Archive for January, 2008
On January 25th the astroturf flak-claque fraud-blog laughably titled Evangelicals for Mitt touted the newly released Focus on the Family video voters guide in a blog burst titled FOCUS ON THE FAMILY’S ASSESSMENT
Charles Mitchell, the author, cites Time’s account of the voters guide and emphasizes how the voters guide is said to criticizes Gov. Huckabee. Mitchell also quotes, but allows to pass without comment, this particular claim:
[...] “Mitt Romney has acknowledged that Mormonism is not a Christian faith,” Minnery adds. “But on the social issues we are so similar” [...]
About Time’s account of the Focus on the Family voters guide, Mitchell issues this strange disclaimer: “I’m not saying the TIME story is right—and Minnery denies that it is.”
Precisely what Minnery denies Mitchell leaves unspecified. But could it have something to do with Minnery’s preposterous claim that Romney had, at any time, acknowledged that he is not a Christian?
“Last week, the political arm of James Dobson’s Focus on the Family released an online video voter guide to help Christians sort through the “pro-family” records of the presidential candidate,” writes Michael Scherer for http://www.time-blog.com’s Swampland in a blog burst titled Focus on the Family Voter Guide Wrong About Romney
The guide offers largely negative appraisals of Rudy Giuliani, John McCain and Mike Huckabee, and a far more glowing description of Mitt Romney.
But not everything the voter guide says about Romney is true. In one key part, Tom Minnery, a public policy expert at Focus on the Family, says the following:
Mitt Romney has acknowledged that Mormonism is not a Christian faith, and I appreciate his acknowledging that.
On Saturday, I read this quote to Eric Fehrnstrom, Romney’s traveling press secretary. He did not hesitate or mince his words. “The governor has not made that acknowledgment,” Fehrnstrom told me. “He has said that his belief is not the same as others. But there is no doubt that Jesus Christ is at the center of the LDS church’s worship.”
In fact, the Church of Latter Day Saints, also know as the Mormon church, holds as a central belief that it is a Christian faith. This belief is a concern for some evangelical Christians, who see Mormonism as a competing religion. On the campaign trail, Romney has avoided discussing his faith in depth, and he has acknowledged that there are differences between his faith and others. But he has not been quoted saying Mormonism is not a Christian faith [...]
Romney’s own claims on this issue have been vexed and misleading. See:
Romney retreats from “I believe that Jesus Christ is the Son of God and the Savior of mankind” blur-the-distinctions line, falls back to weaker, compromising, pragmatic, “different faiths, same values” line delivered through screen of Evangelical surrogates—conclusion: Romney’s “speech” failed completely
Dr. Dobson’s publicly articulated—or often disarticulated—attitude toward Romney has also been vexed and varied:
“‘Tim Russert said on MSNBC today that Mitt Romney ‘could buy the (GOP) nomination,'” writes Doug Perry in an Elections blog post for the Oregonian titled Romney Trying to ‘Buy’ Nomination While Clinton Turns to Delegate-Free Sunshine State
How? He’s got the money and John McCain doesn’t. And because, unlike the weeks of retail politics required of candidates in Iowa and New Hampshire, Florida and Super-Duper Tuesday are largely about TV ads.
This all bodes well for the former Massachusetts governor, who is spending millions of his own dollars on this presidential quest. On the stump and at coffeeklatsches, Romney is clearly a robot. A likeable one, sure, but who can trust robots? [...]
We discuss and criticize the Russert “Romney can now buy the nomination” fixed point here:
The Russert’s “Romney can now buy the nomination” fixed point is confirmed by Romney’s hugely expensive loss in Louisiana, a contest where F2F and retail politics were decisive (a contest that Romney could not buy), and a contest in which Romney spent the most to get the least ROI.
[...] In addition to the uncommitted delegates and McCain and Paul supporters, Governor Mitt Romney appears to have won a handful of state convention delegates,” writes the shameless Romney sycophant Jim Geraghty in an NRO Campaign Spot post titled Louisiana’s Results, Clarified
“Governor Romney and his team have worked hard for over a year in Louisiana to build a strong organization,” Villere said. “The Governor has been to Louisiana more than any other GOP candidate, including one trip specifically to appear at a state party fundraising dinner,” he said. “Governor Romney has shown a commitment to Louisiana that is second to none and the strong support he has here is an indication that Louisiana Republicans are excited about his candidacy,” Villere said [...]
