Year: 2012

MOR-A-MOR-A-THORIUM

I’ve not yet found the 90 minutes to watch the thorium video that kicked off this little series — I will.  In the meantime, thanks to Jim Gulecas for passing on this “very layman friendly documentary,” which at 28 minutes I did find time to watch.  (And. per yesterday’s column, if you prefer reading to watching, here is the compelling case in Popular Mechanics.)

All of this is so critically important, because . . .

FROM THE PAGES OF THE ROLLING STONE

Global Warming’s Terrifying New Math

Three simple numbers that add up to global catastrophe – and that make clear who the real enemy is

By Bill McKibben

July 19, 2012 9:35 AM ET

If the pictures of those towering wildfires in Colorado haven’t convinced you, or the size of your AC bill this summer, here are some hard numbers about climate change: June broke or tied 3,215 high-temperature records across the United States. That followed the warmest May on record for the Northern Hemisphere – the 327th consecutive month in which the temperature of the entire globe exceeded the 20th-century average, the odds of which occurring by simple chance were 3.7 x 10-99, a number considerably larger than the number of stars in the universe. . . .

Granted, this article is based on science, as developed by academics, appeared in “the media” and calls for government action — which is a problem, because Rush Limbaugh gets deeply red in the face as he identifies for his millions of faithful listeners “the four pillars of deceit” — “academia, science, government, and the media.”  But for those of us who see validation of science everywhere — the miracle of cell phones and of air travel are not in fact miracles, they are the reality-based products of cause and effect, born of centuries of accumulated logical scientific thought — this is an article worth reading in full.

MOR-A-THORIUM

From Popular Mechanics: Thorium has nearly 200 times the energy content of uranium without creating plutonium—an ingredient for nuclear weapons. Is this the nuclear fuel of the future?  It just may be.

BARACK

Beth sends along “194 of President Obama’s Accomplishments! With Citations!”  It includes this challenge to his 2008 voters: “If you can look at this list of the president’s accomplishments after three years and not be excited, you have a serious problem with perspective.”

And even if you do see the glass as half empty, which is your right, consider the alternative: the global depression that the Republican austerity budget will trigger if they win.  Send this to any friends or relatives you know who plan to vote for Governor Romney.  Tell them: listen, if you can’t bring yourself to vote for the President for some reason, at least stay home November 6.  Because if you think things are tough now, slamming on the brakes at exactly the time we should be stepping on the gas to rebuild our infrastructure — well, that will be like cutting the military budget in the middle of World War II because our debt was exploding.  The result would have been a very different world.

MITT

It’s fine with me that Mr. Romney is Mormon — several of the finest people I know are Mormons.  Equally fine with me that he’s rich.  Ditto.  But should we really be embarrassed to question his truthfulness?  His core beliefs?  His lack thereof?

Romney: Gold Medal in Dishonesty
By Brian Moench

July 20, 2012 “Information Clearing House” — Mitt and Ann Romney will soon be heading to the London Summer Olympics in pursuit of a gold medal with their dressage horse, Rafalca. I think Mitt already has a gold medal wrapped up. Maybe not for horse dancing, but for mental gymnastics, and by that I mean lying. And not just for lying about his Bain Capital tenure, or being deliberately deceitful about Obama. I think a serious fundamental defect in Mitt Romney has been on display for a long time.

In 1969, at age 19, I went on a Mormon mission just like Mitt. I eventually supervised about 200 other missionaries. A few years later while living in Boston during my medical residency I also attended the same church as Mitt and Ann Romney. Mitt had several high callings from the Mormon Church hierarchy during his time in Boston eventually supervising the ecclesiastic affairs of about 4,000 Boston Mormons, much like a shepherd watching over his flock. Ann and my wife shared positions of responsibility in our local “ward” and in that capacity Ann was in our home several times.

My wife and I both thought highly of Ann and liked her as a friend and a fellow church member. We liked Mitt as well, in that he was married to Ann. Mitt would offer a firm, robotic handshake on Sunday mornings, but he managed to make his “Good morning, it’s great to see you,” feel condescending and superficial.

Mitt was distinctly impersonal and it seemed his interest in me was only to the degree that I could further his career, which I couldn’t–I had no pedigree to enhance the value of my Harvard appointment. He was nakedly ambitious and it was widely assumed he would eventually run for President.

Mitt went on to climb quickly up the Mormon Church ladder, becoming a “Stake President” at a very young age, while simultaneously laying the foundation of his high profile political career. Within the Mormon community his ascendency to the door step of the Presidency is viewed with almost as much anticipation as the Second Coming of Jesus. They look to a Romney Presidency as validation of their belief system, and a golden opportunity to disseminate it worldwide. To them Romney embodies simultaneous theological and political triumph.

In contrast to Mitt, I have distanced myself from the Mormon Church after a personal battle between critical thinking and the origins and doctrines of the Church. Nonetheless, I still respect and admire its culture and social strengths and most of my friends and family are active Mormons. But I will not be warmly regarded for divulging anything unflattering about Mitt.

Mitt’s interaction with his religion is indeed a legitimate issue for voters, but not for the reasons that have been raised by evangelicals. It is not because Mormonism is a non-Christian cult. Mitt’s significant leadership positions in the Mormon Church evokes a much deeper connection to his religion than any other presidential candidate in modern history has had to their religion. Reaching this rather exhalted state within the Church hierarchy is supposed to manifest not just one’s extraordinary commitment to the Church, but also to behavior and a value system beyond reproach. A Mormon Stake President is expected to live an exemplary, Christ-like life. Therefore it is not only fair, but important to ask: does Mitt’s behavior and value system meet those lofty expectations?

As a Bishop and a Stake President in the Mormon Church, Mitt would have interviewed thousands of Church members to sign off on their worthiness to attend ceremonies in the ultra-sacred and exclusive Mormon temples. One of the key questions he would have been required to ask in those interviews would have been, “Are you honest in your dealings with your fellow man?” That question is intentionally vague but is supposed to weed out people who tell lies, cheat on their taxes, or are dishonest in business transactions. If Mitt would be unable to truthfully answer yes to that question of honesty, then he is not just someone who we would cynically write off as just another dishonest politician, but he would qualify also as an extraordinary hypocrite. It would be like John Edwards sitting in judgement on someone else’s marital fidelity.

