Truly, they are the Best and the Brightest.

I don't know what all happened with Romney and Bain, but this article is pretty obviously not giving an objective history, so I'm going to ignore it. I'd like to know the real story though. Wikipedia wasn't much help.

See, Romney IS a job creator! He created jobs in Mexico.

Mitt Romney as a tapeworm. I think that's a meme that deserves promoting.

TheOnion: I don't know what all happened with Romney and Bain, but this article is pretty obviously not giving an objective history, so I'm going to ignore it. I'd like to know the real story though. Wikipedia wasn't much help.

How Private Equity Firms "Work"

/it's one of the scummiest, yet incomprehensibly legal, ways of getting absurd profits from almost no risk
//barely-above-zero risk should net you barely-above-gov't-bonds rates of return, not 88% annual

gameshowhost: TheOnion: I don't know what all happened with Romney and Bain, but this article is pretty obviously not giving an objective history, so I'm going to ignore it. I'd like to know the real story though. Wikipedia wasn't much help.

How Private Equity Firms "Work"

/it's one of the scummiest, yet incomprehensibly legal, ways of getting absurd profits from almost no risk
//barely-above-zero risk should net you barely-above-gov't-bonds rates of return, not 88% annual

Seems like it was super high risk. According to wikipedia out of 77 deals 10 represented 70% of the profit, and about half of them had no return at all. Having some investments with huge positive returns and others with huge negative returns is basically the definition of risk. And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

TheOnion: I don't know what all happened with Romney and Bain, but this article is pretty obviously not giving an objective history

The New Times chain of alternative journalism papers focus large parts of their efforts toward investigative journalism--which by definition is not "objective." The article notes that both Bain Capital and Romney were asked for input on the story, and is more than happy to put its own information in the context of the Wall Street Journal and the Associated Press's own inquiries. Phoenix New Times in particular is going to take a skeptical attitude toward large corporate interests, as well as corrupt state officials. They been the ones digging up the dirt on Sheriff Arpaio since the late 90's when I lived there. They pride themselves on the populist angle. And you might ask yourself why there isn't more at Wikipedia given that the New York Times, the Wall Street Journal and the Associated Press have all looked at Bain Capital. Remember--Bain Capital is a completely private company. They are not publicly owned or traded. And they have never been forthcoming about the companies they've bought.

TheOnion: Seems like it was super high risk. According to wikipedia out of 77 deals 10 represented 70% of the profit, and about half of them had no return at all. Having some investments with huge positive returns and others with huge negative returns is basically the definition of risk. And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

You're missing the point. It's not the private equity firm that assumes the risk. They dump it off first on the company or the shell company they create for it, and then ultimately the risk is assumed by the tax payer. It's the exact same scam the investment banks pulled with mortgages.

TheOnion: And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

Yeah--you didn't read the article, did you? The entire point is that by charging hundreds of thousands of dollars monthly for management fees and siphoning capital out of the company, Bain investors are paid immediately. They don't have to wait for dividends. And if the company can't survive and the jobs are lost, Bain doesn't suffer and neither do their investors--they already got paid. You really might try at least skimming TFA.

His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge management fees and paying Romney and his investors enormous dividends

incidentally, Ayn Rand considered classified people like this as 'looters' and she hated them more than she hated moochers.

how's that grab ya? Even Ayn Rand hates Romney's style of running a business. sobering, ain't it?

TheOnion: gameshowhost: TheOnion: I don't know what all happened with Romney and Bain, but this article is pretty obviously not giving an objective history, so I'm going to ignore it. I'd like to know the real story though. Wikipedia wasn't much help.

How Private Equity Firms "Work"

/it's one of the scummiest, yet incomprehensibly legal, ways of getting absurd profits from almost no risk
//barely-above-zero risk should net you barely-above-gov't-bonds rates of return, not 88% annual

Seems like it was super high risk. According to wikipedia out of 77 deals 10 represented 70% of the profit, and about half of them had no return at all. Having some investments with huge positive returns and others with huge negative returns is basically the definition of risk. And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

It isn't high risk. Watch the video; see the scheme.

Somacandra: TheOnion: And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

Yeah--you didn't read the article, did you? The entire point is that by charging hundreds of thousands of dollars monthly for management fees and siphoning capital out of the company, Bain investors are paid immediately. They don't have to wait for dividends. And if the company can't survive and the jobs are lost, Bain doesn't suffer and neither do their investors--they already got paid. You really might try at least skimming TFA.

I read the whole article but, as I said, it's clearly pushing an agenda, so I just ignored it.

Let's say they buy a business. They have to at least pay whatever it is worth, right? And presumably they can't then extract more than it is worth. I mean, where is the money that they're taking out of the business coming from? No one is gonna sell a business for $10 if they could extract $100 from it, right?

