I was disappointed that the first episode of Moyers & Company was not aired on my local PBS station according schedule, Fortunately, I found the show on the internet at Bill Moyers web site
The amazing thing is that there are middle and lower class Republicans strongly in favor of Mitt Romney as a President who will restore jobs to America.
I don’t know if this show will make anybody realize what is going on. What I find missing, other than an audience of the people who need to hear it most, is a description of the devious ways that money has been taken from the middle class by the wealthy.
I have been posting these explanations here in the hopes that the readers here will arm themselves with enough information to explain it all to the people who are least likely to read this blog.
“[If] Romney wins the nomination, this early fuss might have inoculated him against the Scrooge gambit,” TIME columnist Joe Klein wrote.”The public may feel Bain is same old, same old by October.”
Don’t buy it, Democrats say. Even while they acknowledge that they planned to roll out the Bain angle later for a reason, they find it pretty hard to contain their grins overall.
“I would have preferred to wait, yes, to keep the bottle of whup-ass fresher,” one Obama campaign strategist told TPM. “At the same time — and this is important to note — having the Republicans eat their own actually makes the Bain story more potent than we ever could because it instantly validates it as a line of attack and falls on independent ears as a matter of legitimate debate, not as a partisan line of attack.”
And when the real Bain attack comes, it will be anything but old news to the voters it needs to reach. After all, it’s hardcore Republicans who are paying the closest attention to the GOP campaign and its Bain moment right now, and they’re not voting for President Obama anytime soon.
While I like the article, some of the comments are real gems.
If you are retired or ever plan to retire, you have to see the Retirement Heist video on CSPAN. You may know you have been taken by your employer, but I bet you don’t even know the half of it.
CSPAN does not provide for embedding their videos in this post, so you will have to use the previous link to see it. Here is the summary that went along with the video:
Ellen Schultz argued that many large employers have plundered employee pension plans over the past decades and detailed some of their tactics. She also talked about the crisis this loss has created. She responded to questions from the retiree association leaders in the audience. This talk was part of their orientation for the National Retiree Legislative Network’s third annual Washington, D.C., Fly-In to advocate for retirement issues.
When I wrote up those comments, I had no idea of the magnitude of the scam that I was describing.
If you know anybody who still thinks that rich people got that way because they work harder than their lazy employees, then force them to look at this video,
If you think that a 52 minute video is too long to watch, consider just watching a little bit of it. It may draw you in to watching the whole thing, but in any case from whatever amount of this that you see, you will have learned something valuable.
You can also break up your viewing into segments. Just remember the time stamp of where you stopped the last segment. When you open the video again, just slide the slider to the remembered time stamp.
This is a perfect example of how the lame stream media pretends to check the facts, but leaves the obvious questions all unanswered.
They start with an interview with Rick Rickardson who runs a a private equity firm in Washington. He was amazed at Bain’s 88% per year returns when the industry average was 25%. The people in Bernie Madoff’s industry were equally amazed at his returns over 20 years, until they discovered he was running a Ponzi scheme. So what do we really learn from what Rickardson had to say? Would that the reporter had probed a little deeper. Maybe they did dig deeper and carefully edited this out of Rickardson’s remarks.
Then they reported on a steel company in which Bain invested $100 million to turn the company around, the company went bankrupt, and Bain made a $34 Million profit. What kind of a reporter would report that set of facts and not even ask himself, “How could that be?” Wouldn’t we all like to hear an explanation of that. I suspect that Bain took the profits and the lenders took the losses.
There is a fabulous comment posted on this story. The comment started with the following paragraphs:
60 minutes needs to “look further”. Look what happened to the deferred wages of the “Defined Benefit Pension plans” of the baby boomers that disappeared during the “Merger and Aquisition” schemes that Bain Capital and others used to “steal pensions”.
Merger and Aquisitions never would have happened if there was no DB Pension funds in those Companies. The ‘Creative accounting theft” of Pension plans were recently disclosed after a 10 year investigative reporter, Ellen Schultz of the Wall Street Journal, looking at hundreds of 10K’s and figured out that Companies were stealing the employees deferred wages of DB pensions.
What a job of reporting. Rick Rickardson was amazed at Bain’s 88% per year returns when the industry average was 25%. The people in Bernie Madoff’s industry were equally amazed at his returns over 20 years, until they discovered he was running a Ponzi scheme.
The you report on the failure of GS Industries steel mills. Bain walked away with a $34 million profit after investing $100 million in the company which went bankrupt. Any decent reporter would instantly say, “How did they do that?”