Even mainstream journalists have written about Mitt taking political lying and disdain for the facts to a new art form on campaign issues ranging from his tenure at Bain to blatantly dishonest ads about his opponents, first in the Republican primaries, and now about President Obama. Michael Cohen of the Guardian typified many of these observations with the statement, “Romney is doing something very different and far more pernicious. Quite simply, the United States has never been witness to a presidential candidate, in modern American history, who lies as frequently, as flagrantly and as brazenly as Mitt Romney.” Jonathan Chait, columnist for New York Magazine says Romney is, “Just making stuff up now.”

Even worse, Romney repeats the same lies over and over, even after they’ve been debunked. He appears completely unconcerned about being caught. That’s a new level of mendacity. MSNBC’s Steve Benen observed,”Romney gets away with it because he and his team realize contemporary political journalism isn’t equipped to deal with a candidate who lies this much, about so many topics, so often.” It reminds me of Linda Obst’s book, “Hello, He Lied.”

The most disturbing part of the story of Mitt, as a high school senior, assaulting a gay classmate and butchering his hair, is not the story itself–many responsible adults did regrettable things as teenagers–but the almost guaranteed lie last month that he couldn’t remember ever having done it. His cohorts in crime remembered it vividly and later became deeply disturbed about taking part in it.

When Mitt was in Salt Lake City in 2002 managing the Olympics he apparently told another whopper. During a traffic jam going to one of the Olympic events, Mitt was outraged at what he viewed as an incompetent volunteer directing traffic. As reported in the Salt Lake Tribune, during several articles that became a hot topic of conversation in Utah, the volunteer and several witnesses, including a captain in the Sheriff’s department, said he let out a profanity laced tirade directed at that volunteer that included dropping the “f-bomb.” Use of that kind of language may not seem like much of an offense now, but for a high ranking Mormon official to use that kind of language anywhere, let alone in a public venue, would be as shocking and disillusioning to the Mormon faithful as if it had been uttered by the prophet Joseph Smith himself. Never apologetic, Mitt vehemently denied that it ever happened.

But there is more dishonesty to Mitt than has been printed so far. There is a stark failure to live his religion, at least to the level of what should be expected of one who has risen to the upper echelons of Mormon ecclesiastical authority.

First, Mitt’s recent statements about believing that marriage is “an enduring institution only between a man and a woman” is not what the Mormon Church believes. The history of the Mormon Church’s practice of polygamy during the 19th century is well known, slightly less well known is its official renouncement of the practice in 1890.

But what is not publicly known is that Mormon men can still marry, for “time and all eternity” in Mormon temples, sequentially more than one wife. If a Mormon male gets divorced, or becomes a widower, he can marry another woman in the temple and be sealed for eternity to multiple wives. This option is available to males, Church leaders and laity alike, but not to women. Those subsequent “temple” marriages are considered as eternally binding as first marriages. In other words, the most sacred of Mormon rituals–holy, eternal marriage–implies that polygamy is still practiced in the highest stations of glory in heaven.

Mitt knows this very well. For obvious reasons he would be loathe to admit it publicly. But either he doesn’t believe in this Mormon practice, which would contradict his high callings in the Church, which require strict adherence to its orthodoxy, or he doesn’t believe what he proclaims publicly is his political position on who should be allowed to marry. Fundamental dishonesty in either case.

Second, contrary to pronouncements by many evangelicals that Mormons are not Christians, Mormons do consider the life and teachings of Jesus Christ to be the centerpiece of their spiritual beliefs. All of the purported teachings of Jesus described in the New Testament–the four Gospels, the Sermon on the Mount, etc.–are the heart and soul of Mormon theology and the standard by which they believe their behavior will be judged, from both a mortal and an eternal perspective.

Eschewing personal wealth and materialism and giving generously to the poor is a core tenet of New Testament theology. The hallmark of that tenet is Jesus comparing the difficulty of a rich man entering into the kingdom of God to the difficulty of a camel passing through the eye of a needle (Matthew 19:24). Everyone knows Mitt is extraordinarily wealthy, but, as is currently being heavily exploited by the Obama camp, he acquired at least some of his wealth in dubious ways. In fact, if the business model of Bain Capital were to be placed in a New Testament backdrop, the most obvious candidates to play the role of Bain would be the money changers in the temple that Jesus dispatched with an outburst of fury, or the robbers in the parable of the good Samaritan. How does one coldly order the calculated financial demise of thousands of workers, pocket hundreds of millions of dollars in the process, and walk away “on water,” ala Jesus Christ?

One has to ask: if Mitt was a genuine “Christ-like” spiritual icon, just how many “million dollar dressage” show horses would Jesus own? How many multi-million dollar estates with car elevators would Jesus need for his vacations? Which of the Cayman Islands would Jesus shield his wealth in? There is little evidence that beyond paying his Mormon tithe of 10%, he spent any significant percentage of his hundreds of millions of dollars feeding the hungry, helping the poor, ministering to the sick or visiting those in prison. Mitt certainly seems to be at odds with Luke 12:48: “For everyone to whom much is given, of him shall much be required.”

Third, Bain reportedly would not invest in companies profiting from alcohol and tobacco which violate Mormon behavioral standards, but Romney apparently has no problem accepting tens of millions of dollars from people like casino magnates Steven Wynn and Sheldon Adelson, despite the fact that Mormonism considers gambling a sin. I’m sure Romney hasn’t asked either billionaire if any of the money they donated might have also come from the proceeds of any of other sins that go on in Las Vegas casinos, any of which would also violate Mormon standards.

As Mitt flies from one megamansion to another, collecting hundreds of millions of dollars from the country’s billionaires to put him in the driver’s seat of a new government even more hostile to the less fortunate, one wonders where are the scriptures that suggest the Kingdom of God and the Kingdom of Billionaires are one and the same.

