[SmileRight]

Regardless of what you think of the candidates or who your preference is, capitalism works, and they shouldn't be attacking it.

[RC one]

But it was OK to attack Newt for being a capitalist?

[Cringing Negativism Network]

Blah blah blah.

Romney is a waffling weenie.

[CainConservative]

Then Willard the Lib should have no problem releasing his past five years of tax returns THIS WEEK.

[dfwgator]

I don’t care if Romney is a “good” capitalist, I don’t want him in the White House.

[impimp]

Right on!

[Utmost Certainty]

As somebody else explained to me recently:

Too many people are defending Romney as just being a good little capitalist, when this isn't really the case. He was playing shell games and essentially committing fraud with investors. I think most agree that the government should probably punish somebody selling watered gas… so why not punish dishonest debt instruments? I think most agree that if a minority shareholder uses company money to issue himself a big paycheck, this is embezzlement from the other shareholders. When Romney does this with his multi-million dollar consulting fees, this isn't different?

Now the crux of this problem is of course the government. Their limited liability laws unfairly rip up contracts between creditors and debtors. Making debt financing tax deductible, but not equity financing, has seriously skewed the corporate structure. And lastly, the Federal Reserve issuing so much debt (largely indirectly) and then bailing out said debt (→ moral hazards) is a significant problem in aiding and abetting private equity craziness of reckless LBOs, etc..

Specifically how the system works: A bank overflowing with money they created from low Fed Reserve interest rates meets with a private equity firm to talk about taking over firm. The bank provides ~80/20 the money and they together purchase the take over target. The PE firm immediately loads up the acquired firm with debt for the bank to get their money. The debt is structured as a huge balloon payment set to self-destruct in about 5 years. The bank realizes this is ticking time bomb, so unloads this debt ASAP to other banks, hedge funds, insurance companies and pension funds. The smarter investors realize this is a hot potato and keep passing it around. Recently they've been hiding this bad debt in CLOs (almost identical in concept to real estate CDOs). Hidden amongst other debt, people have no idea the mess they purchased. The PE firm on the other hand wastes no time in borrowing HEAVILY again to finance corporate mergers (they don't want to do it from the PE firm directly because they could be liable for the debt). They also borrow heavily to finance huge dividends that more than make up for what they paid for the firm. They justify the dividend legally by jacking up short term profits (price increases, job cuts, quality reductions) that threaten the long term health of the company, and by money saved from tax deductible interest as well. If possible, the PE firm tries to dump their acquired firm before the balloon payment comes up… but even if they're stuck with the firm they usually do very well given all the consulting fees they charge and the huge dividends they give themselves.

[alloysteel]

So, what is the brand on Mitt Romney?

Is it because he is Mormon, or is it because he was involved in a venture capital enterprise that bought up failing businesses, stripped out their negatives (which in some instances included a bloated payroll), and put these reconstituted companies back on the market, now much meaner and leaner, but with a good chance of survival.

That all these enterprises did not survive and thrive, is no more a strike against Bain Capital, than any other venture capitalist organization out there. Once relaunched, and Bain Capital has been reimbursed for their efforts, they had the same shot at grabbing the brass ring as any new venture, perhaps better, because they had some idea of how NOT to make rookie mistakes.

I doubt that Mitt would describe his business model in such manner, but we are trying to be a little bit objective here.

The “crony capitalism” label his opponents are trying to hang on Mitt is a red herring.

[moehoward]

"Gordon Gekko in “Wall Street,” deliver the line, “Greed is good,” my date that evening was horrified. I, on the other hand, wanted to stand up and cheer."

Might not be the best example considering Gecko ends up in jail.

[kevkrom]

Let’s stipulate that the author is correct. Even then, why is it so hard for Romney to make this case for himself?

His hemming and hawing, rather than a simple, forthright defense and explanation, is just another point in favor of the idea that Romney is nowhere near the “electable” candidate the establishment wishes to portray him as.