Cutting through the rhetoric and dealing with substance on Romney, Bain Capital, and Private Equity

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    Dec 21, 2011 1:44 PM GMT
    Anti-Romney rhetoric mostly from the left, but also from some challengers in the Republican Party, have suggested his goal was to buy companies with the intent of damaging them and laying off workers. Romney has countered that with business in general, there are successes and failures, and that some companies that Bain acquired were in poor shape and that the assessment was made that to save those companies and preserve any jobs, sometimes restructuring is required and layoffs are inevitable.

    The purpose of this thread is to stimulate serious discussion on both Bain's record and the role of private equity in general, and whether a company that seeks to return profit to its fund investors would logically pursue a strategy that consisted of acquiring companies that are successful and deliberately restructure the companies and layoff workers. A related question that should be considered is if a company could remain in business but because it had become bloated and inefficient, its profits were reduced or non-existent, should a private equity firm allow the bloat to continue versus maximizing profit for its fund investors.

    For those interested and not familiar with private equity, I provided a couple of links to provide some definitions and explanations. Also a link from wiki on Bain Capital provides a list of companies in which it has invested. I haven't verified all the information in the links are accurate, but it seems to be a reasonable basis for discussion.

    http://www.investopedia.com/terms/p/privateequity.asp#axzz1hAuJkcyZ

    http://en.wikipedia.org/wiki/Private_equity

    http://en.wikipedia.org/wiki/Bain_Capital
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    Dec 21, 2011 10:40 PM GMT
    southbeach1500 saidLiberals definitely won't be able to digest all this.



    LOL, I guess I'm talking to myself here.

    There are only two words that liberals understand, tax and spend, tax and spend, tax and spend, tax and spend, tax and spend, tax and spend, tax and spend, tax and spend, tax and spend.
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    Dec 21, 2011 11:23 PM GMT
    It's not complicated at all.

    Romney is Richard Gere in Pretty Woman without the hooker or the happy ending. Simple, really.
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    Dec 22, 2011 12:11 AM GMT
    A couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1
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    Dec 22, 2011 12:39 AM GMT
    socalfitness saidA couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1


    You must have forgotten this little bit from the same article:

    "Companies taken over in private equity deals, the World Economic Forum study found, averaged -- five years after getting gobbled up -- 1 percent fewer jobs than comparable companies outside the private equity orbit."

    And then there's what Bain did under Romney's control, which led to far worse outcomes than the average.
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    Dec 22, 2011 12:46 AM GMT
    Christian73 said
    socalfitness saidA couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1


    You must have forgotten this little bit from the same article:

    "Companies taken over in private equity deals, the World Economic Forum study found, averaged -- five years after getting gobbled up -- 1 percent fewer jobs than comparable companies outside the private equity orbit."

    And then there's what Bain did under Romney's control, which led to far worse outcomes than the average.

    It wasn't a striking conclusion..
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    Dec 22, 2011 12:50 AM GMT
    Christian73 said
    socalfitness saidA couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1


    You must have forgotten this little bit from the same article:

    "Companies taken over in private equity deals, the World Economic Forum study found, averaged -- five years after getting gobbled up -- 1 percent fewer jobs than comparable companies outside the private equity orbit."

    And then there's what Bain did under Romney's control, which led to far worse outcomes than the average.


    Do you think all these bankrupt companies should have stayed in business? Where were they going to get the funds to pay the employees? Where were they going to get the money to pay for supplies? Did you think the government should bail them out? What Romney did was smart. People own businesses to make profit. Thats how I want Romney to run the country.


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    Dec 22, 2011 12:53 AM GMT
    CHRISTOPHER34 said
    Christian73 said
    socalfitness saidA couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1


    You must have forgotten this little bit from the same article:

    "Companies taken over in private equity deals, the World Economic Forum study found, averaged -- five years after getting gobbled up -- 1 percent fewer jobs than comparable companies outside the private equity orbit."