Our conclusion: The other candidates had until now to take out Romney. They failed.
We had predicted
(a) that the other candidates would organize around regional strongholds and contest single states
(b) that the other candidates would concert themselves against Romney
(a) and (b) raised the costs of Romney’s operations tremendously. But the other candidates could never concert or coordinate their efforts against Romney with the intensity or consistency necessary to stop him.
The task of stopping Romney now passes to the Democrats.
“From the day he announced his candidacy, observers have noted that Mitt Romney ‘looks presidential,’ yet this appearance advantage did not particularly help Romney in the early primary states,” writes Ana Marie Cox in a Time.com article titled Romney’s Cash Advantage Sinks In
In Iowa and New Hampshire, states where voters expect — and usually receive — face time with every candidate, Romney came across on the stump as stilted and rehearsed. Voters flocked instead to the personality rich and cash poor campaigns of Mike Huckabee and John McCain [...]
[...] The good news for Romney is that in the larger, more diverse state of Florida, most voters won’t have a chance to make that up close judgment. If Romney is able to surge past John McCain here in the state’s primary on Jan. 29 — and most recent polls have McCain with a very slight lead — it will most likely be due to his ability to spend freely on expensive advertising throughout the state.
Throughout the primary season, Romney has been accused of trying — though often failing — to buy elections. But Florida is the first state money really can buy. “Romney is the only one [of the four major candidates] who has the money on hand to go on the air in our 10 major media markets,” says Daniel Smith, a professor of political science at the University of Florida. “For everyone else, it’s cost prohibitive to run a media campaign in Florida. It’s completely different from New Hampshire, Iowa or Michigan.”
As in every other state contest thus far, Romney is far outspending his Republican rivals on paid advertising. In Iowa he spent more than Huckabee by a ratio of 7 to 1, while in New Hampshire and South Carolina, he spent more than McCain by at least 5 to 1. And in the past month, one rival campaign estimates that Romney has spent twice the amount spent by any other candidate. He has also worked to gain an advantage in what consultants call “earned media” — the free, generally friendly local news coverage that a candidate generates by swinging through town. On that front, he’s made high-profile visits to the state since 2005 — when he had an off-the-record meeting with then-Governor Jeb Bush, several of whose former staffers work for Romney today. Thursday evening’s surprisingly civil GOP debate played to his strengths as well: on camera, Romney came across as prepared, not scripted.
Florida may be a diverse state, but Romney makes much the same appeal to all Floridians; an unshakeable belief in reuniting the “Reagan coalition” of social, fiscal and foreign policy conservatives. Romney staffers seem confident that the governor can attract the social conservatives and evangelicals who have been supporting Huckabee —who has greatly reduced his presence here since his loss in South Carolina — along with a good chunk of the fiscal conservatives for whom Romney’s private sector background has an almost mystical appeal [...]
[...] Still, Romney advisers do have some basis for their optimism about Tuesday’s race. The Florida GOP primary is the first “closed” primary in the country; only registered Republicans can vote. McCain, while pulling a fair share of registered Republicans in other states, has been put over the top by independents. As national spokesman Kevin Madden puts it, “There is no refuge in the independent vote in Florida.” But fortunately for Romney, there is some refuge from too much face-to-face, retail politics in the Sunshine State [...]
Yes. Passing in review, (a) Romney fails to mobilize voters when he is forced to actually meet them and talk to them—i.e. in retail politics or F2F Romney fails to impress, or, worse, he mobilizes support for his rivals. Hence (b) in large, diverse states where retail politics and F2F contact is less decisive, Romney enjoys a potentially decisive advantage because (c) his vast and personal reserve of cash allows him to reach more voters in a more controlled way, by means of controlled, scripted, and focus-group tested television advertising.
