The Washington Post has awarded The King of Bain four Pinnochios, much as it awarded four Pinnochios to a Romney SuperPAC ad which devastated Newt in Iowa. Romney’s response at the time basically was, who me?
The King of Bain is a mini-documentary created by a former Romney campaign advisor, the rights to which were purchased by a pro-Newt SuperPac.
Reading the WaPo fact check, though, it’s clear that while the film got some things wrong, other things were right or close enough as to be fair in a political race.
The key issue WaPo took with the film was timing.
For example, WaPo points out that the KB Toys deal did not close until late 2000 (December, to be precise), and that Romney left Bain in 1999. We need more of a chronology than that to declare the attack to be false; for example, what role did Romney play at Bain even after he “left”? I’ve heard varying accounts that he was on its management board until 2001-2003 (I can’t seem to pin it down precisely). If so, he would have had to approve the deal in 2000. Also, while the deal closed in December 2000, how much of the work, incuding initial approvals and deal structuring, was done while Romney was at Bain. So while the timing might indicate the inclusion of KB was a false attack, WaPo does not provide enough information to decide.
On a company called DDi, WaPo actually finds the account in the film mostly true, but takes issue with the profit number attributed to Bain, which it said unfairly failed to take into account that when Bain sold its stock it retained some equity interest which was lost when the company went into bankruptcy. Fair enough, maybe the film overstated Bain’s profits, but WaPo does not tell us by how much. WaPo also says the film fails to disclose that the company emerged from bankruptcy and is operating; again, fair enough but the statement in the film that the company went bankrupt still was true.
On Ampad, WaPo notes that other factors, such as an industry economic downturn, contributed to the company going under. (added) Ironically, pricing pressure from Staples was one of the factors. But WaPo does not dispute that Bain pulled tens of millions of dollars out of the company, and I guess we’ll never know how things might have turned out had the financing been handled differently; that hardly makes the financing a non-issue. There is a factual misstatement in this segment about Romney owning 15 homes; watching the film I viewed the person saying it as venting, but the film should not have included the number if it was not correct.
On the closure of the UniMac plant in Marianna, Fla., WaPo notes that the deal closed in 1998 under Romney, and that he left Bain a year later, but that the damage to the company did not take place for several years. None of the financing of the company during Romney’s tenure is discussed by WaPo, so it’s hard to know whether the failure was attributable to Bain. And again as to Romney, it’s hard to know how much involvement he would have had in the couple of years after he “left” Bain.
But if Romney is to claim credit for job creation at companies Bain successfully funded for the years after Romney left Bain, shouldn’t he receive at least some blame for job losses which stemmed, in whole or in part, from the way in which the deal was structured by Bain while he was there.
Additionally, the terms of Romney’s separation included Romney’s continued participation in some Bain deals. So Romney may have profited from the deals which WaPo says were post-Romney. It would be nice if the fact checker gave us all the facts.
The WaPo fact check leaves much to be desired. It does show that the King of Bain is a typical political advertisement, which takes some kernals of truth and twists them in a way to portray the target in an unflattering light. And in some instances, the facts are false.
Does King of Bain deserve 4 Pinnochios? No more or less so than this entire campaign season, which has seen a full-fledged effort to minimize Newt’s contributions to conservative successes in the 1990s and to paint him as mentally unstable.
Haunting music, audio clips taken out of context, overly dramatic effects are the norm. It would be easy, and true, to say that Romney started it all in Iowa, much as he started it all in 2008. Nonetheless, “he started it” can’t be the standard.
One thing to note. The 4 Pinnochio rating for King of Bain is receiving extensive coverage both in the mainstream media and the conservative media. How many of you heard of the 4 Pinnochio rating on the Romney SuperPAC ad until Newt mentioned it during a debate?
Update: Newt released a statement calling for the SuperPAC to remove any inaccurate portions or pull the film, and challenging Romney to do the same with his SuperPAC. Expect outrage in 3 … 2 … 1 … that Newt supposedly is illegally “coordinating” with the SuperPAC.
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Comments
It’s not just WaPo calling foul on the film as fact-chellenged propaganda. So is CNN:
http://finance.fortune.cnn.com/2012/01/12/the-bain-bomb-fizzles/
It strikes me as odd to defend its deliberate twisting, even manufacturing, of facts as nothing more than the “norm” for political advertising. Most candidates and their supporters defend the essential truthfulness of their messages (creepy music and dark pictures aside).
In this case, I guess it’s just indefensible.
Professor Jacobson, the details are in Chapter 6 of this book. It takes effort to understand the background but if this book is right, the pattern is clear once you understand how it works:
http://www.amazon.com/gp/product/1591842859?ie=UTF8&tag=theamerpros-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=1591842859
TJSC, I went to your link and read what was avaiable. I could not read Chapter 6. It seems that Chapter 6, while listed is not available.
