The national debate over private equity so far has hinged on the question of whether experience in the field qualifies Mitt Romney, the former Bain Capital executive, for the presidency. But a more vexing, and largely unanswered, question lies just beneath the surface: How is it, exactly, that an investment company can make millions even as the company it's ostensibly trying to turn around goes bust? For that answer, we turned to what may seem like a less-than-reliable source: Tony Soprano. The investors profit, it turns out, not despite the failure of the company, but in fact because of it. In the organized crime world, the business practice is known as a bust out. A group of investors -- in Soprano's case, an entire family ... Continue reading →
The national debate over private equity so far has hinged on the question of whether experience in the field qualifies Mitt Romney, the former Bain Capital executive, for the presidency. But a more vexing, and largely unanswered, question lies just beneath the surface: How is it, exactly, that an investment company can make millions even as the company it's ostensibly trying to turn around goes bust? For that answer, we turned to what may seem like a less-than-reliable source: Tony Soprano. The investors profit, it turns out, not despite the failure of the company, but in fact because of it. In the organized crime world, the business practice is known as a bust out. A group of investors -- in Soprano's case, an entire family ... Continue reading →
Tony Soprano and Henry Hill from 'Goodfellas' (1990) explain how Bain Capital works. Continue reading →
Policymakers are facing difficult trade-offs in formulating the nation’s fiscal policies. On the one hand, if the fiscal policies currently in place are continued in coming years, the revenues collected by the federal government will fall far short of federal spending, putting the budget on an unsustainable path. On the other hand, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion. In fact, under current law, increases in taxes and, to a lesser extent, reductions in spending will reduce the federal budget deficit dramatically between 2012 and 2013—a development that some observers have referred to as a “fiscal cliff”—and will dampen economic growth in the short term. CBO has analyzed the economic effects of reducing that fiscal restraint. ... Continue reading →
They fought gallantly and when it was over on Saturday afternoon, the horse, I'll Have Another, and the chessplayer, Hikaru Nakamura, 24, were declared winners almost at the same time. The comparison between the Preakness Stakes horse race held in Baltimore, Maryland, and the 2012 U.S. Chess Championship in Saint Louis, Missouri, may seem out of place, but both races had a lot of things in common. Two best U.S. grandmasters, the defending champion Gata Kamsky and the top-rated American Nakamura, went neck-to-neck in the 11-round robin, leaving others far behind them. Two best horses at the Kentucky Derby and Preakness Stakes, Bodemeister and I'll Have Another, trounced the competition by eight horse lengths. An exciting come-from-behind victory was featured on the chessboard as well ... Continue reading →
By Rex Nutting, MarketWatch WASHINGTON (MarketWatch) — Of all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree. As would-be president Mitt Romney tells it: “I will lead us out of this debt and spending inferno.” Almost everyone believes that Obama has presided over a massive increase in federal spending, an “inferno” of spending that threatens our jobs, our businesses and our children’s future. Even Democrats seem to think it’s true. Government spending under Obama, including his signature stimulus bill, is rising at a 1.4% annualized pace — slower than at any time in nearly 60 years. But it didn’t happen. Although there was a big stimulus bill under Obama, federal spending is rising at the ... Continue reading →
