Venture capital or leveraged-asset pawn shop?

BAIN. It’s like the upcoming Dark Knight movie. The presence of “evil” (at least according to Romney critics) presents a stark disconnect between what is true VC, and what is leveraged Hardcore Pawn behavior.

For example. When Mitt was with Staples, he really was VC. And at the time, it was an honest stab at entrepreneurship, where Romney stocked shelves, drank bad coffee, and lived the dream of opening a flagship store. But lately, Bain Capital has been marred by the requirement of any efficient business model, that layoffs are part of the evil that is corporate hegemony.

Corporations are social. It’s the greater good of entrepreneurship, capitalism, and freedom rolled into the benefit of stock and price earnings (PE). The ADD-esque attention span of private equity creates an ideology, that ruining other people’s lives is for the greater good, or social corporatism.

And that’s when Romney blew Rush’s head off:

“In the general election I’ll be pointing out that the president took the reins at General Motors and Chrysler — closed factories, closed dealerships laid off thousands and thousands of workers — he did it to try to save the business. … We also had the occasion to do things that are tough to try and save a business.”

Wait a minute…Eine Minuten, bitte…

Did he just justify the auto bailout as something Private Equity normally does?

It’s not bad enough that fiscal conservatives were fooled by Romney’s Wall Street Journal Op-Ed that told Detroit to go cuss itself. It was that he flipped so easily, 48 months later. – and without a blink.

Seriously, Saul…Do you want the MIGOP to side with this guy?  And with the strong Western TEA a real factor (the TEA is caucusing in 2012), should you risk a schism?

And as an independent, I can understand the misgivings of a government bailout of GM and Chrysler. But that’s ironically the point with my problem with Romney.  I think the bailout was necessary, evil, and indigestible.  It was the reality of the facts on the ground.  Otherwise, Michigan would be dead in the water if we went with Mitt’s Op-Ed.

And to ram the point home, just yesterday, Mitt-Flops said:

“I think any time a job is lost it’s a tragedy. For the family, for the individual that loses a job, it’s devastating.”

Where were you on November 11, 2008, Mitt?  I thought you were a idealist when you said “tough patooties, Detroit”?  The irony here is that Romney was right in the first place, though reality (and the scope of corporate socialism today) would show otherwise.  For purists of free market fundamentals, the problem isn’t free-market, it’s the rhetoric that tries to trick you into thinking this corporate socialism is laissez-faire.  The scope of true capitalism is only measured in proportion to the percentage of single-proprietors to the oligarchy of corporate ideologues.

Truth is, the only thing separating us from bankruptcy is the notion that were we to actually go bankrupt, the run on our economy would destroy the world ten times over.  Forget the third-world, our nation is already on the brink of a third-world crisis.  And we have to ask ourselves, can we cut our way out, or do we have no choice but to grow our way out?

With 100% GDP-to-debt ratios, trillion-dollar-debt swaps sitting in the EU, we’re no closer to a free market, but a too-big-to-fail global structure in dire need of reform.

And that brings us back to Bain Capital, in whatever form before or after Mitt.  The easy explanation, that ideal that Romney brought 100,000 jobs to America…Is offset by the fact that Romney had nothing to do with Staples’ growth after he ran to Salt Lake 2002.

And as a glorified bagel runner in SLC, I can understand his desperation for bona fides.  After all, the suit makes the man.

The thing is, the Romney WSJ Op-Ed was the only reason any fiscal conservative would’ve  trusted him in 2012.  From his trust-fund ideology to his eagle-chops, the average conservative doesn’t trust him, because he just looks manufactured at the expense of a blue-collar job.  But when he ran that “Let Detroit Go Bankrupt” editorial, people bought into the notion that Mitt Romney was on their side, and that’s why we’re where we are today in the GOP primaries.

Lest anyone realize what happened to the greatest mall toy store of any generation:  Kay-Bee Toys.

Kay-Bee was a conglomerate franchise, that the individual stores were key to driving sales into the black during Christmas season.  But the truth was, when Bain Capital leveraged the hard effort of two generations of toy retailers…They squeezed Kay-Bee until it died.  They used assets to get loans that had no intention of being repaid.  And that’s the “Bad Bain”, and the question for Mitt today.

Multiple layoff sessions, and then reduction of stores reduced the entire reasoning of having a mall outlet for sales.  That Kay-Bee was so outdated, Bain Capital squeezed them dry.  For 4 years of “profitability” (truly based off of the assets leveraged by Bain for loans), they were willing to destroy the entire company, lay off thousands, and basically kill a 70′s kids’ dream job.

This is where Mitt’s GM/Chrysler reversal is so important.  The moderation of a candidate is fine…so long you don’t try to sell yourself as a fiscal conservative.

Bain Capital isn’t as much a VC today (as when Mitt was in charge) as it is a corporate pawnbroker.  They take all the assets of a company in a tight cash-flow, then leverage 70+% of the company in order to realize their closed investment goal.  That $80 Million in bonuses is on the backs of thousands of workers who had no choice but accept the leveraged buyout.

Maybe Mitt was a good VC guy.  Just like Governor Snyder, the daily process of a VC entity is managed risk.  And any private equity firm has to manage risk with their investments.

Was it hedged?  Did Mitt try to justify a hostile takeover of GM?  To lay off tens of thousands, in order to “save the company”?

Hardly free-market, and as Newt said, “crony capitalism”.

What we should question is the difference between Mitt’s Bain Capital and today’s Bain Capital.  It is too easy to excuse the former for the latter, just because you don’t like Mitt.

And to be honest, most of the rhetoric from the other GOP candidates suggest that they’re just like the 99%ers, that they vilify #occupywallstreet, yet try to take credit for the activism of today’s young generation.

After all, the blend of consumerism and commercial development is hard to parse.  We need corporations, big business, and solid investments in the markets.  And sometimes, we have to accept the fact that the heroes of an industry are really no better than orange farmers sitting on the I-10 to Santa Monica.

Naranja, indeed.

So the question remains.  While some private equity firms are true VC, others are opportunistic entities that take advantage of weakness.  And the “decent” version of Venture Cap is that you actually believe in the product, not the numbers.

Is Mitt a numbers guy…or a VC guy?  That’s the question SC Voters will have to answer. Otherwise, they could find themselves betrayed in the end.  Mako out.