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Arraya.
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September 2, 2012 at 2:09 PM #751058September 2, 2012 at 5:42 PM #751059
ctr70
ParticipantYeah Rolling Stone. They are about as objective and non-partisan as the SD Union Trib. LOL.
Almost any major successful businessman if they ran for president and were put under the microscope and subject to the opposing sides “interpretation” of their career, could be “painted” and “spun” as unethical and bad. Steve Jobs would be ripped apart for labor practices in China. Warren Buffet would be ripped apart for many of his biggest companies being the largest recipients of the bailout money (and I’m sure you could dig up a lot more on both.) And it goes on and on, pick a name.
At least Romney had a “real Job” in the private sector (the sector that provides the tax base for Government to even exist). Vs. Obama who never had a real job outside of Government and academia.
September 2, 2012 at 9:02 PM #751064CA renter
Participant[quote=davelj][quote=CA renter]
In the end, the government surrendered. At the time, The Boston Globe cited bankers dismissing the bailout as “relatively routine” – but the federal documents reveal it was anything but. The FDIC agreed to accept nearly $5 million in cash to retire $15 million in Bain’s debt – an immediate government bailout of $10 million. All told, the FDIC estimated it would recoup just $14 million of the $30 million that Romney’s firm owed the government.
I think Romney’s kind of a d-bag, but… let’s recall that this particular *bailout* by the FDIC is really a bailout by… the banking industry itself, as it’s the banks that pay a portion of their profits (based on total deposits) to the FDIC to capitalize the insurance fund. So, while I agree that Romney’s maneuverings here are sleazy… I’m curious as to why folks care about how the 1% go about screwing each other – here Romney simply outfoxed his Banksters, and the industry as a whole plugged the hole.
This applies to the money lost in Bain’s failed LBOs as well – it’s the banks and other creditors that took the hits, not taxpayers. Again, who cares how the 1% goes about screwing each other?
The job destroyer/job creator issue is much more complicated. Personally, I think that net/net most LBOs are destroyers of jobs, but… it’s probably not as insidious as it appears on the surface.
Take the KB Toys example. Yeah, they screwed that up bigtime. Lots of jobs lost… at KB Toys. But I’m pretty sure all of the toys no longer sold by KB were sold by someone else, so jobs were created at those other companies. And some of the folks who lost their KB Toys job were probably happier in their new jobs and/or started small businesses themselves. Again, net/net jobs were almost certainly lost and in many cases the new job sucked worse than the KB Toys job – I’m not an apologist for the LBO industry. But… the industry’s not quite as evil as it’s portrayed although clearly the “value added” is questionable, at best. Generally, piling debt onto a company simply because you can – or think you can – is a dubious business strategy. But it has certainly served the 1% well!![/quote]
And the profits of those banks are, for the most part, paid for by consumers. If bank executives had their compensation slashed in order to pay these costs, it would be one thing, but I sincerely doubt that’s what happened here (could do some more research on this, and will try if I find the time). Romney screwed the banks, and the banks likely screwed their customers (or other employees) in order to make up for the losses.
I don’t distinguish between “taxpayers” and “consumers.” Taxpayers are simply consumers of government services. Whether or not we are being ripped off is all that matters, not whether or not those ripping us off are wearing a “private sector” hat or a “government” hat.
September 3, 2012 at 10:05 AM #751081davelj
Participant[quote=CA renter][quote=davelj][quote=CA renter]
In the end, the government surrendered. At the time, The Boston Globe cited bankers dismissing the bailout as “relatively routine” – but the federal documents reveal it was anything but. The FDIC agreed to accept nearly $5 million in cash to retire $15 million in Bain’s debt – an immediate government bailout of $10 million. All told, the FDIC estimated it would recoup just $14 million of the $30 million that Romney’s firm owed the government.
I think Romney’s kind of a d-bag, but… let’s recall that this particular *bailout* by the FDIC is really a bailout by… the banking industry itself, as it’s the banks that pay a portion of their profits (based on total deposits) to the FDIC to capitalize the insurance fund. So, while I agree that Romney’s maneuverings here are sleazy… I’m curious as to why folks care about how the 1% go about screwing each other – here Romney simply outfoxed his Banksters, and the industry as a whole plugged the hole.
This applies to the money lost in Bain’s failed LBOs as well – it’s the banks and other creditors that took the hits, not taxpayers. Again, who cares how the 1% goes about screwing each other?
The job destroyer/job creator issue is much more complicated. Personally, I think that net/net most LBOs are destroyers of jobs, but… it’s probably not as insidious as it appears on the surface.
