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Tony Soprano explains Bain Capital. Source: Huffington Post
Well, polite society's moratorium on pummeling Mitt Romney over Bain Capital's piracy lasted all of about two weeks. And now the hunt is, quite rightly, on again. The New York Times delivers the beating:
Companies’ Ills Did Not Harm Romney’s Firm

By MICHAEL LUO and JULIE CRESWELL

Cambridge Industries, an automotive plastics supplier whose losses had been building for three consecutive years, finally filed for bankruptcy in May 2000 under a mountain of debt that had ballooned to more than $300 million.

Yet Bain Capital, the private equity firm that controlled the Michigan-based company, continued to religiously collect its $950,000-a-year “advisory fee” in quarterly installments, even to the very end, according to court documents.

In all, Bain garnered more than $10 million in fees from Cambridge over five years, including a $2.25 million payment just for buying the company, according to bankruptcy records and filings with the Securities and Exchange Commission. Meanwhile, Bain’s investors saw their $16 million investment in Cambridge wiped out.

That Bain was able to reap revenue from Cambridge, even as it foundered, was hardly unusual.

No, it's not unusual at all. In fact, it was very nearly standard practice for Bain to engineer deals that ensured that Bain got paid even as companies it bought foundered. What's more, it seems to have been standard practice to set those companies to foundering in order to make sure that Bain got paid.

What sets the Cambridge example apart, though, is that it appears to be an example of Bain making sure it got paid even as its investors were wiped out. That ain't good business practice! Unless, of course, your business is taking care of Number One. Still, this is surely an unusual example, even for Bain. You have to be able to give your potential investors a pretty good shot at actually making money most of the time in order to be able to stay in the private equity business, or any business for that matter. So this kind of total cluster#*&@ can't happen all the time.

As I think has been amply demonstrated already, for Bain and its investors to have profited handsomely while the companies it acquired went down the crapper was pretty near standard practice. Bain chose its targets carefully (as even the Romney camp is only too eager to remind us). Left unsaid, though, was that Romney's voracious appetite for business intelligence was aimed at helping him sniff out companies worth raiding. That is, middling companies that had done things like maintained healthy credit lines or cash reserves so that they could actually grow and create jobs when the time was right, and kept their employee pension funds fully capitalized. Those were the juicy targets, because they'd forgone risky expansions and giant executive paydays in order to shore up their companies, and if Bain could take control of them, they could not only drain those credit lines, cash reserves and pension funds, but use the cash to both expand recklessly and pay their executives the gluttonous bonuses by which "business success" is measured these days. Bain Capital was not about turning around failing companies. It was about eating the seed corn of cautious mid-level performers, while cutting their labor and production-related expenses to the bone to make them look "efficient," so that they could be flipped for sale.

Along the way, Bain used the leverage gained by taking over the boards of these companies to declare and pay special dividends to itself, which they could pass on Bain investors to keep them happy. And when cash ran short, Bain directors could order the companies to borrow against the value of the company itself, again handing the cash over to Bain. It all worked out very well for Bain and its investors.

All the while, though, Bain was double-dipping. In addition to the special dividends, bonuses paid to themselves with company cash, and the like, Bain's directors also routinely voted to force the newly acquired companies to pay Bain for "managing" the takeover, and the day to day running of the company, even if where they were running it was into the ground. Again, this was standard practice for Bain, engineered right into its acquisition deals. The Times article explains:

The numerous fees collected by private equity firms have been a frequent lightning rod for the industry. First, the firms charge their investors a percentage of the fund as a management fee, meant to cover its overhead. During Mr. Romney’s tenure, this was initially 2.5 percent and then dropped to 2 percent. Private equity firms also collect transaction or deal fees, ostensibly for advisory work, from companies they buy. These fees are generally collected for major transactions, like the purchase of another company, a public stock offering or even the initial acquisition of the company. A third fee stream comes from annual monitoring or advisory fees that portfolio companies typically pay to their owners, the buyout firms.
How do you like that? Some racket, huh? You borrow money from someone else in order to buy a company, then you force the company to pay you for having the genius idea of buying it. Don't you wish you could get the things you buy, like your groceries or maybe your car, to pay you for being smart enough to buy them? No wonder one-percenter cyborgs like Romney think everyone should be rich. In their world, people pay you to buy stuff! Hell, I'd have me a car elevator too, if that were the case!

