Steve Roth — The Global “Capital” Glut

What Bain capital has to say about the global capital glut.

So what about Bain Capital, Romney’s shop? Here from their December 10, 2012 report (PDF; hat tip to the always-remarkable Izabella Kaminska, and to Climateer Investing).

World awash in nearly one quadrillion of cheap capital by end of decade, according to new Bain & Company report
Their takeaways include:

The capital glut will be accompanied by persistently low real interest rates, high volatility and thin real rates of return. 

Sound like secular stagnation to you?

 Also:

The ever-present danger of asset inflation will contribute to an overall steepening of the investment risk curve… companies will need to strengthen their bubble-detection capabilities

In short, there’s a huge amount of money floating around out there relative to income and production. (In Steve World, all financial assets embody money, and the money stock is the total value of financial assets — including dollar bills, deeds, or other formal financial claims — regardless of how currency-like those things are. Equating currency and currency-like things with money is conceptually incoherent.)

This is an excerpt. If this is your interest, read the whole thing and follow the link at the end.

Hint: it’s about what the herd does with all that money.

Asymptosis
The Global “Capital” Glut

Steve Roth

Thom Hartmann — The Bankruptcy and Privatization of Detroit Is a Terrifying Preview of What Republicans Want to Do to the Rest of the Country

The Bain Capitalization of Detroit, perfected by Michigan "favorite son" Mitt Romney — load it up with debt, extract cash, and then sell it off piece by piece — just as the core is doing with the periphery in the EZ. Hey, "that's just capitalism" (read neoliberalism).

AlterNet
The Bankruptcy and Privatization of Detroit Is a Terrifying Preview of What Republicans Want to Do to the Rest of the Country

Thom Hartmann

Marty Kaplan — The Real Reason Scout Prouty Leaked the Famous Romney "47%" Video -- It Was Over Romney Profiting from Slave Labor

Yep, it's worse than you thought.

AlterNet
The Real Reason Scout Prouty Leaked the Famous Romney "47%" Video -- It Was Over Romney Profiting from Slave Labor
Marty Kaplan

The New Meme? John Sununu: Democrats Won Thanks To Voters Dependent On Government

If Republicans are trying to shy away from the notion that America is divided between productive capitalists and dependent moochers, they forgot to tell John Sununu. The former New Hampshire governor and Mitt Romney campaign surrogate said Tuesday that Democrats and President Barack Obama won reelection by turning out the moochers.

"They aggressively got out the base of their base, the base of their base that’s dependent, to a great extent economically, on government policy and government programs," Sununu said at a forum with two other Republican governors, according to the Concord Monitor.

Sununu's comment recalled Romney's infamous statement during the campaign that 47 percent of Americans are dependent on government and would vote for Obama no matter what. The remarks, delivered at a big-donor fundraiser in May, roiled the campaign.

"There are 47 percent who are with him, who are dependent on government, who believe that, that they are victims, who believe that government has the responsibility to care for them," Romney said. "I'll never convince them they should take personal responsibility and care for their lives."

As it happens, Romney's former running mate, Rep. Paul Ryan (R-Wis.), repudiated that notion during an awards dinner in Washington on Tuesday evening.

"Both parties tend to divide Americans into 'our voters' and 'their voters,'" Ryan said, according to Politico. "Republicans must steer far clear of that trap. We must speak to the aspirations and anxieties of every American. I believe we can turn on the engines of upward mobility so that no one is left out from the promise of America."

The Huffington Post
John Sununu: Democrats Won Thanks To Voters Dependent On Government
Arthur Delaney

The extreme extremist push the "47 percent" narrative. The moderate extremists push back. Do I sense a circular firing squad in the making?

Whitney Tilson — Why I’m Voting for Obama Again

Stating the obvious. Is Romney a "real conservative," as he sold himself to the GOP base. Or is he a moderate, as he is selling himself to the independent undecideds? When etch-a-sketch becomes shapeshifting.