Take the KB Toys example. Yeah, they screwed that up bigtime. Lots of jobs lost… at KB Toys. But I’m pretty sure all of the toys no longer sold by KB were sold by someone else, so jobs were created at those other companies. And some of the folks who lost their KB Toys job were probably happier in their new jobs and/or started small businesses themselves. Again, net/net jobs were almost certainly lost and in many cases the new job sucked worse than the KB Toys job – I’m not an apologist for the LBO industry. But… the industry’s not quite as evil as it’s portrayed although clearly the “value added” is questionable, at best. Generally, piling debt onto a company simply because you can – or think you can – is a dubious business strategy. But it has certainly served the 1% well!![/quote]
And the profits of those banks are, for the most part, paid for by consumers. If bank executives had their compensation slashed in order to pay these costs, it would be one thing, but I sincerely doubt that’s what happened here (could do some more research on this, and will try if I find the time). Romney screwed the banks, and the banks likely screwed their customers (or other employees) in order to make up for the losses.
I don’t distinguish between “taxpayers” and “consumers.” Taxpayers are simply consumers of government services. Whether or not we are being ripped off is all that matters, not whether or not those ripping us off are wearing a “private sector” hat or a “government” hat.[/quote]
True, but you’re only looking at one side of this issue. Just as consumers subsidize losses so are they subsidized by other consumers’ profitability. For example, the 80/20 rule typically applies for most banks, especially the largest ones. So, the largest 20% of a bank’s customers – almost all corporate customers – are the really profitable customers and subsidize the vast majority of the others. (On average, 2/3 of bank customers are not profitable or barely so. Voluminous regulations make it very difficult to get rid of them.) So, yes, customers theoretically pay some portion of the losses generated by corporate customers that generate those losses (as they are passed on). But most customers also benefit from the subsidy of the largest (corporate) customers that actually make the bank profitable. I don’t see anyone defending these corporate customers for this subsidy. Instead, most folks just focus on the corporations that cause the losses and end the analysis there.
Likewise, yes, Bain Capital has no doubt done some unsavory things in its pursuit of profits. Things that have not benefitted the middle class. However, many of Bain’s largest investors have been public pension funds (I saw a list recently – it included SDCERA) who have reaped huge gains by investing with Bain. Those gains go toward paying the pensions of mostly middle-class folks. My point is that all of these issues are much much more complicated and far less black-and-white than most in the media would have us believe.
September 3, 2012 at 11:11 AM #751082briansd1
GuestSo it’s all interrelated. It takes a village.
September 3, 2012 at 5:19 PM #751085ParticipantAgreed, davelj. There is usually far more grey than black and white…in most areas of life.
September 3, 2012 at 6:26 PM #751087ParticipantA great op-ed piece written by Hedrick Smith in the NY Times regarding greed and the competing interests who vie for the surplus value created by labor. Didn’t want to post the entire piece, but it’s all relevant. If it’s a problem, let me know and I’ll delete it, Rich. (bold is mine)
………………..IN the rancorous debate over how to get the sluggish economy moving, we have forgotten the wisdom of Henry Ford. In 1914, not long after the Ford Motor Company came out with the Model T, Ford made the startling announcement that he would pay his workers the unheard-of wage of $5 a day.
Not only was it a matter of social justice, Ford wrote, but paying high wages was also smart business. When wages are low, uncertainty dogs the marketplace and growth is weak. But when pay is high and steady, Ford asserted, business is more secure because workers earn enough to become good customers. They can afford to buy Model Ts.
This is not to suggest that Ford single-handedly created the American middle class. But he was one of the first business leaders to articulate what economists call “the virtuous circle of growth”: well-paid workers generating consumer demand that in turn promotes business expansion and hiring. Other executives bought his logic, and just as important, strong unions fought for rising pay and good benefits in contracts like the 1950 “Treaty of Detroit” between General Motors and the United Auto Workers.
Riding the dynamics of the virtuous circle, America enjoyed its best period of sustained growth in the decades after World War II, from 1945 to 1973, even though income tax rates were far higher than today. It created not only unprecedented middle-class prosperity but also far greater economic equality than today.
The chief executives of the long postwar boom believed that business success and workers’ well-being ran in tandem.
Frank W. Abrams, chairman of Standard Oil of New Jersey, voiced the corporate mantra of “stakeholder capitalism”: the need to balance the interests of all the stakeholders in the corporate family. “The job of management,” he wrote, “is to maintain an equitable and working balance among the claims of the various directly affected interest groups,” which he defined as “stockholders, employees, customers and the public at large.”
Earl S. Willis, a manager of employee benefits at General Electric, declared that “the employee who can plan his economic future with reasonable certainty is an employer’s most productive asset.”
From 1948 to 1973, the productivity of all nonfarm workers nearly doubled, as did average hourly compensation. But things changed dramatically starting in the late 1970s. Although productivity increased by 80.1 percent from 1973 to 2011, average wages rose only 4.2 percent and hourly compensation (wages plus benefits) rose only 10 percent over that time, according to government data analyzed by the Economic Policy Institute.
At the same time, corporate profits were booming. In 2006, the year before the Great Recession began, corporate profits garnered the largest share of national income since 1942, while the share going to wages and salaries sank to the lowest level since 1929. In the recession’s aftermath, corporate profits have bounced back while middle-class incomes have stagnated.
