Everyone knows that Mitt Romney is fantastically rich. But what most voters don't know is the way he actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. He is one of the greatest and most irresponsible debt creators of all time.
Romney nonetheless warns us of "exploding deficits and crushing debt, a prairie fire of debt sweeping across the nation, getting closer to our homes and children."
It's a brilliant comedy: A man makes a fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt he saddled them with in the first place. That same man then runs for president riding an image of children roasting on flames of debt, choosing as his running mate perhaps the only politician in America more pompous and self-righteous about the evils of borrowed money than the candidate himself -- Paul Ryan, an anal, thin-lipped, Whitest Kid U Know penny pincher who'd be honored to tell Oliver Twist there's no more soup.
Romney's gambit isn't simply a reflection of his own artlessly unapologetic mindset -- it stands as an emblem for the resiliency of of the entire sociopathic Wall Street set he represents. Four years ago, the Mitt Romneys of the world nearly destroyed the global economy with their greed, shortsightedness and -- most notably -- wildly irresponsible use of debt in pursuit of personal profit. It was so disgusting that people were ready to drop an H-bomb on Lower Manhattan and bayonet the survivors. But today, that same insane greed ethos, that same lunatic belief in the pursuit of instant borrowed millions -- well, it's dusted itself off, it's had a shave and a shoeshine, and it's back out there running for president.
On the campaign trail, Romney relentlessly trades on his self-perpetuated reputation as a kind of altruistic rescuer of failing enterprises, never missing an opportunity to use the word "help".
Here's how Romney would go about "helping" a company: A private equity firm like Bain Capital typically seeks out floundering companies with good cash flow. It then puts down a relatively small amount of its own money and runs to a friendly big bank for the rest of the financing. The takeover firm then uses that borrowed money to buy a controlling interest in the target company, either with or without its consent.
Romney and Bain avoided the hostile takeover, prefering to secure the cooperation of their takeover targets by buying off the company's management with lucrative bonuses. After that, the rest is just math. If Bain values the company at, say, $500 million, it might put down $20 million of its own money, then borrow $350 million from banks to take a controlling stake.
But here's the catch: When Bain borrows all that money from the bank, it's the target company that's on the hook for all of the debt.
So in addition to whatever problems your troubled firm had before, you now owe Goldman or Citigroup or JP Morgan Chase $350 million. With all that new debt, things are suddenly untenable. You almost have to start firing people immediately to get your costs down to a manageable level.
Fortunately, the geniuses at Bain who now run the place are there to help tell you whom to fire. And for the service it performs of cutting your company's costs to help you pay off the massive debt that it, Bain, saddled you with in the first place, Bain naturally charges a management fee, typically millions of dollars a year.
Since the acquisition of your company was greased by promising big bonuses to upper management, all that pain comes out of the benefits and payroll of your hourly workforce. You fire and slash to pay all your new obligations, or you go bankrupt.
This business model wasn't really about "helping", of course.
Mitt Romney is a perfect representative of one side of the ominous cultural divide that will define the world's next generation. Forget blue vs. red, swing states, and all that.
The coming conflict will be between people who live somehwere, and people who live nowhere. It will be between people who consider themselves citizens of actual countries to which they have patriotic allegiance, and people to whom nations are meaningless, who live in a stateless global archipelago of privilege -- a collection of private schools, tax havens and gated communities with little connection to the outside world.
Mitt Romney isn't blue or red. He's an archipelago man, an apostle of an economic revolution in which transactions are manufactured instead of products, wealth is generated without accompanying prosperity, and Cayman Islands partnerships are lovingly nurtured while American communities fall apart. The entire purpose of Romney's business model is to move money into the archipelago from places outside it, using huge amounts of taxpayer-subsidized debt to enrich a handful of billionaires.
It's a vision of society that's crazy, vicious and selfish, yet it's running for president.
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