    And then there's what Bain did under Romney's control, which led to far worse outcomes than the average.


    Do you think all these bankrupt companies should have stayed in business? Where were they going to get the funds to pay the employees? Where were they going to get the money to pay for supplies? Did you think the government should bail them out? What Romney did was smart. People own businesses to make profit. Thats how I want Romney to run the country.




    The government isn't a business. icon_rolleyes.gif
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    Dec 22, 2011 12:55 AM GMT
    Christian73 said
    CHRISTOPHER34 said
    Christian73 said
    socalfitness saidA couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1


    You must have forgotten this little bit from the same article:

    "Companies taken over in private equity deals, the World Economic Forum study found, averaged -- five years after getting gobbled up -- 1 percent fewer jobs than comparable companies outside the private equity orbit."

    And then there's what Bain did under Romney's control, which led to far worse outcomes than the average.


    Do you think all these bankrupt companies should have stayed in business? Where were they going to get the funds to pay the employees? Where were they going to get the money to pay for supplies? Did you think the government should bail them out? What Romney did was smart. People own businesses to make profit. Thats how I want Romney to run the country.


    The government isn't a business. icon_rolleyes.gif

    And they're not supposed to be an incompetent venture capitalist either, as in throwing good money down the toilet on unprofitable green industries.
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    Dec 22, 2011 12:58 AM GMT
    Please respect the thread. A socialist trying to discuss private equity would be like Rosie O'Donnell working as a Personal Trainer at Equinox or 24 hr.
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    Dec 22, 2011 6:47 PM GMT
    socalfitness said
    Christian73 said
    CHRISTOPHER34 said
    Christian73 said
    socalfitness saidA couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1


    You must have forgotten this little bit from the same article:

    "Companies taken over in private equity deals, the World Economic Forum study found, averaged -- five years after getting gobbled up -- 1 percent fewer jobs than comparable companies outside the private equity orbit."

    And then there's what Bain did under Romney's control, which led to far worse outcomes than the average.


    Do you think all these bankrupt companies should have stayed in business? Where were they going to get the funds to pay the employees? Where were they going to get the money to pay for supplies? Did you think the government should bail them out? What Romney did was smart. People own businesses to make profit. Thats how I want Romney to run the country.


    The government isn't a business. icon_rolleyes.gif

    And their not supposed to be an incompetent venture capitalist either, as in throwing good money down the toilet on unprofitable green industries.


    Weak. Just weak.
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    Dec 22, 2011 11:12 PM GMT
    Christian73 said
    socalfitness said
    Christian73 said
    CHRISTOPHER34 said
    Christian73 said
    socalfitness saidA couple of additional points: Much of the criticism of Bain in the media has pertained to job layoffs in a firm that was acquired in South Carolina. The overall question is what is the net effect on jobs resulting from Bain private equity transactions? The following reports do not focus on Bain, but the private equity industry in general.

    A recent report states that, "Although private-equity investments do often lead to big layoffs, they also often lead to a lot of new jobs. But those jobs tend to be at different areas of the company and don't happen in one big blast."
    http://www.cbsnews.com/8301-505125_162-57331505/do-private-equity-firms-really-destroy-jobs/

    Another comprehensive report from 2008 states: The evidence, the World Economic Forum study went on to conclude, "supports neither the apocalyptic claims of extensive job destruction nor arguments that private equity funds create huge amounts of domestic employment."
    http://www.alternet.org/economy/75216/?page=1


    You must have forgotten this little bit from the same article:

    "Companies taken over in private equity deals, the World Economic Forum study found, averaged -- five years after getting gobbled up -- 1 percent fewer jobs than comparable companies outside the private equity orbit."

    And then there's what Bain did under Romney's control, which led to far worse outcomes than the average.


    Do you think all these bankrupt companies should have stayed in business? Where were they going to get the funds to pay the employees? Where were they going to get the money to pay for supplies? Did you think the government should bail them out? What Romney did was smart. People own businesses to make profit. Thats how I want Romney to run the country.


