After the Bain Existence controversy about my post about Bain Capital yesterday, and whether or not Bain Capital really wanted to lend Chrysler and GM money to fund their managed bankruptcies, and about whether or not Bain Capital’s PR agency understands the concept of sarcasm and can recognize it even when it’s wearing a red flag, and about whether or not Mitt Romney knows that Chrysler and GM did file for bankruptcy and did undergo managed ones that, thanks to the government’s bailout money, enabled them to emerge as ongoing entities rather than pieces for liquidation, I swore off politics posts on AB and figured I’d just limit myself to my tried-and-true subject matter: legal analysis.
But, well, I live in Michigan, which is both Ground Zero for the auto companies and Ground Zero for the next big day of primaries. And, well, Romney was in the state today (albeit not my part of the state) giving a speech and being interviewed by local journalists. And his speech and the interviews were covered on the local evening news broadcasts, including the one I watched.
I still might have resisted commenting, were it not that Romney apparently was asked by a reporter this afternoon why he continues to imply in his spoken comments and op-ed pieces that GM and Chrysler did not go through bankruptcy, or did not go through managed bankruptcy, as he repeatedly now says he recommended at the time, and instead were given the federal bailout money to survive without filing bankruptcy. I say “apparently,” because the news clip I saw, on the Detroit metro NBC affiliate (clickondetroit.com), showed only Romney’s answer to whatever question was asked; it did not show the reporter asking the question.
But, speaking between clenched teeth embedded in a frozen “drop dead, you liberal elite member of the news media” smile—eyes flashing with barely-controlled rage—he said, um, that the car companies did file for “managed bankruptcy,” and that they finally did so at his urging, having earlier refused to do so, and that it is very nice that the companies have survived and are thriving now.
Which it is. Very nice, that is. But now that Romney has conceded that managed bankruptcy is in fact what the companies underwent, he now really should also concede that the only way they were able undergo and emerge from managed bankruptcy, rather than go through just a plain old bankruptcy whose endgame is liquidation, is that the federal government’s bailout financed it. And that there was no other possible source of that financing. Unless, of course, Bain Capital could done it, maybe through leverage provided by Goldman Sachs, which might have had the funds for it because it already had been bailed out by the government.
Or maybe Bain Consulting (no relation to Bain Capital) had an even better idea—if only they’d been asked.
The managed bankruptcies that Romney had in mind in early 2009 for the two car companies pretty clearly were liquidations that would then allow Bain Capital or other venture capital firms to buy small parts of these companies, eliminate union workers, and … I’m not sure. A weird, incoherent ad his campaign’s been running on the local news broadcasts actually hints at the elimination-of-union-workers thing, while actually advertising that “liberals” got “Obama” to save the auto industry. Seriously.
Anyway, in keeping with my promise in my earlier post today in which I said I would never, ever—ever—again write something facetious would expressly identifying it as sarcasm, satire, or just a plain old joke, I make the following disclaimer: the title of this post is intended as a joke. Mitt Romney probably does not read Angry Bear. Even though he did seem awfully well prepared for the question.
The reporter who asked him the question must be an AB reader, though.*
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*That sentence was edited after this post was posted, to make clear that the reporter was quite well prepared, and that of course that indicates that he had read my AB post about Romney’s weird failure to acknowledge that the two car companies did go through managed bankruptcy and emerged from it as ongoing companies only thanks to the government’s financial assistance (a.k.a., the bailout) during the bankruptcy process.
Beverly:
Mitt is almost DOA in Michigan. He poison the well and he is not his father’s son or even an Eisenhower.
What’s on your mind…
run
EVEN an Eisenhower?
I liked Ike. Romney is not fit to shine his combat boots. Neither was his father.
Beverly
I wouldn’t be too sure the reporter was not “prepared.” He may not have been prepared for a tough follow-up, but I have long suspected they are prepared in the sense of being told what questions to ask.
run
EVEN an Eisenhower?
