When Mitt Romney Came To Town — Full, complete version

The first 3 minutes of this video is the teaser that you saw in my previous post, The Suffering Began When Mitt Romney Came To Town.

The next 24 minutes is devastating.

I am not sure the video makes it quite clear enough how Bain Capital grew to a $65 billion company while the companies they invested in closed down and went bankrupt.

The video said many times that the companies borrowed huge amounts of money and then could not pay their debts. Where did the money go? To Bain and its investors. Where did the money come from? The people who lent it and would never get it back. What is this called? Highway robbery.

I do not think that highway robbery is touted as an admirable way to make a living in The Book of Mormon.

People like Mitt Romney are able to divide their lives into two separate pieces. There is the life on Sunday where you go to church, pray to god, tithe some money, and help the down trodden. Then there are the other 6 days of the week where you take money from people in ways that are barely legal, put people out of their jobs and homes, and steal money from the investors. Oh, did I forget to mention the government that gets to pick up the pieces of these shattered lives and try to keep people from killing themselves? Where does the government get the tax money to do this? Not from the people who stole it, that’s for sure. They get it from the people who haven’t been robbed. Yet.

And yet, and yet, people want to vote for turning this country over to these people. At least it isn’t socialism.

I should mention the mechanism for doing leveraged buyouts. You find yourself a company that is what is called in the investing world a cash cow. That means that the company is profitable enough and well enough run that it stays in business, pays its debts, sets aside money for its workers pensions and health benefits, and does it all with very little borrowed money.

Particularly if the company is public and its shares are traded by the public, you have a piggy bank waiting to be broken into. The corporate raider, borrows enough money to entice the current stock holders to sell their shares to the raider. The raider then goes into the company and cuts costs ruthlessly. He takes the money out of the company to pay off what he borrowed and pays himself handsomely.

How does he take the money out? Instead of the company self-funding itself with its income, the raider has the company (which he now owns as a corporation) borrow heavily to fund its operations. The raider takes the assets that are in the pension fund and the health insurance fund out, and has the corporation borrow money to replace it. The company has an excellent reputation, so why would people hesitate to lend it money?

All the business schools are teaching that it is a waste of a corporations’ assets to put any more money into the pension funds that what is minimally required by law. If the company goes belly up, the government will pay the pensions. So why worry?

When the debt is high enough and the cash is all gone into people’s pockets, the people being the corporate raider, the company cannot meet its debt obligations out of the decimated factories’ profits. So the company goes bankrupt. All the lenders lose all their money. The workers are all fired. There are no assets to sell. However, the legal person to take all the responsibility is the corporation. Remember corporations are people. The people who took all the cash were merely officers of the company. The laws for corporations shield the people who got all the money from any responsibility to pay it back.

As long as there is some judge somewhere who won’t find it obvious that the corporate raider took the company private for the sole purpose of stealing all the money, then the perpetrators are home free. Even if they get a couple of years in jail, they still get to keep their billions after they get out.

If they manage to stay out of jail, they can go into politics and write laws to make what they did all perfectly legal.

I also wonder if the people who were working for many years at these now bankrupt companies were expecting a pension when they retired. Did the Pension Benefit Guarantee Corporation, a U.S. Government Agency, have to make good on the defaulted pensions? Did the pensioners only receive a fraction of what they should have received? I have a friend who is living solely on Social Security because the owners of the company where he worked for 20 years walked off with all the pension money to use for their own retirement.

Look at my subsequent post Did Romney actually create jobs at Bain?. There is a fabulous comment that gives more details to what I have been trying to explain here.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.