Friday, February 17, 2012

America For Sale

The last time I wrote about Mitt Romney, I reported that his religious beliefs were curious but mostly harmless, and ultimately of little concern.

This remains true. However, I also noted that “the former governor of Massachusetts and current Republican candidate for President in 2012 is a charlatan and a swindler.” Now that he has achieved so much success campaigning for president, I think it’s important to talk about how he’s earned those distinctions.

Romney has amassed an enormous fortune in the private sector; by his own estimation at least $200 million, with others speculating that it could be as high as $260 million. For some reason, a number of uninformed voters equate his vast wealth with his grasp of how the entire U.S. economy operates. As best I can tell, the argument appears to be “How could he have made so much money without understanding how the business sector works?”

As evidenced by his career with Bain Capital, the private equity company which Romney co-founded and obtained most of his wealth while working for, Romney does know a lot about the economy – but only enough to exploit it for its own game.

For those unaware of what a “private equity firm” is or how it operates, consider this hypothetical scenario: Let’s say you have a few hundred million dollars lying around. Let’s also say that your favorite restaurant, a tiny Italian place down the street, is in danger of going out of business. You decide to bail out the proprietors and purchase the restaurant yourself, pump your fortune into it, and turn it into a national chain. So at the very least, you’ve kept your favorite place in business and saved the jobs of all the chefs and wait staff who work there. If your new business plan succeeds, you eventually make your money back and turn a profit. Sounds innocent enough, right? Not when you learn how to rig the system like Mitt Romney has.

Return to our original scenario, but this time pretend you’re not a business tycoon with a heart of gold and taste for linguini; rather, you’ve bought this restaurant at the behest of a private equity firm. Even though it seems like this sort of thing shouldn’t be legal at all, you can go to the bank and apply for a huge loan, and put up all of the business’ assets as collateral. Secretly, you know the business has no chance of repaying that loan, but as long as you never say that out loud you can get away with your diabolical plan. You use the proceeds from the bank loan to repay yourself the costs of purchasing the restaurant, plus a little extra for yourself in the form of “management fees.” Congratulations! The hard part is over.

Now all you have to do is make it look like you’re trying to turn a profit. This is easy – fire just about everybody, sell off the restaurant’s assets, and before long you’ll make money in the short-term while completely submarining the restaurant’s chances of surviving more than a few more years. But this is no problem at all. You can either trick some sucker into buying your “profitable” restaurant just before it goes belly-up, or wait for the bank to seize what’s left of your restaurant, while you still walk away richer than when you started. Remember, this is all completely legal as long as you don’t make it painfully obvious that you wanted the business to fail in the first place.

This is exactly how Mitt Romney made his money. There were a number of times where Bain Capital would amass millions in profits after purchasing struggling businesses, only to see those businesses file for bankruptcy almost immediately after they were pawned off to somebody else. Mitt Romney mastered the art of private equity buyouts, which amount to nothing more than a glorified pyramid scheme – and yet millions of Americans think it’s a good idea to let him captain the entire economy.

A Romney presidency should frighten us all. His only concern is how to earn a return for his investors (i.e. wealthy campaign donors), and how to take a little off the top for himself. The last thing this country needs is to become the latest Bain Capital acquisition.

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