Perry backer bails over Bain attacks

posted at 1:20 pm on January 12, 2012 by Ed Morrissey

Rick Perry has been campaigning in South Carolina since the Iowa caucuses, looking for a game-changer.  He may have found one, but not in the nature he was seeking.  As a consequence of joining Newt Gingrich’s attack on Mitt Romney over his private-equity experience, one of Perry’s big donors has quit — and switched to Romney:

One of Rick Perry’s leading financial supporters in South Carolina is defecting to Mitt Romney – and he told CNN Thursday that Perry’s sharp criticisms of Romney as a “vulture capitalist” were the main factor in his decision. …

Barry Wynn, the former chairman of the South Carolina Republican Party and a financial adviser in Spartanburg, said the escalating rhetoric about Romney’s business background is “destructive.”

“It’s just a dance I didn’t want to be a part of,” Wynn said in an interview, explaining his decision to leave Perry’s campaign.

Wynn, along with a handful of other previously neutral South Carolina moneymen, will publicly endorse Romney on Thursday.

“This latest attack, it’s so foreign to me, I couldn’t see myself being a part of that,” he explained. “I don’t think you can be on both sides of free market capitalism. A big part of me being a Republican for the last 40 years is that I think it’s the best hope to protect free market capitalism, the growth engine of our economy.”

There could be some populist cred for Perry if big donors tied to Wall Street start leaving him, but that’s a big trade-off for the funding Perry desperately needs in South Carolina.  If he can’t put ads on the air and compete with Romney, Santorum, and Gingrich, then Perry won’t go anywhere in his last-gasp effort to stay in the race. He’s already at the bottom of the pack in the latest Insider Advantage poll, at 5%.  Even Jon Huntsman scores better than Perry in South Carolina, at 7%.

The defection of Wynn looks a like a more principled version of what happened to Michele Bachmann in the last few days of the Iowa campaign. It’s likely to produce the same effect for Perry in South Carolina as it did for Bachmann in Iowa, which is to create the impression of an imploding campaign.


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And you obviously think that companies shouldn’t be allowed to pay dividends if they owe any money.

You obviously think that companies shouldn’t be allowed to pay dividends FROM their Retained Earnings.

You obviously think that Modigliani–Miller is full of crap, and that the only correct capitalization ration is 100% equity.

Got it.

blink on January 12, 2012 at 2:54 PM

I can’t speak to whatever conversations you are having with yourself in your head but I can tell you that your business will go bankrupt if you keep paying dividends while your business is losing money. Trust me, taking out new debt just to pay those dividends will just make things even worse.

ZGMF_Freedom on January 12, 2012 at 3:10 PM

Palin wants Perry to rally

workingclass artist on January 12, 2012 at 1:47 PM

She does? What did she say? I missed it. I still think he would be a good president, but he blew it with the Bain attack. How does he stay until TX with the money drying up?

herm2416 on January 12, 2012 at 3:12 PM

Did these supposed “unsuspecting investors” not sign their closing documents prior to infusing their capital.

Did these supposed “unsuspecting investors” not see the amount of investment being made.

Did these supposed “unsuspecting investors” not read the disclosure statements prior to signing their closing documents?

Please tell us.

blink on January 12, 2012 at 3:02 PM

Have you been asleep for the past decade? How many people have gone to jail for lying about the financial conditions of their companies?

Yes, what does this former broker-dealer equities analyst have to do with Bain?

Bain got out just in time. I want to know what they knew. I want to see their emails. (This was how Blodget was caught.) I want some transparency. I mean, my God, we are picking the president of the United States and he won’t he release his tax returns.

Are you serious? Are you really trying to claim this? Why was Bain required to hold stock that Lehman Brothers claimed that they liked?

Would Bain be allowed to sell their gold stocks right now even though some analysts like gold stocks???

Seriously? Is this the best you have?

blink on January 12, 2012 at 3:02 PM

I have only what Romney is willing to release which is nothing. How about we give him the same scrutiny we gave Cain?

Bill C on January 12, 2012 at 3:14 PM

Thanks, I’ll stick to thinking and writing the truth.

blink on January 12, 2012 at 3:11 PM

And so far up Romney’s rear end that you even think honest descriptions (heck, it wasn’t even intended to make Bain look bad) of what Bain does is an attack…okay…ya’ nutball.

cozmo on January 12, 2012 at 3:14 PM

Please provide us with more detail about these supposed government policies.

blink on January 12, 2012 at 2:26 PM

One is the advantage for debt in US corporate tax law. It would cost Bain a lot more and make much less sense to buy a company and load it with debt if that advantage did not exist.

I wouldn’t demonize the practice of advantaging debt across the board, as it does give a boost to small business. But it creates an artificial incentive for making money on margin, in a very particular way, off a failing company.

Another government policy is bailing out the pensions of failing companies. This was the case with the failing Kansas City steel mill. If Bain had had to take on the company’s pension burden, it probably wouldn’t have even touched that hot potato.

The bankruptcy and restructuring would have been handled differently — through bankrutpcy court — with the assets being sold off to make good on debt, shareholder interest, and pension burden to the extent possible, and the government perhaps picking up an amount of the unfunded pension obligations. But Bain was able to take over the company and make millions off of slicing it up, because the federal government bailed out the entire pension program for $44 million. That was an artificial guarantee against risk; without it, Bain couldn’t have made millions on the company, and wouldn’t have even tried.

In one way after another, government is constantly using policy and taxpayer money to create artificial conditions in the business environment. Typically, those conditions cushion risk on behalf of favored constituencies. That is big government, pure and simple, and Romney’s professional life in finance was conducted wholly in that environment. That doesn’t make Romney a bad person, but it gives him a skewed perspective on government’s proper role in business.

