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September 4, 2012

Rolling Stone exposes the real Mitt Romney

September 4, 2012. Rolling Stone Magazine released a scathing investigative report on Mitt Romney, his vast wealth, and the way he made his fortune. The GOP Presidential nominee’s tax returns are sealed, his wealth hidden offshore and his vast empire amassed not by building anything, but by taking advantage of a weak America, corrupt politicians and an economic system rigged to benefit the rich. Here are the details everyone’s been looking for.

Image courtesy of Rolling Stone.

Like Hollywood’s hit movie Wall Street, Mitt Romney is portrayed by Rolling Stone as being the epitome of the evil, heartless, greedy Gordon Gekko, the character who coined the phrase, “Greed is good”.

The article describes Mitt Romney saying:

‘He's Gordon Gekko, but a new and improved version, with better PR – and a bigger goal. A takeover artist all his life, Romney is now trying to take over America itself. And if his own history is any guide, we'll all end up paying for the acquisition.’

What America didn’t know back in the 80’s was, while the fictitious Gordon Gekko was destroying our country in the movies, Mitt Romney was using the same tactics to destroy it in real life.

In the America of 2012, a hand full of individuals and multi-national corporations are literally sitting on trillions of dollars in American money – money that once flowed through the veins of all Americans, putting food on the table, paying for teachers, buying clothes, fixing roads, paying medical bills, tuition, rent and all the other things one must pay for daily while chasing that elusive American dream.

In an extensive report describing Mitt Romney’s road to riches, Rolling Stone lumps the Republican Presidential candidate into the small, select group of global financiers that all but destroyed the American economy, and America’s middle and working classes in the process.

Rolling Stone

The title of the report is, ‘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’.

The first and most shocking conclusion of the investigation is that Mitt Romney is not the bumbling, non-politician who flip-flops incessantly because he’s behind the times and simply trying to catch up with the America he’s reluctantly out of touch with. Instead, the article argues, Mitt Romney knows exactly what he’s doing, and the magazine insists, ‘It’s big’.

According to the publication:

‘What most voters don't know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America's top political journalists for two consecutive presidential campaigns: Mitt Romney is one of the greatest and most irresponsible debt creators of all time. In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on planet Earth.’

The new economy

As this news outlet often reminds readers, President Bush warned America that he and his supporters were going to transform America from a manufacturing-based economy to a service-based economy. Together with their Democratic allies, they promised more jobs, better and higher-paying than at a factory. America learned the hard way that they were wrong. And Mitt Romney was at the center of it all, profiting handsomely with the power of his wealth, his family connections and a political system that was corrupted by those who didn’t hesitate to sell out the American people to realize their financial dreams.

Rolling Stone takes a shot at the entire financial industry when it writes:

‘Mitt Romney, it turns out, is the perfect frontman for Wall Street's greed revolution. He's not a two-bit, shifty-eyed huckster like Lloyd Blankfein. He's not a sighing, eye-rolling, arrogant jerkwad like Jamie Dimon. But Mitt believes the same things those guys believe: He's been right with them on the front lines of the financialization revolution, a decades-long campaign in which the old, simple, let's-make-stuff-and-sell-it manufacturing economy was replaced with a new, highly complex, let's-take-stuff-and-trash-it financial economy. Instead of cars and airplanes, we built swaps, CDOs and other toxic financial products. Instead of building new companies from the ground up, we took out massive bank loans and used them to acquire existing firms, liquidating every asset in sight and leaving the target companies holding the note.’

The early days of Mitt Romney

Describing an almost boy wonder, the Rolling Stone article describes the young Mitt Romney as being fantastically wealthy, a graduate of Harvard Business School, tall, handsome, and from a politically powerful family. He could have done anything he wanted to with his life. Mitt Romney chose to be ‘Gordon Gekko’ and destroy American businesses for profit.

The magazine writes:

‘In 1977, he joined a young entrepreneur named Bill Bain at a firm called Bain & Company, where he worked for six years before being handed the reins of a new firm-within-a-firm called Bain Capital…Toward the middle of his career at Bain, Romney made a fateful strategic decision: He moved away from creating companies like Staples through venture capital schemes, and toward a business model that involved borrowing huge sums of money to take over existing firms, then extracting value from them by force.’

Mitt Romney the power player

The investigative report goes on to describe the mid-life Mitt Romney as the mirror image of ‘Wall Street’s Gordon Gekko, actually mentioning the similarity numerous times. In doing so, Rolling Stone gives a step by step account of the process Mitt Romney used to amass his fortune at Bain.

According to the publication, Romney and Bain would first find a struggling but valuable company as their take-over target. With as little as 5% of their own money, Bain would borrow enough from a large Wall Street bank to carry out a hostile take-over of the company, buying out a majority of its stock.

The key to Romney’s success was the fact that due to the structure of the take-over, the company inherited not just Mitt Romney and Bain, but also the loan they took out from Wall Street to finance the acquisition in the first place. As the publication puts it:

‘Now your troubled firm – let's say you make tricycles in Alabama – has been taken over by a bunch of slick Wall Street dudes who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.’

In addition to taking care of executive management with exorbitant bonuses, Bain also takes control of the ‘turn-around’. Firing American workers, outsourcing, consolidating, and other turn-around practices were the services Bain and Mitt Romney specialized in, and they charged these poor companies millions of dollars in additional ‘management fees’ to do it.

As the report puts it, ‘So Tricycle Inc. now has two gigantic new burdens it never had before Bain Capital stepped into the picture: tens of millions in annual debt service, and millions more in management fees.’

An example of a Mitt Romney 'turn-around'

For readers who enjoy those local, personal glimpses of tragedy thrust into the national spotlight, consider one of the examples the Rolling Stone article gives us of a Mitt Romney turn-around:

‘Take a typical Bain transaction involving an Indiana-based company called American Pad and Paper. Bain bought Ampad in 1992 for just $5 million, financing the rest of the deal with borrowed cash. Within three years, Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees. A year later, Bain led Ampad to go public, cashed out about $50 million in stock for itself and its investors, charged the firm $2 million for arranging the IPO and pocketed another $5 million in "management" fees. Ampad wound up going bankrupt, and hundreds of workers lost their jobs, but Bain and Romney weren't crying: They'd made more than $100 million on a $5 million investment.’

Special thanks to Rolling Stone for the above excerpts. Click here to read the full article, ‘Greed and Debt: The True Story of Mitt Romney and Bain Capital’.

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