So give us the Cliff notes which will not violate copyright laws.
Give us a hint. What’s the point of Chapter 6 of that book, since few if any people are going to buy it just to find out.
I need to work on a better summary but here’s the gist:
Chapters 1-5 of this book describe the background and methods generally used by firms such as Bain Capital. It is very helpful to read those chapters to understand the pattern. Chapter 6 focuses on Romney and Bain. Here are some excerpts:
“For people not familiar with Romney’s background as the owner of Bain Capital or with his relationships to other private-equity firms, the irony of this advice might not have been immediately clear. PE firms during the 2003—7 buyout boom often had their companies use increased short-term earnings that came from reducing customer service, raising prices, and starving them of capital—not to reinvest or pay debt, but instead as the basis to borrow more money, which they then gave to their PE owners through dividends. Many of these businesses are now stuck with enormous debt and falling earnings.”
“Mitt Romney was a pioneer of this strategy. His private-equity firm, Bain Capital, was the first large PE firm to make a serious portion of its money not from selling its companies or listing them on the stock exchange, but rather by collecting distributions and dividends, which in this context is the exact opposite of reinvesting in a company. Bain Capital is notorious for its failure to plow profits back into its businesses.”
“Traditionally, cash-rich public companies have paid dividends to lure and reward investors. They distribute some of the profits that they are not reinvesting as a way to say they have surplus funds and expect to have them in the future. These dividends generally amount to cents or a few dollars per share paid quarterly. But when private-equity firms take distributions, they typically do not tap excess profits. Instead, they increase the pool of available funds by having their companies borrow money—on top of the original debt taken on to finance the LBO.
Mitt Romney used this strategy in the 1990s as part of his private-equity playbook, long before it became common practice during the 2003—7 buyout boom. The credit crisis that started in mid-2007 limited the practice, as it became difficult for companies to borrow funds to pay the
dividends. But the scale back was purely a function of credit availability, not of any backing off by the PE firms. Just as venture capitalists rushed to
get their businesses listed on the public markets in 1998 and 1999 to take advantage of the IPO frenzy, private-equity groups used dividend payments in this decade as a way to profit from the cheap-credit bubble. If Bain’s experience is any indication, many of the companies that
borrowed money to issue dividends will not be able to survive.”
The chapter then proceeds to go IN DETAIL into the histories of Dade Behring, Ampad, KB Toys, and others – a total of 6 companies that were bankrupted from 2000 to 2004.
Apparently in order to avoid Pinnochio awards one needs to be very clear what day Romney started and what day he “left” Bain. Those dates and Romney’s role need to be accounted for in discussing this, but you can’t understand the “this” until you have this background.
Excellent summary. So they basically pump up earnings by reducing investment to trick creditors who look at a company through a different lens than traditional investors to give them cash, and then they run as fast as they can away from the company. I remember when I heard first about this scam back around 2002-3 when some capital raiders were found out to be trying to form a consortium to raid Microsoft and turn it from a software company to a debt service company. They couldn’t raise the capital because they couldn’t find enough suckers to go ahead with it.
Yes, and I am beginning to like another term — they are essentially “DE-Capitalists” because what they are doing is de-capitalizing the target business by taking out equity / capital that has built up over time, pledging it for huge amounts of debt, and the pulling that equity out in the form of management fees or dividend payments to themselves. Thus a company that was doing fine for 80 years and has built up the resilience to survive ups and down of competition is emaciated and made brittle so that the first shock kills it. And since the “bait” that has been invested by the Private Equity firm is so small in relation to what they have taken out, they can ignore the losses that they might incur on stock that becomes worthless in the resulting bankruptcy. Of course they’ll cry that this “loss” shows they were hurt too, but the capital firm from the beginning has cared nothing but for its NET profit, and the original take-out far exceeds any “loss” at bankruptcy. What a business model!
This actually sounds a lot less risky than actually running a business. It also sounds profoundly wrong, because if you are a well known investment firm and your planning on de-capitalizing a firm the suckers (the lenders) may not be able to tell which of your past deals were simply failed businesses or simply companies you ran into the ground, because they may not be highly tuned into the PE world. Then you can call the spurned investors and unemployed workers “anti-capitalists” because they don’t appreciate your “risk-taking”.
Yeah these thoughts have been running around in my head. Now the idea of companies maintaining excessive capital has traditionally been known as sounds business, but from my own experience, I don’t like keeping my business over capitalized as well. I mean it just sits there instead of my retirement account doing pretty much nothing. But the other hand, its the fraudulent misrepresentation of the intent of the PE firm to everyone. If you go in there and tell the workers “Hey I am going to invest in this company and make it no 1”, but instead you want to send them to the unemployment line after your raid is done and send the lenders to the poor house after you make off with the doe, then you really have committed a deep fraud. I cannot understand why this cannot be considered a tort or even a crime.
