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Friday, August 31, 2012

Matt Taibbi Explains Romney's Wealth

Posted by on Fri, Aug 31, 2012 at 6:58 PM

... and what it means. This is a breathtaking well-written must-read.

Last May, in a much-touted speech in Iowa, Romney used language that was literally inflammatory to describe America's federal borrowing. "A prairie fire of debt is sweeping across Iowa and our nation," he declared. "Every day we fail to act, that fire gets closer to the homes and children we love." Our collective debt is no ordinary problem: According to Mitt, it's going to burn our children alive.

And this is where we get to the hypocrisy at the heart of Mitt Romney. Everyone knows that he is fantastically rich, having scored great success, the legend goes, as a "turnaround specialist," a shrewd financial operator who revived moribund companies as a high-priced consultant for a storied Wall Street private equity firm. But what most voters don't know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America's top political journalists for two consecutive presidential campaigns: Mitt Romney is one of the greatest and most irresponsible debt creators of all time. In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on planet Earth.


[Mitt has] been right with them on the front lines of the financialization revolution, a decades-long campaign in which the old, simple, let's-make-stuff-and-sell-it manufacturing economy was replaced with a new, highly complex, let's-take-stuff-and-trash-it financial economy. Instead of cars and airplanes, we built swaps, CDOs and other toxic financial products. Instead of building new companies from the ground up, we took out massive bank loans and used them to acquire existing firms, liquidating every asset in sight and leaving the target companies holding the note. The new borrow-and-conquer economy was morally sanctified by an almost religious faith in the grossly euphemistic concept of "creative destruction," and amounted to a total abdication of collective responsibility by America's rich, whose new thing was making assloads of money in ever-shorter campaigns of economic conquest, sending the proceeds offshore, and shrugging as the great towns and factories their parents and grandparents built were shuttered and boarded up, crushed by a true prairie fire of debt.


Comments (34) RSS

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A very real description of the one percent tactics. Note that this is the essence of I 502 with the regard of outside elitist coming in and taking over instead of earning the assets.
Posted by pupuguru on August 31, 2012 at 7:50 PM · Report this
It's the corporate equivalent of me taking out a bunch of credit cards in your name, getting thousands of dollars out of ATMs, and skipping town.
Posted by Pope Buck I on August 31, 2012 at 7:55 PM · Report this
Free Lunch 3
Good luck explaining that in a 15-second soundbite.
Posted by Free Lunch on August 31, 2012 at 7:58 PM · Report this
@3: Yup. The stupidity of the voter is Rmoney's greatest asset

Posted by mubhappy on August 31, 2012 at 8:05 PM · Report this
Gay Dude for Romney 5
The premise is wrong. Why does wealth need to be explained in the first place?
Posted by Gay Dude for Romney on August 31, 2012 at 8:18 PM · Report this
Will in Seattle 6
Never forget that Mitt, as CEO of Bain and as the Olympics head, received more government cheese than every citizen of Seattle put together.

Posted by Will in Seattle on August 31, 2012 at 8:24 PM · Report this
Ziggity 7
@5: it's not about wealth, it's about hypocrisy. The idea that he "built that" doesn't ring false just because it's based on an out of context misstatement but because it is literally false. This man's success is built on the backs of others. This only needs explaining because he's so adamant in denying it.
Posted by Ziggity on August 31, 2012 at 8:27 PM · Report this
seatackled 8
@3 @4

@2's explanation will fit easily into those 15 seconds.
Posted by seatackled on August 31, 2012 at 8:28 PM · Report this
Because, Moron For Romney, the problem isnt the wealth. It's that he got it by acting like a cartoon super villain and has the audacity to act as if he's a moral human being. The fact that idiots like you enable his serial rapist like approach isn't making it any less despicable.
Posted by mubhappy on August 31, 2012 at 9:00 PM · Report this
Posted by the Buttsore Liberal Left on August 31, 2012 at 9:33 PM · Report this
Mitt=Bob Dole
Posted by Johnston on August 31, 2012 at 9:40 PM · Report this
Eric Arrr 12

Something I can't figure out from Taibbi's article: if corporate raiders like Bain are simply loading their targets up with debt and then discarding them, why do the lenders keep playing along?

Posted by Eric Arrr on August 31, 2012 at 9:47 PM · Report this
That's a hell of an article - a lot of hard work went into it. Thanks for highlighting it. He uses the "archipelago" metaphor toward the end. Reminded me of the Stranger's apt use of it a few years ago to frame the rural v. urban voters in the US. Here's how Taibbi uses it:
Romney, on the other hand, is a perfect representative of one side of the ominous cultural divide that will define the next generation, not just here in America but all over the world. Forget about the Southern strategy, blue versus red, swing states and swing voters – all of those political clichés are quaint relics of a less threatening era that is now part of our past, or soon will be. The next conflict defining us all is much more unnerving.
That conflict will be between people who live somewhere, and people who live nowhere. It will be between people who consider themselves citizens of actual countries, to which they have patriotic allegiance, and people to whom nations are meaningless, who live in a stateless global archipelago of privilege – a collection of private schools, tax havens and gated residential communities with little or no connection to the outside world.
Mitt Romney isn't blue or red. He's an archipelago man.
Posted by gloomy gus on August 31, 2012 at 10:05 PM · Report this
I am not for Romney. I was in the military for a number years, and I have a real problem with why none in a family of six +/- kids felt an obligation to write a blank check with their lives to the people of this country. I think something is very wrong with that.