But it's these fees that made it possible for Bain to make bank on Cambridge even as its investors lost their money. Bain kept collecting nearly a million dollars a year in management fees even as they "managed" the company right into bankruptcy. And although that represented just standard business practice to Bain, think about what a departure that is from real capitalism (even as the Romney camp still maintains attacking Bain equals attacking capitalism).

The reason Bain was able to engineer fat payments to itself and its investors even as the companies it bought went bankrupt and their workers were robbed of their pensions and fired is that in our economic system, it's the capital that's paramount. What we're supposed to think really makes things go isn't the labor that produces the products companies sell to get rich, but the money investors put in that makes the company possible.

It's a little bit of a chicken-and-egg story, but in our system, that's how we've come to think of things. (I'm sure it has nothing whatsoever to do with right-wing belief tanks spending so lavishly to train judges to think exactly that.) For practicing capitalists (as opposed to those of us who just live in a capitalist system), insisting that investors need to get paid before the workers do is justified by the belief that their egg is what makes chickens possible, so primacy on payday is simply the natural order of things. Try arguing with them that you need to pay the chickens who lay the eggs first, and they'll laugh in your face. (And so will their judges.)

But that's kind of what happened with Cambridge, isn't it? Bain bought the company, as it always did, with borrowed money. Money that investors gave over to Bain to do the shopping, and that they'd come to trust would, under current business law and practices, ensure that they got paid first, since capital is what makes the world go 'round. Yet when payday came and there was only so much to go 'round, the managers at Bain took their cut first, on the argument that it was their "work" that made the acquisition possible in the first place. The chickens, after all, had laid these eggs, whereas the capitalists had merely sat back and thrown money at them.

Ain't that something? So how about this? If nothing else, this should put your mind at ease that in attacking Bain, you'll no longer be attacking capitalism. You'll be attacking racketeering. Does that suit you better? I'll assume that's an offer you can't refuse.

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Comment Preferences

  •  the "locust" meme should also be effective when (14+ / 0-)

    discussing Romney w/anyone with any sort of Christian background.  especially evangelicals and fundies.

    "Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face" & "Polka will never die." - H. Dresden.

    by bnasley on Sat Jun 23, 2012 at 03:22:39 PM PDT

  •  Assholes like Mitt and his Bain buddies are what (21+ / 0-)

    is ruining this country. Not blacks, not "hippies", or whatever this week's scapegoat is on Fox.

    Where are all the jobs, Boehner?

    by Dirtandiron on Sat Jun 23, 2012 at 03:23:58 PM PDT

  •  racketeering facilitated by kleptocracy supported (11+ / 0-)

    by deregulated environment

    No, it's not unusual at all. In fact, it was very nearly standard practice for Bain to engineer deals that ensured that Bain got paid even as companies it bought foundered. What's more, it seems to have been standard practice to set those companies to foundering in order to make sure that Bain got paid....You borrow money from someone else in order to buy a company, then you force the company to pay you for having the genius idea of buying it. Don't you wish you could get the things you buy, like your groceries or maybe your car, to pay you for being smart enough to buy them? No wonder one-percenter cyborgs like Romney think everyone should be rich. In their world, people pay you to buy stuff! Hell, I'd have me a car elevator too, if that were the case!... I'm sure it has nothing whatsoever to do with right-wing belief tanks spending so lavishly to train judges to think exactly that.

    slutty voter for a "dangerous president"; Präsidentenelf-maßschach; Warning-Some Snark Above"Nous sommes un groupuscule" (-9.50; -7.03) "Sciant terra viam monstrare." 政治委员, 政委!

    by annieli on Sat Jun 23, 2012 at 03:24:41 PM PDT

  •  Nice clear synopsis in plain english (8+ / 0-)

    Matt Taibi is also good at this kind of writing.

    Everything I write is within a margin of error of precisely 100%.

    by Bailey Savings and Loan on Sat Jun 23, 2012 at 03:27:49 PM PDT

  •  How can anyone celebrate this? (6+ / 0-)
    Bain Capital was not about turning around failing companies. It was about eating the seed corn of cautious mid-level performers, while cutting their labor and production-related expenses to the bone to make them look "efficient," so that they could be flipped for sale.
    Well, anyone who isn't a serial "bust out" professional, that is.

    When you are right you cannot be too radical; when you are wrong, you cannot be too conservative. --Martin Luther King Jr.

    by Egalitare on Sat Jun 23, 2012 at 03:27:56 PM PDT

  •  Great video, but (0+ / 0-)

    what is it with gangsters and fur coats?

