Posted on 01/14/2012 2:24:16 AM PST by Laissez-faire capitalist
... Under Romney's leadership Bain bought majority control of World Wide Grinding Systems in 1993. It put up $8 million of the $75 million purchase price and borrowed $125 million by issuing bonds. Bain immediately sent investors $36 million in dividend checks...
A steel business is capital-intensive and sensitive to economic conditions. That's why it needs to conserve money for the lean years. When the economy did go south, so did GS Technologies. GS Technologies went bankrupt in 2001, the plant closed and 750 workers lost their jobs.
Bain skipped out on a previous agreement to provide severance pay and health benefits coverage if that happened. The workers saw their pensions slashed by up to $400/month. But Bain walked away from the smoking ruins $12 million richer, not including $4.5 million in consulting fees.
And it had tapped government as well. The company had extracted $3 million in tax savings from Kansas City... The Federal Pension Benefits Guarantee Corp bailed out the company's underfunded pension plan to the tune of $44 million [taxpayer-funded]
...
(Excerpt) Read more at sunjournal.com ...
I haven't seen any criticisms of Bain's venture capital side -- all the criticisms (including the this one) are of the private equity side that did turn-arounds.
I hate Romney with a Passion, but the attacks on Bain are Bullsh*%.
In this case, they purchased a dying company in 1993 and 8 years later - the is EIGHT years later, it went bust and Bain profitted $12 million for that duration. By and large, this was a meager return.
Capitalism must have investors. Not all business ideas are produced by those with the means to position them for success financially. Attacks on Private Equity firms are an attack on capitalism - period! This is not the road we need to go down and we are playing right into the liberal’s hand.
Let me make this clear, I am not voting for Romney in the primaries!!!!!
They made around 4 million on an 8 million investment over a period 10 years (article is lying). Those 750 Iron Mill workers had jobs for that period. Without Bain’s infusion of cash the company would have gone bankrupt 10 years earlier.
Everyone one of these examples the left (and the anti-capitalists on Freerepublic) use involves a corrupt union that is unwilling to negotiate. The underfunded pension fund was underfunded by the union before the cash investment and unsustainable under the best of conditions. The only way for this company to have survived would have been to bust the union. However, Bain did provide high wages and benefits for these workers for ten years longer then they could hope for without their help. They weren’t competitive because of unreasonable union demands.
Mitt Romney no stranger to tax breaks, subsidiesPlease guys, stop defending Bain Capital as 'capitalist'.
Romney relied on corporate welfare
Romney: Corporate Welfare Bum
Selling out capitalism in the defense of Romney and Bain
Mitt Romney and 100,000 jobs: an untenable figure
Mitt Romney In 2003: Denounces Classical Republican View On Corporations
Romney likens work at Bain Capital to Obama’s auto industry bailout
Repeat After Me: Bain Capital Is Not A VC Firm
I’m beginning to think there are “capitalists” who would sell their own grandmother to China and blame unions.
It’s become like Obama blaming Bush.
You are absolutely right. Not one criticism I have heard has a thing to do with a venture capital action. It kind of frustrates me to hear presumably more knowledgable commentators on Fox repeatedly use the term “venture capital”.
Are they clueless or are they in the tank for Romney?
Pardon me, but capitalism is nothing more than producing more than you consume, saving the surplus until you chose to deploy it in a more productive manner to create more wealth that solves human needs. There is no fault in freedom, but rather in the apparatus of control that alleges to protect us from ourselves.
A free, capitalistic society allows for individuals to own all factors of production, whereas in other political systems they are owned by the state, or state-favored monopolies (the only kind). The US Constitution was supposed to protect our freedom to lead our own lives, but you can see how that is working out.
Now, where’s the fault again?
BTW, here is another one of her columns:
Froma Harrop: Newt Courting The Donald
The fault is, apparently you aren’t paying attention to the difference between a capitalist and a corporate welfare bum. Romney is a corporate welfare bum.
The WAPO is giving it 4 pinnochios...
Newt is asking to delete those items that are false, but this one isn’t.
Everything is perfectly legal...
Think for a minute what the dems are going to do? With the millions of federal workers out there, they will make them think a vote for Romney is vote to put them out of work.
Don’t get me wrong, we need a complete over haul of the gov’t and workers. Privatize the post office and transportation etc... but Romney is no doubt coming out the weaker on this.
I get your comment #14. There is a reason capitalism is not working. There is a view from the left and a view from the right, but both are looking at the same thing. Equal opportunity is essential, and that has been so greatly distorted in America, that it is all but gone. When I say ‘equal’ I am not saying ‘share the wealth’. Mitt/Bain will be the poster boy for unions and for socialism. It is unfortunate that we are so blind that we can't see that although Bain was legal, it was not something we should condone. Mitt will get destroyed over this in the general election and he will take down free enterprise with him. We can all see how the housing market and resulting of collapse of our economy was bad, and yet we can't see that once the scales are tipped in favor of some, all get screwed. The scales were tipped in favor of people who couldn't afford homes because of bad laws, and we all got screwed. With Bain the scales were tipped in favor of investors because of laws. The companies and employees were on the hook for all the debt, but the investors weren't. THAT is not capitalism.
