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Thread: After a Romney Deal, Profits and Then Layoffs

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    After a Romney Deal, Profits and Then Layoffs

    [URL="http://www.nytimes.com/2011/11/13/us/politics/after-mitt-romney-deal-company-showed-profits-and-then-layoffs.html?scp=1&sq=bain%20&%20company&st=cse"]http://www.nytimes.com/2011/11/13/us/politics/after-mitt-romney-deal-company-showed-profits-and-then-layoffs.html?scp=1&sq=bain%20&%20company&st=cse[/URL]

    Interesting article. From November. Too long to post here. I posted the first few paragraphs. I highlighted what I think is interesting and pertinent to current US politics and policy.

    [QUOTE]

    By the green-hued yardsticks of Wall Street, the 1990s buyout of an Illinois medical company by Mitt Romney’s private equity firm was a spectacular success

    Mr. Romney’s company, Bain Capital, sent in a team of 10 turnaround experts from Boston to ferret out waste, motivate executives and study untapped markets.

    [B]By the time the Harvard M.B.A.’s from Bain were finished, sales at the medical company, Dade International, had more than doubled. The business acquired two of its rivals. And Mr. Romney’s firm collected $242 million, a return eight times its investment.[/B]

    But an examination of the Dade deal, which Mr. Romney approved and presided over, shows the unintended human costs and messy financial consequences behind the brand of capitalism that he practiced for 15 years.

    [B]At Bain Capital’s direction, Dade quadrupled the money it owed creditors and vendors.[/B] It took steps that propelled the business toward bankruptcy. And in waves of layoffs, it cut loose 1,700 workers in the United States, including Brian and Christine Shoemaker, who lost their jobs at a plant in Westwood, Mass. Staggered, Mr. Shoemaker wondered, “How can the bean counters just come in here and say, Hey, it’s over?”

    [B]Mr. Romney’s career at Bain Capital, which he owned and ran as chief executive, is a cornerstone of his campaign for the Republican presidential nomination — a credential, [U]he argues[/U], that showcases the management skills and business acumen that America needs to revive a stalled economy.[/B] Creating jobs, Mr. Romney says, is exactly what he knows how to do.

    The White House, though, is already preparing a less flattering portrayal, trying to frame Mr. Romney’s record at Bain as evidence that he would pursue slash and burn economics and that his business career thrived by enriching the elite at the expense of the working class.

    From 1984 to 1999, Mr. Romney and his deputies made fortunes by investing in, acquiring and then selling about 150 companies. It was high-stakes work that shaped Mr. Romney’s values and views, taught him the art of salesmanship and negotiation and took him deep inside the boardrooms and factories of American business.

    Because financial data for many of the acquisitions are not publicly available, it is difficult to fully tally the wins and losses, the jobs created and the jobs eliminated on Mr. Romney’s watch. But the experience with Dade, Bain’s biggest transaction at the time, shows how Bain managed its investments, structuring deals so it would be hard for Mr. Romney and his partners not to come out ahead.

    Bain and a small group of investors bought Dade in 1994 with mostly borrowed money, limiting their risk. They extracted cash from the company at almost every turn — paying themselves nearly $100 million in fees, first for buying the company and then for helping to run it. Later, just after Mr. Romney stepped down from his role, Bain took $242 million out of the business in a transaction that, according to bankruptcy documents and several former Dade officials, weakened the company.

    Even some people who benefited from that payday and found it reasonable at the time now question it. “You would have to say, looking back, that it was too large, because it pushed us into bankruptcy,” said Robert W. Brightfelt, a former Dade president who collected more than $1 million.

    Bain Capital declined to comment specifically on the Dade acquisition, but cited a long history of improving companies’ performance in both “good and challenging economic conditions.” A campaign spokeswoman, Andrea Saul, defended Mr. Romney’s tenure at Bain, saying that “while not every business was successful, the firm had an excellent overall track record and created jobs with well-known companies.”

    In recent years, Mr. Romney has acknowledged having second thoughts about some of the deals he drove, saying his post-Bain career in government had sensitized him to the consequences of his decisions as a businessman.
    ...
    [/QUOTE]

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    Arguments against capitalism wont go far among those of us not in the Occupy movement. How many people work at Staples today? They had one store when Bain went in to business with them.

    I'm hoping Romney sends that team of MBA's in to government bureaucracies to clean up the the waste.

