David Stockman: Mitt Romney and the Bain Drain – Newsweek

David Stockman wrote to me yesterday with a heads up that an excerpt from his new book would appear in Newsweek. A quote:

Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses.

Just to disabuse anyone of the notion that this statement might be politically motivated I know Mr. Stockman well enough to have visited him at his home so I know that this statement is not because Mr. Stockman is pro Obama in any way. He has been equally vitriolic in his criticism of Obama and his policies. Anyone who is familiar with Mr. Stockman’s writings and frequent media appearances  know that he has been a critic of the financial status quo, regardless of political party.

Mr.  Stockman’s new book will be available on Amazon.com in March 2013.

The Newsweek piece begins here:

Bain Capital is a product of the Great Deformation. It has garnered fabulous winnings through leveraged speculation in financial markets that have been perverted and deformed by decades of money printing and Wall Street coddling by the Fed. So Bain’s billions of profits were not rewards for capitalist creation; they were mainly windfalls collected from gambling in markets that were rigged to rise.

Mitt Romney was not a businessman; He was a master financial speculator who bought, sold, flipped, and stripped businesses. (Charles Ommanney / Getty Images)

Nevertheless, Mitt Romney claims that his essential qualification to be president is grounded in his 15 years as head of Bain Capital, from 1984 through early 1999. According to the campaign’s narrative, it was then that he became immersed in the toils of business enterprise, learning along the way the true secrets of how to grow the economy and create jobs. The fact that Bain’s returns reputedly averaged more than 50 percent annually during this period is purportedly proof of the case—real-world validation that Romney not only was a striking business success but also has been uniquely trained and seasoned for the task of restarting the nation’s sputtering engines of capitalism.

Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.

That is the modus operandi of the leveraged-buyout business, and in an honest free-market economy, there wouldn’t be much scope for it because it creates little of economic value. But we have a rigged system—a regime of crony capitalism—where the tax code heavily favors debt and capital gains, and the central bank purposefully enables rampant speculation by propping up the price of financial assets and battering down the cost of leveraged finance.

via David Stockman: Mitt Romney and the Bain Drain – Newsweek and The Daily Beast.