You would think the Romneys would want to suppress such unflattering, almost despairing analysis. But no, even their supporters—e.g. Mitchell of Evangelicals for Mitt—argue the same case, exactly the same way (see the point, counterpoint link below). Apparently Cox and Mitchell are rehearsing their lines from the same talking points memo. (Either that or this is an emerging fixed point in the discussion of Romney’s fitness but we sort of doubt it.) Here is where we discuss and criticize the Cox-Mitchell “Romney wins when Romney is a talking head on a television screen” trope:
[...] “That’s why the GOP’s other post-Florida choice, Mitt Romney, troubles me so,” opines race42008‘s DaveG in an editorial discursis titled Uniters and Dividers
Ultimately a sane, empirical, good government Northeastern Republican, Romney has spent the past few years letting the GOP Pharisees know that they can push him around. He’ll change his views on anything and everything in order to please the Pharisees. Instead of running to lead the GOP, he’s running to be the proxy candidate of the dividers. And the sad part is, that sort of strategy might actually work due to the cocoon mentality of today’s Republican base. Conservatives who react with dismay at the Independents that cross the aisle to vote for McCain in GOP primaries need to step back and think about what they’re saying — that no new voters are welcome in today’s Republican Party. We’ve seen this attitude before in places like California and New Jersey, where similarly terrified conservatives destroyed their respective state parties rather than allow them to be modernized. Sadly, the GOP may have to lose a couple of more elections before the base finally learns that fifty-one percent, and not moral certitude or a sense of entitlement, is what makes a majority [...]
We heartily concur.
Regard: Political power requires developing the issues—living issues, felt issues, current issues—that can form the basis of a coalition. After you have developed your issues coalition, or at least its basis, and after you have tested its themes at the ballot box or other performance indicators (e.g. fund raising, attendance at rallies, play in the media), then and only then you can begin the slow, patient, and often painful process of popular education through political action and calls to action or calls for support, through policy proposals, and through the pursuit of a positive program to consolidate and continually renew your coalition. You will suffer reverses, setbacks, take a lot of beatings, and you will be forced to compromise at every turn, but this is the way the game is played.
In other words, you begin from the experience of the people, especially the people who vote, by acting on their self-interest, which you identify with the national interest because, after all, they are the nation or at least an important part of it. Then you begin the slow, painful process of drawing them closer to your point of view—this is when ideologies form—after, and not before, political labor, action, and thorough self-criticism and review.
This is where the center-right and the conservative movement have failed most critically, and probably fatally at least in the short term.
In the person of Willard Milton Romney, however, the GOP establishment and its institutions propose another path to power, only it isn’t popular power but their own power, a path predicted by the iron law of institutions.
We call it Romneyism.
Here is our question. Is the Romney candidacy
(a) the case of a corrupt party establishment bilking a super-rich ingenue of his many millions?
(b) the case of a super-rich Richard III purchasing a morally, deologically, as well as financially bankrupt GOP establishment to pursue his own advantage?
Or could both (a) and (b) be true? To be honest, we don’t yet know.
“MIAMI — As the economy takes center stage in the Republican presidential race, Mitt Romney spoke in unusually personal terms about his own business experience during remarks to the Latin Builders Association this morning,” writes the credulous Scott Conroy in a cbsnews blog burst titled Romney: Making Layoffs “An Awful Feeling”
“I’ve had settings where I’ve had to lay people off,” Romney said. “It’s an awful feeling. No one likes laying people off. Someone who thinks you’re a bad person if you lay someone off doesn’t understand. You feel bad. It’s probably the hardest thing I’ve done in business was asking a person to be let go.”
(1) Follow Romney’s “reasoning”
(a) Someone who thinks you’re a bad person if you lay someone off doesn’t understand.
(b) You feel bad.
(c) It’s probably the hardest thing I’ve done in business was asking a person to be let go.
Note the passive voice in (c)—Romney’s awkward attempt to obscure his own agency—not lay a person off, or let a person go, but “ask a person to be let go.” But this bizarre locution implies consent, as if those “to be” laid off were given a choice!
(2) So we should not resent those who like Romney lay people off because they feel bad about it? Is Romney serious? Is Romney really making the case that his feelings are more important that peoples’ jobs?
(3) Does it not follow that Romney can excuse himself of any act by referring to his hurt feelings? Yes, I campaigned negatively against McCain and Huckabee—I lied, and I distorted their records—but anyone who would call me a bad person just doesn’t understand—I felt really bad about it.
