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An article I read on Bloomberg about Mitt Romney.


Is there any fairness in a system where a group of people can borrow a bunch of money to buy a company and pay themselves millions of dollars in dividends and fees, while the company itself ends up bankrupt and its employees lose their jobs, health insurance and pensions?
Can you imagine the owners then being celebrated in fancy society while the unfortunate workers are left to fend for themselves as the collateral damage of the system?

William D. Cohan is the author of the recently released "Money and Power: How Goldman Sachs Came to Rule the World" and the New York Times bestsellers "House of Cards" and "The Last Tycoons."
More about William D Cohan

Welcome to Mitt Romney’s America. This is the true story of how in October 1993 buyout firm Bain Capital LLC, which Romney founded and ran from 1984 to (roughly) 1999, and its partners bought a steel mill in Kansas City, Missouri, from Armco Steel Corp. (AKS) for $75 million, merged it with other steel companies, loaded it with too much debt, paid themselves big dividends and ran the company into the ground. Bain’s behavior was all perfectly legal, of course, and many argue that this is an essential part of the creative destruction that is capitalism (except when there are huge bailouts, of course).
Lucky Few

In many ZIP codes around Boston, Chicago, Los Angeles, New York and San Francisco, Bain and its partners are celebrated and admired. Many graduates of our finest colleges, universities and graduate schools would almost kill to get a job at Bain, with its elegant offices and promise of great wealth for the lucky few. And now one of them may well end up in the White House.
But there’s a darker side to this fairy tale, and the Armco deal is a perfect illustration. For its $8 million in cash --largely taken from its outside investors -- Bain Capital received a majority stake in the steel company, renamed GS Technologies Inc. The minority investors were GE Capital, a division of General Electric Co. (GE) that provided the new company with a line of credit; Leggett & Platt Inc. (LEG), a large customer of the steel plant; and a group of former and existing managers. The new company paid Bain an annual $900,000 fee for“professional services,” a standard private-equity trick to begin sucking fees out of an acquired company. Three Bain executives, Bob White, Paul Edgerley and John O’Malley, went on the board of the company. (White remains a close Romney adviser.)
In short order, Bain did to GS Technologies what it has done to any number of other companies that it purchased with other people’s money -- among them American Pad & Paper and Dade International, which both went bankrupt. In August 1994, 10 months after the sale was completed, GS Technologies issued $125 million of 12 percent senior notes. Some $55 million of the proceeds went to repay existing debt, while $65 million went out as a dividend to shareholders. Of the $65 million, Bain took $36.1 million, more than four times its original investment.
In October 1995, Bain arranged for the company to merge with Georgetown Steel, a steel-rod manufacturer in South Carolina. As part of the acquisition, the merged company issued another $125 million in senior notes and refinanced the existing credit facility. The partners invested $30 million more of equity in the merged company, with $16.5 million of that coming from the dividend Bain had taken earlier.
Heavy Debt
The merged company, renamed GS Industries Inc., was to have annual revenue of $941 million, net income of $13 million and 3,800 employees. It also had about $370 million in long-term debt -- eight times its earnings before interest, taxes, depreciation and amortization -- and about $180 million of additional long-term liabilities such as future health-care and pension payments.
In the end, GSI didn’t work out as planned. For many reasons -- tough competition from abroad, a high-cost structure, too much debt related to the acquisitions, and the cost of the dividends paid to Bain and GE Capital -- the company filed for bankruptcy on Feb. 7, 2001. It closed the Kansas City plant and fired 750 workers. Many of the employees’ benefits were eliminated, including long-term health-care coverage, life insurance and parts of pensions.
Asked what happened at GSI, a Bain spokesman told Reuters in January 2012, “Over $100 million and many thousands of hours were invested in GSI to upgrade its facilities and make the company more competitive during a seven-year period when the industry came under enormous pressure and 44 U.S. steel companies went into bankruptcy.” After pointing out that another steel company Bain owned, Steel Dynamics, is a successful $6 billion business, the spokesman said Bain’s focus“remains on building great companies and improving their operations.”
The GSI debacle has been in the news lately because of a campaign ad made by a group supporting President Barack Obama. It features Joe Soptic, who worked at the Kansas City plant for 28 years and lost his job when the company filed for bankruptcy. Soptic lost a significant part of his monthly pension and his health-care benefits. He eventually found a new job as a school janitor paying him $24,000, about two-thirds less than what he had been paid as a steelworker at GSI.
Wiped Out

Also part of Soptic’s story is his wife, Ranae. She was no longer covered by her husband’s health-care plan. Then she got sick with pneumonia. It was too late by the time she went to the hospital: She had advanced lung cancer and died two weeks later. Soptic wiped out his $12,000 of savings to pay the hospital bills; the hospital wrote off the balance of the $18,000 he owed.
Romney supporters point out that this was years after the bankruptcy and that Ranae Soptic had quit a job that provided health insurance, which is true but irrelevant. If the old Armco plant hadn’t been run into the ground and her husband had kept his job, she would have had coverage. And the Soptics’ story is a sidebar. The real point is how a man who wants to be “CEO of America” left a trail of destroyed lives when he was only chief executive officer of a single private-equity firm.
Romney is a very wealthy man, worth at least $250 million. His partners, including White, are very wealthy, too. They got rich at Bain Capital doing again and again and again the things they did at GSI, involving hundreds of others companies and thousands of other people. Not all worked out like GSI of course, and some were big successes. But the inequity of it all just seems unworthy of a great nation.
(William D. Cohan, the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres, Merrill Lynch and JPMorgan Chase. The opinions expressed are his own.)
 

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So were any of these companies bought with government money?

A lot of people borrow money to start or buy companies. Although I do not agree with what he was doing to these companies there is nothing illegal about or wrong about buying competition and closing the doors, it happens everyday in some sort.