The previous commenter seems to have the explanation which is the same one that came to my mind minus just a few of those details.
In the future, do not send in a credulous reporter to dig up the facts on an industry he knows nothing about. I am tired of listening to stories reported by people who know less about the subject than I do.
Of course, I am a credulous listener if I expect the corporate news media to really report on the shenanigans of their brothers in crime.
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.
You would probably never get this information from the lame stream media. You have to turn to Stephen Colbert to have a guest who can explain the legal intricacies of forming a Super PAC and running for President.
Republican front-runner Mitt Romney, who has cast the 2012 presidential campaign as “free enterprise on trial,” finds himself in a struggle over the role of capitalism in an unlikely place: within his own party.
As Romney attempts to frame a general election contest with President Barack Obama on the economy, some of his rivals for the Republican nomination have made many of the same arguments against him that Democrats have.
The provenance of this paper is a little confusing to me, but is has no bearing on the value of the paper. The summary and link to the paper is published on the Global Development And Environment Institute At Tufts web site.
Unstable global capital flows to developing countries have been characteristic of the world economy in the wake of the global financial crisis. Such flows have triggered asset bubbles and exchange rate appreciation in a number of emerging and developing country markets, especially from 2009 until the Eurozone jitters in the fourth quarter of 2011. In response, some individual nations have deployed capital controls. Resorting to these measures has met a mixed response. On the one hand, institutions such as the International Monetary Fund have supported the use of controls in limited circumstances. On the other hand, there has been a vociferous response by leading politicians, distinguished economists, and in the blogosphere claiming that the use of capital controls amounts to financial protectionism.
This paper argues that such claims are unfounded. Specifically, the paper shows that:
There is a longstanding strand of modern economic theory that dates back to Keynes and Prebisch and continues to this day that sees the use of capital controls as essential to financial stability, the ability to deploy an independent monetary policy, and to maintain exchange rate stability.
The empirical record has shown that capital market liberalization was not associated with growth in developing countries.
In a most recent development, economists have developed a “new welfare economics” of capital controls that sees controls as measures to correct for market failures due to imperfect information, contagion, uncertainty and beyond.
Taken as a whole, rather than the “new protectionism,” capital controls should be seen as the “new correctionism” that re-justifies a tool that has long been recognized to promote stability and growth in developing countries.
This paper reminds us of the sound theoretical foundation for the use of capital controls that had seemed to go out of vogue in the era of deregulation worship and over worship of supposedly free markets. It is one thing for economic theorists to put forth theories along with their explanations as to why they ought to work. It is quite another to measure the effects of putting these theories into practice. When one does do the measurement, one often finds that the results are not quite what was expected due to other forces in action that the theory did not take into account. This does not mean that the theory wasn’t consistent within its framework of explicit and implicit assumptions. It meant that those assumptions were not representative of the economic climate at the time. In other words, the theory could become applicable if the conditions of the economy became consistent with the assumptions. Of course, the trick in economic forecasting is to know what are all the forces then dominating in the economy and knowing how they might change with the introduction of a new policy.
I think the lesson to be learned here, and one that I have always promoted, and thought that President Obama promoted too, is that we have to be humble in our belief about how much we can know of all the economic forces that exist now and may exist in the future. In the face of the uncertainty, whenever we propose policy changes or even to make no changes, we must be constantly measuring the effect of policy to detect deviations from our expectations as soon as possible.
As President Franklin D. Roosevelt did, Obama should have made clear to the public that each policy initiative was an experiment that needed to be monitored. If it did not work as desired, it would be modified or completely abandoned as measured evidence would suggest. President Obama used this management style during his campaign. I fully expected that he would maintain this effective management style when he became President.
Also my pejorative remarks about deregulation worship must be taken in perspective of the lessons learned here. When the urge to deregulate began, it probably was a reasonable tactic to adopt. The failure is in treating deregulation as a religion. Use it as long as it works. Keep measuring its effects. Stop using it when it no longer produces good results. Oh yes, and make sure you measure the effects in all dimensions of relevance. It may be great if the average income is going up, but not so great if some people end up starving in order to boost the average.
It pays to keep in mind the statistical quality control techniques that W. Edwards Deming so successfully taught the Japanese companies as they rose to dominance. One such technique that I learned about is the use of process monitoring charts. There were limit lines drawn on the charts that showed how far a process could deviate and still make acceptable product. However, there were lines drawn that were closer to the set point that showed that a process was straying out of control and action needed to be taken before unacceptable product was produced.