“Bain Capital is notorious for its failure to plow profits back into its businesses.”
Why, it almost sounds like investing profits back into a business is a normal thing!
I found the film fair, though Unimac could have used more details. The interesting thing is that no one defends what happened at KB toys. Its like a blank admittance that something very sleazy happened. The only thing they say is that He left. Well the fillings say otherwise. Honestly his position as Founding partner and the fact he was still running around doing stuff probably means he was still involved at some level. Tie that with how much of his personal fortune was at stack I can’t imagine he didn’t know exactly what was going on and what the plan was.
Romney is damaged goods and its time for the Party to move on.
Here are some answers to your questions: http://finance.fortune.cnn.com/2012/01/12/the-bain-bomb-fizzles/
That piece is even more propagandist than the film its supposed to be calling propaganda. “unnamed sources” at bain are treated like gold, but whatever they do, they don’t defend what happened at KB Toys they say that despite the sworn filings that he wasn’t really there. Same with DDI looks like a pump and dump operation at its heart.
You can complain about Unimac, but as the film points out it too looks like a pump and dump. Short term slashing and screwing people for huge profits. Not necessarily illegal, but it makes him look like an ass.
So just to ensure I am understanding things correctly, a single previous 30-second Romney Superpac attack ad was awarded (4) Pinnochios for lying or misleading statements.
On the other hand, an approximately 27 minute film released by a Gingrich supporting Superac was also awarded (4) total Pinnochios for lying or misleading statements.
By comparison, the pro-Gingrich Superpac was incurring one Pinnochio, on average, every 6 minutes and 45 seconds. Another way to compare would be to say the movie earned about 0.074 Pinnochios per every 30 seconds.
Therefore, the pro-Romney Superpac was 54 times more deceitful per time interval.
Doesn’t seem to be fair to compare Pinnochios without noting the difference in time interval and associated intensity-in-misstatements..
You’d think he wood
(sorry)
Assuming that Romney’s actions at Bain were completely moral, at the end of the day it is the perception that will matter. Right Romney supporters? After all it is the perception that conservatism is immoral that leads us to needing a moderate to defeat Obama.
We are going to get a high-risk candidate any way we go. We might as well get one with some upside.
The upside of a Romney candidacy will be Romney getting crushed in the general, and permanently removed from future consideration as a candidate.
Hey, cut me some slack, I’m trying to think positive here. =)
lol. If Romney wins the nomination he will most likely lose the election to Obama, hopefully taking him out of contention for 2016.
If Romney does manage to win against Obama expect a one term presidency followed by 8 years of FULL Democratic control of at least the House and POTUS.
So looking at it that way, 4 more years of Obama with a full GOP House and Senate doesn’t look so bad does it?
Strategically it’s the wiser course of action.
Perception matters.
And Romney supporters would understandably desire backing and support to “get past” the perception problem, especially during the general election.
But conservatives by and large have no desire to support Romney.
A fair and balanced analysis, Professor. I share your disgust for this electoral season.
I have a hard time getting interested in the jobs-created scoreboard or the fact the Bain pulled millions out of this company or that. It’s easy to demagogue capitalism in this country. Bain was in business to make profit, as all businesses are. Most of the Bain buys and mergers were mutual and voluntary transactions. When a company is on the ropes, you do what you can to turn it around. Sadly, that often means cutting payroll, which is the most most controllable variable cost. It’s difficult to save employee jobs if the employer goes belly up. Furthermore, hindsight only works in Washington, DC.
Defending corporatism isn’t do capitalism any favors. The last thing capitalism needs is private equity (debt) firms like Bain Capital being extolled as exemplars of free-enterprise.
Was I defending “corporatism?” Was I extolling firms like Bain Capital “as exemplars of free-enterprise?” If so, I apologize. I’m an ignorant businessman. I don’t know what you mean by “corporatism.” And since you apparently don’t know the meaning of free enterprise, we don’t have much to discuss.
This article is reasonable for clarifying the difference between corporatism and capitalism, especially pg. 2.
I personally don’t consider it ‘free-enterprise’ when you have firms like Bain Capital on the government take with market-distorting tax subsidies and bailouts, etc.
I’d also appreciate if defenders of ‘free-enterprise’ wouldn’t advocate such a naive view of it, that’s entirely decontextualized from the legal conditions under which it operates. And would take into consideration that the kinds of processes we’re talking about re: Bain Capital, are rather heavily influenced by implicit government involvement—via how bankruptcy and corporate laws are structured and what not—which indirectly has major consequences on how winners and losers are getting decided. Which makes it vital to question how these laws are written, insofar as how they influence the rational behavior of agents in an ostensibly capitalist, free-market society. And ask yourself whether the laws provide the right kinds of accountability, etc. in order to mitigate moral hazard, encourage coherent economic decision-making with optimal time-preference valuation, and so forth.