Call it what you want but it is good business on his part. Very few start their businesses to help others, most do it for the money and comfort of not having to worry about finances in life.

As for the lady who's husband lost his job years ago and she had another job with benefits that she quit and then dies supposedly because she didn't have insurance has absolutely nothing to do with Mitt Romney. Is her family trying to say that the hospital kicked her to the curb because she did not have insurance, I think not!

I quit my job 4 years ago to start my company and didn't have health insurance for 3 years. If I got sick and decided to not get medical help because I didn't have insurance that is my fault not my spouses previous employers.
 

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Discussion Starter · #3 ·
I did not post the article to start any debate, I merely posted it so it could be read, and folks could draw there own conclusion and be better educated about a candidate running for the highest office.
 

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I could go on and on about people whining about things but they just need to realize this is America, the land of opportunity.

Life is what you make it. You can be or do anything you want in America. If you want to be a business owner you can do that, if you want to be a paper boy you can do that, if you want to be bum and suck hard earned money out of me and my family, you can do that. Your life is what you make it.

Life is not fair, if your neighbor makes more money then you, do something about it, don't whine and cry and say he should give you some.

You will loose jobs in life, thats normal but a hard working American will go out and find another. Sometimes you will have to work for less money or start a new trade but there is always work out there. People who sit at home jobless for years are truly not looking very hard.

People think they are poor here. Nobody in America is poor. If you think you have it rough living in your small home driving a crappy car then maybe you should take a trip to a 3rd world country and see how they live. When you are living in a shack with a dirt floor and no plumbing working 15 hours a day for a bowl of rice and are just happy your family is healthy then you can say you are poor.

That is all! Sorry for being a ****.
 

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I did not post the article to start any debate, I merely posted it so it could be read, and folks could draw there own conclusion and be better educated about a candidate running forthe highest office.
But I like to debate.:p

To me it is not education but more of trying to make a business man look bad for bettering himself and his family.
 

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Chris, you're much more tolerant than me on this one... But again, I'm farther to the right than Attila the Hun!
 

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I try.:D

I am just sick and tired of the poor me attitude this country has.

I am tired of being taxed to death for stupid programs.

Obviously we have proved we can not run a country economically.

We are too scared to go backwards we would rather fail all together.

I wish I would have been born 100 years ago back when people had to work for what they had.

Outsourcing I am not for it but unions have made it clear they are for it when they refused to work for the same amount they did before or less when the economy goes south.

Google Mercury Marine in Wisconsin. 800-1000 employees are loosing their jobs because the union rejected lower pay for new hires and lay off returns. It was that or close the doors. The union decided that 800 people would be better off sitting at home then working for a bit less money.
 

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Discussion Starter · #8 ·
I could go on and on about people whining about things but they just need to realize this is America, the land of opportunity.

Life is what you make it. You can be or do anything you want in America. If you want to be a business owner you can do that, if you want to be a paper boy you can do that, if you want to be bum and suck hard earned money out of me and my family, you can do that. Your life is what you make it.

Life is not fair, if your neighbor makes more money then you, do something about it, don't whine and cry and say he should give you some.

You will loose jobs in life, thats normal but a hard working American will go out and find another. Sometimes you will have to work for less money or start a new trade but there is always work out there. People who sit at home jobless for years are truly not looking very hard.

People think they are poor here. Nobody in America is poor. If you think you have it rough living in your small home driving a crappy car then maybe you should take a trip to a 3rd world country and see how they live. When you are living in a shack with a dirt floor and no plumbing working 15 hours a day for a bowl of rice and are just happy your family is healthy then you can say you are poor.

That is all! Sorry for being a ****.




I totally agree Chris, if life gives you lemons, make lemonade, smile and be thankful.

On another note I personally feel that every jr,high school student should spend a month in a third world country, they just might appreciate what they have here in this country. JMO.
 

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That would definitely help. I think a big part of our problem is the schools and media teaching people that it is ok to be bum and expect others to take care of them.
 

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Latest statistic says 1 in 3 people are receiving some sort of welfare now. It was 1 in 36 four years ago. This clown loves people that want/need handouts. Make the people dependant on the government, it makes the government more powerful
 

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this is what i know ( and its very little) when Clinton was in office he signed into law ''nafta" (north american free trade agreement) and everyone was happy,,, i saw right through this smoke and mirror BS,,,, what nafta was and is, is a big vacuum cleaner that sucks out all of the blue collar jobs from us Americans and puts them in country's that 90% of us never even heard of.
im living proof of this, i had an awesome job as a mechanic. ( i worked at gillette ) .. yes it took several years for ''change'' to happen but it did, it started with the sale of gillette to P&G,, their folks came in and told us ''we'' where doing it all wrong and we had to ''change'' our practice's or there would be consequences....

well the consequences they spoke of included forcing everyone with 20 plus years to ''retire'' if you did not fall into the 20+ year group you where given 1 weeks pay for every year served.
all of the manufacturing was moved to mexico, san palo Brazil, and china........ yup thanks nafta-------need i explain more

how we,,, the blue collar guy's knew change was bad.
P&G took away 7 of our 14 paid holidays.
took away all over time... yup any and all hours over 40 was regular time. ( yes i know the law says time and a half over 40,,,, but their lawyers found some crazy loop hole)
removed all chairs and benches from the floor ( except break rooms ) (petty i know)
no more sick time..
general chit chat was frowned at.
our breaks and lunch times were cut 20 minute break was cut to 10, 30 minute lunch was cut to 20,,, we worked a 12 hour day.


the douch in office now, spoke of change,,,, yup we got that, people out of work and cant find a job,,, home foreclosures that set an all time high
national dept,,, can any of you even say that number

Well thats what i know of change and change sucks.
 
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