(4) How do you reconcile Romney’s appeal to the sufferings of fund managers who engineer layoffs to benefit investors at the expense of workers with Romney’s repeated promise “to fight for every job”:
[...] [Romney:] “You’ve seen it here, in furniture. You’ve seen the textile industry, where Washington watched, saw the jobs go and go,” the Republican presidential contender told a group of senior citizens at the Sun City Hilton Head Retirement Center.
“I’m not willing to declare defeat on any industry where we can be competitive. I’m going to fight for every job,” Romney said […]
Answer: You can’t. The two positions cannot be reconciled.
Back to the credulous Conroy:
Throughout the campaign, Romney has touted his success in the consulting and venture capital fields in contrast to the “lifelong politicians” in the race. But yesterday, Mike Huckabee alluded to a negative impact of Romney’s days at Bain Capital, as the former Arkansas governor continues to brandish his own brand of economic populism.
“And I would also suggest one needs to look very carefully at what exactly the business record is,” Huckabee said. “If it’s taking companies who are in serious trouble, buying them when they are in pain, selling off their assets, and then making a huge profit off of it, that’s not something a lot of Americans can relate to, except those who have lost their jobs because of those kinds of transactions. If that’s the turnaround, there are a lot of Americans who would really not like to see their own lives turned around quite like that” [...]
Yes. We have harped on these finely tuned strings for a long, long time:
- Flaherty: “Layoffs are a common result of private equity takeovers, with [Romney’s] Bain Capital no exception”
- Samuelson: “it is becoming clear that capitalism’s most dangerous enemies are capitalists”—our conclusion: capitalists like Romney
Back to the credulous Conroy:
[...] “If you haven’t changed and improved the way you provide your product to the marketplace, your competitor will, and ultimately you’ll be gone,” Romney said. “Constant improvement, constant change is called for. And that’s where I spent my life, where you have, in the private sector” [...]
Here is the problem: the marketplace operates according to different rules than the state. Citizens have a right to expect continuity from the decisions and operations of a state. Citizens also have a right to expect continuity from their elected officials. For example, Romney’s sudden conversion to the notion of Washington supervising industry, here neatly summarized and commented upon by the estimable Daniel Larison:
[...] There is a developing conventional wisdom that Mitt Romney primarily appeals to and represents “economic conservatives” within the Republican coalition, a view that has not been shaken very much by the candidate’s interventionist promises to quintuple government spending on technology research to benefit Michigan’s battered auto industry. Romney backers seem to be unfazed by this, just as his record of signing universal, government-mandated health care into law did not deter them from labeling him sound on economic and fiscal policy, but among those not already declared for the former governor, Romney’s latest round of telling his audience whatever they wanted to hear has gone over very badly.
Romney must be one of the first Republican candidates ever to be likened to a Soviet premier on account of his economic proposals [...]
[...] There are two things particularly striking about Romney’s appeal to Washington for the solution to Michigan’s economic woes. The first is that Romney has partly built his “transformation” campaign around the argument that the federal government has been overspending, but has vowed to increase spending within the “first 100 days” in a transparent (and successful) effort to buy votes in Michigan—his own fortune is no longer sufficient to buy supporters, so now he must draw on our money as well. The second, more telling problem is that Romney embodies not only the image of corporate America, but also possesses the mentality and ideology of the free-trading globalists who policies have worked to reduce manufacturing in Michigan and across the Midwest and the country to its present state. Even if Romney’s proposals were sincere (doubtful) and even if they were efficacious (unlikely) in ameliorating some of the damage of broader trade policy, he has stated that he has every intention of pushing for additional free-trade agreements and exacerbating the causes of de-industrialization and job losses. It is therefore all the more disturbing that someone who embraces the policies that have contributed to the economic ravaging of his home state can win over a plurality of voters based on little more than sentiment and promises to make them more dependent on the government that has failed them [...]
[...] “TAMPA, Fla. — Mitt Romney lost three of the first five big Republican contests and lags behind in most major state and national polls. Yet he is still widely seen as a credible contender for the nomination thanks mainly to one trait: his wallet,” writes ELIZABETH HOLMES for online.wsj.com in an article titled Romney’s Wallet Keeps Him in the Race
A senior aide to Mr. Romney says the millionaire investor plans to spend as much as $40 million in the campaign. Mr. Romney spent $17.4 million of his own money on his campaign through the third quarter of last year, according to the Federal Election Commission.
