We got up at 5am this morning in order to catch the early train to London. It brought back memories. We made this trip every week for years. We lived in Paris, but we worked in London.
But those days are gone.
Now, we live mostly in the US…but still travel frequently.
Travel is good for people with their eyes open. They see things. Usually, they realise that the world is a bigger, more complex, and more interesting place than they thought. They are humbled by it.
Anyone who thought, for example, that the US was going to create a Western-style democracy in Iraq or Afghanistan should have gotten out more. If he had, he would have replied: ‘Good luck with that!’
But travel won’t help people with their eyes closed. They only see what they want to see… and everything they see confirms their prejudices and delusions. They might as well stay home.
Our recent trip to Israel opened our eyes a bit to the problems in that part of the world. We had gotten tired of reading about them. Since we were born – which is a while ago – the US press has seemed obsessed with Israel’s concerns. Why not worry about Ghana… or Denmark… or Uruguay, we wondered.
But now that we’ve seen it up close we realise how fascinating it is. Israel is trying to operate a government in a hostile area… with a large part of its own internal population hostile to it. Good luck with that!
Also, getting out and about gives you a fresh perspective on your own home. You come back and you see things a little differently.
What we see in the US is a lumbering empire, so burdened by excess costs and silly fantasies that it cannot help going broke. It still has enough room to manoeuvre to avoid disaster. But time is short. And now, in the home stretch of a presidential election, neither candidate shows any hint of understanding the problem or having any intention to confront it.
With so many zombies on every street corner… and lined up in front of every polling station – government employees, retirees, food stamp recipients, fighter jet manufacturers, chisellers, layabouts, anglers, lawyers, lobbyists – we’re not sure that any presidential candidate would dare take them on. But certainly not Obama or Romney.
As for Obama, well… good luck with that! But what about Romney? He claims to have real business experience…to understand how the economy works. He says his success in the private sector guarantees that he will have success in the public sector too. Is it so?
Here, David Stockman, Reagan’s budget director, looks at the record. He says Romney created ‘debt zombies’:
‘Bain Capital is a product of the Great Deformation. It has garnered fabulous winnings through leveraged speculation in financial markets that have been perverted and deformed by decades of money printing and Wall Street coddling by the Fed. So Bain’s billions of profits were not rewards for capitalist creation; they were mainly windfalls collected from gambling in markets that were rigged to rise.
‘Nevertheless, Mitt Romney claims that his essential qualification to be president is grounded in his 15 years as head of Bain Capital, from 1984 through early 1999. According to the campaign’s narrative, it was then that he became immersed in the toils of business enterprise, learning along the way the true secrets of how to grow the economy and create jobs. The fact that Bain’s returns reputedly averaged more than 50 percent annually during this period is purportedly proof of the case – real-world validation that Romney not only was a striking business success but also has been uniquely trained and seasoned for the task of restarting the nation’s sputtering engines of capitalism.
‘Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way – out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production.
‘Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn ‘roll-ups,’ and then deliver them back to Wall Street for resale – the faster the better.
‘When Romney opened the doors to Bain Capital in 1984, the S&P 500 stood at 160. By the time he answered the call to duty in Salt Lake City in early 1999, it had gone parabolic and reached 1270…
‘The Wall Street Journal examined 77 significant deals completed during that period based on fundraising documents from Bain, and the results are a perfect illustration of bull-market asymmetry. Overall, Bain generated an impressive $2.5 billion in investor gains on $1.1 billion in investments. But 10 of Bain’s deals accounted for 75 percent of the investor profits.
‘Accordingly, Bain’s returns on the overwhelming bulk of the deals – 67 out of 77 – were actually lower than what a passive S&P 500 indexer would have earned even without the risk of leverage or paying all the private-equity fees… By contrast, the ten home runs generated profits of $1.8 billion on investments of only $250 million, yielding a spectacular return of seven times investment…
‘The startling fact is that four of the ten Bain Capital home runs ended up in bankruptcy, and for an obvious reason: Bain got its money out at the top of the Greenspan boom in the late 1990s and then these companies hit the wall during the 2000-02 downturn, weighed down by the massive load of debt Bain had bequeathed them. In fact, nearly $600 million, or one third of the profits earned by the home-run companies, had been extracted from the hide of these four eventual debt zombies.’
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