J.E. Dyer on January 12, 2012 at 3:15 PM

No, this is a lie.

blink on January 12, 2012 at 3:09 PM

Links?

Bill C on January 12, 2012 at 3:15 PM

blink on January 12, 2012 at 3:16 PM

Suuuuurrre…

cozmo on January 12, 2012 at 3:19 PM

Everyone already knows that. A 5 year old knows that.

blink on January 12, 2012 at 3:15 PM

Your a 5 year old? That explains the way you are acting.

Bill C on January 12, 2012 at 3:19 PM

Palin wants Perry to rally

workingclass artist on January 12, 2012 at 1:47 PM

She does? What did she say? I missed it. I still think he would be a good president, but he blew it with the Bain attack. How does he stay until TX with the money drying up?

herm2416 on January 12, 2012 at 3:12 PM

Last night on Hannity, she was probably at her worst ever…the worst part was giving her 2 segments to make an @ss out of herself.

rubberneck on January 12, 2012 at 3:20 PM

I don’t even support Romney.

blink on January 12, 2012 at 3:16 PM

Yes, most 5 year olds are bad at lying.

Bill C on January 12, 2012 at 3:20 PM

There could be some populist cred for Perry if big donors tied to Wall Street start leaving him

How is Barry Wynn tied to Wall Street?

VorDaj on January 12, 2012 at 3:21 PM

Palin defended Perry last night and asked Romney to release his tax returns.
workingclass artist on January 12, 2012 at 2:07 PM

This is pathetic. Palin is now showing each day that she is no principled conservative. If Sarah Palin had any guts, she would have DENOUNCED the incompetent buffoon Rick Perry’s outrageous attack on free enterprise. Sarah Palin seems more concerned with pleasing Perry fans in order to help the Palin brand. Unfortunately Sarah Palin, the number of Rick Perry fans can probably be counted on one hand.

I’m just going to come right out and say it: RICK PERRY IS A JOKE! We all know it. Let’s quit pretending that Rick Perry is anything but a pro-illegal alien amnesty, corrupt crony capitalist, big spending, utterly incompetent, ill-prepared man who comes off like a rodeo clown with “special needs.” The empty suit Rick Perry has no business running for president. Perry is an embarrassing man who offers nothing but a cartoonish urban cowboy act.

The fact that Perry’s own financial backers are now running as fast as they can from the Perry sinking ship (as this article describes) doesn’t surprise me one bit. Someone better get some grief counselors on hand for Dr. Evil, workingconartist, Aslan Girl and katy (the poster who posted using what I consider foul language). Those people are probably the last remaining Perry fans… though I suppose it’s possible they are really Obama plants trying to get the weakest Republican (Rick Perry) nominated so that Obama could coast to victory. Well, they failed. Not once did any of these people make anything close to a compelling case for anyone to vote for the BOZO Rick Perry.

All I have to say is… Perry, please return to TX and take care of business there. You are ABSOLUTELY NOT the man to be president. It’s time to end the charade!

bluegill on January 12, 2012 at 3:21 PM

Some of the companies Bain has helped and helped bring YOU products or services:
Since inception has invested in or acquired hundreds of companies including such notable companies as AMC Entertainment, Aspen Education Group, Brookstone, Burger King, Burlington Coat Factory, Clear Channel Communications, Domino’s Pizza, DoubleClick, Dunkin’ Donuts, D&M Holdings, Guitar Center, Hospital Corporation of America (HCA), Sealy, The Sports Authority, Staples, Toys “R” Us, Warner Music Group and The Weather Channel.

So has Bain been an asset to America and capitalism? I would say absolutely! How many jobs do these companies employ and provide steady paychecks, 401k’s, benefits, etc. There are many oother companies I did not list…so this attack on Romney and his work at Bain is RIDICULOUS as a conservative. You are attacking the very platform our party stands for which is freedom to rise and help others along the way through capitalism.

g2825m on January 12, 2012 at 3:21 PM

The Bain Capital Attacks Have Just Started.

I get that Romney releases his fact checkers out into the blogsphere, but if team Romney thinks trolling Perry threads on Hot Gas is going to stop this line of attack in South Carolina, well good luck with that. I still think Newt, and Rick did Mitt a favor, this was ammo the democrats were keeping dry for the General.

Dr Evil on January 12, 2012 at 3:22 PM

I’m just going to come right out and say it: RICK PERRY IS A JOKE! We all know it. Let’s quit pretending that Rick Perry is anything but a pro-illegal alien amnesty, corrupt crony capitalist, big spending, utterly incompetent, ill-prepared man who comes off like a rodeo clown with “special needs.” The empty suit Rick Perry has no business running for president. Perry is an embarrassing man who offers nothing but a cartoonish urban cowboy act.

bluegill on January 12, 2012 at 3:21 PM

Only in your hatin’ nutball little mind.

cozmo on January 12, 2012 at 3:23 PM

Romney is running on his Bain Record on jobs creation and now nobody is allowed to criticize that?

workingclass artist on January 12, 2012 at 1:52 PM

Of course, Perry is allowed to criticize it, but he must accept the consequences.

Gelsomina on January 12, 2012 at 3:24 PM

So has Bain been an asset to America and capitalism?

g2825m on January 12, 2012 at 3:21 PM

Yes.

cozmo on January 12, 2012 at 3:24 PM

bluegill on January 12, 2012 at 3:21 PM

If Rick Perry is a joke, why are you bothering to comment in a Perry post, and why do you YELL it?

Dr Evil on January 12, 2012 at 3:24 PM

If Rick Perry is a joke, why are you bothering to comment in a Perry post, and why do you YELL it?