Mitt’s now legendary and record breaking flip flopping is routinely written off as political pandering and insincerity. Those terms are too soft. It is another form of lying. It is simply not believable that a politician could so thoroughly change every one of his core beliefs over the short time that Mitt professes to have done so. That is unless he had no core beliefs, other than that he should be President. In that case, pretending that he has core beliefs is another manifestation of dishonesty.

Mitt has arrogantly dismissed criticism of his wealth as the ugly underbelly of envy. This will probably come as a genuine surprise to Mitt, but many of us, perhaps most of us, aren’t envious at all. Most of us don’t need a private jet, multiple Cadillacs, or horses with aristocratic names in order feel OK about ourselves. Many of us would feel embarrassed or ashamed to allow ourselves that much grotesque self indulgence.

Mitt, many people’s lives were ruined in building your pot of gold. Not everyone is willing to do that. My criticism of your wealth has nothing to do with envy, but everything to do with the dysfunctional moral compass you use to guide your life’s work. Despite your high profile position in the Mormon Church, it is a compass that seems grossly at odds with the teachings of Jesus Christ. And your ambition has allowed you to rationalize that dishonesty as well.

Dr. Brian Moench is a member of the Union of Concerned Scientists. He can be reached at: drmoench@yahoo.com

THORIUM REACTORS

Ted Graham: “Hacker News is a news site for people interesting in tech startups.  This discussion of thorium reactors has contributions from dozens of people.  I didn’t see any compelling arguments against the idea.”

Del Rickel:  “Thorium is the answer.   More Thorium than uranium in the Earth’s crust.  Reactors cannot melt-down ala Fukushima.   They can be used to literally incinerate all of that waste plutonium that nobody knows what to do with.   They cannot produce weapons grade plutonium, hence the decision of yore to develop Uranium fueled reactors.   Here is a quick intro.”

WHOM TO VOTE FOR

If you are that rare bird who is truly undecided which candidate to vote — you’re not, but if you were — here is a site reader Kevin Knopf‘s son showed him that helps you see whose views most closely match your own.  It’s fun.

(I know you’re not truly undecided because it turns out truly undecided voters are “low information” voters who don’t much follow the news and won’t start paying attention to the race until the debates.  And that’s not you.)

OR JUST VOTE FOR THE MORE LIKABLE GUY

Horrifyingly, that’s how a great many people vote.  Happily, in this case it works in our favor.  Check out this series of photos from the Kiss Cam.  I think it’s pretty hard to conclude anything but that these are really nice people.

Have a great weekend.

LOVE V. HATE IN JACKSONVILLE

Dick: “Thanks for yesterday’s item from the former Jacksonville mayor. I have sent it on to a friend in Omaha who is gay and whose brother condemns, reviles, and badmouths him constantly, especially on Facebook. The brother is, predictably, a rock-solid Republican, hyper-uptight self-styled Christian (of the kind Jesus would condemn) and absolutely rigid in his conviction that he is right and the Bible says so and that’s all there is to it — and so on and so on with incredible viciousness.  Oddly, the gay brother is a very religious Pentecostal who finds no conflict between his inborn sexuality and his deep-felt Christianity.  The condemning brother is a total Tea-partier Evangelical holier-than-everybody jerk.”

Sounds as though the “straight” brother may have some deep-seated issues.

Abe:  “See Matthew 22: 36-40. ‘On these two commandments hang all the law and the prophets.’  Jesus kept it simple.  It appears to me he had it right.”

BRAVE NEW WORLD DEPT.

James Musters: “Take some time and go back to school for an hour and a half with this. THORIUM LFTR reactors are probably what will save the environment, the human race and everything.  This subject is worth learning. Don’t let the science scare you. You may have to pause and refresh your drink, or take a class break, but stick with it. This is probably the correct energy solution for the future, but strongly resisted by the current industry. It will take a brave man to go against the existing energy industry and start a real LFTR project. Kennedy launched the Moon Race, maybe Obama can launch the Thorium reactor race.”

I don’t have an hour and a half right now, but a few of you do — and some of you have the technical background to understand it in 10 minutes, not 90.  Would you take a look and let the rest of us know what you think?

MORE BRAVE NEW WORLD

Prasanth Manthena: “Any idea if BOREF is working on developing WheelTug for cars?  Something like this seems right up their alley.”

I have to think something like this has occurred to them, if only because they drive cars themselves.  BTW, I sat next to an American Airlines pilot deadheading from Chicago to Miami yesterday. He had heard of WheelTug and liked the idea. The word is spreading. Hang on.

RELEASING TAX RETURNS

So Mitt Romney is stonewalling on his taxes — and getting pretty badly beaten up for that.

Jonathan H.:   “I received an SBA loan to help my small business grow.  Thanks Uncle Sam!  I had to provide three years of tax returns to get this loan.  Is my little $38,000 loan more important than the top job in a country with a $14 trillion GDP?  Seems as though due diligence for that position should be more extensive.”

Why would Mr. Romney not release all his returns, going back as far as, say, his dad did?  One might guess it’s because whatever they would reveal is worse than the hits he’s taking for not releasing them.  And what could that be?  Well, how about a year or two when he made millions but paid no tax — something like that?  All perfectly legal, but the kind of thing that could rankle the average gal or guy struggling to make ends meet.

That may not be it at all. I don’t know.

But there does seem to be something about his prior tax returns he really does not want voters to see.

AN AUDACIOUS PROPOSAL

This crazy economist offers to run Barclays for just $1 million a year.  What is he: a communist?  A mother Teresa impersonator?  Who can live – in London, no less – on $1 million a year?  Yet I hope his offer catches fire.  Because the truth is, CEO compensation has long been out of control.  And Kotlikoff makes the case bitingly here for Forbes.

JESUS IN JACKSONVILLE

Jacksonville, Florida, is considering an ordinance to ban discrimination.  Here‘s what one former Jacksonville Mayor, now President of the University of North Florida thinks of that:

I am a pro-life religious conservative. I pray and read the Bible daily. I’m a rock-solid, loyal Republican. I am with Ronald Reagan’s ideological tutor, Sen. Barry Goldwater regarding homosexuality: Live and let live. . . . I support the bill to ban discrimination based on sexual orientation. . . . Jesus boiled down God’s mandates to two: Love God with all one’s heart, and love one’s neighbor as one’s self.  The sinners that Jesus most often criticized were the arrogant, the righteous and the sanctimonious.

