Plutocrats never lose, it’s just a matter of how much they win
Greg Palast has a article in The Nation this week that should be blowing the lid off the Romney campaign. Sadly, it’s getting scant attention. The article, “Mitt Romney’s Bailout Bonanza”, shows how hedge fun managers manipulated the rescue of the auto industry in order to cash in heavily and earn millions in profits, paid for entirely by the American tax payers. In the process, they stripped workers of both their pensions and their union protections.
The sad part is, if we hadn’t bailed out Chrysler and GM, these vulture capitalist friends of Mitt Romney probably would have figured out a way to cash in even more.
Mitt Romney was heavily invested, “more than $1 million” from the tax returns he has released, in a company called Elliott Management, directed by Paul Singer. Singer is the ultimate real-life Gordon Gekko. He purchased stock of failing Delphi, a former division of GM and major parts supplier, for about 67 cents a share. After the bailout, he took the company public again for $22 per share, earning him a 3,284% profit. For every $1 million that Mitt Romney had invested in Elliott, through his wife’s “blind trust”, he earned, at the very least, $10.2 million.
Through their very savvy manipulations, Singer and his banking pals, managed to strip Delphi workers of their pensions and transfer that obligation onto the federal government. Just for fun, they made sure the Obama administration got blamed for the big cuts these workers took when this transpired.
They also made sure the remaining workers had no union protections:
Romney has slammed the bailout as a payoff to the auto workers union. But that certainly wasn’t true for the bailout of Delphi. Once the hedge funders, including Singer—a deep-pocketed right-wing donor and activist who serves as chair of the conservative, anti-union Manhattan Institute—took control of the firm, they rid Delphi of every single one of its 25,200 unionized workers.
Of the twenty-nine Delphi plants operating in the United States when the hedge funders began buying up control, only four remain, with not a single union production worker. Romney’s “job creators” did create jobs—in China, where Delphi now produces the parts used by GM and other major automakers here and abroad. Delphi is now incorporated overseas, leaving the company with 5,000 employees in the United States (versus almost 100,000 abroad).
Third Point’s Daniel Loeb, whose net worth of $1.3 billion owes much to his share in the Delphi windfall, told his fund’s backers this past July that Delphi remains an excellent investment because it has “virtually no North American unionized labor” and, thanks to US taxpayers, “significantly smaller pension liabilities than almost all of its peers.”
Here’s the rub in all of this: had the domestic auto industry failed and gone into bankruptcy the way Mitt Romney said it should have in his New York Times op-ed “Let Detroit Go Bankrupt”, it would have taken down Ford with it along with all of the auto industry suppliers. These vultures would then have swooped in to pick up the pieces at an even lower price and stolen the pensions from even more workers while ensuring that they, too, had no union coverage.
It was never a matter of whether these people, exemplified by Mitt Romney’s pal Paul Singer, were going to make a profit off this situation or not. It was only a matter of how much.
This is exactly how Mitt Romney has made his fortune: by taking advantage of the failings of companies to exploit for his own gain.
This is an important piece of journalism that I have only skimmed the surface of. You should read the whole thing and share it with your friends. When people talk about how Wall Street crashed the economy and then got bailed out by the American taxpayers, these are the bankers and investors they are talking about. And Mitt Romney is not only good friends with them, he’s allowing them to create massive amounts of wealth for him, generally at the expense and to the detriment of the middle class.