what the media reported about firms such as Bain Capital last week in relationship to the Facebook initial public offering. On a sunday morning talk show the head of a venture capital firm such as Bain that had invested in Facebook stated that it goes in thirds. About one third of all investments make you money, about a third break even, and, about a third lose money. This individual stated that there are a few big hits that cover so many of the losses.
Earlier in the week, one of the founders of Bain Capital, along with Mitt Romney, stated that Bain Capital had a return on equity (ROE) that averaged 88% over the fourteen years that Romney was with the firm. And, we remember the film Wall Street in which the corporate raider Gordon Gecko attempted to wreck an airline by running up its debt, declaring bankruptcy, and then plundering its pension plan by issuing the minimum in retirement annuities to each worker and profiting about fifty million dollars from this transaction. We are not saying that Romney ever did this, but, we are not saying that he didn't do this sort of thing either. We are simply saying that, in the real world, it definatly could be done.
When we were with the Allstate Insurance Company, they felt that an ROE of 15% per year was a satisfactory return and, at that time, was a benchmark for profitable companies that were the standard of their industries. What we are really saying however, is that with a business type such as Romney there are going to be winners in government with him in control and there are going to be losers. It is not the job of government to bottom line, but, rather, to see that even the most defenseless have some modicom of care. So often, those defenseless ones have medical problems that have made them that way and, looking at what little we know about Romney's plans as president, the defenseless ones will be even more deprived under his presidency than they are now. Another talk show participant last week stated that an impartial analysis of Romeny's tax plans would give those making over a million dollars a year another 150,000 dollars of tax deductions while the average American would see their taxes go up about 156 dollars per year.
One could also say that Mitt Romney might be called ruthless and a good proof of that is the example that he set last week when he ran an op-ed in the Chicago Tribune savaging President Obama's foreign and defense policies at the same time that Obama was meeting with the NATO leaders in that same city. Many of these same leaders are the ones that he would have to deal with if he became president. It is also interesting to note that the Russian president Vladimer Putin blew off the G-8 meeting at Camp David because of the cool relationship that he has with the United States. We are certain that comments made by people like Romney and Arizona senator John McCain have done little to help the relationship along. It was just a few weeks ago that Romney was critized by house speaker John Boehner for critical comments that he made about the president and his foreign policy while the president was abroad meeting with international leaders.
IOVHO,
Regards,
Joe
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