just redistributed money from the company to the private-equity investors.

As a result, private-equity firms are increasingly able to profit even if the companies they run go under—an outcome made much likelier by all the extra borrowing—and many companies have been getting picked clean.

There is sometimes not a lot of difference between what private equities do to the companies they buy and what Tony Soprano did to Davey Scatino's sporting goods store to recoup Scatino's gambling losses.

 

It's interesting that the strategy Romney used goes against LDS values of avoiding debt.

And yes, it is pilfering if you use increase a companies debt so you get your money while those who own the debt are left out in the cold. When a regular citizen just leaves their house and allows a bank to foreclose, it's dishonest, but when a private equity firm cashes out while leaving large debt behind, it's smart business.

 

Two things I'd like to point out: First, even if you stipulate that's a valid depiction of what private equity firms do, there's one little problem with the attempt to apply that interpretation to Romney's Bain Capital tenure: He left Bain Capital in 1999, a point in time when, per the article, such dividends were "not that common." Second, and again stipulating that that's a valid depiction of Bain Capital's business model, that is NOT pilfering the assets of a company. Rather, it is cashing out on the equity (or, alternatively, the perceived equity) that flowed from your original purchase. Those millions weren't there before you bought that company. You could only raise those millions after you bought it.

Suppose I am the great god of business turnarounds. I see a company that I think is undervalued. I put together a fund (some of my money, lots of others' money) and buy it. With some work I am now able to make a case that the company is worth a lot more (at least its cash flow is capable of servicing a lot more debt). So I borrow even more on those projected cash flows and cash out. You can make a case that I'm sticking it to those who lend to me -- it's nowhere near air-tight, but at least it's credible -- but I have "pilfered" nothing from those who were the investors in*/owners of the company at the time I bought it.

*Promised pensions is an uncomfortable issue here, but it is almost always the case that pension obligations are considered to be unsecured debts.