Why the hell should I trust the lives of my kids to someone who neither served nor whose children didn't feel that it was necessary to put thier lives at risk for the rest of us?

That aside, CDO's, swaps and other financial instruments have a legitimate and beneficial place in our financial environment. The issue is no longer that they now exist or were used in the past, but how they are now regulated in an increasingly integrated worldwide economy. They are here to stay. They are not going away, and they are a constant fixture in this economy. Instead of whining about their existence and the risks they once imposed and currently pose, you really need to embrace and understand them.

Posted by Fairhaven on August 31, 2012 at 10:09 PM · Report this
Noone in the military has "put their lives at risk for the rest of us" since WWII. Just accept it.
Posted by qrq on August 31, 2012 at 10:22 PM · Report this
@12 The lenders get the assets from the liquidation. The typical takeover target has assets and a cash flow. Loading them with debt swallows the cash flow (for debt service), but the company's liquidation value is still typically above the size of the debt. Plus, there are typically loan origination fees, so the banksters get their profits up front and are all too willing to bankroll the pigeon hunters. The only people who get "rolled" are the ones who were working for a living, the mere pawns in this game.
Posted by Brooklyn Reader on August 31, 2012 at 10:30 PM · Report this
"Noone in the military has "put their lives at risk for the rest of us" since WWII. Just accept it."

Bullshit. The fact they are expected to act on your behalf in the event they are called to do so is putting their lives at risk. Most of being in the military is the mind-numbing boredom of waiting for that event, and sometimes it never comes.
Posted by Fairhaven on August 31, 2012 at 10:35 PM · Report this
@15 Agreed.

And as for the fifteen-second soundbite, it's possible, as indicated, and they better do it next week. We really need to reveal this "sterling businessman" for what he really is: The King of Debt.
Posted by floater on August 31, 2012 at 10:37 PM · Report this
dnt trust me 19
From what I've read, Taibbi is a sensationalist and a Daddy's boy. I don't like him at all. As for Mitt, how can I say something that hasn't been already said a billion times on Slog before?
Posted by dnt trust me on August 31, 2012 at 10:43 PM · Report this
Karlheinz Arschbomber 20
@19 in other words, Taibbi is a big doody-head.

Go go corporate kleptocracy! Drain the remaining pools of blood from the corpse of the middle class and the democracy in general. Be sure to waive the flag vigorously and praise Jeebus along the way.
Posted by Karlheinz Arschbomber on September 1, 2012 at 4:46 AM · Report this
"But what most voters don't know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back."

I've always thought that the way Bain pays back their loans is by stealing the money that they to force the company that they've bought to borrow. Is that not how that works? Is there some other way that Bain makes a company pay back the loans that Bain takes out to buy it? I just find the phrasing of "borrowing vast sums of money that other people were forced to pay back" and "leaving the target companies holding the note" unclear as to how the debt is transferred from Bain's responsibility to the company that they've bought.
Posted by ignatz ratzkywatzky on September 1, 2012 at 6:44 AM · Report this
@14 the general feeling of comments of @15 is that the military action since WW2 has been to protect or increase the US 'Empire', and not truly 'protect' the US. Cold War or post Cold War . Most soldiers don't believe it when they sign up, most sign up for noble reasons.

My dad was a WW2 vet with 2 purple hearts from the Pacific. He was very conservative but firmly believed that every president from LBJ lied/misled the country about how we used our military and who in this country benefited from it and who paid the price. So its not just a lefty hippie view.

Posted by Cassette tape fan on September 1, 2012 at 7:25 AM · Report this
tainte 23
i want to like taibbi, and i know he's a smart dude, but he's such a fucking douche. i mean, maher level douche.
Posted by tainte on September 1, 2012 at 8:05 AM · Report this
Pope Peabrain 24
It's like I always said. The deck is stacked against honest, hardworking people in favor of rotten motherfuckers.
Posted by Pope Peabrain on September 1, 2012 at 8:28 AM · Report this
@5 (Gay Douche for Romney):

The premise is wrong. Why does wealth need to be explained in the first place?

Try telling that to the IRS. But I'm sure every Wall Street insider who made out like a bandit betting against the toxic CDOs they designed would agree with you wholeheartedly.
Posted by PCM on September 1, 2012 at 8:50 AM · Report this
Whether the military is used to "protect" the US in any specific instance is debatable. It all depends upon how broadly you define "protect" and "US".

But what is not debatable is that Romney was pro-war as far back as Vietnam. Even though he skipped out on that and became a missionary to France to get the French to give up wine, smoking and premarital sex.

