The Danger Of Short-Term Gains

Jan 12 2012 @ 4:50pm

Joe Klein argues against blaming Romney for job losses. But he doesn't let Mitt off the hook:

To my mind, the more questionable private equity practices had to do with the way they restructured the companies they bought: it was always in the direction of higher returns–higher salaries and bonuses for executives, higher returns for the investors in their funds. What’s wrong with that? Nothing, in principle. In practice, it led to a lot of short-term, quarter-to-quarter, thinking; often it led to a stripping away of research and development, less emphasis on the patience needed to bring new products to market and an addiction to ever-increasing profit margins. This caused a fundamental distortion in the free market system.

Yep, and it meant those companies were strapped with debt, while Bain sucked the equity life out of them.

And as we saw, it just so happens that Bain often sold the stocks at peaks, and then the companies swiftly tail-spun into bankruptcy. I have to say I am not envious of the wealth of others. I celebrate the success of others. I have often refused to demonize the wealthy or even criticize them.

But this is not about being wealthy; it's about how you get wealthy. The more I learn about what Romney actually did, the more Wall Street in the worst sense it appears to be. Not making things, but manipulating things; not building companies, but ransacking them with clever plays in the stock market, helped by positive reviews from Lehman Brothers, for goodness' sake. The contrast with the people actually living out there in the heartland, with his glib, slick celebration of money for its own sake is … well brutal.

Maybe he has a better story to tell about jobs created. He needs to get it out there quickly.

But Mitt's role in life has been that of the repo man, who wins the lottery every time he brings bad news. He may be necessary, but you sure don't like him. And in this recession, I have to say it could be fatal.

Game on.