I liked Ike. Romney is not fit to shine Ike’s combat boots. Neither was his father.
just to anticipate..
i am sure Ike did a lot of bad things. even so.
Damn. I meant that the reporter who asked him the question WAS prepared, maybe because he reads AB. I added the sentence, “Even though he [Romney] did seem awfully well prepared for the question,” after I finished writing the post, and should have rewritten the last sentence then, but didn’t. I think I’ll edit it to make that clear.
Just made the editing change, coberly.
You’re right, run, that even if Romney manages to pull it out here in the primary, squeaking by Santorum, he can’t win this state in the general election. I think he’s probably dead in Ohio, too.
On a serious note Romney in his statements about Obama selling out to unions makes it clear that his definition of “managed bankruptcy” is narrowly focused on Bain (Capital not Consulting) style bankruptcies that include ripping up union contracts and stripping pension funds to leave a “leaner, meaner” company whose interests are 150% aligned with the shareholders.
Interestingly this is not even considered immoral by the new 1% who have taken a legal principle that management has a fiduciary responsibility to shareholders (or at least the subset of new shareholders represented by the takeover partners) and extended that to deny ANY such responsibility to workers or localities. Even when such workers and localities have made explicit past tradeoffs and givebacks.
And in the narrowest legal sense this may be true (Linda?) but it flies in the face of the PR rhetoric about ‘partnership’ and ‘jobs’ management typically trots out to get those concessions to start with, instead ‘Greatest Good’ simply vanishes in the face of ‘principal/agent’ legalism.
The shocking thing, at least to someone like me that comes at these issues from a historical and political approach that valorizes utilitarian social democracy, is that the plutocrats do and always have claimed the moral high ground, that screwing over labor (by reducing compensation as close to subsistence as possible) in favor of capital gains/wealth accumulation is not just built into the legal structure governing capitalist economies but is a positive good IN AND OF ITSELF.
That is Romney sees two different fors of ‘managed bankruptcy’, one that attempts to reach Pragmatic/Utilitarian Greatest Good outcomes, and another that attempts to maximize returns on capital and sees the former as inherently illegitimate. Morally. Obama by allowing labor to be a stakeholder as opposed to 100% privileging capital wasto that degree a traitor.
And that is not hyperbole (entirely), the 1% in the last century moved on from older ideas of Conservatism based on the Great Chain of Being (High to low, Deserving to undeserving) to one summed up in the book title of their 20th century prophet: “Capitalism and Freedom”.
That is Uncle Miltie and his nephew by adoption Mittie R have gone beyond some libertarian notions of the sanctity of contract and private property, or even Randian economic theories of ‘producers’ vs ‘moochers’ to valorize capitalist accumulation as the highest form of moral good. No matter what the externalities.
Now there are perfectly good historical terms for this. Unfortunately they risk running afoul of certain (IMHO rather twee) Internet traditions and ‘laws’. So let me substitute one that is loaded in a different direction:
Gangsterism. Which is now manifested as Bangsterism. The fictional Don Corleone in ‘The Godfather’ instructed adopted son and eventually to be Consigliare Tom Hagen that “you can steal more with a briefcase than a gun”. And what makes Don Corleone that oddly compelling mix of admirable family (and Family) man and cold blooded murdering sociopath is that his Code valorized Gansterism. Indeed the opening scenes of ‘The Godfather’ feature Michael instructing Kay why his Gangster father considers himself the full equal in every way, including morality, with the Bangster/Bankstas. Who in his world (and ours) included the politicians. At least the ones who wern’t vassals themselves.
Mitt Romney as Tom Hagen. It is only immoral bordering on sociopathy when viewed from the outside in.
