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Earlier this year, when Texas Gov. Rick Perry (R) was still a presidential candidate, he took aim at Mitt Romney's controversial private-sector background. Perry told voters, "There is something inherently wrong when getting rich off failure and sticking it to someone else is how you do your business."
The notion of "getting rich off failure" is certainly a tough one to grasp. I suspect most Americans believe business success is dependent on the opposite -- one invests in a venture, and if the enterprise thrives, the investor benefits. Capitalizing off failure, though, is harder to understand.
But for Romney, the key to appreciating his private-sector accomplishments is acknowledging his habit of making enormous sums of money from failure. The New York Times had this report over the weekend.
The private equity firm, co-founded and run by Mitt Romney, held a majority stake in more than 40 United States-based companies from its inception in 1984 to early 1999.... Of those companies, at least seven eventually filed for bankruptcy while Bain remained involved, or shortly afterward, according to a review by The New York Times. In some instances, hundreds of employees lost their jobs. In most of those cases, however, records and interviews suggest that Bain and its executives still found a way to make money. [...]
He has fended off attacks about job losses at companies Bain owned, saying, "Sometimes investments don't work and you're not successful." But an examination of what happened when companies Bain controlled wound up in bankruptcy highlights just how different Bain and other private equity firms are from typical denizens of the real economy, from mom-and-pop stores to bootstrapping entrepreneurial ventures.
Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain's funds.
In several instances, even when Romney's firm drove companies into bankruptcy, and even when Bain's own investors lost, Romney made millions, thanks to fees he charged the companies as they spiraled towards collapse. Taking risks may be a key element to successful capitalism, but this Republican created a system in which risk taking wasn't necessary.
As far as the election is concerned, Romney is telling voters this background helps prove his qualifications for the presidency. I still haven't the foggiest idea why.
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Because he's a rich White man, Benen. That's all Willard believes is necessary.
And those on the right, who in effect worship Mammon, will support Mittsywittsy.
Why would two men pose for a picture in this fashion, they look like swindlers or baracudas advertising some devious scheme or trying to sell a product in which anyone in their right mind would steer clear away from. Every picture tells a story, and this one is no different. They are posing as if to say, we look scandalous, hire us.
They are swindlers. And please, everyone, look up the pictures of Ted Bundy. Romney's twin...
rikyrah, I agree with you. He is not President Obama and that is enough for a lot of people.
For anyone still unsure of how Bain did business, just go watch Goodfellas.
It is called "busting out a joint", and Henry Hill narrates chapter and verse.
http://www.youtube.com/watch?v=reiq4lEvnEw
Layla you got me on my knees, I'm begging you darling please, oh ease my weary mind.
Mr Benen, having only 7 companies fail out of 40 is a phenomenal record. Most businesses fail. That alone is why Romney should get elected.
I have little doubt you're a very smart person, Mr. Benen, but the nitty-gritty world of making/buying/selling seems to be foreign to you. The insularity of the liberal punditocracy is separating you from understanding how the real world works. I suggest you open a lemonade stand to get a glimpse of how commerce actually happens.
I think the point is that Mr. Romney made tons of money from the failure of those 7 companies with basically no risk. How does that qualify him to be president?
This: http://maddowblog.msnbc.msn.com/_news/2012/06/25/12397713-it-was-difficult-for-the-firm-to-ever-really-lose?threadId=3450305&commentId=67372404#c67372404
goes here.
You're right that business failures happen. And hopeful the business will shut down, before the loses are devastating to owners and shareholders. I think you missed the point found in the last paragraph of this piece -
"Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain's funds."
In other words - Bain officers/executives put money in their pockets off the failures of seven businesses.
The lemonade stand analogy you're implying in this instance would be like my mom taking all the profits, claiming value for her time spent encouraging the enterprise, and leaving me with melting ice cubes and covering costs with my babysitting money ....... Should that be real commerce? I would hope not.
Really? What's the failure rate for the S&P 500? I seriously doubt that one in six fail over a 20-year period.
Bernie Madoff understood the way business and the economy work's.He ran basically the same scam as Romney.No matter what the market did he profited.Does that give him the cred's to be POTUS.
To all, The companies Bain bought, were not sold because they were making too much money. Is everyone assuming that the seven companies that went under would have remained open without Bain? Bad assumption. A lot of those companies extended employment by years only because of Bain.
Meanwhile Bain bought companies and borrowed money against them. They got to keep the money after expenses. The banks that lent money to the companies got stiffed. Am I supposed to feel bad for banks? I don't think so.
DamSkippy, because he made a profit. Unlike Obama who makes losses. Moreover he created jobs and saved companies, unlike Obama.
knitter, welcome to the real world.
DC, that is the definition of cherry picking.
Disgusted, I see you're still relying on personal insults. Tsk.
No, genius. Most startups fail. Private equity isn't venture capital. Private equity buys publicly traded companies that are going concerns. Private equity rarely touches companies that are at risk of failure. Instead, they look for a midcap that's doing okay, if not great, and has some innate potential to throw off cash that isn't being tapped.