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    [QUOTE=chiefst2000;4314033]Arguments against capitalism wont go far among those of us not in the Occupy movement. How many people work at Staples today? They had one store when Bain went in to business with them.

    I'm hoping Romney sends that team of MBA's in to government bureaucracies to clean up the the waste.[/QUOTE]


    Who is arguing against Capitalism?

    I think it is clear Romney BORROWED tons of Capital to get a company profitable. And it worked.

    But now as a Presidential Candidate Romney is all about the "Let's not spend a penny more than our revenues bring in" and a "Balanced Budget is more important than low unemployment". By the way a balanced budget has not been signed Republican President since Nixon in 1969.

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    [QUOTE=Buster;4314075]Who is arguing against Capitalism?

    I think it is clear Romney BORROWED tons of Capital to get a company profitable. And it worked.

    But now as a Presidential Candidate Romney is all about the "Let's not spend a penny more than our revenues bring in" and a "Balanced Budget is more important than low unemployment". By the way a balanced budget has not been signed Republican President since Nixon in 1969.[/QUOTE]

    I'm not interested in the past. Bush had his chance and he blew it. Before then we haven't had a GOP led congress in my lifetime so your data is irrelevant. Obama is not interested in balancing the budget. He said as much on his 60 minute interview. I disagree with your premise that government debt is good. I think that premise is absurd. The Greeks, Italians, Portugese and Irish all tried it and they are doomed.

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    [QUOTE=Buster;4314075]Who is arguing against Capitalism?

    I think it is clear Romney BORROWED tons of Capital to get a company profitable. And it worked.

    But now as a Presidential Candidate Romney is all about the "Let's not spend a penny more than our revenues bring in" and a "Balanced Budget is more important than low unemployment". By the way a balanced budget has not been signed Republican President since Nixon in 1969.[/QUOTE]

    I'd say it dpends on how much we have to borrow to create one job.

    If it's less than the job makes and is worth, great.

    If it's $450,000 to create a $26,000/year job, not so great.

    As many have mentioned of late, not all debt is bad, not all debt is good. All depends on what it's for and how it's used and what it creates.

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    [QUOTE=chiefst2000;4314099]I'm not interested in the past. Bush had his chance and he blew it. Before then we haven't had a GOP led congress in my lifetime so your data is irrelevant. Obama is not interested in balancing the budget. He said as much on his 60 minute interview. I disagree with your premise that government debt is good. I think that premise is absurd. The Greeks, Italians, Portugese and Irish all tried it and they are doomed.[/QUOTE]



    We are not "The Greeks, Italians, Portugese or the Irish". Folks are buying [B]our [/B]debt cheap. When we sell bonds and tbills they are purchased. When the Europeans you mentioned do the same buyers wait for the interest rates to be raised. The Market is stating loud and clear that American debt is a good bet. Buyers can't get enough of it. It is only logical that we should be taking advantage of this [B]FACT[/B]. Just as a business uses a bridge loan or prints paper to build a new factory.

    Unemployment is what is wrong with our economy Not Debt.

    But I agree with you that when the economy is strong and unemployment is low a balanced budget is very important. But when times are bad and unemployment is high Government debt built on washing money thru the economy is good.

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    [QUOTE=Warfish;4314100]I'd say it dpends on how much we have to borrow to create one job.

    If it's less than the job makes and is worth, great.

    If it's $450,000 to create a $26,000/year job, not so great.

    As many have mentioned of late, not all debt is bad, not all debt is good. [B]All depends on what it's for and how it's used and what it creates.[/B][/QUOTE]



    In general I agree with you but there are other factors to consider.

    If it costs $450,000 to create a $26,000 and time spent getting from Queens to Hoboken is cut down by an hour then it is good.
    Or
    If it costs $450,000 to create a $26,000 and a fully automated broom factory is built in the USA and one is closed in Nanjing that is also good. IMHO at least the manufacturing is once again in the USA maybe not the hundreds of jobs but a few.
    Or
    If it costs $450,000 to create a $26,000 and a kid who would have become a welder instead becomes an engineer and thus earns 3X the income during his life than a welder that is also good. He is a better citizen, spends more money, pays more taxes, etc.

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    [QUOTE=Buster;4314075] By the way a balanced budget has not been signed Republican President since Nixon in 1969.[/QUOTE]

    That is due to (D) Congresses who would have no truck with them.