You need read further only if you don’t already agree — or want to read more before forwarding it to your Bible-reading “rock-solid, loyal Republican” brother-in-law who has yet to see the light.

OUR SO-CALLED HIGHEST-IN-THE-WORLD CORPORATE TAX

If you only read the text or the headline of yesterday’s Business Insider link, you missed this very-easy-to-digest series of 9 telling charts.  Guess what: the actual taxes our corporations pay are below average.  Yes, all agree it would be very good to cut out loopholes to allow us to lower the top rate while raising as much or more in revenue — simplifying the code.  But that was not something the Republicans were willing to work with Democrats on in the President’s first term, because their strategy to regain power was not to work with him on anything in his first term.  Combine that with the power of the lobbyists and, now, the power of Citizens United money to protect corporate loopholes, and it’s not clear just how many of these could be closed.  But we should try.  Everyone agrees.  This is not a “Republican” idea.  Their idea is just to cut rates for rich people and corporations and never raise them, under any circumstances.

WHEN TAXES CAN GO UP

Never, says Grover Norquist and the 236 House and 40 Senate Republicans who have signed his pledge.  They can only go down, never up.  We never want to go back to the awful economy of the 1950s and 1960s, when tax rates were very high, because, although by today;s standards the economy then was booming, well, what we reaqlly want is more of the George W. Bush economy, when . . .

MAYBE SHE MEANT PASSIVE PARTNER?

Zac: “Best FoxBiz clip EVVVER trying to defend the Romney-Bain scandal. . . you MUST POST.  AT 2:20 Gerri Willis says ‘I mean, come on, have people never heard of a passive manager?!?!?! I mean come on, right?'”  Well no, as a matter of fact, because there’s no such thing because if you are a manger you are not passively involved.”

What one commentator says about this makes no difference; and I think she probably just meant “passive owner” or something.  But (a) that’s sure not how he described his role to the SEC — I’ve never heard of a passive CEO.  And (b) the main thing, I fully grant, is not what he did at Bain, but that he has embraced the Ryan/Tea Party austerity vision that would, unfortunately, out-Hover Hoover (another successful businessman) and tip the world into full-scale depression, with all the attendant misery and potential horror that entails.  So anyone who can’t bear to vote for Obama for some reason should at least just not vote, rather than vote for that.

CLIMATE CHANGE AND CORN SEX

As we spew millions of tons of pollution into our little space ships atmosphere and oceans, it’s (mainly Republican) folly to think there will be no repercussions worth avoiding (just as for so long the tobacco industry maintained there was no link between smoking and cancer and the oil industry didn’t bother to pre-position giant deep-water containment domes in the Gulf of Mexico — what could go wrong?).  Here is one example.  Even corn is sometimes just not in the mood.

WHEN TO SELL

Abe: “Sell discipline…tell your reader from Friday to read Gerald Loeb, The Battle for Investment Survival.  It is the best thing ever written on the subject and has not changed one wit since it was written if you are an investor (not a trader).  His rules are sometimes hell to abide by but they will save your A**!  May have a hard time finding the book but it is worth it.  Nothing really changes, just morphs into a different camouflage and speeds up.”

Not that hard to find — and just 99 cents for the Kindle edition that you can download instantly.

MITT IN 30 SECONDS

Juan:  “From my marketing times at American Express, I think that this is a great ad. I think it will become a classic.”

MITT’S TAX PLAN

According to Business Insider: “Mitt Romney’s Tax Plan Will Help Rich People And Hurt Most Americans.”  Read it here if you’re one of “most Americans.”

BLOOMBERG ON THE ROMNEY RECORD

Here:

Romney’s Bain Yielded Private Gains, Socialized Losses

Mitt Romney touts his business acumen and job-creation record as a key qualification for being the next U.S. president.

What’s clear from a review of the public record during his management of the private-equity firm Bain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors. When some of the investments went bad, workers and creditors felt most of the pain. Romney privatized the gains and socialized the losses.

What’s less clear is how his skills are relevant to the job of overseeing the U.S. economy, strengthening competitiveness and looking out for the welfare of the general public, especially the middle class.

Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy. It’s worth examining some of them to understand Romney’s investment style at Bain Capital.

In 1986, in one of its earliest deals, Bain Capital acquired Accuride Corp., a manufacturer of aluminum truck wheels. The purchase was 97.5 percent financed by debt, a high level of leverage under any circumstances. It was especially burdensome for a company that was exposed to aluminum-price volatility and cyclical automotive production.

Casino Capitalism

Forty-to-one leverage is casino capitalism that hugely magnifies gains and losses. Bain Capital wisely chose to flip the company fast: After 18 months, it sold Accuride, converting its $2.6 million sliver of equity into a $61 million capital gain. That deal, which yielded a 1,123 percent annualized return, was critical to Bain Capital’s early success and led the firm to keep maximizing the use of leverage.

In 1992, Bain Capital bought American Pad & Paper by financing 87 percent of the purchase price. In the next three years, Ampad borrowed to make acquisitions, repay existing debt and pay Bain Capital and its investors $60 million in dividends.

As a result, the company’s debt swelled from $11 million in 1993 to $444 million by 1995. The $14 million in annual interest expense on this debt dwarfed the company’s $4.7 million operating cash flow. The proceeds of an initial public offering in July 1996 were used to pay Bain Capital $48 million for part of its stake and to reduce the company’s debt to $270 million.

From 1993 to 1999, Bain Capital charged Ampad about $18 million in various fees. By 1999, the company’s debt was back up to $400 million. Unable to pay the interest costs and drained of cash paid to Bain Capital in fees and dividends, Ampad filed for bankruptcy the following year. Senior secured lenders got less than 50 cents on the dollar, unsecured lenders received two- tenths of a cent on the dollar, and several hundred jobs were lost. Bain Capital had reaped capital gains of $107 million on its $5.1 million investment.