Good post.
The only thing is, that what she writes is basically true. You now have Romney getting it from all side.
He started this in Iowa...I think it shows too, that Newt is a fighter...and can go toe to toe with the dirty tactics the Obama people will wage on him.
Absent essentially free money, compliments of artificially low interest rates set by the Federal Reserve, over the past twenty years, leveraged buyouts wouldn't even be in our vocabulary. The mechanisms of fiancial control of the USD create these issues out of thin air by presenting opportunity.
As I've said, I hate MR with a passion. However, I disagree with the attacks on Bain.
Venture capital and private equity firms serve a function that cleanses the market. Absent private equity, Alltel would have folded instead of being revamped and sold to Verizon, HCA would be no more, First data would be a thing of the past - the list goes on. The markets and consumers inevitably determine the winners and losers, but cash inflow from private equity is all that saves a lot of companies. If these companies were to go belly-up and send all of their employees to the curb, would private equity be blamed for the job losses for not stepping in and saving them? Some work out, some don't. Cerebus tried like hell to save Chrysler.
I like what I’m seeing. Newt’s Pac releases the documentary. Sure, it seems a bit over the top and one sided...it gets 4 pinnochios and Newt says that he puts a challenge to Romney to ask his Pac to remove what is untrue about him, and he will do the same...
Tonight in the debates Newt will be asked about the ad...and he can take the high road, while the ad still runs, and in fact will probably get more hits. Newt can offer to debate Romney one on one on it. Either way, Romney is going to look weak and stupid tonight.
Also, Perry will probably be the one who will be throwing most of the heat at Romney tonight.
BTW, anyone know how many hits the Bain ad has got?
Laissez-faire - also called individualism, the doctrine of unrestricted freedom in commerce, esp for private interests - thefreedictionary.com
BTW, unless the laws have changed recently, pension funds are segregated from the business & may not be raided by the business or its owners, old or new. Any pension bailout occurred because the poor management prior to the buyout failed to adequately fund & manage the pension. And w/o the buyout, these failing companies would have gone out of business, with all jobs lost, all investment lost, & a nearly worthless pension.
Gingrich, Perry, & the Left would have us believe that venture capitalists walk into a business & announce they are taking over. Actually, they are INVITED into the business by the current owners, who want to salvage the business & some of their investment before it goes bankrupt. Nine times out of 10, those owners are motivated by MONEY, not jobs or the already underfunded pension.
If Bain Capital made money in investing in & assisting these businesses to avoid total collapse, then I say, “Keep up the good work!”.
I suppose that if Romney was a surgeon specializing in amputations, we would be criticizing him & his employers for creating so many cripples.
Before you jump to accuse me of supporting Romney, let me assure you, I DETEST ROMNEY & WILL NEVER SUPPORT HIM FOR ANY PUBLIC OFFICE!!!
My support is for capitalism & the free market!
You think the two are mutually exclusive??? LOL!
A couple of points:
What percentage of Bain's take-over/turnaround targets involved the promise of government subsidies or taxpayer-guaranteed bailouts (like the above)? It seems to me that such deals are at least one or two removes from actual "free market capitalism."
Codevilla's celebrated (yes, even by Rush Limbaugh) article "America's Ruling Class -- And the Perils of Revolution" includes "big finance" in the coalition of "ruling class" entities. Well, there are reasons why so much of Wall Street (including Bain, I hear) money goes to Dems!
Actually, some book I read back in the 70s (whose name and author escape me now) pointed out the liberal tendencies of those "money managers" (I use this as an umbrella term, if inexact) who manage other people's money, as opposed to the conservatism of those businessmen who are dealing with their own money. Obviously, there are exceptions both ways, but still . . .
You don’t know much about the free-market if you think Bain Capital was an exemplar of free-enterprise. Jeez.
They were willing to sell their grandmother to China because she joined a union. The demise of millions of manufacturing jobs can be placed at the feet of the Unions.
How many steel mill jobs were lost during the period that Bain ran the company? Did you know that over 20,000 steel mills jobs were lost in 2001 due to cheap imports? Just about every steel mill in the United States was facing bankruptcy. The whole industry was imploding. In 2001 it was impossible to save the company. In 2002 Bush imposed tariffs of up to 30 percent on various kinds of imported steel to in an attempt to save the dying industry.
Wrong. I just choose to place blame where it belongs. The government that writes the check is more to blame than the person taking it to the bank.
I choose to look beyond the headlines.
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