    Pelosi + Reid...unbalanced

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    [QUOTE=Buster;4314075]
    But now as a Presidential Candidate Romney is all about the "Let's not spend a penny more than our revenues bring in" and a "Balanced Budget is more important than low unemployment". By the way a balanced budget has not been signed Republican President since Nixon in 1969.[/QUOTE]

    Because there's no difference between a business borrowing money and govt borrowing money right? :rolleyes:

    Your smear campaign sucks.

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    [QUOTE=quantum;4314940]Because there's no difference between a business borrowing money and govt borrowing money right? :rolleyes:

    Your smear campaign sucks.[/QUOTE]

    Tell that to Governor Romney

    Romney and his supporters claim that his experiences working at Bain Capital are the skills he will draw upon to fix the economy.

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    [QUOTE=Jungle Shift Jet;4314606]That is due to (D) Congresses who would have no truck with them.

    Pelosi + Reid...unbalanced[/QUOTE]

    For the first six years of President Bush II administration the Republican Party had the majority in both houses of congress.

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    [QUOTE=Buster;4315002]For the first six years of President Bush II administration the Republican Party had the majority in both houses of congress.[/QUOTE]

    I challenge thee to do some research. Research yearly deficits for the Bush years. Look for when the numbers went up. I believe you will find that the numbers were rather tame prior to 2006.

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    [QUOTE=chiefst2000;4315231]I challenge thee to do some research. Research yearly deficits for the Bush years. Look for when the numbers went up. I believe you will find that the numbers were rather tame prior to 2006.[/QUOTE]



    [URL="http://en.wikipedia.org/wiki/United_States_public_debt"]http://en.wikipedia.org/wiki/United_States_public_debt[/URL]

    2006 USA national debt $8 trillion

    [IMG]http://upload.wikimedia.org/wikipedia/commons/thumb/7/74/Federal_debt_to_GDP_-_2000_to_2010.png/800px-Federal_debt_to_GDP_-_2000_to_2010.png[/IMG]

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    [QUOTE=Buster;4315518][URL="http://en.wikipedia.org/wiki/United_States_public_debt"]http://en.wikipedia.org/wiki/United_States_public_debt[/URL]

    2006 USA national debt $8 trillion

    [IMG]http://upload.wikimedia.org/wikipedia/commons/thumb/7/74/Federal_debt_to_GDP_-_2000_to_2010.png/800px-Federal_debt_to_GDP_-_2000_to_2010.png[/IMG][/QUOTE]

    So by your chart, as a percentage of GDP debt through the Bush years remained at the historic norm around 65%. It did begin to rise until 2007-2008 and the rapid accelleration from 70% to 95% happened in the Obama term. Your premise that the concern over the debt is directly a result of a Democrat in office is disproven by your chart. Clearly per your chart debt as a % of GDP is up close to 50% compared to the nostalgic good times of year 2007. That is a MASSIVE increase. If the chart continued through 2011 or showed 2012 projections the numbers are even more staggering.

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    First off getting data on the deficit of the Bush II years is very difficult. Since the Bush Administration decided that cooking the books was the best way to pay for their folly (aka the Iraq war) by using “Emergency Supplemental” bills. This was done with the sole intention of keeping deficit numbers low (off the books) and the American taxpayer in the dark. Hurray for duplicity!

    Secondly when President Bush II took office there was a budget surplus and not a budget deficit. Times were good. Unemployment was low. And President Bush was running up the debt. Talk about stoopid.

    Thirdly TARP was approved under Bush II and spent under Obama. Thus both administrations approved of this spending. But folks push its weight entirely on the Obama Administrations shoulders.


    Fourth the money the Obama administration spent was spent in the hope of pulling the US economy out of the ditch that President Bush II and his congress drove it into. The money was spent in America on Americans. On the other hand President Bush II spent his money rewarding his campaign contributors in the military industrial complex and by spending gobs of money on Iraqi infrastructure that he just spent gobs of money bombing! He also had the balls to send pallets of cash to Iraq. Can’t make that sh!t up! Oh, and President Obama for many reasons has not been able to cut the ridiculous amount of spending in Iraq and the Pentagon but it appears next term it will end. Yay!