Which brings up a point that I have brought up against Coberly in other contexts: you don’t have to posit evil men to find evil outcomes. Because for some such actors neither the outcomes or the means are evil at all. For Willard the failure of Obama to […]
An error: Bain Capital is, and was, principally a Private Equity firm, and its role in any post-restructuring resurrection of GM, etc., would have been as PE artists. These are *very* different. PE firms take borrowed money, buy an asset, squeeze it for all they can (management fees, equity holdings) and then flip its shell onto the market. Perhaps Romney’s unconcealed anger at the success of the Detroit bailouts is because he had a concealed position that he lost, or because he’s miffed he couldn’t have made more millions selling the shell of a collapsed GM and Chrysler to some offshore saps.
Bruce,
Nice! Always enjoy your thoughtful, insightful and historical perspective on issues.
To be fair these were not typical “managed” or “pre-pack” bnakruptcies, when the federal government is your sponsor and future shareholder the dynamics are quite different.
Necessary, yes. Overly protective of the UAW, of course.
Did Romney have a better plan? Of course not.
yeah
i’m just another guy who can’t take a joke, unless it’s explained to him.
Bruce
I guess I’ve been hanging around with people of a much older moral tradition.
If Mitt just believed in the code you might argue that he was in some sense rational and “virtue”-ous.
But he is a shambling liar, and while that is a virtue, sort of, among those who think they have a moral right to fool “the enemy,” it has never been considered a virtue among those who are the enemy.
Try to remember that the Mafia are murderers, and not just of each other.
I frankly don’t know if the devil thinks of himself as evil. And I don’t really give a damn.
Yes, Bruce, very nice.
IMO there is really no reason to take a predatory approach when a good neighbor policy would work just as well in the long run. That is why these Romney types are so amoral. They don’t even consider other, more people friendly, approaches to solving business problems. They are apparently in business to make mean.
http://www.nationalmemo.com/article/gm-records-its-highest-profit-ever-76-billion from associated press via national memo
http://www.nytimes.com/2008/11/19/opinion/19romney.html?adxnnl=1&adxnnlx=1329481061-O/j8O3GI3MK6gb/0qUSjzw 2008 op-ed in NYT Romney declares the Detroit bailout to be the end of the auto industry
Perhaps it is a disitnct lack of imagination?
Oh Mannn you just can’t help yourself. You really need an irony intervention.
Well two can play that
gamevaluable pixel saving rhetorical technique.“Bain Consulting (no relation to Bain Capital)” is a false assertion. In fact Bain capital was founded by two partners at Bain consulting (neither of whom is leading polls in Michigan) . Part of the sordid horror of GS technologies is that, before going bankrupt, it didn’t just pay a huge dividend to Bain Capital but also paid Bain Consulting huge fees.
Excellent insight “That is Romney sees two different fors of ‘managed bankruptcy’, one that attempts to reach Pragmatic/Utilitarian Greatest Good outcomes, and another that attempts to maximize returns on capital and sees the former as inherently illegitimate.” Some people simply cannot see the bigger picture when judging the consequences of actions. Some people just don’t care about the bigger picture–not my problem. (Thinking about this, I might put Gingrich in the first category, Santorum in the second, and Romney in both.)
Actually, Robert, that parenthetical was intended as a sarcastic reference to the email sent to Dan on Wed. evening by Bain Capital’s PR agent. The email, which was the subject of my first post yesterday, is quoted in full in that post. Commenters to that post discuss the Wikipedia entry for the Bains, explaining their relationship, and Mitt’s very direct connection to both.
“Necessary, yes. Overly protective of the UAW, of course.”
Nice bank shot, right into the eye of labor. Covered over by use of the collective UAW, but essentially labor none the less. Let’s see a bankruptcy of a large corporation for what it often, and in this case, is. Workers, amongst other stake holders, had contracts with a corporation. The corporatition went through a legal metamorphis and emerged as though newly created. As a result workers were told to work for less. Work? Yes, but for less.