    Tracy B Ann - technically that is my signature.

    by ZenTrainer on Sat Jun 23, 2012 at 03:28:47 PM PDT

  •  The "racketeering" angle should be hammered. (14+ / 0-)

    And the Sopranos video is a great tool to help with that. These guys are like the Mafia. They nearly busted out this country last decade, and with the Lying Sack of Mitt in office, they'll finish the job.

    "You with your big words, and your...small, difficult words!" -- Peter Griffin

    by Penny Century on Sat Jun 23, 2012 at 03:29:36 PM PDT

  •  About 20% went bankrupt under Romney (12+ / 0-)

    That's his record. That's what he says we should look at. Seven out of 40 of the companies Bain had a majority share in under Romney went bankrupt.

    It's about a 20% failure rate.

    If Americans want a 20% failure rate in the White House, they deserve to lose to China.

    Of course, win, lose or draw, the rich always win, and that's the way it worked at Bain.

    Romney just wants to make sure that at least 20% of the wealthy's wins come at the expense of everyone else.

    He's exactly the type of rich silverspoon fed trust fund scumbag that killed our economy in 2008. It really is pretty shocking that Republicans are looking to him this time around, of all times.

    •  I'd like to take a look at the 33 others (11+ / 0-)

      I bet the end result in many of the others cases is simply less bad than the 7.

      When you are right you cannot be too radical; when you are wrong, you cannot be too conservative. --Martin Luther King Jr.

      by Egalitare on Sat Jun 23, 2012 at 03:41:59 PM PDT

      [ Parent ]

      •  It's a mixed bag (4+ / 0-)

        Limiting my research to Wikipedia articles, some cases actually did better under Bain Capital, but not because of any particular skill BC  brought to the table (for example Home Depot before BC bought it with The Carlyle Group, & Clayton, Dubilier and Rice had been run by Robert Nardelli -- who is a real piece of work, & later went on to run Chrysler into the ground), some obviously worse (for example, after Bain Capital got control of the Weather Channel, all of the original meteorologists were fired), some a mixed bag (for example Sealy Mattress & Burger King).

        But I'm biased. I worked at Stream, which Bain Capital acquired, & they not only turned it into a sweat shop, they misunderstood where the high tech industry was going.

        Geoff

  •  No risk capitalism, (3+ / 0-)

    at least for Romney and his pals.

    "We believe that the people are the source of all governmental power; that the authority of the people is to be extended, not restricted."-Barbara Jordan

    by sancerre2001 on Sat Jun 23, 2012 at 03:38:03 PM PDT

  •  America needs Romney/Bain (6+ / 0-)

    like amber waves of grain needs a dark swarm of grasshoppers.

  •  From the great Mafia movie Goodfellas (10+ / 0-)
    Now the guy's got Bain Capital as a partner. Any problems, he goes to Mittens. Trouble with the bill? He can go to Mittens. Trouble with the cops, deliveries, Tommy, he can call Mittens. But now the guy's gotta come up with Mitten's money every week, no matter what. Business bad? Fuck you, pay me. Oh, you had a fire? Fuck you, pay me. Place got hit by lightning, huh? Fuck you, pay me.
    OK, so I edited it a bit. Do I amuse you? Do you think I'm a clown?

    What can be asserted without proof can be dismissed without proof. - C. Hitchens

    by sizzzzlerz on Sat Jun 23, 2012 at 03:42:08 PM PDT

  •  Sounds like Goodfellas. (9+ / 0-)

    "The place burned down? Fuck you pay me. Lightning struck? Fuck you, pay me. Slow business? Fuck you, pay me." -Ray Liotta, Goodfellas.

    When locust capitalism is hardly discernible from a mob protection racket, you've got a problem.

    •  Like a mob protection racket, except it's all (2+ / 0-)
      Recommended by:
      phonegery, opinionated

      within the law.....
      because they own the people that write the laws.

      To use another gangster analogy/ quote from the Godfather;
      "I need, Don Corleone, all of those politicians that you carry around in your pocket, like so many nickels and dimes. "

      They should have included judges in that quote.

      In 2012 the financial predators own four Supreme Court judges too.

  •  I Got $50 Million for Anybody Who Can Figure (5+ / 0-)

    out how to get this knowledge out to the general electorate.