Hopefully this makes sense.
It makes perfect sense. I wrote about the same thing here:
http://propertyfreedompeace.blogspot.com/2012/01/newt-gingrich-and-mitt-romney-two-sides.html
You, in effect, itemized Government Interventions Nine, Ten, Eleven and Twelve in your comment. 🙂
Errata: Looks like one of my links didn’t parse correctly the 1st time because the URL had an apostrophe in it (tax subsidies and bailouts).
The article you link perfectly illustrates the dilemma faced by businesses in today’s coercive marketplace. If the government offers a farmer a subsidy for growing corn, is it unethical for the farmer to grow corn?
Is it unethical for a taxpayer to accept a deduction for raising a dependent?
Many libertarians believe laws which protect Intellectual Property are immoral, yet they copyright their written work.
How do you combat government intervention and coercion without becoming a self-sacrificial lamb?
Using that logic, then we have nothing to complain about when it comes to men like Billy Sol Estes, T. Boone Pickens and George Soros. After all, they were just businessmen doing what businessmen do, make a buck at all costs.
Sir, my comment had nothing to do with making “a buck at all costs.” If you have evidence Bain Capital’s methods were fraudulent or illegal (as was the case with Billy Sol Estes), produce it. I said it’s easy to demagogue this issue. You’re proving my point.
Excuse me if I paraphrased your “Bain was in business to make profit” comment.
So was T. Boone Pickens and George Soros. And while what they did was legal, it certainly wasn’t ethical. The term “robber baron” became a perjorative not because what they did was illegal, but because it was unethical. You can say that the railroads created jobs, which was true, but at what cost? How many gandy dancers died in the process? But don’t look at that aspect. Look at the jobs the robber barons created and the money they donated to charities after building empires on the backs of those who actually took the risk, the worker.
Now, that is not to say that I am against anyone making an honest buck, or millions of honest bucks. I’m not. But there is also a human factor involved and that is exactly what brought about fair labor laws.
There are a lot of business examples where the ownership not only made a profit for themselves, often great profit, as a return on their investment, but realized that its employees were a valuable commodity and helped create that success. Happy employees do a better job and create a better product. A little respect goes a long way.
I remember when the auto industry was in D.C. begging for bailouts. But Ford turned it down. The CEO of Ford put on the front page of its website that it was refusing taxpayer funds because it had a stong believe in not only its product, but its employees, and together Ford would sink or swim. And swim it has. Wednesday, Yahoo! Finance reported that Ford is the 7th most trusted brand in the U.S. and that its sales are exceeding GM/Chrysler.
You and I have more on which to agree than disagree.
Let’s talk about ethics. Like it or not, business ethics are not absolute, they change from age to age. For example, 300 years ago children worked in factories in conditions we now consider deplorable. It was ethical to employ children then, given the extreme hardship and poverty of the times. Today, children do not have to work to survive. It would be unethical to hire them to work as they did 300 years ago. That said, I am certainly not contending that, within the context of the times, every action of the so-called Robber Barons was ethical.
Were the actions of Bain Capital unethical? All I can say with certainty is that cutting wages and dismissing employees in and of itself is not evidence of unethical conduct.
With regard to the “human factor” you mention, any successful businessman knows this, especially within the context of a free labor market. The days of running a ship like Captain Bligh are long gone. A business which respects and listens to its employees is at a tremendous competitive advantage in the marketplace, as you point out with the Ford example. In such an environment it’s easy to acquire and retain high quality employees.
The respect must be mutual, however. There is a limit to what any business can provide to employees in the way of salary, working conditions and benefits. There is a point where an investment in capital equipment is more profitable than an investment in employees. This is not heartless or inhuman, it is merely reality and simple economics. I invite all my employees to do what is in their best interests. If they find a better job, I encourage them to take it. They have no compunction about “firing” me. Their first loyalty is to themselves and their families. Mine is to me, my family and my business. My employees treat me as a means to their ends; I do the same with respect to them.
The primary responsibility of successful business owners is to make a profit. There is simply no other rational way to operate. This is not to say that making the highest possible profit is most ethical. It is to simply acknowledge that without profits, the company is no good to anyone. Everyone concerned with the business is better off when the company is profitable, and everyone in the company should know this. As it happens, in my business I tend to hire people when profits are greatest and dismiss people when it is unavoidable and when losses so dictate. My employees understand why this must be so.
Any business owner who doesn’t realize that his employees are his most valuable asset is a fool and, probably, a failure. This is why it is foolish to believe that businesses become extremely profitable by disabusing their most valuable asset. Still, any business owner will tell you that managing that asset is the trickiest part of staying profitable.
