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Bain vs. U.S. Government: Which Management Would You Want Running Your Business?

September 7th, 2012 Leave a comment Go to comments


09.07.2012

Bain Capital Companies. All these companies operating independently from government. Source: Wikipedia (Image Collage: NetAdvisor.org® Staff) Logos trademarks of their respective owners.

Bain vs. U.S. Government: Which Management Would You Want Running Your Business?

original article written by Net Advisor

Part I. How to Run a Private Business

Washington DC. The Obama Administration has tried to paint Mitt Romney and Bain Capital as evil greedy capitalists. Over the years, Obama had no problem taking $120,000 in campaign money from these evil greedy capitalists and their employees (Source: ABC News).

What the Administration won’t tell you is Bain Capital created hundreds-of-thousands of U.S. jobs. WAIT – who created all those jobs? A private company – not affiliated or bailed out by the U.S. government.

In fact, we all probably have been to, ate at, or bought something from one or more Bain companies.

According to Wikipedia, Bain invested or owns companies such as:

  1. AMC Entertainment
  2. Aspen Education Group
  3. Brookstone
  4. Burger King
  5. Burlington Coat Factory
  6. Clear Channel Communications
  7. Domino’s Pizza
  8. DoubleClick
  9. Dunkin’ Donuts
  10. D&M Holdings
  11. Guitar Center
  12. Hospital Corporation of America (HCA)
  13. Sealy
  14. The Sports Authority
  15. Staples
  16. Toys “R” Us
  17. Warner Music Group and
  18. The Weather Channel

Bain – not the government – created incomes for all the people working at these companies. Sure, management and founders who did most of the earlier work, risked their own money and time with no guarantees of success got well paid because they produced massive success.

Bain’s founders or employees weren’t paid because ‘someone else’ built their business, and that they should be entitled to their “fair share” of another person’s labor (Obama’s claim – video). They built their business. Those involved were rewarded.

Bain went from $0.00 to $66 Billion in assets. I’ll take that over a government program, wouldn’t you? Let’s look now at how government runs a business.

Sample of government ran and or government influenced businesses. All went bankrupt and or seized by government instead of allowing bankruptcy laws to work independently – without government influence. A free market would allow competitive bidding with private money, not taxpayer money to restructure companies that still produce goods and services that people want. Image collage: NetAdvisor.org® Staff. Logos trademark of their respective companies.

Part II. How Government Runs a Business

Government Motors. Recall what happened to millions of investors (pensions, retirement systems, individuals, mutual funds, etc.) who held original GM and Chrysler stock? Both companies had their stock values wiped out. GM and Chrysler were seized by the Obama Administration with taxpayers “investing” nearly $80 Billion in a government bailout.

It should be noted that Ford Motor Company never required a government bailout. Ford managed their business responsibly. As of 09-06-2012, Ford is a more valuable company based on the market capitalization (total value) of Ford’s stock (PDF) verses GM’s stock (PDF). Thus, even after a massive government forced takeover, bailout and influence over GM’s business, Ford is still a more valuable company.

Government also ran a taxpayer funded “Cash for Clunkers” program in 2009. The result: More Americans bought foreign cars (report). Dealers complained about the 13 pages of government forms they had to fill out to get the auto rebates from the government.

So what happened to Chrysler?

Obama and Company “strengthened the American auto industry” (video claim) by handing control of Chrysler to Italy’s Fiat.

Government Bank. Next, the Obama government claims it saved 14,000 jobs after taking over GMAC, now called “Ally Financial.” That may be true, but it cost U.S. taxpayers $1.228 million to save each GMAC job. Taxpayers are at a loss of $17.2 Billion for this GMAC bailout. The U.S. Government (taxpayers) own 73.8% of the company who continues to struggle (Report).

Government Mortgage. Fannie Mae (chart) and Freddie Mac (chart) stockholders lost roughly 95% of their original value to date. Long-time government backed Fannie and Freddie – key pieces of the housing bust [article. Point #[8]) still hold some $5 Trillion of mortgages (Source: CS Monitor).

[further reading: Top Lobbying Banks Got Biggest Bailouts – But Gov Helped Create the Housing Crash].

Solar Dump. The Obama Administration gave $535 Million in taxpayer loans to the president’s ‘green energy’ project – Solyndra. Government made the loan despite red flags about the business. Solyndra went bankrupt, and 1,100 employees lost their job (Source: CBS). It is said that taxpayers are not likely to recover the money (Source: Bloomberg).

AIG – The Uninsured. The former world’s largest insurance company, AIG was taken over by the U.S. government during the Bush Administration in September 2008 (Source: Wall Street Journal). To be fair, government didn’t run this company into the ground. By all accounts, AIG lacked risk management. We have no idea were the insurance and other regulators were who missed what became a $182 Billion bailout.

AIG management ended up under Obama’s control in January 2009. Results? The Federal Reserve Bank forgave $25 Billion of AIG debt in exchange for AIG stock in September 2009.

If you bought AIG stock on say December 4, 2000, one is down 98.07%. Based on AIG’s reverse stock split (Reuters story/ our report), the stock would have to reach $2,073.80 to break even with its 12-04-2000 high. As of 09-06-2012, AIG closed at $34.22 (current stock price).

Taxpayers got a questionable deal out of AIG. Taxpayers are the largest shareholder of AIG.

The Trillion Dollar College Nightmare. In his recent DNC 2012 speech, President Obama continued his mantra for more education. Education is a good thing, but an education is not free.

President Obama seized control over the student loan program from the private sector in 2009, and placed what is now $1 Trillion in education liability to the taxpayers. The student loan program wasn’t in trouble, Obama just decided he was going to take it over. Since Obama took over the student loan program, 2,500 employees lost their job.

Oh, and remember all those college students who supported Obama and took out big college loans thinking government would help them with education costs? $67 Billion of student loans are now in default.

So how is Obama helping those college students? The Obama government under the U.S. Department of Education has retained debt collectors to make sure that his supporters also pay back their loans.

“With $67 billion of student loans in default, the Education Department is turning to an army of private debt-collection companies to put the squeeze on borrowers.”

— Source: Bloomberg, 03-25-2012

Government Health Care. With a business track record like this, government now wants to run your health care (article). Before the U.S. Supreme Court ruled on a legal challenge to ObamaCare, the Executive Branch publicly chastised the Judicial Branch (article with video). In the end, Obama’s government lawyers changed their position and said they are adding a tax on Americans which allowed the Supreme Court to uphold the new law (Source: Forbes PDF).

The only problem running this particular business is the ever-growing costs. ObamaCare has not been fully implemented, yet its cost projections have soared.

Here are (PDF) news articles by date regarding costs of ObamaCare:

2009-10-29 Pelosi unveils $894 Billion House health plan

2009-10-29 CBO Puts House Health Bill Total Cost At $1.055 Trillion

2010-03-18 House Dems on track for vote on $940B health bill

2012-03-14 CBO – ObamaCare Price Tag Shifts from $940 Billion to $1.76 Trillion

2012-07-11 Obamacare to cost $2.6 trillion over first full decade

Based on the aforementioned, the costs of ObamaCare have nearly tripled before the program has fully started.

Fiscal Distress. As if all of these massive government ran programs and takeovers haven’t ran up costs to taxpayers, the U.S. deficit rose to about $5 Trillion so far since Obama took office (report). If you owned a business, and the people you hired to help run the business put you so deeply in debt with nothing to show for it, would you keep those people on payroll?

In other words:

Which business management would you want running your business?

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