    (Trust me, I've got $50 of my own money behind it.)

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sat Jun 23, 2012 at 03:44:39 PM PDT

  •  From now on it's "Tony" Romney. Love it. (0+ / 0-)
  •  What's technically illegal about this? Surely (0+ / 0-)

    something that is currently on the books, would prove it's illegal.

    "But Brandine, you're supposed to be in Iraq stopping 911!"

    by leftyguitarist on Sat Jun 23, 2012 at 03:49:21 PM PDT

    •  There's something called "Fiduciary duty" which (4+ / 0-)

      requires Directors of a Company to act in the interests of the shareholders - although I would wish it were the interests of the company. However, as the Cambridge example shows the Directors who ok'd bringing in Bain, and continuing to pay Bain were shafting the shareholders (or if not shareholders then the other investors). Furthermore these individuals did so frequently with self-enrichment, paying themselves bonuses while the ship was going down.
      It seems to me that prosecuting some of these individuals for breach of Fiduciary duty might have the desired effect and dry up this corrosive model of "capitalism". I don't believe we're lacking the tools - just the will to use them.

      •  Thank you. I feel that running up credit that (3+ / 0-)
        Recommended by:
        TRPChicago, RUKind, phonegery

        you know can't be repaid is illegal, in any circumstance, no?

        "But Brandine, you're supposed to be in Iraq stopping 911!"

        by leftyguitarist on Sat Jun 23, 2012 at 04:14:30 PM PDT

        [ Parent ]

      •  There's so much cover available... (3+ / 0-)
        Recommended by:
        CA Berkeley WV, phonegery, where4art

        under the "business judgment rule," that proving a breach of fiduciary duty is sometimes nearly impossible.

        Did the directors of Cambridge owe a fiduciary duty to the shareholders to maximize the value of their shares? Sure. And who were the shareholders? Well, once Bain bought them, Bain was the majority shareholder. And they got plenty of value for their money. In their judgment, this was a great idea.

        So, go ahead. Take it to court.

        And remember, chances are the judge in the case has been trained to think this makes all the sense in the world. And if the trial judge hasn't been, the appellate judges surely have.

  •  Conflict of Interest? (1+ / 0-)
    Recommended by:
    rbird

    Isn't this the same type of Conflict of Interest that got those Wall Street stock market adviser types in big trouble a little while back? I would figure a nice ad contrasting and comparing the two would be quite enjoyable!

    "I think it's the duty of the comedian to find out where the line is drawn and cross it deliberately." -- George Carlin, Satirical Comic,(1937-2008)

    by Wynter on Sat Jun 23, 2012 at 03:51:44 PM PDT

  •  Much of the video is "Goodfellas" and (7+ / 0-)

    yes, I did think of it when Bain's practices came up.

    BTW, in Goodfellas, they didn't just drain the restaurant as "partners"; when the restaurant couldn't come up iwth the payments owed, they burnt it down and collected insurance, much as Bain put companies into bankruptcy after they drained it and shoved all th liabilities onto the government and creditors.

    And the mob doesn't pay taxes like regular folks, to complete the analogy.

    Not that Bain was illegal, mind you: it was a perfectly legal form of parasite that often killed the host.

    Romney is campaigning to be President SuperBain; his cure is to cut wages, end pensions, let companies go bankrupt, and let the assets of production go dark or be sold to China. He really thinks thats the best of all possible Americas.

    by Inland on Sat Jun 23, 2012 at 04:00:03 PM PDT

  •  Great post Kags. Needs to be boiled down (5+ / 0-)

    to 30 seconds, maybe the latest SCOTUS decision will allow "fuck you, pay me" to be broadcast.

    Who cares what banks may fail in Yonkers. Long as you've got a kiss that conquers.

    by rasbobbo on Sat Jun 23, 2012 at 04:12:32 PM PDT

  •  On the first day after the Kochs buy the election, (2+ / 0-)
    Recommended by:
    phonegery, opinionated

    the Romney administration sells off the Grand Canyon, Lake Michigan, and the Chesapeake Bay; gives Hawaii to China to settle debt; relocates all families below the poverty line to Guantanamo and mends their safety net if it needs it; leases the Mississippi and all other rivers to Halliburton; walls off all urban centers; privatizes education, public safety, transportation, and national defense; locks all prisons and asylums and lays off all personnel; returns to the gold standard and confiscates all gold; reroutes the Keystone pipeline from Hardisty, Alberta through Yosemite National Park, ringing around the Smoky Mountains and draining into the Everglades; outsources all manufacturing and service industries to Blackwater; nationalizes all financial institutions; establishes a national religious cult; registers women as documented workers; reinstates prohibition; dances with horses.

