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Old 09-03-2012, 10:03 AM
 
1,698 posts, read 1,537,487 times
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I think we take the idea that Mitt Romney made his millions in "business" for granted, without really considering the mechanics of how he got to be so darn successful.

I found this article to be quite helpful:

Quote:
Here's how Romney would go about "liberating" a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent. When an LBO is done without the consent of the target, it's called a hostile takeover; such thrilling acts of corporate piracy were made legend in the Eighties, most notably the 1988 attack by notorious corporate raiders Kohlberg Kravis Roberts against RJR Nabisco, a deal memorialized in the book Barbarians at the Gate.
Quote:
But here's the catch. When Bain borrows all of that money from the bank, it's the target company that ends up on the hook for all of the debt.

Now your troubled firm – let's say you make tricycles in Alabama – has been taken over by a bunch of slick Wall Street dudes who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.

"That interest," says Lynn Turner, former chief accountant of the Securities and Exchange Commission, "just sucks the profit out of the company."
Quote:
But there's a key difference between private equity firms and the businesses that were America's original industrial cornerstones, like the elder Romney's AMC. Everyone had a stake in the success of those old businesses, which spread prosperity by putting people to work. But even private equity's most enthusiastic adherents have difficulty explaining its benefit to society. Marc Wolpow, a former Bain colleague of Romney's, told reporters during Mitt's first Senate run that Romney erred in trying to sell his business as good for everyone. "I believed he was making a mistake by framing himself as a job creator," said Wolpow. "That was not his or Bain's or the industry's primary objective. The objective of the LBO business is maximizing returns for investors." When it comes to private equity, American workers – not to mention their families and communities – simply don't enter into the equation.

Take a typical Bain transaction involving an Indiana-based company called American Pad and Paper. Bain bought Ampad in 1992 for just $5 million, financing the rest of the deal with borrowed cash. Within three years, Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees. A year later, Bain led Ampad to go public, cashed out about $50 million in stock for itself and its investors, charged the firm $2 million for arranging the IPO and pocketed another $5 million in "management" fees. Ampad wound up going bankrupt, and hundreds of workers lost their jobs, but Bain and Romney weren't crying: They'd made more than $100 million on a $5 million investment.

To recap: Romney, who has compared the devilish federal debt to a "nightmare" home mortgage that is "adjustable, no-money down and assigned to our children," took over Ampad with essentially no money down, saddled the firm with a nightmare debt and assigned the crushing interest payments not to Bain but to the children of Ampad's workers, who would be left holding the note long after Romney fled the scene. The mortgage analogy is so obvious, in fact, that even Romney himself has made it. He once described Bain's debt-fueled strategy as "using the equivalent of a mortgage to leverage up our investment."

Romney has always kept his distance from the real-life consequences of his profiteering. At one point during Bain's looting of Ampad, a worker named Randy Johnson sent a handwritten letter to Romney, asking him to intervene to save an Ampad factory in Marion, Indiana. In a sterling demonstration of manliness and willingness to face a difficult conversation, Romney, who had just lost his race for the Senate in Massachusetts, wrote Johnson that he was "sorry," but his lawyers had advised him not to get involved. (So much for the candidate who insists that his way is always to "fight to save every job.")

This is typical Romney, who consistently adopts a public posture of having been above the fray, with no blood on his hands from any of the deals he personally engineered. "I never actually ran one of our investments," he says in Turnaround. "That was left to management."

In reality, though, Romney was unquestionably the decider at Bain. "I insisted on having almost dictatorial powers," he bragged years after the Ampad deal. Over the years, colleagues would anonymously whisper stories about Mitt the Boss to the press, describing him as cunning, manipulative and a little bit nuts, with "an ability to identify people's insecurities and exploit them for his own benefit." One former Bain employee said that Romney would screw around with bonuses in small amounts, just to mess with people: He would give $3 million to one, $3.1 million to another and $2.9 million to a third, just to keep those below him on edge.


Read more: Greed and Debt: The True Story of Mitt Romney and Bain Capital | Politics News | Rolling Stone
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Old 09-03-2012, 10:13 AM
 
Location: Texas
35,236 posts, read 19,282,093 times
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As one who has lived through a hostile take-over, that article is right on target.

