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The Fundamental Lie Behind Mitt Romney (and the Financial Elite)

The Fundamental Lie Behind Mitt Romney (and the Financial Elite)

By Dennis Loo (8/30/12)

Rolling Stone is reporting in its online edition today (“The Federal Bailout That Saved Mitt Romney”) - based on Freedom of Information Act documents they have obtained - that Romney’s much touted rescue of Bain & Company (B&C) from bankruptcy in the early 1990s was in fact a game of extortion exercised by Romney against the U.S. government (and in turn, U.S. taxpayers). Romney and his gang of financial mavens walked away from their debts of more than $30 million to the U.S. government with, in effect, a $10 million bailout, allowing B&C to survive when by all rights it should have gone bankrupt.

The background to this story: B&C created a spin-off Bain Capital (BC) in 1984 – headed by Romney - to engage in LBOs (leveraged buyouts). LBO’s were all the rage of the 1980s’ Reagan/Bush years and the cutting edge of the new economic game in which some of the biggest monies were to be made by buying up companies, saddling them with crushing debt in the process of borrowing the money to buy those very companies, then selling off those companies’ assets piece by piece like a car thief stealing a car and taking it to a chop shop for its parts. This is also how the infamous Savings & Loan disaster was engineered – looting regular people’s, including retirees’ life savings, so that a few robbers could raid the S&L’s and saddle the taxpayers with hundreds of millions in debts. This is how the cheerleaders for “makers” have made their fortunes. This is compared to alleged “takers” (for example, public employees such as teachers, nurses, and firefighters who do nothing but “take” from the people by teaching them, healing them, and protecting them from being burned alive).

B&C lost much of its operating capital when the principals of B & C cashed in B & C stock in order to fund BC. Then a series of events put them in further and deep trouble. As Rolling Stone describes it:

First came scandal: In the late 1980s, a Bain consultant became a key figure in an illegal stock manipulation scheme in London. The firm's reputation took a hit, and it fired 10 percent of its consulting force. By the time the 1989 recession began, Bain & Company found itself going broke fast. Cash flows weren't enough to service the debt imposed by the founders, and the firm could barely make payroll. In a panic, Bill Bain tapped Romney, his longtime protégé, to take the reins.

Romney proceeded to try to rescue B&C by renegotiating B&C’s crushing debts with its four largest creditors (which included the Federal Government) and also got the B&C principals to return $25 million of the monies they’d raided from B&C and forgive $75 million in debts in exchange for being exempted from most future liabilities.

Romney’s plan shortly went bust as B&C’s revenues were inadequate to meet the terms of the deal and Romney went back to redo the deal, this time using the leverage that he had engineered in the deal that if the creditors didn’t accept the reduction of B&C’s debts by, at first 65%, and then, subsequently squeezing even further, 70%, then B&C would instead pay its management (VP’s and up making more than $200,000 per year) big bonuses and draining up the $25 million that they had in cash. This would ensure B&C’s bankruptcy and leave its creditors with very little to liquidate in value. Given the choice, the creditors, including the Feds, capitulated to Romney’s extortion play.

What is notable about this story is how closely it matches the manner in which Romney and his brethren operate with respect not just to corporations that they control but the U.S. economy and its people: the very rich, while making speeches and daily pounding the airwaves and media outlets with their market-solves-everything talk, operate in the precise opposite manner to their rhetoric. They use every advantage they can through their connections with people in high positions in government and business (Romney had close ties to people in the FDIC during this deal-making) to provide themselves huge tax breaks and government subsidies and protection, award themselves fat bonuses for doing so, suck dry the working people who make these concerns actually go and when their house of cards is about to fall apart, extort the government to bail them out or else they will bring the economy down. The perversely revealing thing about this particular story is how Romney used the threatened prospect of executive bonuses being paid to bankrupt the company as a way to force the government to forgive 70 cents for every dollar that B&C owed.

The reason that Romney can’t and won’t reveal his taxes is because his implementation of this this-is-all-for-me-and-fuck-the-rest-of-you philosophy would stand out so starkly that his candidacy would be destroyed.

This tale shows the fundamental lie that rests at the heart of Romney and more broadly the GOP’s claims that they stand for fiscal responsibility, that government is the problem and “private enterprise” the solution, and that we would all be better off without government subsidies by unleashing the forces of the “free market.” Those such as Romney and Ryan who shout the loudest about being self-reliant and contemptuous of “government handouts” and who extol the supposed virtues of the market are in fact among the biggest scofflaw, parasitic, welfare recipients of all, not in the hundreds or thousands of dollars (small fry stuff) but in the millions and, for their ilk, billions. You know, where the big boys and girls play. Their arena is the whole world where they use the government treasury as their personal piggybank and get the ordinary citizens of the world to fight their wars for them while they sit at home comfortable in their mansions, displaying great big American flags from their flagstaffs.

People Board Their Homes as Romney and Ryan Preen for the RNC

People Board Their Homes as Romney and Ryan Preen for the RNC

By Y. (8/29/12)

Editor’s Note: We are pleased to announce that Y is going to be writing a regular short commentary on Wednesdays and Fridays for This is her second article. Her first can be found here. Her article prompts us to ask: what is worse, a tropical storm/hurricane or the RNC?