    On the second day after the Kochs buy...

    Keep your mitts off our government!

    by Says Who on Sat Jun 23, 2012 at 04:13:03 PM PDT

  •  Racketeering is exactly what it is. Been saying it (13+ / 0-)

    for going on six months now.

    To the average person, his kind of business belongs in the same category as loansharking and racketeering rather than invention and innovation. Capitalism isn't on trial. Mitt Romney's business practices are on trial.
    To make a long story short, Mitt Romney isn't a businessman. He's a Wall Street racketeer. Any business that rewards failure is not a market, and certainly not a free and fair one. That's called a racket.
    Excellent post.
  •  the mob analogy must be driven into mitt's balls (5+ / 0-)

    over and over and over again until the american voters begin to understand just what the fuck the republican and blue dog democrats in the house and senate and those backing mitt and his ilk are up to. it is nothing short of a vast effort to rob every nickel and dime from every working person in the country and retreat to gated communities and private clubs while folks go hungry, die from curable diseases and watch their kids have worse living conditions than they did.....yup it is class warfare and we might as well get on with it.

  •  Romney files BK to screw creditors (5+ / 0-)

    Not only did Romney's Bain screw over workers, they also said F*** you to a boat load of creditors. Romney's quote "we had to file BK to shed costs" say it all. They take over a company, load it with debt, extract fees and profits and then they filed BK to "shed costs". What pigs!

  •  I'm not sure I understand what the problem is... (0+ / 0-)

    All three parties involved (the investors, the company, and Bain) knew going into the agreement that Bain was to receive their management "fee" regardless of the outcome of the company purchase.  This fact was established ahead of time.  If it seems unfair, then the investors should not have agreed to use Bain's services.  

    I am sure the investors used their due diligence to research Bain's management record before hiring them to control the other company and agreed to the fees Bain was going to charge.  It's not unlike me hiring a stock broker to advise/manage my retirement funds.  If the broker makes bad decisions, and I lose a significant portion (or all) of my investment, the broker still receives his flat management fee.        

    •  Well it would be interesting to see if the (2+ / 0-)
      Recommended by:
      phonegery, opinionated

      investors or shareholders OK'd these deals. If these deals were down through pliant Directors, then I believe they can be prosecuted for breach of Fiduciary duty. I really doubt then investors or shareholders were on board with this - or else they were badly misinformed. As far as your analogy with the brokers fees - those fees are a small fraction of the money you wage. Would you still be ok if the fees extracted were more like 10% of the value of your trades?

      Furthermore the diary described $950,000 per year in "advisory" fees - that's a h*ll of a lot of advice! Some of it should be on paper - let's see what was written down for that money - I suspect NOTHING of significance - this is fraud.

    •  No. The broker in this case would also be the (2+ / 0-)
      Recommended by:
      Eric Nelson, phonegery

      controlling interest in the company. And in the employ of the company.

      It's just an amazing clusterfuck of unethical bullshit.

    •  Well, let's talk about it. (7+ / 0-)

      All three parties involved knew going into the agreement that Bain was to receive their management "fee" regardless of the outcome of the company purchase.

      Maybe. Probably. We don't know for sure. Certainly Bain knew. And the investors likely knew, too. At least those who were repeat players in the Bain funds. The company may have known, based either on their understanding of Bain's previous practice, or maybe even a direct disclosure ahead of time from Bain. Or maybe they didn't know. After all, Bain could just as easily engineer this through the board of directors of the company, which they'd have taken control of by virtue of the acquisition. Once that's done, it's a simple matter to vote yourself in as consultants.

      But the previous board probably did know. They just didn't care. Those board members who wouldn't be continuing with the company once replaced by Bain executives were getting golden parachutes, precisely to guarantee that they no longer were around to care. Those who would be continuing with the company would be reaping the rewards Bain usually showered down on the execs, that is, giant bonuses and stock options that would be worth millions if they flipped the company.

      So yeah, all the parties probably knew. And I think we can see that that's not really very likely to have made a difference.