Romney's primary rivals rightly labelled him a "vulture capitalist." He made his millions at the expense of thousands of other Americans. It's clear he means to serve himself first.
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Old 09-03-2012, 10:18 AM
 
10,914 posts, read 6,100,838 times
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Quote:
Originally Posted by Old Gringo View Post
As one who has lived through a hostile take-over, that article is right on target.

Romney's primary rivals rightly labelled him a "vulture capitalist." He made his millions at the expense of thousands of other Americans. It's clear he means to serve himself first.
I look forward to seeing this prominently highlighted in the next four days in Charlotte.
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Old 09-03-2012, 10:21 AM
 
Location: Here
10,864 posts, read 11,934,715 times
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Quote:
Originally Posted by HeyJude514 View Post
I look forward to seeing this prominently highlighted in the next four days in Charlotte.
They will obviously have to focus on something as the Democrats surely can't focus on Obama's dismal performance over the past 4 years.

This is basically going to be Blamapalooza2012
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Old 09-03-2012, 10:22 AM
 
Location: On the "Left Coast", somewhere in "the Land of Fruits & Nuts"
8,367 posts, read 8,587,339 times
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Quote:
Originally Posted by Zimar View Post
I think we take the idea that Mitt Romney made his millions in "business" for granted, without really considering the mechanics of how he got to be so darn successful.

I found this article to be quite helpful:

Read more: Greed and Debt: The True Story of Mitt Romney and Bain Capital | Politics News | Rolling Stone
Kinda reminds me of the Clint Eastwood debacle at the RNC. Mitt "borrows" against his influence and connections to "buy" a brand like Clint, especially right at the time when Eastwood is noticeably aging and more vulnerable. Romney then peddles Clint's "assets" at the convention for his own profit, and afterwards when Clint's lost his former value and is no longer useful, Romney simply sells him down the river and moves on.... a perfect metaphor!!
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Old 09-03-2012, 10:29 AM
 
Location: Pluto's Home Town
9,995 posts, read 11,673,452 times
Reputation: 5580
If Karl Rove were a Democrat, he would directly attack Mitt's business skills. His strategy is to attack their strengths, and somehow undermine the primary reason they attract voters. By this reasoning, Romney's business pedigree is fair game.

It does sound like the sort of business a prep. school rich kid would develop. All about accumulating capital through any means possible. Not exactly like building something of value.
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Old 09-03-2012, 10:37 AM
 
10,914 posts, read 6,100,838 times
Reputation: 5894
Quote:
Originally Posted by 01Snake View Post
They will obviously have to focus on something as the Democrats surely can't focus on Obama's dismal performance over the past 4 years.

This is basically going to be Blamapalooza2012
To borrow a post from another thread because Fiddlehead said it so well:

Quote:
Originally Posted by Fiddlehead
From my perspective, Obama averted a depression, saved the financial system, brought back private sector jobs, brought back the stock market, ended the Iraq War,etc. Not a perfect record, but considering he had NO help from the GOP, things are heading in the right direction.
Obama has a lot of good to run on. People remember the colossal wreck the economy was in and the obstacles he faced when he took office. No one but the rabid right expected him to be able to reverse the previous disastrous eight years over night, even as they did everything in their power to obstruct him every step of the way.
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Old 09-03-2012, 10:47 AM
 
1,698 posts, read 1,537,487 times
Reputation: 766
Quote:
Originally Posted by 01Snake View Post
They will obviously have to focus on something as the Democrats surely can't focus on Obama's dismal performance over the past 4 years.

This is basically going to be Blamapalooza2012
Hi!

This thread is not about President Obama, it is about Mitt Romney. I don't know if you've heard of him, but he's running for President, arguably the most important job IN THE WORLD. So we're trying to figure out if his business experience really does qualify him for the job, feel free to read the article and give us your input on that.
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Old 09-03-2012, 11:55 AM
 
Location: Dallas
5,601 posts, read 4,933,024 times
Reputation: 16459
Romney's ruthless business dealings and slippery way of paying taxes on his income may be "legal" but are morally and ethically repugnant. Note I said "may". (We are still waiting for those tax returns.)
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Old 09-04-2012, 09:44 AM
 
1,698 posts, read 1,537,487 times
Reputation: 766
What, no one wants to defend the way Mitt Romney made so much money and had so much "success"?
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