Bain Capital’s acquisition in 1994 of Dade International, a supplier of in-vitro diagnostic products, was 81 percent financed by debt. Of the $85 million in equity, about $27 million came from Bain with the rest coming from a group of investors that included Goldman Sachs Group Inc.

From 1995 to 1999, Bain Capital tripled Dade’s debt from about $300 million to $902 million. Some of the debt was used to pay for acquisitions of DuPont Co.’s in-vitro diagnostics division in May 1996 and Behring Diagnostics, a German medical- testing company, in 1997. But some was used to finance a repurchase of half of Bain Capital’s equity for $242 million — more than eight times its investment — and to pay its investors almost $100 million in fees.

Bankruptcy Filing

Dade was left in a weakened financial condition and couldn’t withstand the shocks of increased debt payments when interest rates rose and revenue from Europe fell because of a decline in the value of the euro. The company filed for bankruptcy in August 2002, because of its inability to service a $1.5 billion debt load. About 1,700 people lost their jobs while Bain Capital claimed capital gains (net of its losses in the bankruptcy) of roughly $216 million, an eightfold return.

There are many other examples of this debt-fueled strategy. In the two years following the acquisition in 1993 of GS Industries, a steel mill, for $8 million, Bain Capital increased the company’s debt to $378 million on operating income of less than a 10th of that amount. Some of this was used to pay Bain Capital a $36 million dividend in 1994. That degree of leverage was excessive in light of the cyclicality and capital-intensive nature of the steel industry.

By the time the company went bankrupt in 2001, it owed $554 million in debt against assets valued at $395 million. Many creditors lost money, and 750 workers lost their jobs. The U.S. Pension Benefit Guaranty Corp., which insures company retirement plans, determined in 2002 that GS had underfunded its pension by $44 million and had to step in to cover the shortfall.

Bain Capital’s acquisition of Stage Stores, a department- store chain, in 1988 was 96 percent financed by debt (mostly in junk bonds) — an extreme level for a cyclical and very competitive low-margin business. Bain sold a large part of its stake in 1997 for a $184 million gain, three years before the company filed for bankruptcy because of its inability to service its $600 million debt.

Success, entrepreneurship, risk taking and wealth creation deserve to be celebrated when they are the result of fair play and hard work. President Barack Obama is correct in distinguishing the patient creation of value for the benefit of investors through genuine operational improvements and growth — the true mission of private equity — from the form of rigged capitalism that was practiced by some in the industry in the past when debt was cheap and plentiful.

While Bain Capital wasn’t alone in using financial engineering to turbo-charge its returns, it was among the most aggressive under Romney’s leadership. Enriching investors by taking leveraged bets isn’t a qualification for a job requiring long-term vision and concern for public welfare. It is appropriate to point that out to voters.

(Anthony Luzzatto Gardner works at Palamon Capital Partners, a private equity fund based in London, and was director of European affairs in the U.S. National Security Council in 1994-95. The opinions expressed are his own.)

WHO CARES?

If you think all this is irrelevant, fine.  Here’s the economic issue that matters:  If we reelect the President, we’ll continue to work our way out of the disaster the Republicans left us — and faster, if, post-election, the Republicans stop standing in the way.  If we elect Mitt Romney, he will out-Hoover Hoover, taking hundreds of billions of dollars of demand out of the economy at precisely the time we need to be putting it in — the Paul Ryan budget onto which the Republican House and candidate Romney have wholeheartedly signed — leading the world into full-scale depression with all the misery, and potential horror, that would entail.

QCOR

Guru likes QCOR, which was recently “marked down” from $58 to $43 for reasons he think make no sense.  “My analysis agrees with this presentation,” he writes.  “The stock was recommended by Merrill Lynch with a target of 60.  I remain baffled by the reaction on Tuesday to old news.”  I bought some at $44.62.

JPM

If you bought JPMorgan puts a couple of months ago as I did, maybe hold on?  Janet Tavakoli:  “JPMorgan admits $4.4 billion in losses, but that’s not even the beginning of the right issue.  (And note that the $4.4 billion represents the net trading losses for the CIO for the second quarter.  The “Whale’s” losses for the first half of this year have mounted to $5.8 billion.)  From the filings: ‘Recently discovered information raises questions about the integrity of the trader marks, and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred in the portfolio during the first quarter, the bank said.’  Given the stream of revelations about the lack of corporate governance for the CIO going back for a long period before the above mentioned quarter, one should have no confidence in previous marks or accounting statements.  As for other divisions of JPMorgan, red flags furiously wave.”

SETTING THE RECORD STRAIGHT ON BAIN

Mitt Romney had absolutely no connection to Bain Capital from 1999 to 2002.  Are we clear on that?  Can we put that to rest, for Pete’s sake?  Yes, he was Chairman and CEO and the company’s sole shareholder.  Big deal!  That’s just a quibble.  Read it here.

MY SWISS BANK ACCOUNT

Oh, that’s right.  I don’t have one.  And there is certainly nothing necessarily wrong with having one, or avoiding U.S. taxes by locating in the Cayman Islands.  But it doesn’t necessarily look all that good on YouTube if you’re running for office.

BOREALIS – WHEN TO SELL

I have to hand it to Mitt Romney.  His ability to pay no attention to Bain Capital for three years even as he was its Chairman, CEO and sole shareholder — and even as it represented almost his entire net worth — boggles my mind.  Hats off to him.  Because even just owning shares of Borealis — representing just a small fraction of my vastly smaller net worth — I find it hard to think about anything else.

(Andy Borowitz has the explanation for how Mitt managed this.  It’s a medical thing.)

But what about Borealis?  Time to sell half?  All?

Steve Mellano: “For me, it is far easier to buy than to sell.  Do you have any good articles or links to help a novice know when to sell?  Before you scold me…  1.  Yes, this is money I can afford to lose.  2.  I know there are no certainties and that everything is relative.  BTW, my 200 shares of BOREF bought at $2.65 are having a good time!!”