Just as some business owners are fools and disabuse their employees, so some employees are fools and disabuse their employers. They may be the proverbial bad apple or a group of employees who band together to demand more than the employer can profitably provide.
The bottom line is the free market is just that: free. Both employers and employees are free to voluntarily strike deals that are mutually advantageous. However, this is not so true in our not-so-free market of today. Oftentimes well-meant government laws and regulations tie the hands of employers and eliminate choices available to employees.
The market today is a complex mix of many, many different individuals, both employers and employees alike, all motivated by different goals and ethical standards, all controlled by a plethora of government rules and regs. Particular situations are not black and white. It’s impossible to generalize that all employers or employees in a particular industry are of a particular ethical persuasion.
Did Bain Capital act unethically? Did Romney? Who can say? Can you? On the basis of what facts and information? If you know the salient particulars of that situation, I’ll be happy to consider them.
I think Powerline also is worth reading: http://www.powerlineblog.com/archives/2012/01/what-really-happened-in-gaffney.php
Investopedia on Leveraged Buyouts
Definition: The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.
Me: So, Bain didn’t risk that much of their own capital. They risked “other peoples’ money”.
Investopedia explains (expanded definition):
In an LBO, there is usually a ratio of 90% debt to 10% equity. Because of this high debt/equity ratio, the bonds usually are not investment grade and are referred to as junk bonds. Leveraged buyouts have had a notorious history, especially in the 1980s when several prominent buyouts led to the eventual bankruptcy of the acquired companies. This was mainly due to the fact that the leverage ratio was nearly 100% and the interest payments were so large that the company’s operating cash flows were unable to meet the obligation.
Me again: Stop me if any of that sounds familiar.
Yup. ZeroHedge broke LBOs down pretty concisely:
That is an excellent link. Thanks for posting it.
For crying out loud! Bain is worse than Goldman Sachs? Everyone hates Goldman Sachs! Well everyone except the Beltway Establishment that is.
I remember Romney’s add getting some negative rating, I don’t remember it was WasPo’s 4 Pinnachios or “Pants-on-Fire” from Poltifact…But then again, Poli-wonk am I, so I make a bad data source.
Listen, Newt (via the superPAC) tried to open a hole, it failed. Kudos to Romney’s team I suppose for mitigating it so well. If Romney makes it to the finish line, hopefully he can continue to use these tactics (which are very familiar….) to defuse the Obama tactics (oh, right that’s why their familiar). If they break down, well then someone else will rise up.
Meanwhile, I don’t think this is what killed Newt’s campaign. Given the random surging of “Not-Romney’s” I’m not sure the Iowa ads killed it either. I like Newt, but sometime’s he’s not personable, and he’s a bit too intelligent for the way the electorate currently votes. (Mostly on style) He’d probably also be more useful to the party (and country) as a whole somewhere where his intelligence can be put to work (cabinet, advisor, etc.)
fortune.CNN.com will prop Romney up until the general election. Then we can expect commercials like:
Little Girl: “Mommy, is it because I was bad? Is that why Santa didn’t come this year?”
Mother: “No, honey. It’s because of something called ‘creative destruction.’ Daddy had to lose his job because otherwise there wouldn’t have been enough money to pay Mitt Romney his million dollar bonus for figuring out how many people to fire at daddy’s company.”
Narrator Mitt Romney likes to fire people because he thinks that’s how capitalism works.
Followed by an ad depicting a Romney-look-alike in a dark business suit pushing a wheelchair containing what appears to be small businesses off a cliff.
Narrator: “Mitt Romney threw small businesses off a cliff. What will he do to the rest of us?”
As I have warned, many times, Bain is going to be Romney’s Waterloo.
Greg Sargent of the Washington Post’s Plum Line, is now reporting that the Obama campaign is going after Romney/Bain. I warned this would happen and was told “so what?”
“Romney closed over a thousand plants, stores and offices, and cut employee wages, benefits and pensions. He laid off American workers and outsourced their jobs to other countries. And he and his partners made hundreds of millions of dollar while taking companies into bankruptcy.
Althoug some of the businesses in which he took a state undoubtedly added jobs, neither Romney’s campaign nor any independent factg checker has supported his claim of producing a net increase of 100,000 American jobs — or even anything close to it.
That is Romney’s record. His overwroght response to questions about it has been to insist that any criticism of his business record is an assault on “free enterprise” itself.
But this is just an attempt to eveade legitimate scrutiny of the record on which he says he is running. “Free enterprise” isn’t running for President, Mitt Romney is.