      And yes, the investors probably knew full well about the fees. They were, after all, paying a 2.5% management fee to Bain for handling the investment fund to begin with. And of course, the prospectus doubtless warned them, as all such documents do, in boilerplate language, that there was a risk that they'd lose their investments. Believe me, I'm not crying for the investors.

      But it's worth remembering that private equity is largely unregulated when it comes to this sort of thing. Private equity investors are presumed to be sophisticated enough not to need broader protections needed by investors in the public markets.

      The point isn't that nobody knows that Bain (or any broker, for that matter) has rigged the game so that they always profit. The point, I think, is precisely that we do know that. And yet, for some reason still unclear to me, we're supposed to think that this rigged game represents business genius.

      That's the issue here. This was virtually a no-lose situation for Bain, and we're being told that it's somehow indicative of Romney's acumen as a hands-on businessman, when in fact he was a financier taking a percentage for a finder's fee at a liquidation sale.

      That he was also a greedy enough bastard to take a bigger chunk than just management fees by firing workers and stealing their pensions, then handing the debt off to the federal government and making you and I pay it with our taxes just adds fuel to the fire.

  •  Robert Reich explains Mitt/Bains locust capitalism (6+ / 0-)


    Romney Racketeering

    Great post DW - let's keep it open season

  •  Legislative and political origins of vulture capit (2+ / 0-)
    Recommended by:
    sfcouple, justintime

    Has anyone ever written a history of what went into the creation of vulture or locust capitalism? The main characters that created the political forces, the lobbying, the legislation itself and the congressmen and senators responsible for writing and enacting legislation that set up and legitimized this type of activity? If it were presented as it occurred historically it might make more sense.

    Same with the banking industry. Has anyone ever written a history that explains the bank bailouts and how the banks went from boring and not all that important influentially to these big giant mega important institutions that were too big to fail, starting with the bail out of the failed Savings and Loans in Texas that Senator John McCain and others put the american tax payers on the hook for paying for in the form of bailouts that cost the taxpayers hundreds of millions of dollars?
    But that was only the beginning. There was the dismantling of regulations and the open check book guarantee by the federal government to step in and force, yet again, the american tax payers to foot the bill for actions that would have been prevented by adequate regulations which had been legislatively abolished. How did all of this come about? Who were the principle players? What did do what they did? What did they do, legislatively to set up this situation?  

  •  It wasn't just the workers who were robbed. (3+ / 0-)

    It was also the real capitalist entrepreneurs who had conceived of the business, built it, and made it actually produce goods and create jobs. You know, the "productive job creators" the Reps are always bleating about. What did Bain ever do the produced anything but profits for themselves? That's a question the media is unwilling to ever pursue.

    What this story, and all the others like it, tells us is that parasites like Bain and Romney himself are not just enemies of the workers, but saboteurs of the very capitalists -- the real ones, that is -- they claim to champion. They are like the parasitic ants that make chemicals that allow them to masquerade as worker ants so they can eat their larvae.

    In America, a rising tide lifts all yachts and drowns the workers who built them.

    by DaveW on Sat Jun 23, 2012 at 05:31:06 PM PDT

  •  You act as if "locust Capitalism" were... (0+ / 0-)

    some perversion.

    That's what Capitalism is: a locust stripping the Earth and humanity of whatever value it can find.

    Capitalism is about profit and nothing else.  Capitalism is irresponsibility organized into a system.  Capitalism is a leech sucking humanity's blood.

    And Obama, as he proclaimed himself, is positioned between us pitchforkers and the fucking bankers.

    So Obomney loves bankers.  But Robamma will stand with us?

    Right.

    •  Well, I don't know that that's the case. (1+ / 0-)
      Recommended by:
      where4art

      The way I think of it, capitalism is just the acknowledgment (and it's not a logical imperative, we've just agreed to it for whatever reason), that there's a time-value of money just like there's a time-value for labor, such that it is right and proper to pay the owner of capital some premium for making it available to you to underwrite your venture, and that your obligation to repay the principal and the premium takes precedence if necessary over the obligation to compensate labor.

      In other words, a system whereby the ownership rights in some property that are conferred by the transfer of capital take precedence over any claims of ownership rights claimed by virtue of having provided the labor that created or enhanced the value of that property.

      It's certainly possible to regard that order of preference as wrong or even evil in itself. But it's not obviously required by logic. It's a policy choice.