TilsonFunds.com
Why I’m Voting for Obama Again
Whitney Tilson

Adam Weinstein — Romney Enlists General Behind Iraq Debacle as Key Military Adviser

Tell me it isn't so! Tommy Franks?

Mother Jones

Romney Enlists General Behind Iraq Debacle as Key Military Adviser
Adam Weinstein

Ann Romney: Mormon missions and U.S. military are ‘different ways of serving’

The wife of Republican presidential nominee Mitt Romney on Thursday said that her husband and sons had not joined the U.S. military but had found “different ways of serving” by going onreligious missions in France, England, Australia and Chile as part of their obligation to the Mormon church....

“When I read about your husband, what I had read — and maybe you can correct this — is that the reason he didn’t serve in Vietnam was because it was against the religion,” Goldberg said.

“That’s not correct,” Ann Romney insisted. “He was serving his mission, and my five sons have also served missions. None served in the military, but I do have one son that feels that he’s giving back to his country in a significant way where he is now a doctor and he is taking care of veterans.”

“So, you know, we find different ways of serving,” she added. “And my husband and my five boys did serve missions, did not serve in the military.”

The candidate’s wife explained that Mormon missions were like military service in that “you’re going outside of yourself, you’re working and you’re helping others. And it changes you. And are we so grateful in this country for those people — men and women — that are volunteering, they’re sacrificing their life for us, and we cannot forget that or we have to acknowledge that always.”

The Raw Story
Ann Romney: Mormon missions and U.S. military are ‘different ways of serving’

David Edwards

As a Vietnam vet I find this deeply offensive.

Seems that the children of the wealthy and VIPs were too busy doing other things to serve when it came to going in harm's way. Cowards, the lot of them, regardless of political party.

Matt Taibbi — Greed and Debt: The True Story of Mitt Romney and Bain Capital

How the GOP presidential candidate and his private equity firm staged an epic wealth grab, destroyed jobs – and stuck others with the bill

Rolling Stone
Greed and Debt: The True Story of Mitt Romney and Bain Capital
Matt Taibbi

After taking on the vampire squid and the financial sector, Matt goes after Bain and private equity. Matt is getting this down. Not Hunter Thompson's gonzo journalism, but just as devastating and more tightly argued.

Tara Lohan — Romney Releases Energy Plan for the 19th Century: We Are Doomed

Here's a frightening look at what a Romney-Ryan ticket looks like for the environment and our future.

AlterNet
Romney Releases Energy Plan for the 19th Century: We Are Doomed
Tara Lohan

Linda Beale — Romney's Private Equity Magic Trick--equity manager's gain, taxpayers' losses

Romney touts his "business experience in the private sector" as the way to redesign economic policy. Beale shows how private equity companies like Bain Capital extract rent without adding anything to productive contribution. The "productivity increase" comes from downsizing and outsourcing, and the creative uses of debt results in lower taxes due tro the interest deduction. Romney administration = crony capitalism?

Angry Bear
Romney's Private Equity Magic Trick--equity manager's gain, taxpayers' losses
Linda Beale

GOP grabbing the third rail of American politics with both hands?

In May, the Romney team promised a laser-like focus on the economy . But that was then and this is now. This week, Romney changed the conversation when he caved to his right flank and chose Paul Ryan as his running mate, a man known for a budget proposal that's so toxic voters in focus groups, “ simply refused to believe any politician would do such a thing.”

Now, the Romney team is trying to avoid a backlash against the Ryan plan's most loathesome feature (replacing traditional Medicare coverage with a private insurance voucher that would pay for a dwindling share of seniors' healthcare bills over time) by following the old adage that if you can't dazzle them with your brilliance, then just baffle them with your bullshit.

So the Romney campaign and its surrogates are doing everything they can to muddy the waters, hoping – and not without reason! – that lazy political reporters will find all of this wonky stuff so boring and confusing they'll just report what both sides say and we'll end up in a draw over the issue come November. But there are a number of good reasons why this strategy is unlikely to succeed.

