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We are living in the middle of one of the greatest bust out schemes ever perpetrated.  America is being stripped, has been for years, and we are all expected to be good sports about it.  "Just business" it is called; "wealth extraction" it is.

Most people do not know much about bust out schemes.  The term "bust out" has diverse meanings, but the one important for this discussion is the manipulation of a business to extract money by accumulating debts which were never intended to be paid.  This definition may bring to mind a certain political candidate, but he was one of many in this game during the seventies and eighties.  He is, however, the only one with brass enough to run for president, bragging about his accomplishments.  Let us look back in time a bit to get the full picture.

Thirty five or forty years ago, soundly managed companies were justly proud of their assets:  factories, money in the bank, inventory, pension funds.  Before long a squad of vipers found how to turn those strengths into weaknesses.  Since most large companies were publicly owned -- that is, investors held the majority of the outstanding shares -- they could be bought up by a single individuals with enough cash behind them.  These "corporate raiders," as they were called, backed with tons of liquidity from Wall Street banks, started buying controlling interest in a number of prosperous companies and dismantling them for profit.  Most of them just seized the bank accounts, liquidated the equipment, grabbed the pension funds, sold off the inventory, fired everybody, and walked off with the loot.  Mitt Romney at Bain Capital had a slightly different business model.

Romney preferred to take over a company and use it to borrow a giant pile of cash.  This was used to pay him and his confederates huge bonuses and to distribute enormous dividends to them, while the company was slowly crushed by the debt load.  After a few years of these tactics, the company either filed for bankrupcy or was sold for scrap.  This was the bust out.

This technique not only works for businesses, but also for whole countries, and we have been watching it happen here.  The last three Republican presidents oversaw massive increases in the national debt.  They seemed fond of tax cuts for the rich, military buildups, and actual wars.  Let us follow the money.  It has been flowing from the nation's credit to the pockets of military contractors and inhabitants of the upper income brackets.  They keep it; we have to pay it back.  All of their plans for controlling the national debt entail maintaining this flow of money.  In fairness, President Obama has also increased the national debt, but it is critical to consider where the borrowed money has been going.  It has been used to keep the economy from going under.

There is a telling discussion in "Gone With The Wind," where Rhett Butler is confronted by a southern aristocrat about high prices for goods he has smuggled through the Yankee blockade.  He responds that there are two ways to make money off of an empire.  When it is growing, the return is slow but steady; when it is being destroyed, it comes much faster.  He knew a bust out when he saw one.

There are those who think America's day is done, that all this country is good for is to be sucked dry and discarded.  Mitt Romney is their man.  In the White House he would smile and preside over the bust out, spending most of his time trying to find someone else to blame for it.  Obama is not perfect, but at least he seems to believe that this country has a worthy future.  

So do I. . . and you?

Originally posted to TCG on Sun Sep 09, 2012 at 01:29 PM PDT.

Also republished by Community Spotlight.

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