At a time when some campaigns are running dangerously low on funds, Mr. Romney’s ability to self-finance will make it difficult to count him out of the race until the very end [...]
Here is the problem with Holmes’ account: the US$17.4 million figure goes back 2 months. How much Romney actually spent of his own money in Iowa, New Hampshire, Michigan, South Carolina, and now Florida, is unknown, and will remain unknown:
“In recent months Mitt Romney, whose personal fortune is estimated to be as much as a quarter of a billion dollars, blanketed the airwaves of Iowa and New Hampshire with dozens of campaign advertisements,” write the editors of the Washington Times in an article titled Romney and his money
[Romney] clearly has spent tens of millions of dollars of his own money in Iowa and New Hampshire, but he steadfastly declines to say how much. The Romney campaign suffers from a glaring transparency deficiency, which it should address at once.
Mr. Romney has every right to bankroll his presidential campaign with his own money. No argument here. But why has he refused to tell voters how much of his personal fortune he has funneled to his campaign since the end of the third quarter?
On Jan. 4, the day after Mike Huckabee defeated Mr. Romney in Iowa, this newspaper asked the Romney campaign to say how much Mr. Romney had personally contributed since Sept. 30. During the first nine months of last year, Mr. Romney had given his campaign $17.4 million, about 90 percent more than the $9.2 million in the campaign’s cash-on-hand on Sept. 30 [...]
Yet the Romneys refuse to release their fourth quarter numbers until the filing deadline of Jan. 31. This date falls after the primary contests in Iowa, New Hampshire, Michigan, Nevada, South Carolina, and Florida.
Also from the article, Romney’s fund raising “declined from US$20.8 million in the first quarter to US$13.9 million in the second, to less than US$10 million in the third.”
Romney increased his own contributions to compensate.
Transparency issues? Is this how Romney will run our government?
“NEW YORK (Reuters) – Recalling his days as a businessman, Republican U.S. presidential contender Mitt Romney often cites the 25 years he spent in the private sector creating jobs,” which apparently isn’t true, writes Michael Flaherty of reuters.com in an analytical discursus titled Private equity past may cloud Romney’s jobs pitch
But as the leader of private equity firm Bain Capital from 1984 to 1999, Romney’s record shows that while some of the firm’s investments helped companies grow, others ended in thousands of layoffs, and in some cases, bankruptcy.
Layoffs are a common result of private equity takeovers, with Bain Capital no exception. Although Romney is credited with helping make Bain the private equity powerhouse it is today, buyout firms are known more for cutting jobs — not creating them.
“I believe most Americans want their next president to remind them of the guy who they work with, not the guy who laid them off,” Republican rival Mike Huckabee said in a campaign ad and in many campaign speeches.
Companies such as office supplier Staples Inc. and pizza company Domino’s were successful Bain investments under Romney.
But medical test maker Dade Behring, circuit board maker DDi, American Pad & Paper and auto parts company Cambridge Industries are among the companies that went bankrupt after Bain invested in them with Romney at the helm.
“The bottom line of a private equity buyout is not to create jobs. The point is to make money,” said Marisa DiNatale, senior economist at Moody’s Economy.com. “In many cases, the point is to pare down the company and make it run as efficiently and as profitably as possible. Oftentimes that includes cutting jobs.”
Private equity firms buy companies by borrowing most of the money, and sell them later, keeping about 20 percent of the profit on the sale and giving the rest back to their institutional investors.
Romney worked as a consultant at Boston-based Bain & Co before he was tapped to run Bain Capital. The firm started out with more of a venture capital strategy and later moved more toward traditional leveraged buyouts.
The private equity model is built on loading companies up with debt — which can ultimately prove too heavy a load for the business, as was the case with DDi [...]
Precisely. This is not jobs creation or even wealth creation. Private equity is about gaming the system; it is about optimizing, eking out hairline efficiency gains, discovering opportunities for consolidation or liquidation etc. We harp on these strings often around here:
This is what interested us the most in Flaherty’s analysis:
[...] Romney knows a lot about the economy, says a former Bain Capital employee who worked under him. But on the topic of jobs, he says Romney was never one to put expanding a company’s payroll ahead of keeping costs low.
