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:
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.”
Regressives also want Americans to think the President’s proposal would hurt “tens of thousands of job-creating businesses,” as the Journal puts it.
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.
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
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.
Quote of the Day
In 1800, 75% of [an American's] working man's expenditures went for food alone. By 1850, that had dropped to 50%. Today it is a little more than 11%.~The Wall Street Journal, September 20, 1996
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