Friday, January 13, 2012

What do Bain Capital and the Reverend Jeremiah Wright have in common? 

Beats me, but Andrew Sullivan sees a connection. So does Tom Maguire.


By Anonymous Anonymous, at Fri Jan 13, 10:28:00 AM:

Easy. Both phenomena rendered the candidates unelectable.

Obama managed overcome his challenge in large part due to a sycophantic media complex. But to give credit where credit is due, Obama met the challenge head-on, threw Wright under the bus (eventually), and said what he needed to say to placate the mushy middle of the American electorate.

Romney, on the other hand, appears not even to recognize that there is an issue with Bain. Click through to Sullivan's blog, click back about ten posts, and watch the Matt Lauer video clip with Romney. Mitt is completely unaware that there is an elephant standing in the room on this issue.

Americans are forgiving people. Romney could probably overcome the Bain issue by acknowledging that mistakes were made in managing some of their investments, that those mistakes cost some workers their jobs, and by expressing some sort of contrition and voicing an aspiration to use his presidency to improve the economy. His inability even to see the issue is astounding.

Romney is going to be an electoral disaster for Republicans. Critics of the Republican party have tagged the party as being interested only in preserving privileges for the wealthy 1%. By nominating Romney at this point in economic history the party seems to be doing everything it can to confirm that criticism.

--Anon Attorney  

By Anonymous Ignoramus, at Fri Jan 13, 10:29:00 AM:

The recent attacks over Bain Capital weren't close to what Obama & Co. will unleash. Gingrich waited too long to hit Mitt over Bain. When he did it came out of his own mouth, when he should only have used surrogates -- the way Mitt had others "shiv" Gingrich in Iowa. Also, Gingrich couldn't bring up the tax angle to "Bain Capital" the way that Obama & Co surely will.

Private equity is driven by exploiting the tax code. Carried interest, deductions for acquisition financing, and options for the target company managers. Few of these deals would get done "but for" these "little tax wrinkles". Taxes are for the little people.

Bain Capital is a hybrid private equity firm. Unlike some of their competitors who focus just on LBO-ing existing companies, Bain Capital has at times acted more like a venture capitalist by building whole new companies (e.g., Staples). They also do more to make operational improvements at their portfolio companies. I want to think that without the tax angles Bain Capital would still have found its niche and prospered. But that's all irrelevant.

"Bain Capital" is a perfect set-up for Obama & Co once we get to the general. It's a strong opening move that enables several other lines of attack, including attacks on Mitt personally. Mitt will come off looking like a cold, aloof, calculating "playa" with no soul, Mormon or otherwise. Mitt's a perfect foil for Obama -- you'll see a lot of "transference". MSM will love playing along -- they can pretend they're doing real journalism.

If you take away Mitt's success in business, what does he have to run on? Answer: Nothing. A generic Republican can hit Obama in lots of ways that Mitt can't.

Mitt's the wrong guy at the wrong time. A nutless monkey should beat Obama in November. Mitt may not.

So will he or won't he release his tax returns? Mitt won't do it now. Which courts disaster in September. Developing ....  

By Anonymous Ignoramus, at Fri Jan 13, 10:37:00 AM:

"His inability even to see the issue is astounding."

Agreed. And I used to think Obama was a coddled "bubble boy".

Mitt has a real blind spot over the need to be "perfect", even in retrospect. It's one of the reasons he ties himself into knots. Developing ...  

By Anonymous Anonymous, at Fri Jan 13, 10:58:00 AM:

BTW, TH, it pains me to say this but I think Sullivan is spot-on. I don't think Romney can address this issue "in the weeds" without making it worse. He has to recant and disavow the PE industry, which he can't do.

Click through and read the pathetic rejoinder by Dan Primack at Fortune magazine. Does anyone seriously think that the thesis of the movie can be countered by pointing out that the factory worker from UniMac whose life was shattered when Bain capital bought UniMac doesn't have the timeline or the parties precisely correct??? WFT??

You have a blind spot a mile wide on the questionable ethics of modern finance, TH. I suspect you have been in the profession too long and are steeped in the professional culture. Not a criticism, just an observation.

And these are all just flesh wounds. The long knives don't come out until this fall. David Axelrod will have the most fun job in the country this fall.

-Anon Attorney  

By Blogger Assistant Village Idiot, at Fri Jan 13, 10:29:00 PM:

A lot of this is attempt at self-fulfilling prophecy. Boy, that Romney doesn't get it that people really care means "I really care and I think others should, and I'm going to keep pounding that drum. It's a killer issue, I tell ya. A killer."

Well, it might turn out to be. But it doesn't have to be, and I think it is either blinkered or dishonest to say that something is true because you want to be, and hope to make it true by saying it.

And again - what the Democrats will make of this or any issue is not as relevant as people keep saying. If not this, then something else, and whether it is true or fair will not matter in the least. We're talking about Democrats, who conjured images of Bush 41 and Bob Dole as bogeymen, for pity's sake.  

By Anonymous Old Fan, at Fri Jan 13, 10:55:00 PM:

Igoramus and Anon Attorney?