Mentat: TheOnion: Seems like it was super high risk. According to wikipedia out of 77 deals 10 represented 70% of the profit, and about half of them had no return at all. Having some investments with huge positive returns and others with huge negative returns is basically the definition of risk. And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

You're missing the point. It's not the private equity firm that assumes the risk. They dump it off first on the company or the shell company they create for it, and then ultimately the risk is assumed by the tax payer. It's the exact same scam the investment banks pulled with mortgages.

And nobody goes to jail for it either. that's the part that floors me. this is outright theft...and it's entirely legal. Hell, the very people who are hurt by this sort of actually LINE UP to vote for the Republicans...who are run by people who love to loot and pillage the country as much as they can, as often as they can and kick voters in the balls as much as possible.

gameshowhost: TheOnion: gameshowhost: TheOnion: I don't know what all happened with Romney and Bain, but this article is pretty obviously not giving an objective history, so I'm going to ignore it. I'd like to know the real story though. Wikipedia wasn't much help.

How Private Equity Firms "Work"

/it's one of the scummiest, yet incomprehensibly legal, ways of getting absurd profits from almost no risk
//barely-above-zero risk should net you barely-above-gov't-bonds rates of return, not 88% annual

Seems like it was super high risk. According to wikipedia out of 77 deals 10 represented 70% of the profit, and about half of them had no return at all. Having some investments with huge positive returns and others with huge negative returns is basically the definition of risk. And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

It isn't high risk. Watch the video; see the scheme.

Unless wikipedia is wrong, I'd say making no money on 50%, and high profit on only like 10-15% is high risk.

*oh ffs*

TheOnion: I read the whole article but, as I said, it's clearly pushing an agenda, so I just ignored it.

um...what agenda do you think they're pushing? dude - they're laying out what Romney (and a lot of other people) have been doing to this country.

Let's say they buy a business. They have to at least pay whatever it is worth, right?

nope! they put a fraction of the price down in order to buy the business and then leech as much operating capital out of it as fast as possible. then when the business implodes, they chop up whatever's left, sell off the bits and move on to the next victim.

essentially they're destroying companies and leaving a wasteland devoid of value in their wake.

If anything, the fact that Bain *ever* had *any* losses -- given the gravy train they were on -- should give us all an idea just how freaking incompetent those folks were.

/they couldn't even steal efficiently

So why are business owners selling their businesses for a fraction of what they're worth?

Otto's_Jacket:
Yup. That's exactly what they are doing with CC.

even Ayn f*cking Rand hated this sort of behavior. Ayn RAND! when Ayn Rand and the commie socialists both agree that you're a dickhole, you really gotta wonder about the validity of your business model.

TheOnion: Somacandra: TheOnion: And high risk demands a higher return. If they had gotten unlucky seems like they'd have gone out of business. Not to say that neither they nor Romney acted unethically, but making high risk investments and getting high returns on them sometimes isn't unethical inherently.

Yeah--you didn't read the article, did you? The entire point is that by charging hundreds of thousands of dollars monthly for management fees and siphoning capital out of the company, Bain investors are paid immediately. They don't have to wait for dividends. And if the company can't survive and the jobs are lost, Bain doesn't suffer and neither do their investors--they already got paid. You really might try at least skimming TFA.

I read the whole article but, as I said, it's clearly pushing an agenda, so I just ignored it.

Let's say they buy a business. They have to at least pay whatever it is worth, right? And presumably they can't then extract more than it is worth. I mean, where is the money that they're taking out of the business coming from? No one is gonna sell a business for $10 if they could extract $100 from it, right?

Um, maybe you should actually read the article.

TheOnion: So why are business owners selling their businesses for a fraction of what they're worth?

You think all ownership necessarily (1) knew how to do what Bain did, (2) WANTED to do what Bain did, and (3) had the pull to do what Bain did?

TheOnion: So why are business owners selling their businesses for a fraction of what they're worth?

because you haven't been paying attention. Bain secured the necessary loans with as little as 10% down (government backed loans, in many cases). the company owners cash out, Bain and Romney (or whomever) gut the company and the taxpayers eat the cost of the loans. they also pick up the unemployment tab when the company goes under, plus pay the continuing costs associated with long term unemployment due to the sharks ripping apart every domestic company then can get their paws on.

like I said - wasteland devoid of value. that's what these guys left us.

gameshowhost: TheOnion: So why are business owners selling their businesses for a fraction of what they're worth?

You think all ownership necessarily (1) knew how to do what Bain did, (2) WANTED to do what Bain did, and (3) had the pull to do what Bain did?