    The government isn't a business. icon_rolleyes.gif

    And their not supposed to be an incompetent venture capitalist either, as in throwing good money down the toilet on unprofitable green industries.


    Weak. Just weak.


    Weak? You think that it is a good thing that money was (and continues to be) thrown down the toilet for unsustainable jobs - and what's worse to connected lobbyists?
  • creature

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    Dec 22, 2011 11:32 PM GMT
    southbeach1500 saidLiberals definitely won't be able to digest all this.


    So much for serious discussion. And it only took 2 posts icon_rolleyes.gif
  • creature

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    Dec 22, 2011 11:33 PM GMT
    socalfitness saidPlease respect the thread. A socialist trying to discuss private equity would be like Rosie O'Donnell working as a Personal Trainer at Equinox or 24 hr.


    And I see the OP is not looking for a serious discussion too.
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    Dec 22, 2011 11:34 PM GMT
    I think you should focus the question considerably. Private Equity is a topic deserving of multiple books written at a level higher than has ever, even in the days of Satyricon331, has been seen on RealJock.

    I'm perplexed as to why you think Private Equity is incompatible with what you call "socialism", which is what I would simply call a Mixed or UK/European economy. [As I have said before, you seem to use the term in the polemical and not the academic sense]. The funding structure of firms is quite morally neutral in such economies and the field exists essentially simply to exploit the tax efficiency of debt.

    It has to be said that my skepticism quite a few years ago about Private Equity when it was the in thing as opaque and hence a systemic risk, vulnerable to liquidity crises and ripe for suboptimal management teams parachuted in by PE managers has generally proven to well-founded. But there are exceptions.

    The irony is that losses in PE have been born to a great extent by sovereign wealth funds. More fool them.
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    Dec 23, 2011 12:00 AM GMT
    TigerTim saidI think you should focus the question considerably. Private Equity is a topic deserving of multiple books written at a level higher than has ever, even in the days of Satyricon331, has been seen on RealJock.

    I'm perplexed as to why you think Private Equity is incompatible with what you call "socialism", which is what I would simply call a Mixed or UK/European economy. [As I have said before, you seem to use the term in the polemical and not the academic sense]. The funding structure of firms is quite morally neutral in such economies and the field exists essentially simply to exploit the tax efficiency of debt.

    It has to be said that my skepticism quite a few years ago about Private Equity when it was the in thing as opaque and hence a systemic risk, vulnerable to liquidity crises and ripe for suboptimal management teams parachuted in by PE managers has generally proven to well-founded. But there are exceptions.

    The irony is that losses in PE have been born to a great extent by sovereign wealth funds. More fool them.

    I don't disagree that PE can be studied and discussed in some depth. My comment on socialism and PE was intended in a light-hearted way to address some of Christians' comments, especially his first message. He refers to himself as a "democratic socialist", so I was leveraging off that.

    Regarding the depth of a discussion on PE, I think there is a middle ground between, say, superficial rhetoric, such as that levied against Romney, and detailed technical analyses. Whatever the degree of truth there may be to such rhetoric, I was just trying to motivate a discussion to go a bit deeper and think critically when charges are made.
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    Dec 23, 2011 12:08 AM GMT
    socalfitness saidI don't disagree that PE can be studied and discussed in some depth. My comment on socialism and PE was intended in a light-hearted way to address some of Christians' comments, especially his first message. He refers to himself as a "democratic socialist", so I was leveraging off that.

    Regarding the depth of a discussion on PE, I think there is a middle ground between, say, superficial rhetoric, such as that levied against Romney, and detailed technical analyses. Whatever the degree of truth there may be to such rhetoric, I was just trying to motivate a discussion to go a bit deeper and think critically when charges are made.