☞ The general rule is beyond simple.  Sell when you feel have something better to do with the money: an alternative that, when adjusted for risk and the tax consequences of the sale, is more attractive.  Not that that’s easy to know.  But that’s the basic principle.  (In terms of taxes, if you have a loss, it may make switching to another investment more attractive.  If you would have to PAY tax, that’s a consideration as well — but just a consideration, not a determinant.)

Borealis closed at $16 Wednesday, up another $2.30.   Granted, it was on zero volume (well, 8,572 shares, actually, but for most stocks that’s nothing) and someone even paid $17.  The last time this happened, 7 years ago, I urged people to hold on, making the case that, given the huge risks and potential rewards the stock “should” be $100.

I made that case here (” . . . I’m not saying Borealis will ever sport a $5 billion market cap – $1,000 a share – just that I can imagine someone looking at the stock if it ever gets to $100 and thinking, ‘Hmm. It’s a crapshoot, but there’s a chance for a tenfold gain. I think I’ll give it a shot.’ Which is why someone in his right mind might pay $100.”) . . .

And here (“It sounds like a staggeringly large number and in many senses is. But it’s still just the cost of a single ritzy hotel, say. Or two or three jumbo jets. If you had your choice between owning two or three jumbo jets, on the one hand, or a set of patented technologies that you thought just might have huge industrial ramifications across the globe in the decades to come – which would you choose?  Personally, I’d choose the jets. A $500 million bird in the hand is worth billions in the bush. Who of us needs more than $500 million? I’d sell two of the jets and use that cash to pay the cost of living in the third. Would that not be cool? Can you imagine the parties? And never having to be on standby for upgrades? . . . “) . . .

And here (“Chris Williams: ‘You are way out of control, Andy'”) . . .

And here (“People keep asking me what to do about Borealis and I keep coming back to this: The plane moved. I grant you, it would have been more dramatic if it had levitated. Or dematerialized and then rematerialized on the White House lawn. But . . .”)

All of which columns were a little painful to re-read until recently, because far from hitting $100 after it reached $16 (someone actually paid $21 for a few shares), it gradually slipped back to $3 or so, where it remained for much of those next 7 years.

So is this the same deal?  Will the stock gradually return to its quiet state for another 7 (or 13 or 17) years and then, like locusts, come roaring back for the next frenzy?

Maybe, but there are some differences.  This time, the company has several actual serious partners working to help produce the motor.  This time, the motor was shown to work inside the wheels of an actual commercial jet. (Last time, a larger version was running alongside the jet on a cart.)  This time, the company has Letters of Intent from five airline customers with indications of strong interest from many others.  This time, the company has shown that even with the motor in the nose wheel instead of the main landing gear, it gets enough traction — even on rain-slicked or icy tarmacs — to pull the plane.  (But what if the pilots are slight of build and all the really heavy passengers are in the back of the plane?)

So the case for $100 is more or less the same as it was 7 years ago.  Only this time, I have to think the chances that the stock will go all the way back to $3 (a $15 million market cap), let alone to zero, have become quite slim.  Because however buffeted it may be by large competitors or intransigent government agencies or bad luck or unanticipated problems (never underestimate the potential for those!), there seems to be some valuable technology here.  And, on the upside, I have to think the chances that stock might someday sell for 2 or 3 times pie-in-the-sky earnings (a $50,000 annual profit on leases covering each of 10,000 jets = $500 million a year, before allowing anything for cars or forklifts or any of the other Borealis technologies or its iron ore deposits) — while still modest are no longer entirely fanciful.

So I’m holding every share, albeit, as always, with money I can afford to lose.

Now let’s talk about something important:

EXACTLY

The Truth About Obama’s Tax Proposal (and the Lies the Regressives are Telling About It)
By ROBERT REICH
July 10, 2012

To hear the media report it, President Obama is proposing a tax increase on wealthy Americans. That’s misleading at best. He’s proposing that everyone receive a continuation of the Bush tax cuts on the first $250,000 of their incomes. Any dollars they earn in excess of $250,000 will be taxed at the old Clinton-era rates.

Get it? Everyone is treated exactly the same. Everyone gets a one-year extension of the Bush tax cut on the first $250,000 of income. No “class warfare.”

Yet regressive Republicans want Americans to believe differently. The editorial writers of the Wall Street Journal say the President wants to extend the Bush tax cuts only “for some taxpayers.” They urge House Republicans to extend the Bush tax cuts for “everyone” and thereby put Senate Democrats on the spot by “forcing them to choose between extending rates for everyone and accepting Mr. Obama’s tax increase.”

Pure demagoguery.

Regressives also want Americans to think the President’s proposal would hurt “tens of thousands of job-creating businesses,” as the Journal puts it.

More baloney.

A small business owner earning $251,000 would pay the Bush rate on the first $250,000 and the old Clinton rate on just $1,000.

Congress’s Joint Tax Committee estimates that in 2013 about 940,000 taxpayers would have enough business income to break through the $250,000 ceiling – and, again, they’d pay additional taxes only on dollars earned above $250,000.

All told, fewer than 3 percent of small business owners would even reach the $250,000 threshold.

A third lie is Obama’s proposal will “increase uncertainly and further retard investment and job creation,” as the Journal puts it.

Don’t believe it.

The real reason businesses aren’t creating more jobs is American consumers — whose purchases constitute 70 percent of U.S. economic activity — don’t have the money to buy more, and they can no longer borrow as before. Businesses won’t invest and hire without consumers. Even as executive pay keeps rising, the median wage keeps dropping — largely because businesses keep whacking payrolls.

The only people who’d have to pay substantially more taxes under Obama’s proposal are those earning far in excess of $250,000 — and they aren’t small businesses. They’re the fattest of corpulent felines. Their spending will not be affected if their official tax rate rises from the Bush 35 percent to the Bill Clinton 39.6 percent.

In fact, most of these people’s income is unearned — capital gains and dividends that are now taxed at only 15 percent. If the Bush tax cuts expire on schedule, the capital gains rate would return to the same 20 percent it was under Bill Clinton (the Affordable Care Act would add a 3.8 percent surcharge).