Dr Evil on January 12, 2012 at 3:24 PM

b-l-u-e…g-i-l-l-s…That’s all he can do.

cozmo on January 12, 2012 at 3:26 PM

Romney is running on his Bain Record on jobs creation and now nobody is allowed to criticize that?

workingclass artist on January 12, 2012 at 1:52 PM

Of course, Perry is allowed to criticize it, but he must accept the consequences.

Gelsomina on January 12, 2012 at 3:24 PM

He is. South Carolina is a conservative firewall, Mitt’s got to make it past South Carolina. There is no reason for Mitt not to be vetted none. There is no reason if Mitt’s going to run on his Bain Capitol tenure, not to look at his tenure at Bain Capital.

Dr Evil on January 12, 2012 at 3:27 PM

Lots of Wall Street firms have financing units like Bain. If Romney headed up one at Goldman or Merrill would we still not be able to question his business background? Romney is a wonderful man and I supported him in 2008, but this is just not who we want at the top of our ticket in November.

monalisa on January 12, 2012 at 3:28 PM

How is Barry Wynn tied to Wall Street?

VorDaj on January 12, 2012 at 3:21 PM

I think the new mantra is anyone that makes over 250K is tied to Wall Street…haha

We conservatives, whether you support or Romney or not, NEED to move off this BAIN crap because, one, there is nothing there, two, it HAS never mattered to us how a person legally earns ones income! This is why so many conservatives are now moving away from Gingrich, Perry, etc if they continue to on this path.

Also for those of you that say Palin will endorse Perry…no way, if he continues on this Mitt/Bain attack. She will lose many of her supporters for her affiliation.

g2825m on January 12, 2012 at 3:29 PM

South Carolina “This Is Thunder Dome” LOL

Dr Evil on January 12, 2012 at 3:29 PM

This sentence is barely comprehensible. Again, are you saying that companies should be required to be financed 100% by equity?

Again, are you saying that Modigliani–Miller principles of optimizing capitalization rations are crap?

Please explain. Don’t just keep saying that a company will go out of business if it keeps losing money. Everyone already knows that. A 5 year old knows that.

blink on January 12, 2012 at 3:15 PM

Again, you can have whatever debates you want with yourself over the “Modigliani–Miller principles”. If you don’t understand that creating unsustainable debt to pay dividends will lead to a company’s bankruptcy, then I will point you to study the case of Bain and WGS. Otherwise, I can’t help you any further. If you don’t understand, then you simply don’t understand.

ZGMF_Freedom on January 12, 2012 at 3:32 PM

Someone better get some grief counselors on hand for Dr. Evil, workingconartist, Aslan Girl and katy (the poster who posted using what I consider foul language). Those people are probably the last remaining Perry fans… though I suppose it’s possible they (Dr. Evil, workingconartist, Aslan Girl and katy) are really Obama plants trying to get the weakest Republican (Rick Perry) nominated so that Obama could coast to victory. Well, they failed. Not once did any of these people make anything close to a compelling case for anyone to vote for the BOZO Rick Perry.

All I have to say is… Perry, please return to TX and take care of business there. You are ABSOLUTELY NOT the man to be president. It’s time to end the charade!

bluegill on January 12, 2012 at 3:21 PM

Bluegill,
I do not always agree with Dr Evil, Katy, Aslans, etc but have to come out and support them posting and KNOW they are NOT Obama plants as I have been posting with them for quite some time.

We can all be cordial in our posts and discussions.

Carry on…and Go Romney! ;o)

g2825m on January 12, 2012 at 3:35 PM

g2825m on January 12, 2012 at 3:29 PM

That’s not going to happen Mitt hammered Newt in Iowa, with negative ads, and now he’s going to get even…even if it means crashing and burning. The Bain Capital Flank has been opened, and Romney introduced it in his stump speech so his record at Bain Capital is fair inquiry. Gingrich is going scorched earth strategy.

The democrats had every intention of hitting Mitt with this in the General, if he survives the Bain Capital attacks in the primary, it’s possible he will be inoculated in the General.

Dr Evil on January 12, 2012 at 3:35 PM

Also for those of you that say Palin will endorse Perry…no way, if he continues on this Mitt/Bain attack. She will lose many of her supporters for her affiliation.
g2825m on January 12, 2012 at 3:29 PM

If she endorses anyone it will anger the supporters of all the other candidates. To endorse a 5% candidate with no future, who is no more than the late night comics source of joke material, and who’s on a rampage against capitalism would be committing instant political suicide. I suspect she’s too smart for that.

whatcat on January 12, 2012 at 3:37 PM

g2825m on January 12, 2012 at 3:35 PM

Thank you, no I have not been now nor have I ever been an Obot. If Romney wins the nomination, I have already stated I will line up for Gary Johnson Liberatarian, and as is the custom of his supporters, I will cover my windows with tinfoil ;)

Dr Evil on January 12, 2012 at 3:38 PM

What constituencies was favored?

blink on January 12, 2012 at 3:26 PM

The pensioners. Bain was able to take advantage of that. Whenever the government favors a constituency, others can find a way to profit from it.

I would agree with you that the govenment shouldn’t be in the business of guaranteeing pension programs.

Government guaranteeing against business risk is a pervasive factor in business decisions now. It has been for at least 50 years. Many of the guarantees are directed specifically at “labor,” and some of them take the form of regulatory policies. But they create an ever-expanding environment in which smart businesses make more because the risk is mitigated by fiat, with taxpayer money, than they would in a less artificially incentivized environment. I don’t see any evidence that Romney regards this as a problem. But I do.

J.E. Dyer on January 12, 2012 at 3:38 PM

Cozmo: you made the statement that Bain broke up companies and sold off their pieces. Blink disputes this point. You specifically mentioned Minyard’s although it is not clear from your post that was a Bain investment. Also, the process you mentioned (closing marginal stores and then selling the remaining entity as a single unit) is not a breakup, it’s a restructuring (and Minyard’s is still in business, so it must have worked).

