Who is spengler?
Well, at least the goofy defenders of “capitalism” are calling it private equity now instead of venture capital. That’s progress, I suppose.
From what I’ve read, the facts about Bain are not as clear as some would have us believe. I am still trying to find out exactly what happened. I have, however, seen a video and some articles which do not put Bain in a positive light. If these articles are true, Mitt Romney even if the nominee would have a hard time being elected. They will hang the Bain problem around his neck, and he will sink.
From what I’ve read, the facts about Bain are not as clear as some would have us believe. I am still trying to find out exactly what happened. I have, however, seen a video and some articles which do not put Bain in a positive light. If these articles are true, Mitt Romney even if the nominee would have a hard time being elected. They will hang the Bain problem around his neck, and he will sink.
Romney's private equity firm, Bain Capital, bought companies and often increased short-term earnings so those businesses could then borrow enormous amounts of money. That borrowed money was used to pay Bain dividends.Then those businesses needed to maintain that high level of earnings to pay their debts.
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* Bain in 1988 put $5 million down to buy Stage Stores, and in the mid-'90s took it public, collecting $100 million from stock offerings. Stage filed for bankruptcy in 2000.
* Bain in 1992 bought American Pad & Paper (AMPAD), investing $5 million, and collected $100 million from dividends. The business filed for bankruptcy in 2000.
* Bain in 1993 invested $60 million when buying GS Industries, and received $65 million from dividends. GS filed for bankruptcy in 2001.
* Bain in 1997 invested $46 million when buying Details, and made $93 million from stock offerings. The company filed for bankruptcy in 2003.
Romney's Bain invested 22 percent of the money it raised from 1987-95 in these five businesses, making a $578 million profit.
“The way the company was rescued was with a federal bailout of $10 million,” the ad says. “The rest of us had to absorb the loss … Romney? He and others made $4 million in this deal. … Mitt Romney: Maybe he’s just against government when it helps working men and women.”
The facts of the Bain & Co. turnaround are a little more complicated, but a Boston Globe report from 1994 confirms that Bain saw several million dollars in loans forgiven by the FDIC, which had taken over Bain’s failed creditor, the Bank of New England.
Romney aides pushed back strongly on the Democratic charge that Bain & Co. received anything like a TARP-style “bailout.” While the FDIC is a government agency, it is funded by deposit insurance payments rather than taxes. The agency agreed to reduce Bain & Co.’s liability to the Bank of New England, but didn’t pump new funds into the flagging firm. Other Bain creditors also took a haircut in order to avert the company’s collapse.**************
He has his point. Leveraged buyout were developed in part because the traditional means of getting rid of complacent management - proxy fights - were almost impossible to win.