Thinking About the Economy: Is the Way Romney Made His Money Indefensible?

OK, I continue being a complete doofus in what concerns the economy. I see numbers and I fall asleep but I try to fight against this unhelpful tendency. So let’s try to figure this out together.

A reader sent me an article where Matt Taibbi describes the way Mitt Romney made his fortune as “indefensible.” Here is how Taibbi describes Bain’s activities:

Well, look, again, this is what-how companies like Bain made their money. And a great example was a company that I went and visited-well, the place where it used to exist-KB Toys, which used to be headquartered out in Pittsfield, Massachusetts. They took over the company with like $18 million down. They financed the other $302 million. So that’s borrowed money that subsequently became the debt of KB Toys. This is an important distinction for people to understand. When they borrowed that money to take over that company, they didn’t have to pay it back, KB had to pay it back. Once they took over the company, they induced it to do a $120 million, quote-unquote, “dividend recapitalization,” which essentially means that the company had to cash in a bunch of shares and pay Bain and its investors a huge sum of money. And in order to finance that, they had to take out over $60 million in bank loans. So, essentially, you take over the company, you force them to make enormous withdrawals against their credit card, essentially, and pay the new owners of the company. And that’s essentially what they did. They took over a floundering company that was sort of in between and faced with threatening changes in the industry, and they forced them to cash out entirely and pay all their money to the new owners.

I’m sorry for a longish quote but I think this needs to be read in full if we have a chance at understanding what happened. Note the repeated use of the word “force” that is not followed by any explanation about the nature of the forcing.

Here is the most confusing passage (which, at least, is blissfully short) that, again, introduces the idea of force into the description of the situation:

They are-they’re essentially vultures who hang out waiting for companies to get sick, then they forcibly take them over, and they extract fees, commissions and dividends, by force, essentially.

Again, a very short sentence that repeats “forcible” and “by force” like a mantra. I don’t get what this is supposed to mean. I always feel suspicious of such rhetorical devices because they make me think that the author believes that repeating something many times will make it true. What is a “forcible” takeover in this context? I don’t think Bain Capital stormed into a company’s headquarters with guns blazing and made the owners sign paperwork against their will. Surely, there would have been legal recourse available to the victims if that had happened? Did the owners get fake paperwork to sign without understanding what was being proposed to them?

I put the rest under the fold because not everybody wants to read such a long post on the economy.

Continue reading “Thinking About the Economy: Is the Way Romney Made His Money Indefensible?”

The Hollywood View of History

Many of my students suffer from what I call “The Hollywood View of History.” This term stands for an approach where students expect that a discussion of any historical event will end with “. . . and then the US stepped in and saved the good guys from evildoers!”

To give just one example, I have to spend an inordinate amount of time explaining that “No, the US didn’t help Bartolome de Las Casas liberate the indigenous peoples of the Americas from slavery in the XVIth century.” This is why when I teach the Spanish Civil War I repeat many times (and write on the board, and make everybody say it aloud) that “The US refused to help the Spanish Republicans to defend the legitimate democratically elected government from the fascists. The Republicans were helped only by the USSR and the International Brigades, consisting of volunteers from all over the world.” (Please don’t argue with me about this because I don’t have much energy for stupidity right now.)

Still, 70% students wrote on our first mini-quiz that “the US helped the Republicans to defend themselves from the fascists and the Soviet Union.”

Another issue was that, even though I said many times that the Spanish Republicans of the 1930s have nothing in common with the US Republicans, many students wrote “The Republicans in Spain were conservative fascists.” Republican = conservative is their way of applying the worldview that is familiar to them to other countries.

You have no idea how annoyed I am with the Spanish Republicans for not choosing some other appellation. They should have thought of how hard it would be for me to teach the Civil War to Americans in 2012! Those inconsiderate bastards.

P.S. This is an advanced course on Spanish culture and all students are expected to speak, read and write fluently in Spanish. Please stop writing me emails saying that students misunderstand what I say in class because I speak in Spanish. I have already answered half a dozen of these emails and I can’t take it any longer. I teach advanced courses in Spanish this year. These courses have a butt-load of pre-requisites and everybody speaks Spanish in them. Nobody becomes a Major in Spanish without speaking Spanish. Our language program is outstanding and our students have a very good level of Spanish. This is not a linguistic problem but an ideological one. Let’s just deal with this reality and move on already.

PQ Wins Quebec

So the separatist Parti Quebecois won the provincial elections yesterday.

Everybody I know in Montreal has spent the night researching what a move to Vancouver would entail. Some of those people were born and raised Francophone in Quebec. Many are, of course, immigrants. And there are a few Anglos as well.

My sister could barely talk on the phone last night. I’m the drama queen of the family, while she is the ultra-positive, can-do sort of person who will easily pull up by the bootstraps herself, you, me and a busload of strangers. So if she is sad, things must be getting dire.

If anybody has a positive insight into the elections, please share because I need to dispel the gloom.

Sex Ed

Steve left the following comment to yesterday’s post:

Another friend tried to convince me that fucking was ipso factor rape, which was the most serious crime in the world, more serious than murder and you would automatically be hanged for it. I pointed out that children continued to be born, so either that wasn’t true or there were an awful lot of unhanged rapists walking around, even acknowledging that the children were theirs. He then informed me that fucking did not produce children, kissing did. I thougt someone must have lied to him, but when I grew up I thougth that his parents may have tried to give him some sex education, and he had misunderstood it/.

This gave me an idea to discuss what sex education we all received.

I grew up in a country where sex was not discussed and even the word “sex” was not mentioned in polite company. At least, that’s how things were in our social stratum.

A sextant. Not to be confused with sex!

When I became curious about human reproduction at age 12, I decided to consult the fount of wisdom that was the Great Soviet Encyclopedia. I was completely innocent on this subject and had no idea that men had any involvement in reproductive processes. I had this vague idea that women decided when they wanted to grow a baby inside of them and men were not necessary for this in any capacity. We had a neighbor who gave birth to a baby girl without getting married or ever being accompanied by any man (that I knew of, obviously) which was what gave me this idea.

The article on reproduction in the Great Soviet Encyclopedia was filled with long, confusing words that sounded obscene (I mean, “zygote” or “gamete.” I’m still embarrassed whenever I hear these words.) When I finally managed to decipher the article, I was shocked.

“No,” I decided. “Of course, people don’t do these nasty things. Maybe some horrible people do them but nice, normal people definitely don’t.”

This was when I understood why my parents always said that the Great Soviet Encyclopedia was filled with lies.

N. also researched sex at the same age and using the same method. We, the Soviet children, were not very inventive, it seems. His parents, however, did not have the Great Soviet Encyclopedia. They owned a shorter version titled the Small Soviet Encyclopedia. The word “sex” wasn’t there. The closest word to “sex” that it contained was the word “sextant.” N. stared at it for days, trying to figure out why something that looked so innocent was supposed to be this huge mystery. This was when he realized that all adults were idiots.

When I was 14, my great-grandfather finally brought me a brochure that explained human sexuality in a reasonable, calm, and comforting way. I still remember the first sentence from it: “Sexuality could and should be among the best, most beautiful parts of human experience. And if it isn’t, that is a result of how badly we handle the sexual education of the growing generation.”

And how did you learn about sex?