And so America continues its backwards march to labor income insufficiency. The southeast has few unions. The midwest wants to eviscerate what unions they still have. Some how its labor that’s the felonious looter of the golden past and is expected to give back what they are told their fathers took too much of. Deceipt and deception continue to reign supreme. No one was ever paid too much for their labor. Many have been over paid for their ideas and lack of managerial accumen. Lest we forget the median income, the middle score with 50% below that level, as reported by SSA, “By definition, 50 percent of wage earners had net compensation less than or equal to the median wage, which is estimated to be $26,363.55 for 2010.”
It’s a good thing that I don’t live in a place that encourages gun totting and that I’m not inclined to walk around armed, because if I hear one more person complain about union wages, or any labor wages for that matter, I would probably shoot the ass hole and consider it a net gain in the name of vermin extermination.
I’m certainly not in favor of low wages, but the UAW played a role in the deterioration of the Big 3.
Business survive on cash flow, not enough cash flow, no business, no wages. That is reality so fire away.
Beverly,
Why not send a e-mail to the PR firm seeking some clarification? I can’t vouch for the veracity of the Wiki entry. If accurate, it raises at minimum, what is the current relationship between Mitt Romney, Bain Capial and Bain Partners? Is Bain Partners what is left of the late Bain and Company? How did Mitt Romney faciilitate a 10 million dollar reduction in Bain & Company’s liability of 38 million to Bank of New England?
Waldmann, very interesting find. By chance do those two “partners” of Consulting who founded Capital still hold an equity popsition in Bain Consulting? Is there any financial connection between the two firms, even if some what distant?
rusty
bang.
the union workers got paid what the bosses negotiated to pay them. the bosses mismanaged the auto companies, not the unions. i don’t know what you make, but i suspect you can’t beleve that someone who works on an assembly line “deserves” as much as you get, because, because it would raise the price of a car fifty bucks?
the price of the crap detroit was producing was not the reason i paid more to buy “not made in America.”
jack and nanute
i think you are being naive. PR firms are not paid to make things clear. and the financial connection between the two firms was obscured for a reason.
The big 3 were sunk by their own complacency which showed increasingly in their engineering and quality of finished product. They relied heavily on marketing. Did they watch the Mel Brooks movie Space Balls too often and not recognize that marketing is the last step in the march to profitabillity through popularity of one’s products? The Japanese auto makers didn’t steal the market. The big 3 abdicated its crown as leaders of the auto industry. Watch, their executives will become complacent once again and give up the gains they have recouped over the last several years. They can’t help themselves. They will put profits into their pockets rather than continue to develop their products if only because the public can be fooled again and again, but each time only for a short while. When it comes to cars there’s always a buyer’s choice between lots of good products.
Well paid staff don’t reduce the sales of a product. They are part of the cost of production. The product has to stand on its own. When executives learn that profitability is tied to popular products and that popular products need to work better than the alternatives they will not have to blame worker comensation for their mismanagement. If an executive is worth several million $$s for a years work then a factory man or woman is worth what ever they can claim and at least 10% of the chiefs.
I’ve read that elsewhere, too. And it’s a safe bet that if the Wiki entry is wrong, it would have been corrected by now, at the demand of one or another of the Bains, or both. That’s a pretty high-profile site for the Bains to not know about
I’ve read that elsewhere, too. And it’s a safe bet that if the Wiki entry is wrong, it would have been corrected by now, at the demand of one or another of the Bains, or both. That’s a pretty high-profile site for the Bains to not know about any errors in it. That said, it woudl be interesting to see whether the PR firm would respond to the email–maybe with a statement saying that the two companies are legally-distinct entities, or whatever.
Coberly
Naive? Maybe. How about sending them an e mail telling them we’ve noticed a close relationship between both companies and Mitt Romeny. Therefore we see no reason to retract or correct any “errors.”
nanute
based on my sorry experience of getting tough with big guys, it’s better to retract the “error” just the way Beverly did. It didn’t take long to find out just what “no relation” means in PR speak.