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January 10, 2012 02:40 PM UTC

Pink Slips

  • 5 Comments
  • by: Konola

Romney slipped on a pink slip on his way to the New Hampshire coronation of his candidacy. The past two days have been a slug fest, with most of the blows landing on the GOP front runner. I was wondering when this story was finally going to surface.

When I ran for office I ran on a platform of creating jobs. I had spent the previous decade working in an industry that used federal programs to encourage jobs creation in low-income communities. Most federal programs funding not-for-profit lenders have a requirement that a minimum number of jobs must be saved or created in exchange for the receipt of taxpayer money. The amount may have changed, but when I was involved  in the business, there needed to be at least one job saved or created for each $50,000 of federal support.

I always questioned the measurement of jobs saved. It was easy to see the creation of a job, because the number of jobs in a company would go up. It was harder to say that a job was saved. Usually, in the world of CDFIs, the definition of a job saved centered on a scenario where the owners of a company were planning to retire and would close the business if a new owner could not be found.

Romney has been running on his experience in the private sector during a prolonged recession where all of America is focused on unemployment statistics and the brutal fact that high unemployment begets high default rates on mortgages. When more properties are sold through foreclosure than through real estate listings because a family is moving up, the net result is falling property values. All of us have seen  equity in our homes disappear or shrink since 2008. Home ownership was once thought to be the safest possible investment other than cash, and now there are articles written about why renting may be better than owning.

Romney’s private sector experience was not as a jobs creator, it was as a corporate raider. Sure, there were some investments where the company survived; the Weather Channel is one such investment. But there were many more companies that were dismantled, with the workers losing their jobs and pensions and investors pocketing millions. That story finally hit the pages of the Wall Street Journal, and the role that Romney played in destroying jobs, not creating them, is finally the hottest topic in campaign reporting.

Bain didn’t measure its results by the number of jobs saved or created. The measurement was in the return on investment. After investing about $1-billion, the company had about $2.5-billion in gains. If the federal funding mandate for jobs were imposed, the expectation would have been that 20,000 jobs were created or saved. When Romney first ran for office, he said that number was 100,000 jobs. Later he said that number was 10,000 net jobs. At the latest number, the federal programs produce twice as many jobs as Romney did during his private sector experience with the same dollar investment, and the federal programs don’t destroy any jobs in the process.

Homework

http://online.wsj.com/article/…

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5 thoughts on “Pink Slips”

  1. but the icing on the cake is coming out and saying that while raiding these entities, creating misery for thousands, and lining your own greedy-ass pockets that you were somehow the Mother Theresa of job creation.

    Mitt Romney is a special kind of liar. His disdain for the American people is indicated by the level of deception he will stoop to, and the idea that most Americans are stupid enough to believe it.

    Thanks for linking the WSJ article Konola.  Everyone should read it.

  2. Sure, Bain style capitalism is rough and tumble, rich get richer and damn the rest.

    Yes it resulted in destroyed equity and lost companies.

    But the point is that as president Romney could do the same thing.  Think how awesome it would be if he ran up the debt to pay the rich and ignore the rest.

    How much awesomer it would be when he fired (does anyone really get pink slips anymore?) millions of Americans, some directly – the federal employees, many more indirectly by promoting outsourced off shore operations, and at least 12 million by deporting them.

    For those that could manage to survive in America – America would be all about rich people. Again.  No Cadillac driving welfare queens, no illegals stealing all of our jobs, no bad jobs because we’ll have offshored those, and no pesky gov’t employees.

    We’d still have cheap food because ag subsidies aren’t going anywhere, and oversized military budget for weapons and R&D.  

    Wait- maybe Romney is missing the point. What’s the point?  Why are we taking this guy seriously?  

  3. Sure, Bain style capitalism is rough and tumble, rich get richer and damn the rest.

    Yes it resulted in destroyed equity and lost companies.

    But the point is that as president Romney could do the same thing.  Think how awesome it would be if he ran up the debt to pay the rich and ignore the rest.

    How much awesomer it would be when he fired (does anyone really get pink slips anymore?) millions of Americans, some directly – the federal employees, many more indirectly by promoting outsourced off shore operations, and at least 12 million by deporting them.

    For those that could manage to survive in America – America would be all about rich people. Again.  No Cadillac driving welfare queens, no illegals stealing all of our jobs, no bad jobs because we’ll have offshored those, and no pesky gov’t employees.

    We’d still have cheap food because ag subsidies aren’t going anywhere, and oversized military budget for weapons and R&D.  

    Wait- maybe Romney is missing the point. What’s the point?  Why are we taking this guy seriously?  

  5. Today, Newt started the narrative that will really clobber Romney where it hurts — on Romney’s “business expertise”.

    Newt pointed out that one of Bain Capital’s ventures invested $30 million into a company, then took out $180 million from that company leaving it to declare bankruptcy.  Classic vulture capitalism.  Per Newt, this occurred in at least 3-4 cases involving Bain Capital.

    Back in the good ol’ days of the 1980’s, the first game was to take out massive loans from savings & loans, invest in questionable business ventures and take out huge fees.  If the investment didn’t pan out, you just declared bankruptcy and walked away with your fees untouched (see: Neil Bush).

    After that game was shut down, the next play was to go into a company that had “over-funded” pension funds.  Due to the 1980’s stock market gains, many company pension funds were “over-funded” based on actuarial calculations.  Vulture capitalists went into these companies and withdrew the “excess” pension funds for their own personal use.  They would also borrow massive loans also for their own personal use.  If things didn’t work out just perfectly, many of these companies were forced to declare bankruptcy and close.  (see: original “Wall Street” movie with Michael “greed is good” Douglas).

    If what Newt says is true, that Bain Capital did one of these vulture capital “drain the cash” transactions in at least 3-4 companies, then Obama will be able to destroy Romney in the general election.

    (double posted from today’s open thread. Thanks, Fidel for the heads up.)

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