Judge Napolitano: What If Mainstream Politicians Are All The Same?
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On Mitt Romney’s Defense Of Bain Capital And The Private Equity Industry – Here Are Some Facts
Lately, Bain founder and GOP presidential candidate Mitt Romney has found himself in a spirited defense of the private equity industry, doing all he can to spin decades of data which confirm, without failure, that PE Leveraged Buy Outs are nothing but “efficiency maximizing” transactions whose only goal is the “maximization” of EBITDA in the pursuit of dividend recap deals, IPOs or outright sales, while loading up the company with untenable amounts of leverage. All this with a 3-5 year investment horizon, which ignores the long-term viability of a company and seeks to streamline (read fire as many as possible) operations as quickly as possible in the goal of maximizing short-term returns. We wish him luck in his endeavor. As for the other side of the equation, we recreate a post we penned back in November 2009 which analyzes just how effective the mega-LBOs have been for the economy, and the workers involved. In other words – the facts. In a nutshell, here they are: “The Disastrous Performance Of Private Equity: Of The Top 10 LBOs, 6 Are In Distress, 4 Have Defaulted.” Read on for the full details.
For those who are interested in more information, Moody’s has compiled a useful report, entitled “$640 billion & 640 days later: how companies sponsored by big private equity have performed during the U.S. recession.” The track record is simply abysmal: Of the top 10 deals, only Hertz, HCA and First Data are considered “stable” which is actually saying a lot (“stable” by Moody’s means these firms are likely about to have an alien burst out of their ribcage)
And while these companies life expectations are limited at best, regardless of how Hertz’ lawsuit against anyone who has a sell rating against the firm goes, the biggest threat is to the entire PE industry, which just like the CRE space, will be facing a massive refi threat into 2014. Between 2011 and 2014, there is roughly half a trillion in LBO debt maturing. Add that to the $1.5 trillion in bank debt due for rolling, and the roughly $3 trillion in CRE debt that is also supposed to be refinanced, and one can see how the next president will have his arms full as he/she will need to find a way to roll about $5 trillion in debt without the benefit of securitizations. Furthermore, since the economy will be on stimulus #10 by then courtesy of a drunk with power Obama, America will be on fast track to sovereign and corporate Armageddon.
http://www.zerohedge.com/news/mitt-romneys-defense-bain-capital-and-private-equity-industry-here-are-some-facts?
Grand Central Terminal Arrests
Two protesters mic check about the loss of freedom brought about by the passage of the NDAA and both are promptly arrested and whisked out of public sight
http://youtu.be/Cg6ayc-w3bE
Homeland Security monitors journalists
Freedom of speech might allow journalists to get away with a lot in America, but the Department of Homeland Security is on the ready to make sure that the government is keeping dibs on who is saying what.
Under the National Operations Center (NOC)’s Media Monitoring Initiative that came out of DHS headquarters in November, Washington has the written permission to retain data on users of social media and online networking platforms.
Specifically, the DHS announced the NCO and its Office of Operations Coordination and Planning (OPS) can collect personal information from news anchors, journalists, reporters or anyone who may use “traditional and/or social media in real time to keep their audience situationally aware and informed.”
http://rt.com/usa/news/homeland-security-journalists-monitoring-321/
The new WH Chief of Staff and Citigroup
Lew (like so many key Obama officials) also participated in the orgy of Wall Street de-regulation that took place in the 1990s when he served as Clinton’s OMB head; after leaving Citigroup to join the Obama administration, he unsurprisingly said in response to questioning from Sen. Bernie Sanders that he does not believe deregulation contributed to the financial crisis.
So the first White House Chief of Staff, Emanuel, not only built a Democratic majority in the House by supporting corporatist Blue Dogs over progressive challengers, but himself got rich when he left the Clinton White House to join a Chicago investment bank and made “more than $18 million in just two-and-a-half years, turning many of his contacts in his substantial political Rolodex into paying clients”; thereafter, Emanuel worked hard in the House on behalf of the hedge fund industry and — unsurprisingly — “was the top recipient in the House of Representatives of campaign contributions from hedge funds, private equity firms and the wider securities and investment industry during the 2008 election cycle.” The second Chief of Staff was JP Morgan’s Daley. And now the third is Lew.
http://www.salon.com/2012/01/10/the_new_wh_chief_of_staff_and_citigroup/
Bill Black: More Proof of Obama Policy of Covering Up for Elite Financial Criminals
These charges are exceptionally severe. Senior former regulators are willing to be quoted by name asserting that Obama’s (not Bush’s) financial regulatory leaders are blocking lawsuits against fraudulent financial elites and their anti-regulatory co-conspirators because they fear embarrassment. That would be a disgraceful policy. Indeed, it is hard to think of a worse reason for granting the elite white-collar criminals that caused the crisis and the Great Recession immunity from prosecution. The fact that Obama has no response rebutting this grave charge against his administration’s integrity sounds loud, but not proud.
http://www.nakedcapitalism.com/2012/01/bill-black-more-proof-of-obama-policy-of-covering-up-for-elite-financial-criminals.html
Ron Paul: “We Have Had a Victory For Liberty Tonight!”
http://sgtreport.com/2012/01/ron-paul-we-have-had-a-victory-for-the-cause-of-liberty-tonight/
Mitt Romney and ‘The White Horse’ Prophecy
http://sgtreport.com/2012/01/mark-dice-on-mitt-romney-and-the-white-horse-prophecy/
The New Game on Wall Street with “Ranting Andy” Hoffman
starts @17 minutes…
Andy says Wall Street is no longer in the business of destroying retailers. Ever since the repeal of the Glass-Steagall Act, they’ve been in the business of destroying countries and taking power. Andy talks about Goldman-Sachs infiltration into political positions in other countries, and the infiltration into municipalities by other big Wall Street thugs, such as JP Morgan.