Our ecomonic crisis and endemic income inequality were caused in large part by a few who put profits over people, Between now and November the American people will decide whether to respond to this crisis by electing a corporate raider who profited from — and promises to restore — the conditions that caused it, or re-electing a President fighting to level the playing field for American businesses, restore fairness for consumers and help the middle class reclaim a sense of economic security that will benefit the entire economy. That’s what’s on trial, not “free enterprise.”
David Axelrod is getting ready to take the gloves off and put Mitt Romney on the mat. As the Professor has pointed out, this may be Romney’s Jeremiah Wright, Jr. moment, but Romney is not well versed in Chicago thug politics, thinking he can run as Mr. Nice Guy (unless he is attacking other GOP candidates with flyers saying that Rick Perry will end Social Security and leave seniors starving).
Remember, Romney recently said that he did nothing different at Bain than Obama did with GM. Take that argument off the table, Romney just killed it along with Obamacare and global warming.
It’s no surprise that an anticapitalist politician like Obama would use this attack. What’s surprising is that a so-called conservative would show him the way.
Oh, sure. The Obama camp knew nothing of Bain Capital until GOP candidates brought it up. Naivete, thy name is Conrad.
Yes, of course it took Newt Gingrich to teach Barack Obama how to be a socialist. That makes perfect sense.
High time, too. Obama’s presidency is almost over.
It certainly is nice to have CNN and WaPo killing this line of attack on Romney. There must be a few frantic staffers over at the DNC wonder what to do now.
They’re not panicking. They know the dinosaur media establishment will turn its protection of Romney off like a light switch right after the Republican National Convention.
Just like they did with John McCain.
I realize that this comment does not strictly stick to the point of the post, but come on; don’t you all think this endless debate about Bain is ludicrous?
Bain was in the business of buying companies in *trouble*. By definition, if a business in unprofitable and “in trouble” there are problems. If someone invests in such a company for the purposes of trying to salvage that business, changes are going to be necessary, no? Since labor is the highest cost of virtually any business, it stands to reason that an investment group buying troubled companies is probably going to layoff a large number of people over the course of its history.
If the effort to save the business fails, the investors will sell it “for scrap” to salvage as much of their investment as possible. This is a highly speculative enterprise that requires risk, and yet, does serve a valuable economic purpose. So where exactly is the beef?
If you are a socialist, you think the government and private investors are morally obligated to “prop-up” dismal commercial enterprises. If you are a capitalist, no such obligation exists – the operative word is profit, and profit drives change, innovation, and sometimes yes, dissolution of weak players.
The endless drone about “Bain” is akin (IMHO) to calling an oncologist a “misogynist mutilator” for removing cancerous breasts from sick women.
Get a grip.
Mr. Galt, I suggest you research the tactics used in corporate raiding. Not all companies are facing bankruptcy, but may have just have seen a decline in assets due to a temporary stock price drop.
Even Rand, who I assume you are a fan of, did not support corporate raiding.
I like how you told someone else to do more research, and then claimed that a company’s stock price affects its assets. Classic.
Please. I don’t think anybody is disputing the principle that private equity firms like Bain Capital have a place and purpose in a free market—they obviously do. But acknowledging that principle doesn’t exempt the facts of Bain Capital’s record from scrutiny, nor does it make Bain Capital beyond reproach re: the ethicality of its individual business practices in every situation it was involved in—particularly when it was under Romney’s tenure, considering this man is running for POTUS.
The point is to vet the whole process now, during the early primary season, so that if Republicans come to the conclusion that Willard will not be able to withstand the scrutiny that Axelrod will unleash, it’s not too late to nominate someone else.
It would be negligent for the other candidates NOT to make Bain an issue. Frankly, it should have been an issue from day one.
I makes no sense for anyone who wants a Republican in the White House to be opposed to debating the baggage Bain brings to Willard now rather than letting Axelrod define the issue after Willards’s the nominee.
Sorry, that dog won’t hunt. Newt isn’t just presenting this as an attack others will make, for which Mitt must be prepared to answer. Newt himself is making this attack, thus saying, in effect, that businesses owe a duty to “the people” to avoid actions that will result in layoffs. We can debate the merits of this all day, but Newt can’t hide behind the skirt of liberals and pretend that he is only bringing this up for purposes of seeing how Mitt will respond to a line of attack Mitt can expect from OTHER people.
Who slung first mud? Mitt Romney: http://babalublog.com/2012/01/who-slung-first-mud/
I’m still blown away at the brazen hypocrisy, that nobody went after Romney when he stated that Newt should give back the money his private consulting firm earned from Freddie Mac. How come Romney’s comment was never deemed “anti-capitalist rhetoric”?
Maybe because Freddie Mac is a quasi-governmental entity, run by Democrats largely for the benefit of liberal interst groups, to which Newt helped give bipartisan respectability by lending his name as a prominent Republican in exchange for a lucrative payoff completely out of proportion to the fair value of his services “as an historian”?