So if there is another example, please let me know.

HTL on January 12, 2012 at 3:39 PM

I think the new mantra is anyone that makes over 250K is tied to Wall Street…haha

We conservatives, whether you support or Romney or not, NEED to move off this BAIN crap because, one, there is nothing there, two, it HAS never mattered to us how a person legally earns ones income! This is why so many conservatives are now moving away from Gingrich, Perry, etc if they continue to on this path.

Also for those of you that say Palin will endorse Perry…no way, if he continues on this Mitt/Bain attack. She will lose many of her supporters for her affiliation.

g2825m on January 12, 2012 at 3:29 PM

It matters to me if a person has earned his money ethically, without deceit or fraud. Sorry, the Bain ethical issue is here to stay.

ZGMF_Freedom on January 12, 2012 at 3:39 PM

I supported him in 2008, but this is just not who we want at the top of our ticket in November.

monalisa on January 12, 2012 at 3:28 PM

Why? If you supported him in 2008 and he has not had ONE change in his stances actually since 2005 and that one was supporting pro-life legislation that he signed as Governor why would you not support him four years later? This is why for some of you I do not know where you get this boogey-man belief on Romney? He has been consistent if you look at his record and NOT what others post or report about him. I believe that is why he is sweeping many voters up because as they TRULY look at his actual record they see conservative votes and a strong values, integrity, and family man.

g2825m on January 12, 2012 at 3:40 PM

I do not always agree with Dr Evil, Katy, Aslans, etc but have to come out and support them posting and KNOW they are NOT Obama plants as I have been posting with them for quite some time.
We can all be cordial in our posts and discussions.
g2825m on January 12, 2012 at 3:35 PM

True. I should be acknowledged that some folks can sincerely wrong, but they are sincere nonetheless.

whatcat on January 12, 2012 at 3:41 PM

That’s not going to happen Mitt hammered Newt in Iowa, with negative ads, and now he’s going to get even…even if it means crashing and burning. The Bain Capital Flank has been opened, and Romney introduced it in his stump speech so his record at Bain Capital is fair inquiry. Gingrich is going scorched earth strategy.

The democrats had every intention of hitting Mitt with this in the General, if he survives the Bain Capital attacks in the primary, it’s possible he will be inoculated in the General.

Dr Evil on January 12, 2012 at 3:35 PM

Doc,
This is only going to hurt Gingrich long term within the R Party and it will not be pretty. He is revisiting his 1997/98 campaign where he left with the door hitting him in the rear end ONLY after a HUGE victory for the party in ’94. Gingrich’s problem is Gingrich. He cannot seem to stay out of his alter-ego’s way.

g2825m on January 12, 2012 at 3:44 PM

Read my comments on any other thread, Dingbat. I’m only defending Romney against lies. Just like I defend all R candidates against lies.

blink on January 12, 2012 at 3:27 PM

Then we both agree that the Romney campaign needs to address the charges against Bain made in Newt’s video. If he has a good explanation this whole attack will go away.

Yes, and if Gold prices crash tomorrow, then I’m sure you’ll want to know what the people who have been selling Gold for the past few months knew.

You do realize that this was around the time of the internet bubble burst right? Plenty of people gave up on internet stocks while others were continuing to buy them.

And you do realize that we have securities laws regarding insider sales, right?

Do I really need to be explaining all of this to you?

There are no insider trading laws with regards to commodities so your analogy is flawed. If Bain was interested in investing why dump the stock so quickly? I realize we have laws against insider sales and I realize that lots of people try and skirt the law and that for everyone caught a dozen get away with it.

All I want is for Mitt to answer questions about Bain. If he doesn’t then he is no better than Herman Cain, a man who may or may not have had something to hide but refused to answer legitimate inquiries and, therefore, looked guilty.

Bill C on January 12, 2012 at 3:47 PM

So if there is another example, please let me know.

HTL on January 12, 2012 at 3:39 PM

Your original question was what were the differences.

My response was that Berkshire H bought established companies with good track records. Bain, at the time, didn’t have the reputation and looked towards riskier investments. Some good, some bad. They broke up the companies that couldn’t cut it and sold the assets. Blink took issue with that, and called it a lie. Its what any private equity group would do to a losing investment. They know this going in. Berkshire doesn’t shop for those.

cozmo on January 12, 2012 at 3:48 PM

Doc,
This is only going to hurt Gingrich long term within the R Party and it will not be pretty. He is revisiting his 1997/98 campaign where he left with the door hitting him in the rear end ONLY after a HUGE victory for the party in ’94. Gingrich’s problem is Gingrich. He cannot seem to stay out of his alter-ego’s way.

g2825m on January 12, 2012 at 3:44 PM

We were warned he could implode, has he implode yet….I don’t think he’s quite there yet, but the steam is building. Did you see the ad about Mitt’s dog…..I can hear Gingrich answering reporter’s questions. Gingrich: “Yeah I went there” LOL!

Dr Evil on January 12, 2012 at 3:49 PM

ZGMF_Freedom on January 12, 2012 at 2:12 PM

Has read a lot of garbage but doesn’t understand business.

blink on January 12, 2012 all comments..awesome! you are so right.

I am amazed at how many there are on these comment threads that do not understand what companies like Bain actually do and the service they provide the free markets.

Also, a vulture goes after a dead body, this means that vulture capitalism is taking a dead company and 1) turning it around or 2) selling the assets to get some of your investment back. If the company is dead there is no money for pensions and no money to pay people, that means no jobs.

uhangtight on January 12, 2012 at 3:51 PM

There are no insider trading laws with regards to commodities so your analogy is flawed. If Bain was interested in investing why dump the stock so quickly? I realize we have laws against insider sales and I realize that lots of people try and skirt the law and that for everyone caught a dozen get away with it.