Funny, I don’t remember the economy suffering under Bill Clinton’s taxes. I was in Clinton’s cabinet, so perhaps my memory is self-serving. But I seem to recall that the economy generated 22 million net new jobs during those years, unemployment fell dramatically, almost everyone’s income grew, poverty dropped, and the economy soared. In fact, it was the strongest and best economy we’ve had in anyone’s memory.

In sum: Don’t fall for these big lies — Obama wants to extend the Bush tax cut “only for some people,” small businesses will be badly hit, businesses won’t hire because of uncertainty this proposal would create, or the Clinton-era tax levels crippled the economy,

A ton of corporate and billionaire money is behind these lies and others like them, as well as formidable mouthpieces of the regressive right such as Rupert Murdoch’s Wall Street Journal editorial page.

The truth is already a casualty of this election year. That’s why it’s so important for you to spread it.

PRECISELY

The real reason to rehire Barack Obama is that he’s done a spectacular job under the circumstances.  Tough as things are — made so much tougher by the Republican refusal to help make them better — the list of domestic and foreign achievements, and disasters averted, is extraordinary.

The real reason not to hire Mitt Romney is that — leaving aside the stranglehold that would likely give Rush Limbaugh and the Koch brothers et al on all three branches of government — he is committed (whether he likes it or not) to the Paul Ryan Tea Party austerity vision that would have him out-Hoovering Hoover, allowing the world to fall over the cliff into full-scale depression.

But issues of policy and performance-rationally-evaluated are not what win elections.  POLITICO’s chief political correspondent has an interesting take on this, and what it means for November 6, here:

Why don’t we love Mitt Romney?
By ROGER SIMON
2012-07-10

They live among us, but they are not really part of us. They pretend to be like us only in order to gain our votes.

They are the Others, those who insinuate themselves into American life, but who are not “real” Americans at all.

For years, his opponents have tried to portray Barack Obama as an Other.

Rabid racists on the right, joined by just plain cuckoos — hey, Donald Trump, money not only can’t buy love, it can’t buy brains, either — believe or pretend to believe that Obama was not born in America.

But as the birthers have fizzled, they have been replaced by more mainstream and more socially acceptable attacks on Obama’s “otherness”: Mitt Romney’s claim that Obama is a European-style socialist, for instance.

“He takes his inspiration from Europe and the European socialists in Europe,” Romney says of Obama. “I believe in America.”

By implication, Obama does not believe in America. Which is why Romney says we are now engaged in a battle for “the soul of America” in which voters must choose between “a European-style welfare state” or “a free land.”

But the Democrats have reacted cleverly. Hold on, they say, the real Other in the race is Mitt Romney. He is the guy, they say, who does not act like a real American.

Because how many real Americans keeps millions of dollars in foreign banks?

“Hey, how many of you all have a Swiss bank account?” Joe Biden asked voters gathered in Exeter, N.H., in April.

No hands went up in the crowd.

Swiss banks accounts? Who has Swiss bank accounts? Others, that’s who.

Biden described Romney using classic terms of “otherness.” Romney, Biden said, was “out of touch” and “out of step” with basic American values.

The attack is now part of Biden’s stump speech.

“Did you ever think you’d be choosing between two people running for president, one of whom has a Swiss bank account?” Biden asks crowds.

Nobody is saying (as of yet) that Romney did anything illegal by keeping millions of dollars in Swiss and other foreign banks. It just seems … odd.

Democratic officeholders, in what is obviously a coordinated attack, have picked up the theme. Martin O’Malley, the Democratic governor of Maryland, who may be eyeing his own presidential run someday, said on ABC’s “This Week” on Sunday that Romney is betting “against America.”

“He bet against America when he put his money in Swiss bank accounts and tax havens and shelters and also set up a secret company, the shell company in Bermuda,” O’Malley said. “What went the way of Europe were the — the Swiss bank accounts and the American dollars that Mitt Romney stuffed in that offshore Swiss bank account, jobs that he facilitated companies in moving offshore, out of places like Ohio, out of Pennsylvania and Maryland.”

Which is the other prong of the attack: Romney’s record as a businessman is his main qualification for the presidency. But is that record marked by creating jobs in the United States or by shipping jobs overseas?

“Give Mitt Romney credit: He is a job creator,” Joe Biden says. “In Singapore and China and India.”

And the Obama campaign now refers to Romney the “outsourcer-in-chief.”

The Romney campaign appears to have been caught somewhat flat-footed by all this, and Romney’s supporters are not helping.

My simple — and admittedly simplistic — theory of who wins the presidency is that most voters almost always vote for the more likable presidential candidate.

How likable is Mitt Romney?

Just ask House Speaker and fellow Republican John Boehner.

“Can you make me love Mitt Romney?” Boehner said recently. “The American people probably aren’t going to fall in love with Mitt Romney.”

But why not? Is it his foreign bank accounts? Creating jobs overseas? Imprisoning his dog on the roof of the family car? Attacking a gay student in high school with a pair of scissors? Or those four car elevators he wants for his California beach house?

Boehner did not say. But it is not Romney’s wealth that keeps him from being loved. Americans loved John Kennedy, after all.

It is something else. It is some quality Romney has or some quality Romney lacks that, as Boehner says, makes him unlovable, makes him seem not like a president, but like an Other.

In any case, Boehner says it will not matter.

“I’ll tell you this: Ninety-five percent of the people that show up to vote in November are going to show up in that voting booth, and they are going to vote for or against Barack Obama,” Boehner says.

This is the Republicans’ great hope, their great strategy: Forget about Romney. Romney is a cipher, a place holder. He has but one real quality: He is not Barack Obama.

Romney is the Other guy. And if that is enough, he will also be president.

Have a great weekend.

MARYLAND VERSUS KANSAS

From the indispensable New York Times:

States Face Tough Choices Even as Downturn Ends

By MICHAEL COOPER

Published: July 10, 2012

OCEAN CITY, Md. — As state governments begin to emerge from the long downturn, many are grappling with a difficult choice: should they restore some of the services and jobs they were forced to eliminate in the recession or cut taxes in the hopes of bolstering their local economies?