http://sgtreport.com/2012/01/the-new-game-on-wall-street-with-%E2%80%9Cranting-andy%E2%80%9D-hoffman/
Why Banks Back SOPA, the “Bring the Chinese Internet to America” Bill
SOPA and PIPA (Protect IP Act) use nuclear-weapon-to-kill-a-mouse scale solutions to Internet piracy. David Carr in the New York Times, in an rather anodyne article given what is at stake, gave an overview of what is wrong with the bills, namely, a lot. Even if you accept the proponents’ dubious claims about the losses from “rouge” foreign websites ($58 billion!), the bills probably won’t fix that problem and will create a host of new ones. Despite assertions that it would create jobs, it would actually deter technology startups, undermine scientific journals, and could fragment the Internet domain name system. It’s tantamount to making the public wear ankle bracelets to combat shoplifting.
So why is the American Bankers Association one of the sponsors of a bill that seems awfully remote from its terrain? The bill allows anyone to send a complain about a purported SOPA violation and get the site disappeared. This faster and more brutal than the execution of Wikileaks via cutting off its access to payment networks. From TechDirt in December (emphasis theirs):
http://www.nakedcapitalism.com/2012/01/why-banks-back-sopa-the-bring-the-chinese-internet-to-america-bill.html
Trouble for ‘Big Crony’
The players are national politicians, regulators (to include central bankers) and the world’s biggest banks.
For a primer on this arcane world consider the Basel rules – so called because the international regulators have convened in Basel, Switzerland, since 1988 – where they set liquidity and capital standards for the big international banks. In so doing they determine the pecking order for bank investments with rules that specify how much capital (equity) banks must set aside against specific kinds of assets.
In 2008, the Basel rules required 8 percent against corporate debt, 4 percent against mortgages, 1.6 percent against mortgage backed securities (MBS) and 0 percent against sovereign debt. The not-so-subliminal message from regulators was that sovereign debt, Greek, Spanish or otherwise was “risk free.”
For leveraged institutions like banks these are wide spreads which greatly favored and encouraged investment in MBS and sovereign debt. It was an invitation to load up and load up the banks did. This was a great arrangement for those at the top – for sovereign politicians who garnered easy access to sell ever more debt, for the banks seeking greater profits on finite capital and for the regulators who owe their tenure to sovereign politicians. But then it stopped working and panic reigned.
Looking back through the carnage of 2008 and 2011 the connection is clear. At the heart of these crises is a gross overinvestment and subsequent meltdown in MBS (2008) and sovereign debt (2011) – the two “lowest risk” asset categories in the Basel rules.
At the grassroots, savers have been understandably perplexed at the subsequent turn of events. At a time when cash was most precious to banks, savers saw their participation in the economy via CDs and money market funds pay next to nothing. Such price distortion can only occur when the banking system is functioning not as an intermediary between savers and borrowers, but as a crony cartel.
The free market doesn’t convene in Basel, Switzerland, or Davos or in the salons of K Street. The free market doesn’t convene at all.
Free markets are bottom up – crony capitalism is top down.
http://www.clarionledger.com/article/20120108/OPINION03/201080315/Trouble-Big-Crony-?
@13 minutes
Max talks to investment adviser and blogger Michael Krieger about Ron Paul, the Fed and political futures.
http://youtu.be/vVECwKRmhx8
How Cheap Money Will Destroy the World
In Leverage: How Cheap Money Will Destroy the World, well-known market commentator Karl Denninger literally follows the money, tracing the path it has taken through history and discovers a shocking truth—the power to control a nation’s purse strings is addictive, and when that power falls into the hands of only a select few, they will pull the levers of government and policy to enrich themselves at the expense of everyone else. History is littered with the stories of collapsed monetary systems, and in every case the debasement of the currency in question, and the disasters that followed, can be directly blamed on excessive leverage, deployed in ill-intentioned and fraudulent ways by the elite.
The current Great Recession is no exception to this rule. It was no accident, and the politicians and monied interests responsible knew that it was coming. Special interests and other influential individuals have always used leverage to enrich themselves while looting the population at large. Eventually the bill always comes due and then we all have to pay.
http://sgtreport.com/2012/01/karl-denninger-leverage/
Deepak Chopra: ‘I Like Ron Paul’
Deepak Chopra tells WeAreChange: “I don’t know who to support right
now. Who do you choose when the system is broken…”
He goes on to say, “I like Ron Paul a lot.”
http://www.youtube.com/watch?feature=player_embedded&v=DymK4_YA86c
On Mitt Romney’s Millions In Cayman Island Offshore Tax Havens
As a reminder, it has long been Obama’s “tax-policy” to force repatriation of virtually all individual tax holdings held abroad, both legally and illegally, much to the detrimental collapse in the UBS business model. Yet apparently when it comes to potential future presidents, loopholes are quite welcome. Especially when as ABC reports, “the offshore accounts have provided him — and Bain — with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury.” As a reminder: “Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens.”
http://www.zerohedge.com/news/mitt-romneys-millions-cayman-island-offshore-tax-havens?
The Central bankers are in on it too. The system is based on serial dishonesty and irrresponsibility. It’s difficult to know which one’s to resent the most, but it all comes down to a fraudulent monetary system.
http://therealasset.co.uk/bernanke-dogma-gold-price/
A totally maladaptive system due to people voting in their interests and the limitations of democracy showing. The political class constantly over-promised to get into and stay in office. The sheeple vote for free lunches and handouts without any dignity and notion of earning their way. And, the central bankers although bright intellectuals, have no grasp of reality, and love the power that the current system gives them and their boys.
Can’t see any way out of it until a collapse forcing our hand. All a bunch of debt junkies. Phhhhhhhhh…