Bill C on January 12, 2012 at 3:47 PM

Are you referring to the DDI case or was there another instance of Bain pumping and dumping?

ZGMF_Freedom on January 12, 2012 at 3:52 PM

It matters to me if a person has earned his money ethically, without deceit or fraud. Sorry, the Bain ethical issue is here to stay.

ZGMF_Freedom on January 12, 2012 at 3:39 PM

ZGMF and all,
We need to remember that THESE companies reach out to BAIN and other like firms for help. They also SIGN ON to whatever action may be taken on their company. Bain and other firms DO NOT move forward without the companies approval FIRST. So there is nothing unethical about TRYING to save a company that is headed towards failure and Romney SAVED more than failed during his time. Even some that were saved need paring of management and employees…we see that in “traditional” companies today. I have been affected personally by a company doing that and I understood that a company ONLY exists to make a profit…awwwwwwww! Shush! They do not exist to provide employment for employees. The employees are there to accomplish the profit goal and then benefit by receiving some of those profits they helped bring in for the company.

Romney did a great job and we should not mock or attack the way he made his profits ethically because as my previous post shows earlier look at all of the companies that Bain helped and provide employment for thousands today: AMC Entertainment, Aspen Education Group, Brookstone, Burger King, Burlington Coat Factory, Clear Channel Communications, Domino’s Pizza, DoubleClick, Dunkin’ Donuts, D&M Holdings, Experian, Guitar Center, Hospital Corporation of America (HCA), Sealy, Isotoner, The Sports Authority, Staples, Toys “R” Us, Warner Music Group and The Weather Channel.

g2825m on January 12, 2012 at 3:53 PM

We were warned he could implode, has he implode yet….I don’t think he’s quite there yet, but the steam is building. Did you see the ad about Mitt’s dog…..I can hear Gingrich answering reporter’s questions. Gingrich: “Yeah I went there” LOL!

Dr Evil on January 12, 2012 at 3:49 PM

haha Doc, did not see it this go around but saw the one brought up in the 2007/8 campaign. Is it the same ad? Poor old Fido! At least the dog made it as compared to Aunt Edna in Vacation…

g2825m on January 12, 2012 at 4:00 PM

Now, I’m assuming that your answer will depend on many variables which is why I’m assuming that you will want to use the helpful framework provided by the Noble Prize winning Modigliani–Miller.

I understand that you don’t understand anything about corporate finance. If you did, then you wouldn’t use the meaningless word, “unsustainable”, when describing a company’s capitalization structure.

blink on January 12, 2012 at 3:41 PM

Modigliani-Miller (MM) models were discredited when Long Term Capital Management (LTCM) blew up in 1997. Markets are more chaotic than models allow and arbitrage based on MM pricing models are next to worthless in black swan events we seem to have once or twice a decade.

This is the main reason why loading up companies with debt is dangerous. It is the same reason buying houses with too much debt is dangerous. Markets will have 2,3,6 sigma moves more often than the models predict and they will force deleveraging. That is what we are living through right now.

Romney isn’t guilty of any crime other than taking advantage of cheap money to lever up his capital. Bain was smart about it, they got in quick and got out quick. That is the only way to survive leverage. But let’s not pretend that this was a good idea. Companies restructured long before easy, fiat money was made available. The real argument is our financial system is unsustainable and we need to think about a more stable capital market structure because we cannot sustain a these crises that disrupt peoples lives so immensely. Will Mitt Romney change the way capital is allocated? Idk, only Nixon could go to China.

One last thing, if we don’t address the problems with easy money the communists and socialist will.

Bill C on January 12, 2012 at 4:02 PM

They broke up the companies that couldn’t cut it and sold the assets.

This isn’t true. Obviously, the assets of any company that needs to cease operations will need to be liquidated, but this is different than claiming that Bain profited by breaking up the company – even if they ended up making money on the deal overall.

blink on January 12, 2012 at 3:59 PM

Blink,
I think you and Cozmo are talking past each other and basically saying the same thing.

Bain did pare down companies so that they could continue to be profitable and most of the time it worked. :o)

g2825m on January 12, 2012 at 4:02 PM

“That’s not class warfare, it’s just common sense.”
Barack Hussein Obama (and Perry & Gingrich).

whatcat on January 12, 2012 at 4:02 PM

Great explanations exist. But great explanations aren’t always easy for simpletons to understand.

blink on January 12, 2012 at 3:54 PM

The American people are smarter than you think. I have a M.S. in finance and I will give Romney a fair hearing.

Bill C on January 12, 2012 at 4:03 PM

They broke up the companies that couldn’t cut it and sold the assets.

This isn’t true. Obviously, the assets of any company that needs to cease operations will need to be liquidated, but this is different than claiming that Bain profited by breaking up the company – even if they ended up making money on the deal overall.

blink on January 12, 2012 at 3:59 PM

Dude, do you realize that after you claimed the line wasn’t true, you restated the line as truth? And then made another statement you immediately contradicted?

cozmo on January 12, 2012 at 4:05 PM

Bill and others…
I think we need to weigh did Romney help the economy in what he did or ATTEMPT to do in ALL cases compared to what Obama has been doing the last three and half years? This is the question we are faced with in that who do I trust to HELP get Americans in back to work and let’s look at the records of each.

Romney has shown that he has done that in cases he failed he at least went down swinging…Obama has had the bat stuck on his shoulder for every strike right down the middle as he apologizes to his team and claims it is the pitcher’s fault!

g2825m on January 12, 2012 at 4:07 PM

Your original question was what were the differences.
cozmo on January 12, 2012 at 3:48 PM

Um, no that wasn’t my original question. You must have me confused with someone else.