In a busy city like Los Angeles, people mobilize themselves and others on catchphrases like “time is money” or “the show must go on.” Almost everyone has learned to adapt to the fast pace of their times. We have given time a monetary value, and if we waste time, it also seems like we have wasted or bypassed the opportunity to make any profit. In part this has to do with objectives. Everyone is running on a different agenda/objective. Think of the game Monopoly, the goal is to monopolize all the property and in order to do so, one will have to develop a plan/agenda that will lead to the final objective, in this case, monopolization of all property. This game is not far from reality. The invasion of Iraq is just one of various examples. The U.S. government and mass media had to accuse Iraq of WMD possession in order to legitimize the U.S. invasion. This kind of legitimization is aggressive and not to mention ridiculous. The Bush Administration failed to consider how this would affect everything else, for example, the innocent women and children that would pay and are paying the price, the economic toll this would have on the entire country there and here. These issues might not have been overlooked, but simply were ignored because at stake was a bigger agenda. The objective was to invade Iraq at any cost, rationalizations and explanations were secondary and would mutate as time went on, with each one as illegitimate as the one before it.

There seems to be a humongous gap between the people and government officials. Let’s go back as far as August 29, 2005 when Hurricane Katrina struck New Orleans. The failure to adequately prepare for such a storm and the excruciatingly slow, almost non-existent, response after the storm was criminal and unacceptable. Although Isaac does not pose as big a threat as Katrina, almost every effort is being done to successfully execute the National Republican Convention taking place in Tampa, Florida. Party Chair Lenny Curry announced that the Republican Party of Florida will be “ directing storm response donations online to the American Red Cross” in what he called “ a show of solidarity with citizens affected by Issac.” Donations to the American Red Cross are almost like putting a Band-Aid on a bullet wound. Meanwhile, the GOP’s refusal to even acknowledge the grave dangers to the planet of global warming is like handing more bullets to the gunman responsible for the bullet wound in the first place. Curry then states that depending on the impact of the storm there would be room to alter the convention proceedings but at the end of the day “the show must go on.” Is the ghost of Katrina haunting the Gulf Coast again and will this affect the RNC? Can we justify statements like “ the show must go on” on the sole basis that the elections are so close and politicians have prioritized their business first?

The disparity between the people and government officials and the corporations they represent is enormous. The needs of the people are not being met. Why? Mitt Romney along with Paul Ryan are on a time crunch, elections are around the corner. Their agenda is far different from those who are boarding up their homes. Government and corporate officials live in a completely different world, detached from the reality of the rest of us. The disconnect between those on the bottom and those on top who jockey for power has draped a curtain that reveals the struggles of those at the bottom just enough so that those on top might sometimes acknowledge some of those problems, yet never get around to fixing them – or even, truth be told, engage in polices that make those problems far worse.

U.S. DOJ: Prisoners Tortured by U.S. Can’t Reveal That They’ve Been Tortured … Because It Will Reveal “National Security Secrets”

U.S. DOJ: Prisoners Tortured by U.S. Can’t Reveal That They’ve Been Tortured … Because It Will Reveal “National Security Secrets”

By Y. (8/27/12)

Editor’s Note: In the short commentary that follows, Y comments on the Reuters report that Guantanamo Bay detainees and their attorneys may not reveal that the detainees have been tortured. As Reuters’ Jane Sutton and Josh Meyer write:

Prosecutors have said in court filings that any revelations about the defendants' interrogations could cause "exceptionally grave damage."

Civil libertarians argue that if those interrogation methods really are top secret, then the CIA had no business revealing them to al Qaeda suspects.

But, of course, the top secret “enhanced interrogation methods” that the U.S. government has used and is using on its prisoners must not under any circumstances be revealed because this is “double secret probation” material. And when the U.S. government refers to “exceptionally grave damage,” they aren’t including and certainly don’t mean the exceptionally grave damage done to the bodies and psyches of the people they’ve tortured and are torturing.

The T word.

Torture has been more or less taboo for government officials - for years they denied that they were doing it and now that the cat’s out of the bag, the people who they’ve tortured aren’t supposed to reveal that they’ve been tortured. U.S. officials at Guantanamo Bay now have to clean up after themselves and are tracking what inmates are disclosing and to whom. The question is no longer whether prisoners were tortured, we know that they were and are; how government officials justify it is a whole other story. Guantanamo Bay prisoners are being censored when talking about their torture experience to their attorneys. Law is now at the government’s discretion. These prisoners were finally given attorneys, yet the minute they have them, they are told that certain matters in regards to their case may not be discussed, even with their attorneys.

Whose side is Justice on? Who is the law protecting? Every day government officials are coming up with a new strategic rule that prohibits prisoners from leaking out the truth about how they were and are tortured. Not just in Guantanamo, but everywhere, people are fighting laws in place, from immigration to health care. Once people come up with a way to take on the system, the system itself comes up with an act or passes a law that prohibits that too. How far or close are we from Democracy? Or have we just gotten accustomed to thinking of the U.S. as democratic that we overlook how far from Democracy we are?

Elaine Brower 2

Elaine Brower of World Can't Wait speaking at the NYC Stop the War on Iran rally 2/4/12