Your kidding right?

Are these sources even Conservative?

Or are these voices coming from the left, as in the manner of Gingrich, Perry, Obama?

These voices absolutely appear to have no grasp of private equity, or even the most basic Free Market concepts.

Regardless, it is clear these sources are not sound, as they seem to be overtly blinded with a deeply misguided bias.

The excellence Mr. Romney provided via Bain is a sincere strength, especially in this dreadful economic climate created by the disaster in Washington today.

Did they actually suggest, Gingrich should have hit Romney from the left with an attack on his positive Private Sector accomplishment much earlier?

Don't they even realize, Andrew Sullivan is deeply misguided?

Newt Gingrich and Rick Perry are currently being rebuked by so many Conservatives for their anti-Capitalist nonsense. Their absurd populism is only encouraging many Conservatives to rally to defend Mr. Romney.

And the irony is, the Romney continues to do incredibly well:
"Gallup: Mitt Romney has widest lead to date in GOP race"  

By Anonymous Old Fan, at Sat Jan 14, 01:37:00 AM:

Backlash growing in response to the foolish leftist attacks on Bain-Romney by Gingrich, Perry, etc:
"Romney Fund-Raiser Is a Hit Thanks to Attacks"

This is just an example in Florida, Bain attacks are obviously backfiring, increasing Romney's fundraising, and encouraging many to rally to Romney's Candidacy.  

By Anonymous Earl's Court, at Sat Jan 14, 02:24:00 AM:

the choice between the Democrats and the Republicans  

By Anonymous Ignoramus, at Sat Jan 14, 02:42:00 PM:

Correction to my post above.

I gave Bain Capital too much credit for their venture capital investments. While they started out having more in the mix (e.g. Staples) it's a small fraction of what they've done historically.

"Venture capital" means investing in risky growth. There's usually more than one investment firm involved in backing such a company.

"LBO-ing" -- which now subsumes most of what's now called "private equity" including at Bain Capital -- is buying an existing company to "optimize its cash flows". This typically means a combination of (A) cutting taxes by substituting tax-deductible debt for nearly all of the equity in the capital structure, (B) cutting costs, and/ or (C) increasing revenues. You always see A and B. You don't often see C -- Dunkin Donuts is a notable exception where money got put in to expand the national footprint.

Because of this, you don't often see "jobs" going up after a private equity deal closes. They most always go down in number and/or get moved somewhere cheaper.

This matters because Mitt has been selling himself as a guy who's created jobs when he really hasn't. His "100,000 net" is bogus. It's almost all from Staples without set-offs. While Mitt deserves credit for an assist for Staples and it's a great story, the founders should get nearly all the credit. Bain Capital wasn't even the first VC firm in.

Private equity success owes a lot to portfolio theory and optionality. By using lots of debt and making several investments, a few winners can more than cover your losers. The returns are assymetric, as PE firms can -- and do -- walk away from the losers. Also, PE firms have gotten very good at taking cash out as fast as they can through special dividends. Some of these companies later go broke. KB Toys is a good example. With different owners and a more conservative capital structure, many of these wouldn't have gone broke.

So when Mitt says "100,000 net" his nose grows. He will get called on it -- most likely in September because "true conservatives" are telling folks like me to shut up.

Obama & Co have been lying about "jobs" since they took office. Even "official unemployment" has been manipulated. Their lies make Mitt's look like the littlest fib. But they hardly get called on it -- and won't so long as the focus is on Mitt and Bain.

Singing: "See you in September ..."  

By Anonymous Old Fan, at Sun Jan 15, 01:28:00 AM:

Ignoramous actually wrote in the comments, Newt Gingrich should have been attacking the successful Private Enterprise of Mr. Romney via Bain much, much sooner...

The author wrote, "Gingrich waited too long to hit Mitt over Bain"

Guess what?

"Romney opens 21-point lead in South Carolina: Reuters/Ipsos poll"

The sampling suggests...
"Gingrich, a former speaker of the House of Representatives, has fallen far back after holding a strong lead in South Carolina in December. He was in fourth place at 12 percent in the Reuters/Ipsos poll."

Newt was even booed loudly by a large groups of Republicans attending Mr. Huckabee's SC gathering.

Imagine, a so-called Conservative voice believed this was a savvy attack, to go after a Candidate for his proven Executive leadership in the Private Sector, via an outstanding Private Equity Firm which continually turns around failure after failure?

Democratic Partisans believe the Free Market is the problem, genuine Conservatives believe in the empowering Private Sector.

Hard to believe anyone who is truly Conservative would become so lost with a dysfunctional personal bias against a fine Private Sector success like Mr. Romney, to suggest an attack against Free Market Enterprise is a positive political endeavor.

It is quite telling and rather embarrassing.

The reality is, the vast majority of Americans work in the Private Sector, and will have a very negative response to a failed Washington Politician named Obama trying to vilify successful Private Enterprise in the US Free Market.

We continue to see some really lackluster offerings, revealing some voices are simply not very sound.  

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