What I was asking was if you could give me the name of a company or companies that were broken up and had their assets sold piecemeal by Bain. Bain’s primary business is turning around companies (even if it involves downsizing) and then selling off the remaining functioning entity, which is much different than what you are describing.

The argument could also be made that what Bain does is actually more useful than what Berkshire Hathaway does, which is to look for undervalued companies (i.e. companies who are in basically good shape but whose stock is low for exogenous reasons). Bain saves and creates jobs; Berkshire just buys undervalued stock and rides the updraft.

HTL on January 12, 2012 at 4:07 PM

Romney has shown that he has done AND that in cases he failed he at least went down swinging…

I need to borrow a Perry Oops!

g2825m on January 12, 2012 at 4:08 PM

On balance, Mitt’s Bain experience is a positive, especially in contrast to Obama’s ignorance and incompetence regarding business. Romney has a good story to tell, but he has to find an effective way to do it, and come up with an explanation that the average joe can understand and appreciate.

There is NO excuse for the attacks so-called conservatives like Perry and Gingrich have leveled against Romney about his time at Bain. And here at HA, the impression is that Bain is just the current weapon of choice for the Romney haters. If they didn’t have that, it would be something else. There will always be something else.

Meredith on January 12, 2012 at 4:08 PM

haha Doc, did not see it this go around but saw the one brought up in the 2007/8 campaign. Is it the same ad? Poor old Fido! At least the dog made it as compared to Aunt Edna in Vacation…

g2825m on January 12, 2012 at 4:00 PM

That’s the movie I always think of when the Romney family dog comes up The Griswolds.

Dr Evil on January 12, 2012 at 4:09 PM

Romney has shown that he has done AND that in cases he failed he at least went down swinging…

I need to borrow a Perry Oops!

g2825m on January 12, 2012 at 4:08 PM

hahahaaha even jacked up my correction…
has shown that he has done that AND in cases he failed he at least went down swinging…

I need to go to bed.I’m tired. Good nite all from AFG!

g2825m on January 12, 2012 at 4:10 PM

Well, then you can help me educate ZGMF_Freedom regarding optimization of corporate capital structures. As you know Modigliani–Miller frameworks consider the risk of default. As you know, not all debt is considered “unsustainable” even if default does occur someday.

Maybe you can help ZGMF_Freedom to stop using the term “unsustainable” regarding all debt incurred during capitalization restructuring.

blink on January 12, 2012 at 4:09 PM

Not all things you are allowed to do are things you aught to do. All things that improve your bottom line are not things that people are going to see as ethical, no matter how legal they end up being. I tend to wonder how you feel about John Edwards tens of millions of dollars earned from his legal practice of the law. He took risks too you know.

astonerii on January 12, 2012 at 4:12 PM

That’s not going to happen Mitt hammered Newt in Iowa, with negative ads, . . .

Was it Mitt’s campaign or was the PAC that ran those ads?

(Keep in mind that the PAC’s are supposed to be TOTALLY independent from the campaign.)

. . . and now he’s going to get even…even if it means crashing and burning.

WOW!!!

That sounds like a mature adult. /s

The Bain Capital Flank has been opened, and Romney introduced it in his stump speech so his record at Bain Capital is fair inquiry.

This morning the Newtron said that he wanted to make this about “character” and not about Bain.

Is that a flip flop?

Gingrich is going scorched earth strategy.
Dr Evil on January 12, 2012 at 3:35 PM

I am not surprised. It goes to HIS character.

Dr Evil on January 12, 2012 at 3:35 PM

Gunlock Bill on January 12, 2012 at 4:14 PM

Um, no that wasn’t my original question. You must have me confused with someone else.

HTL on January 12, 2012 at 4:07 PM

Okay, you’re right, this was the original question:

If someone could tell me the difference between Bain Capital and Berkshire Hathaway, I’d be happy. From what I can see, it’s a matter of size, not kind.

unclesmrgol on January 12, 2012 at 2:45 PM

I’m not interested in looking for links to the others, its not a big deal to me.

Thanks, HTL. I had my hands full today and didn’t have the time to educate everyone.

blink on January 12, 2012 at 4:10 PM

You mean insult everyone who doesn’t bow to your ego.

cozmo on January 12, 2012 at 4:15 PM

I have not posted this in about a month. Everyone has stayed stagnant while Romney has picked up 10 more since my last post on endorsements from a wide variety and ALL over the country.

