Monday, May 14, 2012

Bain's vulture capitalism

President Obama's campaign is going after Romney's record at Bain Capital, while the latter proudly proclaims his business experience at "creating jobs" gives him the edge. See Obama's two videos at this link debunking Romney's claims. They've also opened a website focusing on Romney's economics. Some copy from the latter:

"Using what’s called a 'leveraged buyout,' Romney and his investors would take control of a successful business, paying only a fraction of the total price. The rest would be paid for by loading the company up with debt, using the firm they were buying as collateral—so ultimately the company, not Romney, would be responsible for paying back the debt. That left Romney and his partners free to extract as much profit from the companies as possible.  In the face of mounting debt, the company would then be forced to cut costs—often by reducing wages and benefits, closing factories and stores, and laying off workers. Sometimes, this debt was enough to drive the company into bankruptcy. Mitt Romney wasn’t trying to build companies for the long term. His plan was to maximize short-term profits, and then resell all or part of the business before the debts came due. The goal was never to create jobs—the goal was to create wealth for investors, as even his former partner admitted.... This is the experience that Mitt Romney now cites as his qualification to be president, and the economic philosophy he would bring to the entire country."

1 comment:

  1. See Rachel Maddow's segment on this:


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