    As I say repeatedly to my students: focus focus focus! One of the reasons political/economic discussions on here are so terrible is that people tend to discuss abstract ideas in the vaguest of terms and demonstrate little sign of flexibility in their thinking.
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    May 14, 2012 5:32 PM GMT
    Another thread relevant today.
  • Posted by a hidden member.
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    May 14, 2012 9:59 PM GMT
    http://www.realclearpolitics.com/video/2012/05/14/former_obama_car_czar_calls_romney_attack_ad_unfair.html

    and on MSNBC
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    May 14, 2012 10:00 PM GMT
    creature said
    southbeach1500 saidLiberals definitely won't be able to digest all this.


    So much for serious discussion. And it only took 2 posts icon_rolleyes.gif


    True, it's mostly pointless.
  • GQjock

    Posts: 11649

    May 14, 2012 10:59 PM GMT
    SoCal SooCal SoCal ...... my man ...


    What is it that you THINK Private equity Firms Like Bain DO ????


    They purchase a company rip it to shreds and then sell it BEFORE it goes under
    If it goes bankrupt BEFORE they UNLOAD it they don't make any money .... See? icon_cool.gif

    You have a problem with Romney's business practices being brought up?
    Go Complain to Rick Perry Rick Santorum and the Gingster ... They were the ones who uncovered it icon_rolleyes.gif

    Bain's involvement with GST Steel

    Bain's involvement with GST Steel was detailed Friday by the Reuters news agency. In the story, former workers said Bain had mismanaged the acquisition, loading up the company with debt while earning profits for itself and in the end abandoning some of its pension commitments.
    Bain's business practices have been an issue in the GOP presidential primary, with critics claiming the former Massachusetts governor has been responsible for layoffs and job elimination.
    In campaign appearances and debates, Romney has admitted Bain bought some businesses that did not succeed. But he says overall Bain has bought and developed companies that have added employees.
    Bain, with Romney at the helm, bought the former Armco Worldwide Grinding System business in 1993, including part of the massive steel plant near the Blue River in northeast Kansas City. A steelworks had operated on the site since the 1880s. At its peak, when it was known as Armco Steel, the plant employed 4,500 people.
    That workforce had dwindled dramatically by the time GST Steel took over operations, making steel rods and grinding apparatus.
    By 2001, facing increased competition from cheaper imported steel -- and several years after a bitter labor dispute at the plant -- GST Industries filed for bankruptcy and closed the subsidiary Kansas City operation, dismissing the remaining employees. A spokesman for the company said GST Steel lost $25 million in 2000.
    The company also said it could not meet full pension and health care commitments to retirees, the Reuters story said. In August 2002 the federal government, through the Pension Benefit Guaranty Corp., said the company had underfunded its pension obligations by $44 million.

    http://midwestdemocracy.com/articles/bain-capital-tied-to-bankruptcy-closing-of-kc-steel-plant/
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    May 15, 2012 12:21 AM GMT
    Like Rick Perry said..Mitt is a vulture capitalist.

    Perry said as governor of Texas he had created one million jobs rather than “destructing businesses or destructing jobs” the way Romney had with his investment firm. 
  • CuriousJockAZ

    Posts: 19136

    May 15, 2012 12:35 AM GMT
    catfish5 saidLike Rick Perry said..Mitt is a vulture capitalist.

    Perry said as governor of Texas he had created one million jobs rather than “destructing businesses or destructing jobs” the way Romney had with his investment firm. 




    Ummm, earth to Kitty Kat....Rick Perry said lots of silly things during the campaign --- and he was judged accordingly. 'Nuff said icon_wink.gif
  • CuriousJockAZ

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    May 15, 2012 12:37 AM GMT
    GQjock said

    You have a problem with Romney's business practices being brought up?
    Go Complain to Rick Perry Rick Santorum and the Gingster ... They were the ones who uncovered it icon_rolleyes.gif



    ...and who went down in flames? One guess...it wasn't Romney icon_wink.gif
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    Jun 16, 2012 3:06 PM GMT
    Bumping because of more BS by the desparate left