Mitt Romney (63)
Sen. Kelly Ayotte (N.H.)
Sen. Roy Blunt (Mo.)
Sen. Scott Brown (Mass.)
Sen. Richard Burr (N.C.)
Sen. Thad Cochran (Miss.)
Sen. Orrin Hatch (Utah)
Sen. John Hoeven (N.D.)
Sen. Mark Kirk (Ill.)
Sen. John McCain (Ariz.)
Sen. Lisa Murkowski (Alaska)
Sen. James Risch (Idaho)
Sen. John Thune (S.D.)
Rep. Rodney Alexander (La.)
Rep. Mark Amodei (Nev.)
Rep. Charles Bass (N.H.)
Rep. Judy Biggert (Ill.)
Rep. Brian Bilbray (Calif.)
Rep. Rob Bishop (Utah)
Rep. Diane Black (Tenn.)
Rep. Mary Bono Mack (Calif.)
Rep. Ken Calvert (Calif.)
Rep. Dave Camp (Mich.)
Rep. John Campbell (Calif.)
Rep. Jason Chaffetz (Utah)
Rep. Howard Coble (N.C.)
Rep. Ander Crenshaw (Fla.)
Rep. Mario Diaz-Balart (Fla.)
Rep. Robert Dold (Ill.)
Rep. John Duncan (Tenn.)
Rep. Jeff Flake (Ariz.)
Rep. Virginia Foxx (N.C.)
Rep. Jim Gerlach (Pa.)
Rep. Tim Griffin (Ark.)
Rep. Michael Grimm (N.Y.)
Rep. Nan Hayworth (N.Y.)
Rep. Joe Heck (Nev.)
Rep. Wally Herger (Calif.)
Rep. Bill Huizenga (Mich.)
Rep. Darrell Issa (Calif.)
Rep. Leonard Lance (N.J.)
Rep. Jerry Lewis (Calif.)
Rep. Billy Long (Mo.)
Rep. Cynthia Lummis (Wyo.)
Rep. Connie Mack IV (Fla.)
Rep. Thaddeus McCotter (Mich.)
Rep. Patrick McHenry (N.C.)
Rep. Buck McKeon (Calif.)
Rep. Cathy McMorris Rodgers (Wash.)
Rep. Jeff Miller (Fla.)
Rep. Jim Renacci (Ohio)
Rep. Phil Roe (Tenn.)
Rep. Hal Rogers (Ky.)
Rep. Mike Rogers (Ala.)
Rep. Mike Rogers (Mich.)
Rep. Dana Rohrabacher (Calif.)
Rep. Todd Rokita (Ind.)
Rep. Tom Rooney (Fla.)
Rep. Ileana Ros-Lehtinen (Fla.)
Rep. Aaron Schock (Ill.)
Rep. Mike Simpson (Idaho)
Rep. Lamar Smith (Texas)
Rep. Greg Walden (Ore.)
Rep. Ed Whitfield (Ky.)
Rick Perry (14)
Sen. James Inhofe (Okla.)
Rep. John Carter (Texas)
Rep. Mike Coffman (Colo.)
Rep. Mike Conaway (Texas)
Rep. John Culberson (Texas)
Rep. Sam Graves (Mo.)
Rep. Jeb Hensarling (Texas)
Rep. Sam Johnson (Texas)
Rep. Kenny Marchant (Texas)
Rep. Michael McCaul (Texas)
Rep. Candice Miller (Mich.)
Rep. Mick Mulvaney (S.C.)
Rep. Steve Scalise (La.)
Rep. Pete Sessions (Texas)
Newt Gingrich (8)
Rep. Joe Barton (Texas)
Rep. Michael Burgess (Texas)
Rep. Phil Gingrey (Ga.)
Rep. Andy Harris (Md.)
Rep. Jack Kingston (Ga.)
Rep. Tom Price (Ga.)
Rep. Austin Scott (Ga.)
Rep. Lynn Westmoreland (Ga.)
Ron Paul (3)
Sen. Rand Paul (Ky.)
Rep. Justin Amash (Mich.)
Rep. Walter Jones Jr. (N.C.)
Rick Santorum (2)
Rep. Lou Barletta (Pa.)
Rep. Glenn Thompson (Pa.)
Jon Huntsman (1)
Rep. Richard Hanna (N.Y.)

g2825m on January 12, 2012 at 4:16 PM

blink on January 12, 2012 at 4:13 PM

Now, you arrive at the “grasping at straws stage“.

cozmo on January 12, 2012 at 4:17 PM

Gunlock Bill on January 12, 2012 at 4:14 PM

He’s not backing off either this is from the Hot Air Headlines.

January 12, 2012, 2:18 PM
Gingrich Sees ‘Wealthy Institutions’ Behind Bain Attacks Backlash

This is an article in the NYTs today.

Dr Evil on January 12, 2012 at 4:21 PM

I have facepalmed myself so much while reading this thread that I have a handprint on my face.

We are so screwed, and it because of the candidates or the parties, it’s because of the voters. All we do is focus on negatives then wonder why nobody’s good enough.

Person A said this, this and this and did this and can’t be a conservative and Person B did this and said this but then did this so he ain’t good enough. I’m leaning towards person C until I find out he did this and this, then I won’t back him anymore because they have to align with 100% of everything I beleive or they’re wasting my time. So I gues I’ll go with the quirky weird old guy from Texas who looks like Yoda.

I have never seen so many people so willing to shoot themselves in the foot to make a point.

Pcoop on January 12, 2012 at 4:21 PM

*it’s not because of*

Pcoop on January 12, 2012 at 4:22 PM

I need to go to bed.I’m tired. Good nite all from AFG!

g2825m on January 12, 2012 at 4:10 PM

Night

Dr Evil on January 12, 2012 at 4:22 PM

You mean insult everyone who doesn’t bow to your ego.

cozmo on January 12, 2012 at 4:15 PM

He is a student who is taking pride in reciting something he just learned. That’s natural. People are proud of their newly learned knowledge. But I think he jumped the shark when he asks everyone to bow to his ego. Idealism of youth, I suppose.

ZGMF_Freedom on January 12, 2012 at 4:27 PM

Now I realize that the Republican Party is not my Party anymore and Romney’s capitalism is not the FREE MARKET CAPITALISM that I used to know and really support.

Goodbye GOP.

I’m an indie now.

TheAlamos on January 12, 2012 at 4:29 PM

He’s not backing off either this is from the Hot Air Headlines.

Dr Evil on January 12, 2012 at 4:21 PM

I didn’t say he was “backing off”.

I said, that according to his comment from this morning, he didn’t want to make this about “Bain” but that he wanted to make this about “Character”.

(Can you hear the Romney camp salivating over the prospects of making this about “character”?

LOL!!!)

