January 07, 2012

locust capitalism . . .

Here's a little background on Romney's claim to be a job creator.
So, doesn't the fact that Romney made money on these busts mean he's a great businessman? Well, it does if you can get past the quaint notion that a "successful businessman" was one that kept businesses operating as going concerns. Once it was discovered that "business success" could mean nothing more than getting as many dollars as possible, there was no point in keeping a business that did things open at all. The only business worth having was the one that entitled you to the keys to the bank vaults.

So that's what Mitt Romney built for himself. A corporate safe-cracking engine. Buy a company, put yourself on the board, vote to max out its credit line and award yourself the cash. Then when they're all out of money, you say, "Oh well, company's broke," fire everyone and shut the doors. That's called a "bust-out," if you're a fan of Goodfellas or The Sopranos. But in real life (and in court, if necessary), it's just called "bad business judgment," provided you went through the niceties of making your financial control of the company a matter of public record first. People who control and plunder companies through secret, off-the-books loans are "legitimate businessmen" (in the old movie gangster parlance). People who control and plunder companies through regular loans are legitimate businessmen. Even if the intent was always to bust it out. You just can't say so in open court.

Gangsters can only pull this stunt on targets of opportunity, though they surely work hard to create opportunities. ("Hard work! They deserve to be rich!") Locust capitalists have made it a replicable business model. You use the cash you siphoned out (paid to you as "management fees"—a great tool that gets you paid to do what regular company owners call "running your damn business") to buy the next company you can find that has a healthy credit line. Remember, it doesn't matter if the companies you buy survive. All that matters is that they have access to cash or credit that you can extract. Like locusts. They don't care if the farmer goes bust when they descend on his crops. He has crops! Eat them! Eat them now!

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