Which does not excuse Romney’s choices in life.
It doesn’t fit into the narrative that Newt is a crazy sleazy guy and that Mitt is an upright model of a philanthropic capitalist.
Nobody is claiming Mitt was acting out of philanthropy. The point is, private businesses AREN’T charities. They are out to make money. That’s what free enterprise is about. If you want to saddle private entities with the affirmative duty of protecting jobs or supporting the “communities” in which they operate, then get ready for a world in which the government or the courts get to decide when a business gets to relocate, reduce payroll, automate processes, change suppliers, or make any other decisions that make affect somebody’s livelihood. It’ll be like the NLRB-Boeing episode, but on steroids. That’s what Obama and OWS would like, and I’m sure they’re grateful to Newt for demonstrating the necessity of such “reform.”
A lot of realtors, banks, appraisers and mortgage brokers made a lot of money during the housing bubble which was created by conditions set by the government. Likewise Bain makes money exploiting loopholes and gray areas in the crooked tax and regulatory framework. As learnliberty.org states being pro capitalist is not the same as being pro business. Business relish the idea of having regulations that protect them and benefit them to the detriment of true capitalism. Don’t conflate the two.
Oh! He played the Carter-Clinton card!
You forgot the part where they interviewed the workers of a factory that was closed after it was sold by Bain, and mislead the workers as to what the documentary was about.
Given that the media has been shilling for Romney big time, I do not assume they will give me a fair and impartial grading of attacks made against Romney.
The media is propping up Romney just like they propped up McCain in 2008. They know Romney is Obama’s ideal candidate, so they prop him up until Romney gets the nomination, then they will rip him apart.
Do NOT be fooled into thinking this takes Bain off the table for the general election.
My question is why is the conservative leaning media so in the tank for Romney. It seems there is some personal hatred of Gingrich. The Republican Establishment is now comfortable with Romney, and are “gang tackling” any effort by Gingrich.
What needs to come out is why they hate Newt. Why are they so willing to portray Newt’s Bain questions as an attack on free enterprise, which is just pushing the Romney dodge? Mitt fans claim these companies would have failed without him, yet the WSJ article says “the rate at which the firms Bain invested in ran into trouble appears to be higher than experienced by some rival buyout firms during the era.” And note this was in the greatest bull (bubble) market of modern times, not in a debt burdened slowdown.
http://online.wsj.com/article/SB10001424052970204331304577140850713493694.html?KEYWORDS=romney+bain
Newt makes another good point about moderates … they have trouble defending their position. Romney has recently been on the other side of many of his supposed conservative positions. His defense of Bain is that it is like what Obama did to GM, only it was private.
On that note … Romney put some private money into a venture, leveraged up their debt, and extracted big fees, then got out while the getting was good, leaving others on the hook for the debt. Mitt claims credit for all jobs created by those companies, with no evidence whether Bain actually helped or hurt their job creation. And are those US jobs?
Obama put public money into GM, distributed excessive benefits for union cronies (screwing some bondholders), and left the taxpayer on the hook. And Obama takes credit for jobs saved or created.
Too bad Republican establishment media has already ordained Mitt, and labeled Newt as an angry loser that won’t play along and submit to their wishes. What is the real root of their hatred of Newt?
thank you for an objective column. While there may be some argument on how much is true, the fact remains that Romney was Richard Gere’s character as depicted in Pretty Woman. They bought companies, broke them up and sold them for parts because they were worth more. They didn’t build anything or make anything besides money. While it may be legal and many other companies do the same thing, it’s unethical and shows a lack or social responsibility. I wonder how many would think this would be ok if they were the ones who lost a job or a loved one? Not too many I bet. Of course many people are giving the OK to Romney on this because they are benefiting from these type of hostile/corporate raiding tactics. 900% profits is plain and simple greed and greed is one of the deadly sins. If you think it’s ok that Romney and Bain did this then you are part of the problem.
I haven’t seen the ad, but apparently Gingrich is comparing Romney to John Kerry because they both speak French! The analyst, Jonathan Tobin, says Newt is proficient in French as well. Seems very silly.
http://www.commentarymagazine.com/2012/01/13/gingrich-romney-frenc/#more-780595
Silly AND hypocritical. More the latter, actually, but no surprise there.
Let’s not forget that Newt was on the board of LBO specialists Forstmann, Little. I look forward to the 24/7 vigil demanding a complete accounting of all the deals Forstmann did that saddled performing companies with suffocating debt.
Gingrich is not basing his campaing on his business acumen while at Forstman. Romney’s sole claim to qualifications for POTUS has been based on his time at Bain and his business acumen there. Apples and oranges.