“It’s fair for him to claim that he spent 20 years of his life in the private economy. And therefore he understands what makes businesses succeed and fail,” said the former Bain employee, who did not want to be identified. “But that’s different from saying he was in a position to oversee job creation as a whole. Bill Gates grew a business from scratch. That’s not what you do in private equity. You’re an investor” [...]
A former Bain employee willing to speak frankly?
[...] “Many professional conservatives do not regard Mike Huckabee or John McCain as true conservatives,” writes David Brooks in a NYT editorial titled The Voters Revolt
“I’m here to tell you, if either of these two guys get the nomination, it’s going to destroy the Republican Party,” Rush Limbaugh said recently on his radio show. “It’s going to change it forever, be the end of it.”
Some of the contributors to The National Review’s highly influential blog, The Corner, look to Fred Thompson and Mitt Romney to save the conservative movement. Their hatred of McCain is so strong, it’s earned its own name: McCain Derangement Syndrome.
Yet a funny thing has happened this primary season. Conservative voters have not followed their conservative leaders. Conservative voters are much more diverse than the image you’d get from conservative officialdom.
In South Carolina, 34 percent of the Republican voters called themselves “very conservative,” but another 34 percent called themselves only “somewhat conservative” and another 24 percent called themselves “moderate.” Only 28 percent of the primary voters there said that abortion should be “always illegal.” This, I repeat, was in South Carolina, one of the most right-wing places in the country.
While various conservative poobahs threaten to move to Idaho if Huckabee or McCain gets the nomination, the silent majority of conservative voters seem to like these candidates. Huckabee has done very well among evangelical voters while loudly deviating from conservative economic orthodoxy. John McCain leads among Republicans nationally. He has a 71 percent favorable rating and a 23 percent unfavorable rating. He has a 63 percent favorability rating among Huckabee supporters, 66 percent favorability among Romney supporters and 81 percent favorability among supporters of Rudy Giuliani. These are much higher second choice ratings than any other candidate.
McCain’s winning coalition in South Carolina was pretty broad. He lost among the extremely conservative but won among the somewhat conservative and the moderates. He lost among those who go to church more than once a week, but won among weekly churchgoers. He won among those who strongly support the Bush administration and among those who are angry at the Bush administration, among those who strongly support the war and among those who strongly oppose it. He won every income group over $30,000.
Even among people who want to deport every immigrant, McCain only lost to Huckabee by 34 percent to 26 percent.
The fact is, this has been a bad year for the conservative establishment. Fred Thompson was supposed to embody the party line, but he has fizzled (despite being a good campaigner the past month). Rudy Giuliani proposes deep tax cuts that do not seem to excite. Mitt Romney ran as the movement candidate in Iowa and New Hampshire and grossly underperformed. Now he’s running as a nonideological business pragmatist for the exurban office parks, and his campaign has possibilities.
The lesson is not that the conservative establishment is headed for the ash heap. The lesson is that the Republican Party, even in its shrunken state, is diverse. Regular Republican voters don’t seem to mind independent thinking. There’s room for moderates as well as orthodox conservatives. Limbaugh, Grover Norquist and James Dobson have influence, but they are not arbiters of conservative doctrine [...]
The emphases are ours, all ours.
[...] “The former Massachusetts governor, who made a fortune as a venture capitalist before entering politics, said he saw a worrying trend in growing numbers of U.S. banks seeking capital offshore following a blowout in subprime mortgages,” writes Jason Szep with editing by Lori Santos, in a reuters.com release titled Romney warns of distressed markets
He stopped short of predicting some banks would face the risk of insolvency. But in a speech earlier to Florida’s Jewish Republican community he said he had been warned of such a crisis.
“We were talking about the credit crisis and how bad the credit crisis was and how to make sure the credit crunch is not spread, and someone sent a message back that said the credit crisis is so 2007 — 2008 is a solvency crisis,” he said.
“And that’s obviously a very fearful perspective and hopefully one that does not rear its ugly head in reality. But people are talking about institutions having difficulty maintaining their level of capital,” he added.