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    [QUOTE=chiefst2000;4315563]So by your chart, as a percentage of GDP debt through the Bush years remained at the historic norm around 65%. It did begin to rise until 2007-2008 and the rapid accelleration from 70% to 95% happened in the Obama term. Your premise that the concern over the debt is directly a result of a Democrat in office is disproven by your chart. Clearly per your chart debt as a % of GDP is up close to 50% compared to the nostalgic good times of year 2007. That is a MASSIVE increase. If the chart continued through 2011 or showed 2012 projections the numbers are even more staggering.[/QUOTE]

    :rotfl:

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    [QUOTE=chiefst2000;4315563]So by your chart, as a percentage of GDP debt through the Bush years remained at the historic norm around 65%. It did begin to rise until 2007-2008 and the rapid accelleration from 70% to 95% happened in the Obama term. Your premise that the concern over the debt is directly a result of a Democrat in office is disproven by your chart. [B][U]Clearly per your chart debt as a % of GDP is up close to 50% compared to the nostalgic good times of year 2007[/U][/B]. That is a MASSIVE increase. If the chart continued through 2011 or showed 2012 projections the numbers are even more staggering.[/QUOTE]


    So now you are saying debt is good?

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    [QUOTE=Buster;4315641]So now you are saying debt is good?[/QUOTE]

    No, I am addressing the oft cited opinion here that Republicans didn't care about the deficit or the debt until "a black president" took office. It is the implication that this is a partisan (or worse racist) issue not a legitimate concern. Your own chart clearly shows that debt as a percentage of GDP has exploded in the past three years. This is a legitimate cause for alarm.

    We have a President that refuses to address the issue and that is also a cause for alarm. Obama has never put out a plan to balance the books. He admitted on 60 minutes as much in his interview a few weeks back. If he wanted to win over independents and moderates he should take a page out of Clinton's book and offer up solutions. Put a plan in writing and promote it. He squandered his opportunity this year when he made his push for stimulus 2 and tax hikes on millionaires. It was a dishonest plan designed to demonize the rich and paint Republicans as defenders of the rich. 100% political. Why? Because the 20-30billion a year that his tax hikes may have raised wont begin to touch the deficits.

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    [QUOTE=Buster;4315637]First off getting data on the deficit of the Bush II years is very difficult. Since the Bush Administration decided that cooking the books was the best way to pay for their folly (aka the Iraq war) by using “Emergency Supplemental” bills. This was done with the sole intention of keeping deficit numbers low (off the books) and the American taxpayer in the dark. Hurray for duplicity!

    Secondly when President Bush II took office there was a budget surplus and not a budget deficit. Times were good. Unemployment was low. And President Bush was running up the debt. Talk about stoopid.

    Thirdly TARP was approved under Bush II and spent under Obama. Thus both administrations approved of this spending. But folks push its weight entirely on the Obama Administrations shoulders.


    Fourth the money the Obama administration spent was spent in the hope of pulling the US economy out of the ditch that President Bush II and his congress drove it into. The money was spent in America on Americans. On the other hand President Bush II spent his money rewarding his campaign contributors in the military industrial complex and by spending gobs of money on Iraqi infrastructure that he just spent gobs of money bombing! He also had the balls to send pallets of cash to Iraq. Can’t make that sh!t up! Oh, and President Obama for many reasons has not been able to cut the ridiculous amount of spending in Iraq and the Pentagon but it appears next term it will end. Yay![/QUOTE]

    Again, in this discussion we are addressing the current fiscal situation and the claims being made that Republicans only care about deficits when a Democrat is in power. Cooking books and emergency supplemental bills are not relevant to this conversation. My point is that the massive expansion of the deficit and debt began in 2008. It is clear from your chart. That has the sensible among us very concerned.

    Speaking of TARP, I am on record as supporting that program as it was presented in its original premise. The financial system was on the brink of collapse and action needed to be taken. The subsequent abuse of the program bailing out auto unions and such was where it went wrong.

    Speaking of Stimulus it may have been a better use of money than nation building in Iraq. That's like saying its better to step in poop than to fall in it. But to think that cash for clunkers or Solyndra style crony capitalism was a good thing is a stretch to say the least. The money was wasted. Few jobs were saved or created, and Obama by delegating the responsibility of TARP to Nancy Pelosi (as well as his health care program) tarnished his legacy. It is why he won't be reelected. Any leader worth their salt would have been salivating at the opportunity to allocate that amount of money in to areas that could have been beneficial both short term and long term. Instead he bowed to his left wing ideology and spent the money on a doomed to fail green jobs agenda.

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    [QUOTE=chiefst2000;4315663]No, I am addressing the oft cited opinion here that Republicans didn't care about the deficit or the debt until "a black president" took office. [/QUOTE]

    not a black one, a democrat one. it is a good dodge to make it seem like everyone is calling you a racist when nobody is.

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