But what you are saying it that the main Romney talking point, his success at Bain, is now off limits when it comes to scrutiny? If Romney didn’t want somone to start looking into his actions at Bain, he should have run on his record as governor of Massachusetts.
Oh, wait, he couldn’t do that either, because his record was, from a conservative point of view, dismal.
Lame attempt to make Gingrich look ridiculous. The point of that ad was to paint Mitt as yet another Massachusetts liberal, like Dukakis and Kerry.
The whole thing about speaking French was just another similarity between Romney and Kerry.
It is just like Romney supporters to focus in on the weakest part, as if it was representative of the whole. Reading all this stuff about the ad, I had figured the French speaking thing was all the ad was about. In fact, it is just an after thought, one last needle into Romney.
But if it helps Romney, well, I guess that makes it OK.
I took the “Oh yeah, and he speaks French” quip as just a joke. At least it got a laugh out of me when I heard it.
Dynamism, I saw the ad too. As you say, it’s just at the end about speaking French and I took it as a joke as you did. I laughed out loud.
Seems to me the joke struck some nerves. Why would that be?
Astroman, I agree. The point of the ad is the similarity between Kerry and Romney as politicians. The French thing is thrown in. I studied French, I love French. J’adore française. That has nothing to do with it. Honestly, if that’s the criticism, maybe Newt is doing better than they want us to think.
Over at Matt Lewis’s column at the Daily Caller, I left the following comment, which I liked and I hope you will forgive me for reprising it here:
Mais oui! Dole, H.W. Bush and McCain all speak French, too: “J’abandonne” ; “Je concède à l’élection.”
With all due respect to the glorious and beautiful French language (which it is) and all the speakers of the glorious and beautiful French language — this is not about the wonderful French language, its subtleties and romance!! — This is about Romney’s actual RECORD in office!!
John Kerry ran as a far-left liberal, and the meaning of this ad from Newt is that Romney is more like Kerry than unlike him.
This ad recounts truthfully Romney’s record.
Romney raised taxes, saddled gun owners with, I believe, a new $100 per gun fee, instituted Romneycare and has refused to say it was a mistake, left Massachusetts in worse financial shape than he found it, and had to not run for re-election because he had such bad numbers that he knew he wouldn’t get re-elected.
Romney himself told the people of Massachusetts to vote for him because he’s “progressive.” I saw the video and Romney says that exact word: that he’s progressive.
To find out what Newt is all about, watch “2012: VICTORY OR DEATH,” from 2009 on YouTube. Newt talks about George Washington and the crossing of the Delaware, and the dire straits Americans were in, and the courage and sacrifice of those who took those steps so that we might live in FREEDOM.
We want to restore our country, that we love, to its constitutional basis.
Find out what this means. If you are an American, you are engaged in self-government. Find out what that means.
I think the People of South Carolina know EXACTLY what Newt means.
(Update: there is now a Facebook page NEWT GINGRICH SPEECHES, with 17 of Newt’s speeches there with links, CONVENIENT AND EASY if you are interested.)
If you go the NEWT GINGRICH SPEECHES on Facebook, SCROLL DOWN to the bottom of the page for the beginning of the list of links to speeches.
“Newt talks about George Washington and the crossing of the Delaware, and the dire straits Americans were in, and the courage and sacrifice of those who took those steps so that we might live in FREEDOM..”
The same guy who talks about individual mandate…yet when cornered by ABC’s Jake Taper about its constitutionality, played semantics on MSM so as not to confirm misgivings that he’s a conservative authoritarian….but still manage to round off the interview by suggesting the government and the IRS still has the moral prerogative to monitor your insurance status. (?)
Preemptively -> “Well at least he didn’t sign a state version like Mitt did” …just so I don’t fall under Legal Insurrection’s current proscription that if you’re criticizing Newt, it must be because you’re a unwilling-to-vet Romney supporter.
Lest we forget, Newt wasn’t the only conservative supporting medical insurance mandates. It was quite the popular idea at one point because of its sense of responsibility. (I’m not defending it; just pointing it out.)
Midwest Rhino
“Too bad Republican establishment media has already ordained Mitt, and labeled Newt as an angry loser that won’t play along and submit to their wishes. What is the real root of their hatred of Newt?”
You just answered your own question. They used these same tactics on Sarah. Anyone not under their control will have their reputation, record and ability to handle future issues destroyed. The republican president will, in effect, be head of the republican party and that will give him vast abilities to change the elite members and/or party structure and the platform somewhat. It is understandable why they don’t like people like Newt and Sarah. Their very livlihood is at risk if the president is not a yes man and owes loyalty to the party instead of the country. We have seen this false loyalty in the dim party the last few years. The republican party is no different in this matter. A republican president will pretty much have unlimited power over the party and its members.
Nailed it!
The Empire Strikes Back.
Casting?