Today the prevailing cut-to-the-bone business ethos means that a company like Caterpillar demands a wage freeze and lower health benefits from its workers, while posting record profits.
Globalization, including the rise of Asia, and technological innovation can’t explain all or even most of today’s gaping inequality; if they did, we would see in other advanced economies the same hyperconcentration of wealth and the same stagnation of middle-class wages as in the United States. But we don’t.
In Germany, still a manufacturing and export powerhouse, average hourly pay has risen five times faster since 1985 than in the United States. The secret of Germany’s success, says Klaus Kleinfeld, who ran the German electrical giant Siemens before taking over the American aluminum company Alcoa in 2008, is “the social contract: the willingness of business, labor and political leaders to put aside some of their differences and make agreements in the national interests.”
In short, German leaders have practiced stakeholder capitalism and followed the century-old wisdom of Henry Ford, while American business and political leaders have dismantled the dynamics of the “virtuous circle” in pursuit of downsizing, offshoring and short-term profit and big dividends for their investors.
Today, we are all paying the price for this shift. As Ford recognized, if average Americans do not have secure jobs with steady and rising pay, the economy will be sluggish. Since the early 1990s, we have been mired three times in “jobless recoveries.” It’s time for America’s business elites to step beyond political rhetoric about protecting wealthy “job creators” and grasp Ford’s insight: Give the middle class a better share of the nation’s economic gains, and the economy will grow faster. Our history shows that.
Hedrick Smith, a former correspondent and Washington bureau chief of The New York Times, is the author of “Who Stole the American Dream?”
September 4, 2012 at 7:46 AM #751101Anonymous
GuestThe great things about Rolling Stone and Matt what’s-his-name, is how absolutely objective and un-biased they are. If you read it in RS, it is true.
September 4, 2012 at 10:07 AM #751108Arraya
Participant[quote=Brutus]The great things about Rolling Stone and Matt what’s-his-name, is how absolutely objective and un-biased they are. If you read it in RS, it is true.[/quote]
Be honest, you did not read more than a paragraph or two
September 4, 2012 at 10:11 AM #751106ParticipantWow… Did this get off track.
The point of the article is the hypocrisy of running a campaign on the evils of reckless debt creation while making a fortune off of fomenting reckless debt creation for profit NOT who pays for the reckless debt creation. Kind of like a strategic defaulter x 1000.
September 4, 2012 at 12:02 PM #751112Participant[quote=Arraya]Wow… Did this get off track.
The point of the article is the hypocrisy of running a campaign on the evils of reckless debt creation while making a fortune off of fomenting reckless debt creation for profit NOT who pays for the reckless debt creation. Kind of like a strategic defaulter x 1000.[/quote]
Personally, I wouldn’t have lent a single dollar to any one of Bain’s LBO companies – it’s too risky for me. But… whether or not all of Bain’s debt (both for Bain itself and its portfolio companies) was “reckless” in totality – with 20/20 hindsight, of course – depends on how much was repaid (plus interest) versus how much resulted in losses to the lenders. I don’t know the answer to that but I suspect that if a bank did nothing but lend money to Bain in proportional amounts it probably did o.k. (Recall that even in a BK, debt holders – particularly senior debt holders like banks – generally end up getting a recovery while common shareholders get wiped out.)
I agree we’ve got too much debt, generally (as a society), and that these LBO shops (and the banks that enable them) are not helping things… but “reckless” should be judged in totality rather than one single, or even just a few, transactions.
September 5, 2012 at 11:30 AM #751151GuestYour’re wrong again, Arraya.. Sigh…
September 5, 2012 at 1:18 PM #751154Participant[quote=davelj]
I agree we’ve got too much debt, generally (as a society), and that these LBO shops (and the banks that enable them) are not helping things… [/quote]
This is systemic, too much debt – the process of capital accumulation and reproduction demands it. This contradiction, of needing ever more amounts of debt to keep the capitalist game going, while, at the same time,
having increasingly and systemically detrimental amounts of debt, will keep you guys arguing until final collapse. If the population is not going to take on debt, the government has to. The only other options are forced contraction via “auserity” or letting the market work and having a revolutionary deflationary collapse. We know the latter is not going to happen(not on purpose anyway). hehe – being a liquidation and bankruptcy expert, Rommey appears to be more quailified to be president for what is coming up. btw- RS and Taibbi concedes that the FDIC bailout did not cost tax payers money.[quote=davelj]
but “reckless” should be judged in totality rather than one single, or even just a few, transactions.[/quote]On second thought, I mostly agree with this. Taibbi was probably reaching a little bit to make that point at least with the information presented. Still, the story is enlightening in many ways. Bain was like an underwater homeowner that demanded a writedown or they they were going to strip all valueable assets and pocket the proceeds then burn the place to the ground(which apparently was uniquely contractual on this deal). Somebody slipped a mickey in the loan docs through “government intervention” that seemed to work out for Romney and Bain. How convenient, eh?
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