Bloomberg published an article on how Bain Capital makes money. It has gone viral because Bloomberg is a business friendly publication. Bain Capital operates like other private equity firms. It is a form of casino capitalism because highly leveraged risky bets are standard procedure. The private equity firms and their investors seldom lose any money on the risky bets. They borrow money to purchase companies, but the firms that they acquire borrow heavily to pay them back quickly. They use the funds to buy back Bain's equity at a premium, and they also use the funds to pay dividends to Bain .Bain also collect large fees for services that they provide to the acquired firms. Many of the firms end up in bankruptcy but Bain and its investors make a profit. If the firms survive, Bain takes them public or sells them at a profit. Either way, Bain wins.
The author of the study is a private equity guy, so he knows how the game works. He argues that Romney's success at Bain is not a good reason to elect him as president. He may be wrong, however, Romney's experience is in the form of capitalism that has produced most of the profits in our economy. The post-industrial society is dominated by casino capitalism.
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