AlterNet
7 Reasons Why Romney-Ryan's Desperate Attempts to Spin Medicare Won't Work
Joshua Holland

Politico — GOP pros fret over Paul Ryan

“I think it’s a very bold choice. And an exciting and interesting pick. It’s going to elevate the campaign into a debate over big ideas. It means Romney-Ryan can run on principles and provide some real direction and vision for the Republican Party. And probably lose. Maybe big,” said former President George W. Bush senior adviser Mark McKinnon.

Politico
GOP pros fret over Paul Ryan
Alexander Burns, Maggie Haberman and Jonathan Martin

John Carney — Wall Street's Big Concern: Can Ryan Help Romney Win?

"The most important development is that this pick makes it unlikely that Romney can win Florida because of the anxiety Ryan generates among senior citizens over Medicare," he [Greg Valliere, chief political strategist at Potomac Research Group in Washington] added. "If Romney can't win Florida, he can't win the presidency."

Read it at CNBC NetNet
Wall Street's Big Concern: Can Ryan Help Romney Win?
John Carney | Senior Editor

John T. Harvey — Romney and Ryan's Disastrous Economic Plan

I have already argued that the latter’s proposed budget is an absolute nightmare (The Ryan Budget: A Mistake of Historic Proportions). It is premised on the existence of a fantasy world within which entrepreneurs, despite the decline in sales that would follow budget cuts, suddenly increase hiring and investment because they have been able to throw off the shackles of government interference. I don’t know any other way to say it–this is idiotic. A reduction in spending by any sector in the macroeconomy will reduce revenue in the private sector and thus make our predicament even worse. Say, for example, that for some reason we no longer had any need for a military presence anywhere in the world and therefore fired every American soldier, marine, airman, and sailor. Precisely how, Mr. Ryan, is this supposed to be good news for the entrepreneurs who sold groceries, gasoline, housing, clothing, etc., to these individuals? You don’t need a PhD in economics to answer that one–it’s not.

Romney may not be as extreme as Ryan, but he is cut from the same cloth. As he states on his web page, “The only recipe for fiscal health and a thriving private economy is a government that spends within its means.” This patently false. The only fiscally healthy or responsible policy is one that generates sufficient demand to hire all those willing to work. This does not include cuts to “non-security discretionary spending by 5 percent,” the shifting of federal government programs the private sector or state governments (entities that DO face a hard budget constraint), or, God forbid, a balanced budget amendment. Furthermore and as argued in an earlier post (The Real Job Creators: Consumers), the economy’s job creators are not, as Romney says, entrepreneurs and the wealthy, but the middle class. How can today’s unemployment be a function of overregulation and overtaxation when we are at or near historic lows in each? Rather, the problem, pure and simple, is demand. No amount of cost cutting will induce firms to expand employment in the absence of an increase in sales. Because this fact is lost on the Romney-Ryan ticket, their economic policies would be a disaster.

Forbes | Pragmatic Economics
Romney and Ryan's Disastrous Economic Plan
John T. Harvey | Professor of Economics, Texas Christian University

Sam Stein — Mitt Romney: Paul Ryan Budget Is Not His, Candidate 'Putting Together His Own'

Within minutes of tapping Paul Ryan as his vice presidential nominee, presumptive Republican nominee Mitt Romney was distancing himself from the congressman's controversial budget, which includes steep cuts to government programs and changing Medicare into a voucher-like program.

The Romney campaign sent out talking points on Saturday that made the case that he was his own man on matters of Medicare and Social Security and that he wouldn't be tied to a document he insisted he'd sign into law and once called "marvelous."

The Huffington Post
Mitt Romney: Paul Ryan Budget Is Not His, Candidate 'Putting Together His Own'
Sam Stein

Most popular Twitter comment: Romney Ryan have best hair. Maybe voters won't notice the Ryan Plan for them.

Mark Thoma — Outsourcing Government: What Is Mitt Romney Talking About?

Romney's position all ideology, no substance?

Read it at Economist's View
Outsourcing Government: What Is Mitt Romney Talking About?
Mark Thoma | Professor of Economics, University of Oregon

Romney jobs plan = no jobs plan

Romney "jobs plan." Here's what he said he would do to create jobs.

