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Sunday, November 04, 2012

What Makes Romney Run ? *

Ezra Klein has a very polite general post on Romney's faith in himself as a manager


I disagree in comments

Shorter Klein:  Everyone has to believe in something and Mitt Romney believes that Mitt Romney should be elected President.

You are more polite than many, but your claim is that Romney feels entitled to the presidency.

I don't entirely agree with you about Romney's record as a manager.  I'm sure you are right about how he sees himself, but you tend to endorse his claim.  My problem is that it is possible to become extremely rich without managing firms well.  Consider George Soros -- he is very rich -- he hasn't proven he can manage anything.  He is rich because he outsmarted his counter parties.  One doesn't have to manage anything well to separate fools and their money.

My honest guess is that Romney became extremely rich at the expense of two sets of people who made costly mistakes.  The first are the investors who bought bonds issued by Bain controlled firms.  In many cases, Bain made huge profits although the firms went bankrupt.  I'd guess that investors paid more for the bonds than they would have if they had accurately assessed the risk of bankruptcy.  To guess further, I think then knew that Bain Capital was very successful and thought they were part of the Bain team or at least Bain clients.  In fact they were taking the other side of a bet than Bain was.  Convincing your counter parties that they are your clients is a way to make huge amounts of money.  It has nothing to do with making firms operate more efficiently.

The other set would be the other Bain Capital principals.  The structure was that they were investors in Bain created limited liability partnerships but Romney was the sole shareholder of Bain capital.  This gave him the power to hire and fire the people who actually managed Bain investments.  I think it is very likely that this single share was given to Romney for a nominal price on the grounds that it just made control clear and that he sold it for a huge price.  Why was he still sole shareholder and CEO of Bain Capital when off in Salt Lake managing the Olympics ?  I think he was bargaining over the huge price of something which had been given to him on the assumption that he wouldn't treat it as his personal property.

I think his closest associates found that they were counter parties not partners.

I conclude that the voters who think that they can have Romney lead our team by voting for him would, if he wins, learn the same lesson about the advantages of trusting a psychopath that many others have learned from Romney.

I'm not sure you remember Richard Nixon.  I do.

*No I haven't read this book.  Why do you ask ?

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