Mitt Romney's Trade Policy Claims Versus Bain Capital's Practices

One of the things that Mitt Romney claims that he would do is "get tough on China" should he win election.  The sound bite plays well with the Christofascist/Tea Party element in the GOP.  The problem is that the claim isn't even consistent with what Romney's former buddies at Bain Capital are doing as they help ship American jobs to China.  The New York  Times looks at example where automotive manufacturing jobs have been and/or are soon to be outsourced to China.  As seems to always be the case, Romney says one thing yet reality is something very different.  Here are some story excerpts:

The tale of Asimco Technologies, an auto parts manufacturer whose plants dot eastern China, would seem to underscore Mitt Romney’s campaign-trail complaint that China’s manufacturing juggernaut is costing America jobs.
 

Nine years ago, the company bought two camshaft factories that employed about 500 people in Michigan. By 2007 both were shut down. Now Asimco manufactures the same components in China on government-donated land in a coastal region that China has designated an export base, where companies are eligible for the sort of subsidies Mr. Romney says create an unfair trade imbalance. 

But there is a twist to the Asimco story that would not fit neatly into a Romney stump speech: Since 2010, it has been owned by Bain Capital, the private equity firm founded by Mr. Romney, who has as much as $2.25 million invested in three Bain funds with large stakes in Asimco and at least seven other Chinese businesses, according to his 2012 candidate financial disclosure and other documents. 

As a candidate, Mr. Romney uses China as a punching bag. He accuses Beijing of unfairly subsidizing Chinese exports, artificially holding down the value of its currency to keep exports cheap, stealing American technology and hacking into corporate and government computers.  . . . . .  But his private equity dealings, both while he headed Bain and since, complicate that message. 

Among the companies in which the Bain funds have invested is a global auto parts maker that is in the process of closing a factory in Illinois and moving most of the equipment and jobs to Jiangsu Province, where the Chinese government has built it a new plant; a Chinese electronics retailer accused by Microsoft of selling computers with pirated software; and a Hong Kong-based Chinese appliance maker that was sued for copying another company’s design for a deep-fat fryer. 

Mr. Romney continues to have money in Bain funds with sizable holdings in China. He has as much as $250,000 in the Bain Capital Asia Fund and as much as $1 million each in Bain Capital Funds IX and X, all Cayman Islands entities used by Bain to make sizable investments in China . . . . 

Bain’s interest in China dates to when Mr. Romney ran the firm. During a panel discussion at the Federal Reserve Bank in Boston in February 1998, he told of touring an appliance factory in China where 5,000 employees “were working, working, working, as hard as they could, at rates of roughly 50 cents an hour.” 

Mr. Romney also has millions invested in a series of Bain funds that have a controlling stake in Sensata Technologies . . . . Two years ago, Sensata bought an operation that made automobile sensors in Freeport, Ill. At the first meeting with the plant’s 170 workers, Sensata managers announced that by the end of 2012 all the equipment and jobs would be relocated, mostly to Jiangsu Province. 

There is more to the article, but the foregoing paints a clear picture: Romney says one thing on the campaign trail, but his own investment strategy and that of his former Bain compatriots tells a very different story.  Is Romney a liar?  Draw your own conclusions.  I've drawn my own: Romney is a pathological liar and money is his only real god.

Greed and Debt: The True Story of Mitt Romney

I often book mark new stories with a plan to come back and read them and perhaps write about them.  Sometimes, however, they get lost in the shuffle and I either forget about them or come across them later.  One such article was one in Rolling Stone that did a great job looking at the real Mitt Romney and what motivates the man.  As the title to this post indicates, it was not a flattering story and it only reinforces my already negative views of the man.  It also gets in some well deserved shots at Paul Ryan, who seems to have a similar lack of compassion when it comes to the less fortunate. It's a very long article that deserves a full read.  Here are some article highlights:

The great criticism of Mitt Romney, from both sides of the aisle, has always been that he doesn't stand for anything.   .   .   .   .   The critics couldn't be more wrong.

Mitt Romney is no tissue-paper man. He's closer to being a revolutionary, a backward-world version of Che or Trotsky, with tweezed nostrils instead of a beard, a half-Windsor instead of a leather jerkin. His legendary flip-flops aren't the lies of a bumbling opportunist – they're the confident prevarications of a man untroubled by misleading the nonbeliever in pursuit of a single, all-consuming goal.

The incredible untold story of the 2012 election so far is that Romney's run has been a shimmering pearl of perfect political hypocrisy, which he's somehow managed to keep hidden, even with thousands of cameras following his every move. And the drama of this rhetorical high-wire act was ratcheted up even further when Romney chose his running mate, Rep. Paul Ryan of Wisconsin – like himself, a self-righteously anal, thin-lipped, Whitest Kids U Know penny pincher who'd be honored to tell Oliver Twist there's no more soup left. By selecting Ryan, Romney, the hard-charging, chameleonic champion of a disgraced-yet-defiant Wall Street, officially succeeded in moving the battle lines in the 2012 presidential race.

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."

And this is where we get to the hypocrisy at the heart of Mitt Romney.   .   .   .   .  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.

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.

Four years ago, the Mitt Romneys of the world nearly destroyed the global economy with their greed, shortsightedness and – most notably – wildly irresponsible use of debt in pursuit of personal profit. The sight was so disgusting that people everywhere were ready to drop an H-bomb on Lower Manhattan and bayonet the survivors. But today that same insane greed ethos, that same belief in the lunatic pursuit of instant borrowed millions – it's dusted itself off, it's had a shave and a shoeshine, and it's back out there running for president.

Mitt Romney, it turns out, is the perfect frontman for Wall Street's greed revolution.  .   .   .   .   He's been right with them on the front lines of the financialization revolution   .   .   .   .  


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.

Here's how Romney would go about "liberating" a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent.

But here's the catch. When Bain borrows all of that money from the bank, it's the target company that ends up on the hook for all of the debt.   .   .   .   .   With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.

Once all that debt is added, one of two things can happen. The company can fire workers and slash benefits to pay off all its new obligations to Goldman Sachs and Bain, leaving it ripe to be resold by Bain at a huge profit. Or it can go bankrupt – this happens after about seven percent of all private equity buyouts – leaving behind one or more shuttered factory towns. Either way, Bain wins. By power-sucking cash value from even the most rapidly dying firms, private equity raiders like Bain almost always get their cash out before a target goes belly up.

There's much more to the article.  And none of it is good and shows the foul, disgusting way that Romney and his fellow vulture capitalists made their millions.  As for the laid off workers and shuttered factories, Romney sadly doesn't give a damn.  He made his money and then moved on to the next targeted company where he would again pillage the company leaving unemployment and devastated localities in his wake.  It's a shame that more has not been done to expose just how foul Romney has been and just how many thousands of the unemployed can thank Mitt Romney for their dire straits.