Sometimes, the cash generating potential is just that--the company has a lot of cash that can be
looteddistributed to the PE firm and its investors before taking it public again. All too often, that potential is simply a lack of debt and the cash is generated for the PE firm and its investors by leveraging the hell out of the company and paying the borrowed money to the PE firm and its investors as "management fees" or dividends or used for a stock buyback. Sometimes, the "potential" is assets that can be sold off. In the later, more degenerate, stages, they settled for just gussying up the balance sheet by slashing R&D expenditures, firing the line employees and shipping the jobs to China, and otherwise trading long term stability for a short term cash position that makes the company look good to uncritical investors (or "greater fool" speculators) when they take it public again.Venture capital is a symbiote. Private equity is a parasite with better P.R.
Certainly, there have been companies that have come out of PE and done well. There have even been companies that came out of PE and did better than they were doing before PE. But if there's ever been a company that came out of PE better than it would have been had the PE firm never gotten its fangs into the company's jugular, I've never heard of it. In every case I've ever heard of, the amount of cash a PE firm sucks out of an acquired company exceeded the reasonable value the PE people added to the company with their supposedly brilliant frikking managment skills by an order of magnitude.
No. Most businesses fail. Not just startups.
http://blog.globalbx.com/2008/10/06/small-business-statistics-and-failure-rates/
"The notion of "getting rich off failure" is certainly a tough one to grasp. I suspect most Americans believe business success is dependent on the opposite -- one invests in a venture, and if the enterprise thrives, the investor benefits. Capitalizing off failure, though, is harder to understand."
After Wall Street destroyed the world and had tax payers pay them for doing it while suffered nothing for their criminal activities, I doubt most people paying attention "believe business success is dependent on the opposite -- one ..."
Most people paying attention understand conservative ideas has, over the last 30+ years, rigged the game.
Here it is, simply put.
http://doonesbury.slate.com/strip/archive/2012/6/24
Well, I see the confused basketball fan is back with more of his lameassery. This time on the rugged capitalist and their heroic efforts in "making/buying/selling." I'm sure he's got more than offering no more than a vapid and fatuous insult like "The insularity of the liberal punditocracy is separating you from understanding how the real world works. I suggest you open a lemonade stand to get a glimpse of how commerce actually happens." He'll sure be telling what more he's got when he explains how Mitt Romney's Bain was a virtuous citizen relying on the virtuous Invisible Hand in its virtuous pursuit of profits no matter the means.
For a look at the confused basketball fan's efficacious work at showing the rest of us unwashed libtards how he takes apart the progressive worldview, just take a look at his heroic efforts of last Friday and Saturday when he set out to tear to shreds Steve's 23rd installment of Mitt's Mendacity. Start here and read till the end of that thread:
http://maddowblog.msnbc.msn.com/_news/2012/06/22/12359704-chronicling-mitts-mendacity-vol-xxiii?threadId=3448547&commentId=67317603#c67310881
As you'll see, we should all be running for the hills because in his quest to illustrate 30 of 30 of Mitt's bullshhits as truths, he showed that 5(!!!) of them were really truths. ...Oh wait, I miscounted, he really only got that 3 of them were truths. ...., Now what the heck is wrong with me?; I miscounted again. He was able to show only one statement from the Lyin' Sack of Mitt was true.
Oh crap!! I'm really messing up today. Our confused basketball fan, Shooter, couldn't show Steve was wrong on a single one of the 30 lies of Mendacious Mitt.
Time well spent there, Shooter. And now you want people to pay attention to your fatuous little sarcasm aimed at Steve on "making/buying/selling?"
Gettin' it done there, fella!
"Romney is telling voters this background helps prove his qualifications for the presidency. I still haven't the foggiest idea why."
Don't feel too badly, Mittens doesn't have the "foggiest idea" either! Maybe it's his quest to accumulate more power, maybe it's because he feels that it's "his turn". Who knows, what I do know is that anyone with a reasonable amount of intelligence needs to vote for President Obama!
I get it now! Elect Mitt so he can finish us off then quickly sell us to China for a profit.
"Capitalism" once meant that businesses were operated by people who owned them - who had, as the Republicans like to put it, "skin in the game."
No longer. The people with skin in the game are pension funds, workers with 401(k) accounts, people with shares in Bain funds, etc. And they have, for all practical purposes, no say in how the companies are run. I regret to say, for instance, that it is almost certain that some of my money is being used to lobby against Wall Street reform. I not only have no practical say in the matter, but (thanks to Congress acting as the agent of those same Wall Street firms) no way to find out what my retirement funds are doing against my own interests.
Perhaps bankrupting the US and then moving to Switzerland.
Who needs crime when crime like this is legal? Yeah, Bain screwed everyone but their own executives royally. They even screwed Bain's own investors. Workers, lenders, investors: Bain sucked the cash right out of them and left all of them empty handed.
Time for shareholder activism (though the Supreme Court has curtailed this possibility).
What else?
Of course Romney's business experience is crucial to what he hopes to accomplish as president - when you are intending to asset-strip a country as large and as wealthy as the US for the benefit of you and you rich buddies, it really helps to have lots of experience looting small to medium-sized companies in order to complete the job efficiently in only four years.