1. Kill Obamacare
2. Balance the budget
3. More foreign trade pacts
4. Drill, drill, drill

In other words, Romney's jobs plan equals no plan. It's the "Confidence Fairy," combined with expatriating more of our production, combined with poisoning the domestic environment for the benefit of the oil companies.

Flawed, Ignorant and Dangerous

“At base, having a small elite with vast wealth is good for the poor and the middle class.”

A Bain Capital Partner’s Worldview - Ed Conard interview

How do you open dialogue with a sociopath?  IS there much common ground?  When is it worth looking for overlap with an electron microscope?  No component in a complex system can fully comprehend OR RANK the options available to the complex aggregate - any more than any given neuron can express the group intelligence of the human CNS.  But they can get some idea, with enough compromise & interaction.

At some point, chicks with dominant balances have to throw out bullies who are deaf, dumb & blind to aggregate options, no matter their personal attributes.  No attribute of a system component has scalable meaning sans the operational ability to coordinate within the aggregate.  In other settings, we lament extreme personal success & group failure as "cancer."

“A lot of people don’t realize that what happened in 2008 was nearly identical to what happened in 1929,” he says. “Depositors ran to the bank to withdraw their money only to discover, like the citizens of Bedford Falls” — referring to the movie “It’s a Wonderful Life” — “that there was no money in the vault. All that money had been lent.” 

Is this grossly ignorant, or contemptibly slick treason?  Given enough time, the two always converge.   He next argues for guaranteed "bank" bailouts, regardless of how or why they fail - while not bothering to discriminate between commercial banks, investment banks & hedge funds.

The biggest flaw I sense in Ed Conard's "mathematical" approach to so many emerging unknowns, is his assumed predictive power.  There's always a lot of math that is exquisitely & laboriously applied to flawed concepts.

Diverse talents emerge unpredictably from massively recombinant sexual reproduction - as his own, humble beginnings in a Detroit suburb show. Only known way to parse that talent - so far - is, as the Marine Corp says, to generate both quality & pace of decision-making by distributing decision-making.  Since decision-making so often means denominating transactions with fiat currency, an economy with options thereby adapts best by distributing  group income in a way that is optimally adaptive, so that talent & local options always meet, ASAP. There's no set theory explaining how "optimal" evolves over time - just that it must adapt quickly to unpredictable, aggregate context.   Income disparity means not giving emerging talent enough income to buy what it is capable of consuming, or inventing.

I wonder how he feels about estate taxes.  What if his own kids have no talent or drive whatsoever?

Politicizing terror

The article is not just about Obama in spite of the title. It's a winning political strategy — with downside consequences, too.

Read it at Asia Times Online

Obama wins politics of terror 
By Sreeram Chaulia

Steve Roth has two related posts on the big rip-off

But is Unz talking about the financial industry and its government (particularly Republican) toadies? Of course not. That would be admitting that he and his movement are largely at fault for the problems he’s describing....

The financial industry, empowered and unleashed by that defanging (with American conservatives cheering and pushing every step of the way), has captured 20-40% of corporate profits over the last decade or so. But it’s the media that’s doing the extracting?All I can say is they’re not very damned good at it. Wouldn’t you expect the extractive elite to successfully . . . extract a lot of money into offshore bank accounts? Exactly which industry is doing that?

Some might find it significant that the word “banks” never appears in the article.

Read it at Asymptosis
The American Conservative: “Extractive Elites” and “Macro-Corruption”

by Steve Roth

The whole purpose of the private equity industry is to destroy the kind of mittelstand, long-lived, profitable, specialized, often family-owned and -operated companies that The Economist, Business Week, et al keep touting as the backbone of Germany’s remarkable success and resilience — its very “model of success.” Private equity’s model is to extract the expected future value of those companies in cash, while simultaneously, in most cases, destroying that value.

Mitt Romney, American Parasite, Destroys America’s Mittelstand

by Steve Roth