Financial capital acquitions

Bloomberg on Romney’s bust-out operation  November 25, 2016 – 06:55 pm
Capital Acquisition for Small

Anthony Gardner, himself a private-equity operator,  has crunched some numbers:

10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy.

Gardner then explains, using some of those big deals (including Ampad and GS Steel) as examples, how the asset-stripping operation worked: Bain would buy control of a company using a little money and a lot of debt, load up the target with still more debt, pay out big chunks of the loan proceeds to itself as fees and share buy-backs, and then let the now-worthless company die, sticking creditors, workers, and sometimes the government with the tab.

I’m sure there’s a legal difference between this sort of operation and the classical “bust-out scam” (aka “long firm fraud”) for which small-time grifters go to prison. (Bust-out scammers buy a retailer of, for example, cameras. They then place big orders with a bunch of suppliers, getting routine 30-day trade credit, sell the stuff quickly for whatever it will fetch, move the proceeds to other bank accounts, and go out of business, leaving the suppliers stuck.) But I’m damned if I can see any moral difference.

Source: The Reality-Based Community

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That's awfully short-sighted of you

I quote:
"Prop 55 is what billion-dollar bond measures are supposed to be for: building schools, or bridges, or other worthy onetime capital projects. Unfortunately, voters March 2 may be reluctant to approve two bond measures, so a prop to repair and upgrade crumbling schools may fall victim to Gov. Schwarzenegger's deficit bailout (Prop 57).
"That would be a mistake. CA sch...l amendment that requires the legislature to adopt a balanced budget and creates a healthy reserve fund as a part of the budget process. But it's directly linked to Prop. 57, which can only take effect if Prop. 58 passes. Together they represent Schwarzenegger's proposal for solving the budget crisis-–and together they're an impediment to real tax reform. Vote no."
SF Bay Guardian, 2/18/04

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