Archive for September 4th, 2012

Most of us do not resent people who get rich the old-fashioned way, by inventing something that people want, or providing a service that people need. True, workers may have to struggle for a just wage, but at least this sort of enterprise creates jobs, builds cities and otherwise contributes to the common good.

But there is another way to get rich, one that has predominated since the 80s. It is a mysterious, occult way of manipulating money. If you are like me your eyes glaze over when you hear terms like private equity, venture capital, leverage buyouts, derivatives, and dividend recapitulation. These terms are arcane to all but the initiates of global capitalism.

Matt Taibbi, of Rolling Stone has done the world a favor by chronicling just what this new capitalism means, and just how one of its top practitioners, Mitt Romney, has made his many millions. And it is not by taking any notice of the common good:

“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.

By making debt the centerpiece of his campaign, Romney was making a calculated bluff of historic dimensions – placing a massive all-in bet on the rank incompetence of the American press corps. The result has been a brilliant comedy: A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place. That same man then runs for president riding an image of children roasting on flames of debt, choosing as his running mate perhaps the only politician in America more pompous and self-righteous on the subject of the evils of borrowed money than the candidate himself. If Romney pulls off this whopper, you’ll have to tip your hat to him: No one in history has ever successfully run for president riding this big of a lie. It’s almost enough to make you think he really is qualified for the White House.”

Read more: http://www.rollingstone.com/politics/news/greed-and-debt-the-true-story-of-mitt-romney-and-bain-capital-20120829#ixzz25VyctJgh

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