I think that generally businesses are acting to maximize profit for their shareholders, even if that means destroying the company. So for 2 they probably wanted to. I don't know if they knew how to do it, but let's assume that these guys are pretty competent if they're running large companies. I'm not sure what you mean by pull, what pull did Bain have?

Weaver95: TheOnion: So why are business owners selling their businesses for a fraction of what they're worth?

because you haven't been paying attention. Bain secured the necessary loans with as little as 10% down (government backed loans, in many cases). the company owners cash out, Bain and Romney (or whomever) gut the company and the taxpayers eat the cost of the loans. they also pick up the unemployment tab when the company goes under, plus pay the continuing costs associated with long term unemployment due to the sharks ripping apart every domestic company then can get their paws on.

like I said - wasteland devoid of value. that's what these guys left us.

So you're saying Bain pays for the companies with government backed or private loans, and then defaults on the loans so they don't have to pay them, and makes money that way? Perhaps I misunderstood.

TheOnion: I think that generally businesses are acting to maximize profit for their shareholders, even if that means destroying the company.

except that's the opposite of capitalism. you're supposed to enhance long term stakeholder value, not destroy existing value to extract a one time profit.

TheOnion: So you're saying Bain pays for the companies with government backed or private loans, and then defaults on the loans so they don't have to pay them, and makes money that way? Perhaps I misunderstood.

I'd say you've managed to successfully grasp the basics of their operating strategy, yes.

that is exactly what they (and others) have been doing.

... can't tell if

, or

Weaver95: TheOnion: I think that generally businesses are acting to maximize profit for their shareholders, even if that means destroying the company.

except that's the opposite of capitalism. you're supposed to enhance long term stakeholder value, not destroy existing value to extract a one time profit.

Why would they be acting against their own self-interest to forsake a greater profit over the long term in exchange for a small profit immediately?

I suppose the problem could be that you have two companies, A and B. A has greater value is buying and destroying company B, enriching A, but hurting B's shareholders. However, I still don't see how A is buying B for less than B is worth, and if it's not then B's stockholder's are just getting bought out for whatever the stock is worth, which isn't bad.

TheOnion: So you're saying Bain pays for the companies with government backed or private loans, and then defaults on the loans so they don't have to pay them, and makes money that way? Perhaps I misunderstood.

Did you watch the video I linked? The whole shebang is explained in less than 3 minutes.

TheOnion: Why would they be acting against their own self-interest to forsake a greater profit over the long term in exchange for a small profit immediately?

um...have you been paying ANY attention to wall street for the past 20 odd years or so? they all think Gordon Gecko is their personal jesus or something.

Weaver95: TheOnion: So you're saying Bain pays for the companies with government backed or private loans, and then defaults on the loans so they don't have to pay them, and makes money that way? Perhaps I misunderstood.

I'd say you've managed to successfully grasp the basics of their operating strategy, yes.

that is exactly what they (and others) have been doing.

If a company defaults on a multi million dollar loan as a business strategy, they're not going to be getting many loans. Again, it doesn't make sense from the bank's perspective to do this. And is the government really providing millions in loans for private equity firms, watching them default, and then doing it again? Isn't the whole point that it is private equity, not public? This just makes no sense to me, and I can't imagine it happening in the real business world where people aren't happy to throw their money at companies and get nothing in return.

TheOnion: If a company defaults on a multi million dollar loan as a business strategy, they're not going to be getting many loans.

why not? the fed isn't charging any interest on the loans and when the loans default, the taxpayer picks up the tab for the default. the ONLY ones who lose in this transaction are you and me, and we don't matter to the folks on wall street OR the guys inside the beltway. besides, they just use new shell companies every time they get another loan. it's not like anyone over at the SEC cares. God knows congress isn't going to investigate either.

TheOnion: If a company defaults on a multi million dollar loan as a business strategy, they're not going to be getting many loans. Again, it doesn't make sense from the bank's perspective to do this. And is the government really providing millions in loans for private equity firms, watching them default, and then doing it again? Isn't the whole point that it is private equity, not public? This just makes no sense to me, and I can't imagine it happening in the real business world where people aren't happy to throw their money at companies and get nothing in return.

You're just being obtuse at this point. This whole scam is just another twist on the leveraged buyouts of the 80's and the mortgage scam of the 2000's. It's all a big shell game designed to hide the risk for as long as possible while gorging on fees.

Weaver95: TheOnion: If a company defaults on a multi million dollar loan as a business strategy, they're not going to be getting many loans.

why not? the fed isn't charging any interest on the loans and when the loans default, the taxpayer picks up the tab for the default. the ONLY ones who lose in this transaction are you and me, and we don't matter to the folks on wall street OR the guys inside the beltway. besides, they just use new shell companies every time they get another loan. it's not like anyone over at the SEC cares. God knows congress isn't going to investigate either.

