Monday, May 21, 2012

Some Prominent Democrats Don't Like Obama's Attacks on Bain Capital

Maybe we're getting somewhere in the fight to support the virtues of truth telling about the private sector, free markets and competition.  As evidence, just take the time to see what the following two articles have to say.

Romney turns Democrats' private-equity words on Obama has this to add to the ongoing and getting heated discussion about the private sector in general and Bain Capital in particular:

"That didn’t take long.

Mitt Romney’s campaign is using Democrats’ statements about private equity against President Barack Obama, pointing to comments made by Newark, N.J., mayor Cory Booker and others as Obama attacks Romney’s record at Bain Capital.

A quick recap: Obama’s campaign Monday morning unveiled a nearly six-minute web video about Bain’s 1992 purchase of office-paper product company Ampad. The video features testimonials from workers laid off after Bain bought Ampad. It followed a similar video released last week.

The recent attacks on Romney’s private-equity career were enough to raise the ire of some prominent Democrats, including Booker, who said the line of attack made him “very uncomfortable.” Booker also said that he didn’t want to indict private equity, and that Bain had done a lot to support and grow businesses.

Words like those from Booker, and former Democratic Rep. Harold Ford Jr. of Tennessee — who said “private equity is a good thing in many, many instances” — were quickly seized on and used in a new 55-second video released by the Romney campaign on Monday afternoon.

“Have you had enough of President Obama’s attacks on free enterprise?” the video asks.

“His own key supporters have.”

Booker later released a video making clear his support for Obama, but didn’t retract his description of this year’s campaign ads as “nauseating.”

Now let's look at the silliness of the Obama campaign's allegations about private equity and Bain Capital.

And Bain Capitalism 101 says this about the logical ridiculousness behind the Democrats' cheap shot ads:

"Watching Obama campaign ads or MSNBC, one could easily come to the conclusion that Bain Capital makes money by destroying the companies it owns. So for voters unsure about the business that Mitt Romney founded but still reluctant to trust the financial analysis offered by community organizers, some perspective might be helpful.

The basic Obama-liberal critique goes like this: Bain buys a company, loads it with debt and then sucks out cash before foisting the wounded business upon an unsuspecting buyer or a bankruptcy court. In the risk-taking world of private equity such a scenario can certainly happen, and it's true that Bain likes management fees and dividends as much as the next partnership.

But then how to explain the history of Bain Capital? Mr. Romney started the business in 1984. The company has since bought and sold many businesses and executed thousands of financing transactions.

If Bain's standard operating procedure were to hand the next owner of one of its companies a ticking bankruptcy package, how is Bain still finding buyers nearly three decades later? And who would agree to lend money to a company backed by Bain? Wouldn't word have gotten around by, say, 1987 that Bain's portfolio companies weren't creditworthy?

The liberal critique of private equity assumes that the financial industry is full of saps who have been eager to lose money across the table from Bain for 28 years. This is the same financial industry that the same liberal critics say is full of greedy schemers when it comes to padding their own pay or ripping off consumers. But financiers can't be both knaves and diabolical geniuses at the same time.

Learning about Bain successes like Staples or Gartner or Steel Dynamics confirms the logical conclusion that Bain had to be creating value along the way—for investors, for lenders, and that means for workers too."

Summing Up

Seek and tell the truth--- always.

Seems like a lesson well worth heeding.

Now if somebody would tell the politicians about the value of truth telling.

But while you're waiting for that happy day's arrival, don't hold your breath.

Thanks. Bob.

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