The debate over the proper balance between taxing and spending has been raging in Congress, on the presidential campaign trail and in statehouses around the country, and no two states have settled it more differently this year than Maryland and Kansas.

Maryland, a state controlled by Democrats that has a pristine credit rating, raised income taxes on its top earners this year to preserve services and spending on its well-regarded schools — leading some business groups to warn that the state might become less competitive. Kansas, controlled by Republicans, decided to try to spur its economy with an income tax cut — which Moody’s Investors Service, the ratings agency, recently warned would lead to “dramatic revenue loss” and deficits that would probably require more spending cuts in the coming years.

Gov. Martin O’Malley of Maryland, the chairman of the Democratic Governors Association, gave an impassioned defense of his approach to mayors from across the state who gathered here at the end of June at the annual convention of the Maryland Municipal League.

“Without any anger, and without any meanness, and without any fear, let’s ask one another in these critical months ahead and years ahead: how much less do we think would be good for our state?” Mr. O’Malley asked. “How much less do we think would be good for our country? How much less education would be good for our children? How many fewer college degrees would make our state or our country more competitive?

“How much less research and development would be good for the innovation economy that we have an obligation and a responsibility, a duty and an imperative, to embrace? How many fewer hungry Maryland kids can we afford to feed? Progress is a choice: we can decide whether to make the tough choices necessary to invest in our shared future and move forward together. Or we can be the first generation of Marylanders to give our children a lesser quality of life with fewer opportunities.”

Gov. Sam Brownback of Kansas, who sought the Republican nomination for president four years ago, said he was persuaded that his state needed to cut its income taxes and taxes on small businesses significantly when he studied data from the Internal Revenue Service that showed that Kansas was losing residents to states with lower taxes.

“My viewpoint, and the viewpoint of the majority of the Legislature, was we’ve got to change our tax policy to attract more people and attract more businesses,” Mr. Brownback said in a telephone interview. “We’re just tired of losing in our league — I consider the surrounding states as our league — and we want to start gaining.”

Mr. Brownback said that he initially had hoped to pay for some of the lost revenues — which are expected to reach a little over $800 million, or 13 percent of general fund revenues, next year — by ending a number of popular tax deductions, and by phasing in the cuts slowly. But he could not find support for that, so, even as other states are beginning to add spending again, he has been looking for savings and more cuts to offset the projected loss in tax revenues. “We are going to be going through everything with a fine-tooth comb,” he said.

The recession and its aftermath have been a tumultuous time for state budgets. As they grappled with the steepest and longest drop in tax collections on record, states cut hundreds of billions of dollars in spending, and many raised taxes — some temporarily — to tide them over. Now, though, revenue has been steadily climbing back for nine straight quarters, and a division between Republican- and Democratic-controlled states is coming into sharp focus over whether to restore the lost services and jobs or to lower taxes, which in some states could effectively lock in some of the budget cuts made during the downturn.

Several Republican-led states see holding the line on taxes, or cutting them, as paramount. Ohio, which sharply cut aid to local governments and education during the downturn, announced this week that it had ended the year with a $235 million surplus. It was deposited in the state’s rainy-day fund, and Gov. John R. Kasich, a Republican, warned that the money should not be used to restore spending cuts.

In Pennsylvania, Gov. Tom Corbett, a Republican, signed a budget last month that eliminated a program that provided cash assistance to the disabled as it lowered some taxes. But in Oklahoma, where the energy sector has helped the economy, Gov. Mary Fallin, a Republican, failed to win passage of an ambitious income tax cut despite strong Republican majorities in the Legislature.

Some Democratic-led states are increasing taxes, saying that it is more important to try to restore the services that were cut — and some of the 657,000 state and local government jobs lost — during the downturn. In California, where temporary tax increases imposed during the recession were allowed to phase out before the state was back on solid fiscal footing, Gov. Jerry Brown is warning that the state will need to cut another $6 billion, largely from education, if voters fail to approve a tax increase he is seeking.

The effects of state taxes are hotly debated. This spring, when the George W. Bush Institute held a conference in New York on how to promote economic growth, panelist after panelist asserted that cutting state taxes would jolt the economy; Governor Brownback told the conference that his small-business tax cuts would be “like shooting adrenaline into the heart of growing the economy.”

But the Institute on Taxation and Economic Policy, a nonprofit research organization in Washington associated with Citizens for Tax Justice, which advocates a more progressive tax code, issued a report this year that found that the states with high income tax rates had outperformed those with no income tax over the past decade when it came to economic growth per capita and median family income.

The choices made by Kansas and Maryland could provide something of a real-time test of the prevailing political theories of taxing and spending — though it could be years before the results are in.

When Governor O’Malley spoke here to mayors from across the state — including more conservative mayors from the Eastern Shore of Maryland — he got perhaps his warmest reception when he spoke about his desire to raise the gas tax so that he could begin to restore highway financing for municipalities, which he has reluctantly cut sharply in recent years.

“I haven’t given up, and I have the scars to prove it,” he said of his failed effort during the last session. “I left a lot of blood on the battlefield, but I didn’t drop the flag. The truth still remains: unless we update, and unless we find ways to invest in our transportation trust fund in a way that keeps pace with inflation, then every town and every city is going to suffer.”

A DIFFERENT KIND OF WHEELTUG

So in 20 years might electric cars be largely self-charging as they roll down the road?  Recharged through their tires?  Look here.

I’m telling you: if we can somehow keep from screwing it up — manufacturing unnecessary debt-ceiling crises and branding “science” a “pillar of deceit,” to take two of so many recent screw-ups (“electing” Bush instead of Gore, to take a third) — the future can be downright Kurzweilian.

THE CASE FOR FREE HIGHER EDUCATION

Here.  Seriously.  (“Here in the Nordic countries, universal access to free higher education is a no-brainer.  That’s because we know education is the ultimate investment in the future.  In addition to not having any tuition fees, all students receive . . .)  Does it not make some sense?  Not for those who don’t want it; and not country-club ivy style for everyone who does.  But are the Finns really so far off?