To claim that the government is giving millions in public money to a private equity firm, over and over, as they default each time, is a pretty amazing claim, and would require serious, direct evidence for me to believe. The linked article is not enough.

Mentat: . It's all a big shell game designed to hide the risk for as long as possible while gorging on fees.

And when it collapses, the fed eats the default and bails out the banks because they are 'too big to fail'.

meanwhile, rank and file Republicans standing in line at the welfare office will fight to the bitter end to make sure the GOP assholes who put them out of work in the first place get to stay in office and screw over the working man as much as possible.

Mentat: TheOnion: If a company defaults on a multi million dollar loan as a business strategy, they're not going to be getting many loans. Again, it doesn't make sense from the bank's perspective to do this. And is the government really providing millions in loans for private equity firms, watching them default, and then doing it again? Isn't the whole point that it is private equity, not public? This just makes no sense to me, and I can't imagine it happening in the real business world where people aren't happy to throw their money at companies and get nothing in return.

You're just being obtuse at this point. This whole scam is just another twist on the leveraged buyouts of the 80's and the mortgage scam of the 2000's. It's all a big shell game designed to hide the risk for as long as possible while gorging on fees.

I get the feeling that it's not a case of 'obtuse', but one of 'dogma'.

TheOnion: To claim that the government is giving millions in public money to a private equity firm, over and over, as they default each time, is a pretty amazing claim, and would require serious, direct evidence for me to believe. The linked article is not enough.

That's because it's not direct. It's indirect. Taxpayers fund the wake(s) of the disaster(s).

TheOnion: To claim that the government is giving millions in public money to a private equity firm, over and over, as they default each time, is a pretty amazing claim, and would require serious, direct evidence for me to believe. The linked article is not enough.

hit up google then. it's not like any of this is secret information or hidden. its all out in plain sight. that is EXACTLY what's been going on for the past 20 years or so. the Fed gives out oodles of money to CEOs who default on loans, reap massive profits for themselves and a select few investors, and then go out and repeat the cycle.

Weaver95: TheOnion: To claim that the government is giving millions in public money to a private equity firm, over and over, as they default each time, is a pretty amazing claim, and would require serious, direct evidence for me to believe. The linked article is not enough.

hit up google then. it's not like any of this is secret information or hidden. its all out in plain sight. that is EXACTLY what's been going on for the past 20 years or so. the Fed gives out oodles of money to CEOs who default on loans, reap massive profits for themselves and a select few investors, and then go out and repeat the cycle.

I read the news (and not news) and haven't heard about this. I feel like it's something I would have heard about it. I'm not going to go searching for this, but if someone posts an article (ideally slightly more neutral than the original linked one) I'd be happy to read it. Something from like CNN, BBC, or some other big news company would be good and reputable.

gameshowhost: TheOnion: I don't know what all happened with Romney and Bain, but this article is pretty obviously not giving an objective history, so I'm going to ignore it. I'd like to know the real story though. Wikipedia wasn't much help.

How Private Equity Firms "Work"

/it's one of the scummiest, yet incomprehensibly legal, ways of getting absurd profits from almost no risk
//barely-above-zero risk should net you barely-above-gov't-bonds rates of return, not 88% annual

This article made me want to ask Hovde a few questions. He just comes across as a D-bag in his commercials.

TheOnion: Weaver95: TheOnion: To claim that the government is giving millions in public money to a private equity firm, over and over, as they default each time, is a pretty amazing claim, and would require serious, direct evidence for me to believe. The linked article is not enough.

hit up google then. it's not like any of this is secret information or hidden. its all out in plain sight. that is EXACTLY what's been going on for the past 20 years or so. the Fed gives out oodles of money to CEOs who default on loans, reap massive profits for themselves and a select few investors, and then go out and repeat the cycle.

I read the news (and not news) and haven't heard about this. I feel like it's something I would have heard about it. I'm not going to go searching for this, but if someone posts an article (ideally slightly more neutral than the original linked one) I'd be happy to read it. Something from like CNN, BBC, or some other big news company would be good and reputable.

hasn't heard about it
feels like he would have heard about it
won't bother investigating
wants a 'neutral' piece that's just as in-depth from a 'reputable' news conglomerate

That is some weapons-grade trolling. A solid 9. The best trolling is the kind that's not at all obvious.

Fark It: hasn't heard about it
feels like he would have heard about it
won't bother investigating
wants a 'neutral' piece that's just as in-depth from a 'reputable' news conglomerate

That is some weapons-grade trolling. A solid 9. The best trolling is the kind that's not at all obvious.

I goddamned hope it's trolling. I can live with being trolled hard.