He's been pro-war ever since. But he's never served. None of his sons have ever served either. Romney says that their "service" is helping him get elected.

Meanwhile, Romney uses tax havens to skip out on paying taxes that are used to fund our military.

Pro-war as long as someone else is taking the risk.
Pro-war as long as he can pay lower taxes.

At $250 million, where are the jobs that he's created?
How well do they pay? Average and median.
How many people are employed for 1 year, 5/10/25 years?
Posted by fairly.unbalanced on September 1, 2012 at 9:17 AM · Report this
@GDfR. You still haven't answered the question repeatedly asked of you. Other then the fact that he is not Obama, why should someone vote for Romney? Certainly it can't be his policy proposals, they are thin gruel indeed, and what little he's given us in terms of his economic plan is nothing more then a doubling down on the economic policies that created the current mess. So what is your rational for supporting him?

It is a simple question why can't you answer it?
Posted by Machiavelli was framed on September 1, 2012 at 10:16 AM · Report this
15 second sound bite:

I,. Oba,ma will master the economic royalists like Romney's bain capital and wall street banksters who overleveraged our economy then got bailouts. They did that through deregulation and cutting their own taxes, to make money to fulfill their endless greed, by improvershing the nation which wrote the bailout checks and the middle class which now carries the load of the taxes they didn't pay. We're going to resinstate the rules that banksters can't play with our economy or hold us hostage, and we're goint to use government to grow the economy instead of taxing the many to enrich the few."

Did I go over? It's a start.

oh wait, democrats don't even have the balls to say what they think.
Posted by 30 seconds maybe? on September 1, 2012 at 10:26 AM · Report this
xjuan 29
This reminds me very much to the economic policies put into effect in Latin America and other emerging economies during the 80s and 90s. Following IMF/WB directives, governments sold every asset they had (mining, infrastructure, land, and other resources) because at the time the mantra was 'privatize privatize privatize'. With the fresh money, politicians and the rich filled their pockets and gave the rest to the people. Salaries lost value, middle class fizzled, everyone suffered the consequences. There was no balance, just the urgency to payback the debt so they could borrow some more. The rich got richer and the poor poorer. Unions disappeared, labor rights were stripped away and millions were left w/o jobs. Up until now, many never recovered, but the story changed a little bit afterwards thanks to social upheaval and other political rarities that divided the continent between left and right, government take over vs. private investment. It doesn't really matter: gazillions of dollars landed in the hands of the rich and left those countries to the same banks where Romney and his friends hide them.
What I read here is pretty much the same: Bain Capital buys, liquidates and resells for others to pay back the debt. Job creation? Not so much. Wealth creation? Sure: the Romney's wealth!
Posted by xjuan on September 1, 2012 at 10:29 AM · Report this
further comment: the notion that "oh my god, it's all too complex for those smarties like us who understand the economy and stuff to have to explain it to those bitter working class whites who're probably racist anyway" is the most disgusting elitism and excuse mongering imaginable. all over the world socialist parties have explained it, and done so rather simply, focuing on class struggle as the basic story. if you need more examples go watch the sean penn speech in the movie about willie stark where he says to voters, "y'all are a buncha hicks, and the city slickers are taking you for a ride, and you don't even know it. I just learned it. I know what a hick is because I am a hick, but now I wised up, so vote for me and we'll tax standard oil and build roads and hospitals" etc. He talked to them. Not above them like most liberals do, wrining their hands and whining that obama is doing a great job, it's just that our voters are too stoopid, pass the white wine and brie, please.
btw hiring geithner paulson etc. didn't help either, duh.
Posted by usa dems too elitist on September 1, 2012 at 10:31 AM · Report this
Cato the Younger Younger 31
It's a good article. And to those who say Taibbi and Maher are 1 percenter douche bags...well they are but they are OUR douche bags so we put up with them. And to paraphrase FDR about the Soviets entering WWII on our side "to get a across this bridge I'd even hold hands with Satan if that's what it takes"
Posted by Cato the Younger Younger on September 1, 2012 at 10:50 AM · Report this
pdonahue 32…. DOJ is finally getting around to convicting bond managers of wire fraud, except this is kind of like punishing the trigger puller rather than the officers who made the order.
Posted by pdonahue on September 1, 2012 at 11:38 AM · Report this
Some Old Nobodaddy Logged In 33
It's preposterous to claim Taibbi or Maher are part of the "1%." They are the working rich. What the 1% represents are those whose only contribution is to manipulate money. They don't need to work, they can live comfortably for the rest of their lives. What they really like to do is control people's lives, destroying them if necessary, for whatever their own sadistic ends.
Posted by Some Old Nobodaddy Logged In on September 1, 2012 at 2:50 PM · Report this
@23 HAHAHAHAHAHAHAHA! Somebody with a woman's ass in his avatar called other people douches. That's rich.
Posted by Your name should be Sucker Max on September 2, 2012 at 5:02 PM · Report this

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