Gunlock Bill on January 12, 2012 at 4:31 PM

Wow, do you seriously not understand that an investor can most certain make a profit on a company prior to shutting the company down or liquidate it? Do you seriously not understand that it doesn’t mean that the investor made money BECAUSE he shut the company down or liquidated it?

blink on January 12, 2012 at 4:21 PM

Yes, I do. Had to do it myself, on a much smaller scale. Most of the time it isn’t fun.

Few investors make money BECAUSE they shut a company down or liquidate it.

blink on January 12, 2012 at 4:21 PM

But those investors aren’t as few as you claim. It leaves a smell on all the others who even come close, when the have to.

No, I don’t like that I insult people. My apologies for it.

blink on January 12, 2012 at 4:22 PM

Well, don’t go off half-cocked on everybody and you will sway more folks. And won’t catch the attention on those who enjoy playin’ with the nutballs.

cozmo on January 12, 2012 at 4:31 PM

bluegill on January 12, 2012 at 3:21 PM

Perhaps Palin will ask Perry to disclose the financial, recipient and performance details of his state sponsored 400 M$ ETF/TEF slush fund that he keeps closely guarded. She can also ask him to list all of his shady land deals over the years and Pery’s current abuse of 1.2 M taxpayer dollars for Texas DPS to provide campaign security. If we’re going to air dirty laundry, bring it ALL out.

Fletch54 on January 12, 2012 at 4:31 PM

Wynn, along with a handful of other previously neutral South Carolina moneymen, will publicly endorse Romney on Thursday.

“This latest attack, it’s so foreign to me, I couldn’t see myself being a part of that,” he explained. “I don’t think you can be on both sides of free market capitalism.

Wynn, you definitely know what free market really means. That’s because you’re part of those people in crony capitalists that reign in Wall Street and DC.

So stop using the word free market capitalism.

TheAlamos on January 12, 2012 at 4:33 PM

Now I realize that the Republican Party is not my Party anymore and Romney’s capitalism is not the FREE MARKET CAPITALISM that I used to know and really support.

Goodbye GOP.

I’m an indie now.

TheAlamos on January 12, 2012 at 4:29 PM

Wow. It’s Bob Dole/Perot all over again. This is…not good.

ZGMF_Freedom on January 12, 2012 at 4:33 PM

Gallup daily tracking poll

Mitt Romney 34% (31%)
Rick Santorum 15% (15%)
Newt Gingrich 14% (16%)
Ron Paul 13% (13%)
Rick Perry 5% (6%)
Jon Huntsman 2% (2%)

These attacks seem to be helping Romney and hurting Newtron and Perry.

Gunlock Bill on January 12, 2012 at 4:37 PM

Perry just can’t catch a break.

SparkPlug on January 12, 2012 at 4:40 PM

. . . . Gingrich’s problem is Gingrich. He cannot seem to stay out of his alter-ego’s way.

g2825m on January 12, 2012 at 3:44 PM

Nicely put. And when his “twin” took control after he had been nailed back in the day, he resigned from Congress all together and called them all “cannibals.”

He is hell-bent on a mission of revenge, and could care less for what happens. Ed’s post pointing out the gaping holes in the “Bain Bomb” should be enough to convince anyone.

Who is the cannibal now, Newt?

Trochilus on January 12, 2012 at 4:40 PM

I understand that you don’t understand anything about corporate finance. If you did, then you wouldn’t use the meaningless word, “unsustainable”, when describing a company’s capitalization structure.

blink on January 12, 2012 at 3:41 PM

Idjit. Your corporate finance lecture stinks.

Review your notes again. You mix up “financing” (to start business0 with the “risk” of paying your debts (to sustain business).

Common sense will tell you that the higher your debt is, the greater is your risk of default, and thus bankruptcy.

What mojo are you trying to teach here?

That’s Obama’s Crony Capitalist Corporate Finance you’re preaching, you idjit! Stop spewing idiotic and dangerous ideas here.

Your theory is the basis of the Democrats for SKY-IS-THE-LIMIT DEBT.

Idjit!

TheAlamos on January 12, 2012 at 4:43 PM

Gunlock Bill on January 12, 2012 at 4:37 PM

I think you are right.

SparkPlug on January 12, 2012 at 4:43 PM

TheAlamos on January 12, 2012 at 4:29 PM

“See my foot.”

BANG!

Pcoop on January 12, 2012 at 4:47 PM

Gallup daily tracking poll

Mitt Romney 34% (31%)
Rick Santorum 15% (15%)
Newt Gingrich 14% (16%)
Ron Paul 13% (13%)
Rick Perry 5% (6%)
Jon Huntsman 2% (2%)

These attacks seem to be helping Romney and hurting Newtron and Perry.

Gunlock Bill on January 12, 2012 at 4:37 PM

That’s interesting Santorum was at 21% nationally after Iowa, other than that not much has changed. Looks like he’s statistically tied with Gingrich now. So much for camping out in Iowa for a year. South Carolina is a whole different ball game.

Thanks for posting.

Dr Evil on January 12, 2012 at 4:49 PM

THIS JUST IN!
Govenor Rick Perry caught on tape…taking test, renewing his driver’s license
http://www.youtube.com/watch?v=pvn-tBeLpCk

KOOLAID2 on January 12, 2012 at 4:49 PM

Rick Perry: the one percenter..

Too bad this blog wasted so much bandwidth promoting Perry with free ad blog spacepostings!

Fail.

Fail.

Fail.

Did I mention fail?

Should’ve listened to the Texans that know Perry well!

But, NOOOO…. you non-Texans all “knew” Rick Perry better than we did…

Have you ever heard the phrase: “Don’t mess with Texas?”

Huh?

No?

Well it’s time to learn that lesson well, you morons.

The good thing is that Perry got destroyed before he was able to destroy the country and take it further down the tubes like he did Texas.

Mcguyver on January 12, 2012 at 4:52 PM

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