Bain & Co

choi

(1) Jesse Eisinger, US Debt? Bain Might Leverage It. New Yor Times, Jan 19, 2012.
http://dealbook.nytimes.com/2012 ... rivate-equity-lens/

Quote:

"The 10-year Treasury bond rate is 1.87 percent. Since inflation is higher than that, real rates are actually below zero, meaning that a lender to the United States government will get back less money in 10 years than it started with. That’s right: When the government borrows, its lenders actually lose money. Yet foreigners and Americans, institutions and individuals alike are extraordinarily willing to shovel money at the United States government right now.

"If the United States government is headed toward bankruptcy, lenders are surely not acting that way [shoving money in US direction]. Maybe those people are making a good decision; maybe they are deluded. It doesn’t matter to the borrower [US].

My comment:
(a) This is one of those articles, that are so refreshing that one MUST read.
(b) Adam sandler
http://en.wikipedia.org/wiki/Adam_Sandler
("best known for his comedic roles * * * though he has ventured into more dramatic territory")
(c) The article states, "Are there private equity executives anywhere in the world who would counsel their companies not to borrow at such extremely low rates? I haven’t had the privilege of meeting one. Their mantra is, borrow now, for tomorrow the Mayans might turn out to be right."

I was clueless when reading the print. Luckily, the online version provides a link to
2012 phenomenon
http://en.wikipedia.org/wiki/2012_phenomenon
(The 2012 phenomenon comprises a range of eschatological beliefs according to which cataclysmic or transformative events will occur on December 21, 2012. This date is regarded as the end-date of a 5,125-year-long cycle in the Mesoamerican [or mayan] Long Count calendar0


(2) Daniel Henniger, Bain Capital Saved America. Wall Street Journal, Jan 19, 2012 (columnist).
http://online.wsj.com/article/SB ... 69032997242246.html

Quote:

(a) Bain Capital saved America. "If only he’d tell the story.

"We are of course putting forth 'Bain Capital' as not merely the Romney private-equity house but as the stand-in for the period of American economic history that ran from 1980 to 1989. Back then it was called the Greed Decade, with asset-stripping barbarians at the gate. Virtually everything about this popular stereotype is wrong. Properly understood, the 1980s, including Bain, were the remarkable years when an ever-resilient America found a way to save itself from becoming what Europe is now—a global has-been.

"After centuries of First World status—and all the perquisites of prestige and power that came with it—Europe is watching its economic status slide inexorably toward new national powers in the East and elsewhere. Because of the modernizing change that Bain and others like it forced on US corporations in the 1980s, we are not fading. Not yet.

(b) "Arguably, the primary force that set off the 1980s upheaval in US corporate restructuring was the deregulation begun by Jimmy Carter and continued by Ronald Reagan. [Various US sectors] all experienced regulatory rollback. Meanwhile, a competitive, globalized marketplace was rising. Management at some of America's biggest companies, confused by these rapid changes, found themselves sitting on huge piles of unused or poorly deployed cash or assets.

"Thousands of Mitt Romneys allied with huge pension funds representing colleges, unions and the like, plus a rising cadre of institutional money managers, to force corporateAmerica to reboot. In the 1980s almost half of major US corporations got takeover offers. * * * This was a historic and necessary cleansing of the Augean stables of American economy. It caused a positive revolution in US management, financial analysis, incentives, governance and market-based discipline. It led directly to the 1990s boom years. And it gave the US two decades of breathing room while Europe, with some exceptions, choked.

My comment:
(a) Augean stable (n; Latin Augeas, king of Elis, from Greek Augeias; from the legend that his stable, left neglected for 30 years, was finally cleaned by Hercules; First Known Use 1599):
"a condition or place marked by great accumulation of filth or corruption
www.m-w.com
(b) There is no need to read the rest, particularly he did not offer any data to support his argument. He did quote economists Bengt Holmstrom of MIt and the University of Chicago's Steven Kaplan, though.