Stocks tumbled at the open on Tuesday, joining a global equity rout on fears of a U.S. recession. Investors dumped stocks despite the Federal Reserve’s slashing benchmark interest rates by 75 basis points in a surprise decision.
Romney is in a close four-way race in Florida where the primary on January 29 is the next test in the state-by-state battles to determine the Republican and Democratic candidates who will square off in November’s presidential election.
The multimillionaire former venture capitalist has retooled his campaign to emphasize his nearly 25 years of business experience that includes founding Bain Capital LLC, a successful Boston-based private-equity firm, in 1984 [...]
Yes. More on Romney’s Bain Capital:
Romney’s “Bain Capital is partnering with China’s Huawei Technologies in a buyout of 3Com, the U.S. company that provides the technology that protects Pentagon computers from Chinese hackers”—is this the economic policy we can expect from Romney?—answer: yes.
And more on Romney’s relationship to the global crash:
“WASHINGTON — Amid the mayhem on world financial markets, it is becoming clear that capitalism’s most dangerous enemies are capitalists,” writes Robert Samuelson in a realclearpolitcs.com article titled Wall Street Elite Put Capitalism at Risk
No one can have watched the “subprime mortgage” debacle without noticing the absurd contrast between the magnitude of the failure and the lavish rewards heaped on those who presided over it. At Merrill Lynch and Citigroup, large losses on subprime securities cost CEOs their jobs — and they left with multimillion-dollar pay packages. Stanley O’Neal, the ex-head of Merrill, received an estimated $161 million.
Everyday Americans will conclude (rightly) that this brand of capitalism is rigged in favor of the privileged few. It will be said in their defense that these packages reflected years of service, often highly successful. So? It’s not as if these CEOs weren’t compensated in all those years. If you leave your company in shambles — with losses to be absorbed by lower-level employees, some of whom will be fired, and shareholders — do you deserve a gold-plated sendoff? Still, the more serious problem transcends the high pay itself and goes to the wider consequences for the economy [...]
[...] By “Wall Street,” I mean all the commercial banks, investment banks, mutual funds, hedge funds and the like that comprise the financial sector — but particularly investment banks. Pay is eye-popping. In 2007, Lloyd Blankfein, chief executive of Goldman Sachs, received compensation estimated at $68 million. But pay is also heavily skewed toward annual “bonuses” based on the profits that traders and bankers generate. I asked Johnson Associates, a compensation consulting firm, for typical Wall Street pay packages. The results describe “managing directors” based in New York with 10 or 15 years experience. Most would be in their 40s.
Here are estimates for 2007:
Investment banker: $2.1 million, consisting of $275,000 in base pay plus $1.2 million in cash bonus and $625,000 in long-term bonus. (An investment banker helps firms raise capital by selling new stocks and bonds and also advises on mergers and acquisitions.)
Bond trader: $1.525 million, with $240,000 in base pay, $975,000 in cash bonus and $310,000 in long-term bonus.
Hedge-fund manager: $1.85 million, split between a salary of $265,000 and $1.585 million bonus [...]
[...] But Wall Street also frequently misallocates capital and credit. The “tech bubble” of the late 1990s was one episode. Now we have subprime mortgages. Why? Well, the herd mentality of financial crazes has a long history. But compensation practices skewed so heavily toward bonuses based on annual profits make matters worse.
“People self-select for careers. On Wall Street, they self-select for the money,” says pay consultant Alan Johnson. “Wall Street is a sales business — they sell bonds, securities, transactions, ideas. … They’re not paid to be long-term, philosophical, reflective.” The pressure is to do the next merger, sell more stocks and bonds, do more trading — whatever boosts current profits and bonuses, the long-term consequences be damned [...]
[...] But if the subprime failure turns out to be a preamble to a larger financial breakdown, flowing from the creation of new securities that offered short-term trading possibilities but whose long-run risks were underestimated, then the mood could turn uglier. Indeed, many Americans may conclude that capitalism has run amok [...]
What does this have to do with Romney? Everything. Quite simply, everything. As we wrote before, Romney’s cohort of mangers and specialists that began their careers in the financial services industry in the 70s have come of age; they are taking their places in our highest echelons.
