Friday, July 20, 2012

Old Cars, Mitt Romney and Bain

I have a son who likes to buy old cars and fix them up.

He usually  can make an old wreck into a vehicle that people admire and desire.

Democrats just don't understand that. Their complaints about Mitt Romney's leading of Bain Capital to great profits is like the little old lady who always complains about the eyesore in the lot across the street. It's an old rusting car. She wants it gone, but then she will complain about the "junk man" who picked it up.

This is a 1953-1960 Triumph Standard and it is sitting in my yard.
A mechanic like my son drives by and sees the car. He checks it out and it runs a little, so he finds the owner and gives him $200 and drives it home. When he gets it home he begins working on it, buying parts, painting, repairing and sprucing it up.

Then he drives it around town and takes it to car shows. Finally he sells it for $6000.

But sometimes he finds something so wrong with the car that he realizes he will not be able to   get  it repaired, so he takes it apart piece by piece and lists the parts on Craig's list or Ebay. When he gets all the parts sold that anyone will buy, he sells the rest for scrap metal, and ends up making $1000, still an okay profit.

Usually the mechanic uses his credit cards to buy parts. That's called leveraging. He'd have to buy the car and let it set until he had spare money, but with the credit card he can work on it immediately and then pay the bills when he sells it.
One of these days my son may fix it up.

Mitt Romney did the same thing with companies.

He'd find a company that was barely getting by, losing money. The owners wanted out because they were being drained and were just tired of fighting with the unions, regulations and tax collectors. They were about to tell all the employees they would close the company, lay off the workers, and sell the real estate and machinery.

Mitt's company, Bain Capital, would leverage the buyout by obtaining loans to buy the company. Just like the mechanic, they would go in, look around and see if it could be repaired.

If it could be repaired, the unproductive workers would either be taught new techniques or fired, just like the mechanic would do: bad parts would be replaced. New workers will be hired, new buildings built in new branches and production will be increased. Everyone makes more money except those workers that wouldn't change. They'll be gone.

It may look like this and be worth $6000 or more.
If the company could not be reconditioned, the company, like the car, would be parted out, and workers laid off. They got a few more months work than if the original owners kept the company. Sometimes failing companies don't even pay their workers their last checks because there just is no money left.

The company was failing, maybe it was because of the workers or their union, maybe it was changing times, and competition, but it was already failing, so no jobs were lost because of Bain Capital or Mitt Romney.

What the Democrats want is for the Old Lady to call the government to remove the car and take it to the dump where nobody makes anything from the failure. Sometimes you even have to pay to have a car towed away.

I think that's what happened to some of the companies Barack Obama tried to help, so it's pretty clear to me how Mitt Romney became a millionaire, but what I can't figure out is how Barack Obama became a millionaire.