      What sets locust capitalism apart, in my mind, is the ferocity with which it consumes value and assets for short term gain. Capitalists leveraged the practices of capitalism in order to build the companies these locusts consume, but in most cases they did so with an eye toward maintaining a position as a repeat player in their local labor market. That is, they did what they needed to do (even if it was always the bare minimum) to maintain civil enough relations with local labor that they'd agree to provide that labor necessary to keep the company a going concern. Bain took no such precautions, and made the bulk of its profits from disregarding the rights and needs of labor in the production equation, something entirely enabled by the presumption of the primacy of capital among policy makers and the judiciary, but previously tempered by the constraints of local ownership, community ties, and the ability of organized labor to bargain effectively on its own behalf.

      With those constraints gone or undermined, the pitchforks are out of the equation. That doesn't necessarily change the nature of capitalism, but it expands the boundaries of what it's able to extract from others. And that's the difference I'm thinking of.

  •  And this is the criminal is going to BAIN America. (2+ / 0-)
    Recommended by:
    flavor411, phonegery

    Celebrating in Utah with Rove this weekend...at their" Romney National Victory Retreat" are 800 Romney "friends." The Romeny for President shareholders seem to be feeling pretty confident Romeny is finally THE MAN.  According the the Washington Post the 800 guests paid 50,000 each or raised at least 100,000 for Mitt. Attenting this victory party..apparently several are already calling him Mr. President.. are several republican boys from the congress and nate along with Carl Rove,  John McCain,Paul Ryan, Condi is there. Peter A. Wish, a Florida Dr. said the weekend is a combination of celebrating and cheering along with and meeting with people who potentially could have a big impact in the administration." He said high donors are getting one on one time with Mitt.  
       So while we discuss Bain, the next election is being bought and paid for this weekend. Mitt is being "told" what these high rollers"expect" in return.They are mapping out how they are going to "do" the country...I'm calling it  how they are going to BAIN the country and the American  citizens,

    Prejudice is a shadowy mist, which in our journey through the world often dims the brightest and obscures the best of all the good and glorious people and objects that meet us on our way. L. Shaftesbury

    by Maggie524 on Sat Jun 23, 2012 at 06:17:38 PM PDT

    •  Except they are going to lose the election. (0+ / 0-)

      They just wrote off Nevada and Colorado with the decision not to contest Obama's change in deportation policy.

      That put Obama at 266 EV by my count.  That means if he carries just one of Fla, NC, Virginia, Ohio or Iowa that he is re-elected.

  •  FINALLY! I have been saying this for as long (2+ / 0-)
    Recommended by:
    flavor411, phonegery

    as I have known what Bain Capital is. What they did was Bust Outs.....I was an avid Sopranos fan I have watched the entire series 4 times straight through...and I saw the correlation right away!

  •  How I describe Romney... (1+ / 0-)
    Recommended by:
    phonegery

    So wooden, and yet so pliable at the same time.

    At least he appears to be made of wood...but up close you see he is plastic.

    Aldus Shrugged : The Antidote to Ayn Rand.

    by Floyd Blue on Sat Jun 23, 2012 at 07:44:15 PM PDT

  •  T&R'd, bookmarked for community edu! (1+ / 0-)
    Recommended by:
    phonegery
  •  Equity Capital Firms (0+ / 0-)

    The central point should be this:  for an equity capital firm to buy a controlling interest in another corporation is inherently unethical.  It sets up a hopeless conflict of interests; the controlling firm is incentivized to direct the other corporation's activities to its own advantage, even when it is to the manifest disadvantage of the controlled firm, and so, as predicted by classical eonomics, it does so.  Every time, except when fearing that it might cause too much of a ruckus.  The victims, of course, are the other stockholders of the controlled firm.  This conflict would not exist if the controlled firm were bought out in toto by purchasing all of its stock.

  •  And Bill Clinton thinks this all good. (0+ / 0-)
    Here's what Mr. Clinton said, vis-a-vis Mr. Romney's career at Bain: “I don’t think we ought to get in a position where we say this is bad work. This is good work."

    And he went on: “There’s no question that in terms of getting up and going to the office and, you know, basically performing the essential functions of the office, a man who’s been governor and had a sterling business career crosses the qualification threshold.”

    http://www.csmonitor.com/...

    What a horse's ass. What is it going to take to get Bill Clinton to STFU?

    Barack Obama: Gives people who tortured other people to death a pass, prosecutes whistleblowers. Change we can believe in!

    by expatjourno on Sun Jun 24, 2012 at 10:26:58 PM PDT

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