Permit us to quote from an earlier contribution:
“That’s the good news for America [i.e. the Democrats backing away from a defacto isolationism]. The bad news for the GOP is that once Iraq goes from being the top headline, the economy is the next issue. And, indeed, with casualties falling, Americans are focusing on the economy,” writes eye in an eyeon08.com post titled economy most important issue?
Yes. About the economy:
“The two appointments [to the federal reserve] come after six tortured months in the credit markets that have included sub-prime debacles, a Congressional crackdown on taxes in the private equity industry, and increasing involvement of the Fed in bailouts,” writes Heidi Moore in a Financial News Online-US article titled Wall Street experts invade Washington
The two appointments Moore refers to are:
Stephen Friedman, former co-chairman of Goldman Sachs, currently co-chairman of Stone Point Capital
John A. Canning Jr., co-founder of Madison Dearborn Partners
Friedman and Canning will “take the respective helms of the two most powerful branches of the 12 banks of the Federal Reserve.” You may not know these two gentlemen. But Romney knows them. And they know Romney. Back to Moore:
… The Federal Reserve under chairman Ben Bernanke has become more involved in Wall Street bailouts and cash infusions amid the credit crunch. The Fed last week injected $41bn (€29.9bn) in the markets to guarantee liquidity, and Bernanke also supports the creation of the $80bn master liquidity enhancement conduit that will sop up assets from troubled structured investment vehicles …
Translation: using taxpayer money—public funds—to recoup private losses in the private equity sector. Back to Moore:
… In addition, some prominent former Wall Streeters hold unprecedented influence in Washington. Hank Paulson, the Treasury Secretary and former Goldman Sachs chief, has spearheaded initiatives to revamp US laws that allegedly hinder competitiveness …
Translation: initiatives to emancipate capital flows from their bondage to local procedures for adjudicating among rival claims—i.e. states, nations, communities—more privatizing gains; more socializing the costs and the losses. Back to Moore:
… The crop of current presidential candidates includes Connecticut Senator Chris Dodd, who heads the Senate banking committee, as well as Bain Capital founder Mitt Romney. New York Mayor Michael Bloomberg has also been rumored as a candidate …
We have harped on this string before—see: Romney and private equity: the new ruling class. As much as we wish it were so, Romney is not an aberration. He and his peers represent the most advanced sector of a new class of professionals—the product of the revolution in financial services that began in the late 70s, early 80s—that have come of age and are now taking their places in senior executive positions. Most of them are comfortable working behind the scenes—not Romney.
The equity sector is capital at the limit of its development—it is capital negating itself as capital, as it is capital without owners in any conventional sense—it is capital in the form of vast pools of spare money or other instruments managed by technical adepti and professional elites. (Drucker famously refers to capital at this level of development as “pension fund socialism.”)
The equity sector gives us the notion of the “business audit”—imagine a pension fund that has bought into a retail chain. Say also that the chain is too big an investment for the pension fund to allow to fail. So: on the basis of a business audity, the fund—the effective “owner” of the retail chain—supplies the technical and managerial expertise to “turn-around” the retail operation. Does this sound familiar? If you’re a Romney observer, it should. It should sound like Romney’s Bain Capital. It should also sound, sadly, like what Romney wants to do with our government (see his interview with Carney that we discussed here).
The equity sector elites are already plundering our treasury to pay for their losses—but how can politicians refuse their demand for relief?—so much of the equity sector is composed of pensions, mortgages, savings instruments, public and private debt, in other words, the moneys, properties, and pensions of the middle classes and the elderly—equity sector money is, in a sense, public money already, only it is public money that disproportionately benefits the class that disposes of it—hence: Romney’s millions.
Imagine a professional class with direct access to our treasury. Imagine a professional class that has the power to tax you—this is the so-called private equity sector. (Not since the central-storage economies of absolute antiquity has economic and political power been this unified or concentrated.) Imagine what this new defacto ruling class will do once of their own sits upon the US presidential dais? This would be corruption on a scale that eye hath not seen, nor hath ear heard.
We have harped on these sad strings for weeks. Our point: Romney, the equity sector, the global crash, the collapse of the GOP and its institutions—these are all related. No, we don’t mean to suggest that they are related in some sort of grand conspiracy; not in the least. Rather: we would argue that they are all the surface irritations of larger, and necessary, historical developments.