QUIET ROOMS  8:55 am August 27, 2012

Wonkette’s Guide to Gawker’s Bain Super Scooper, Pt. II

by Kris E. Benson

Mitt Romney hugging his money before it's sent away to the Cayman IslandsHello Wonketteers, by now you have probably realized that Gawker released 950 pages of Bain Capital records, and that this is either very important or a waste of everyone’s time, depending on whom you ask. WHICH IS IT? IS IT IMPORTANT OR IS IT A WASTE OF TIME? And also, what is a total return equity swap, and why should you care? And how did Romney manage to give $100,000,000 to his heirs without paying taxes on any of it? These are very pressing and important questions, and it is your lucky day because the answers are contained herein. Behold, Part 2 of Wonkette’s guide to the Gawker Super Scooper, where all questions will be answered and all doubts will be assuaged.

Carried Interest

“Carried interest,” which we touched on in our last post, is a share of any profits that the general partners of private equity firms and hedge funds receive as compensation, despite the fact that they haven’t contributed any initial funds. Carried interest is taxed at the capital gains rate of 15%, which allows equity chiefs and hedge fund managers to evade avoid millions, if not tens of millions, of dollars in taxes, especially since the amount of carried interest generally comes to around a fifth of a fund’s total profit, and (in theory) functions to incentivize managers towards improving the fund’s performance. Mommy Benson, who holds an MBA in accounting, put it this way: “while you’re slogging away on your blog or whatever it is you do and paying Social Security tax on your income, these people get to pay the 15% capital gains tax rate on their income because they are job creators, except they aren’t creating jobs, they are creating crap.” Indeed.

Is “carried interest” illegal?

The practice has become pretty controversial, and even Rupert Murdoch referred to carried interest as a “racket,” taking to his Twitter account back in September of last year to urge Obama to tax carried interest earnings as income rather than as capital gains: “Romney tax uses long-term legal loophole. ‘carried interest’ makes all fund managers rich. Time both parties stopped selling out to Wall S,” he Tweeted. The next day, he still wasn’t done complaining and wrote “Carried interest tax racket. Billions over many years. Why and where has Obama been?” Of course, Obama has been advocating for higher taxes on private equity for awhile, but this would require Congressional approval and might risk offending the Job Creators, which we must not do at any cost lest we incur their wrath and they punish us by withholding low-wage jobs with no benefits and no long term security.

Total Return Equity Swaps

We have already explained about paper corporations and blocker entities in Part I. Let us now introduce you to another esoteric tax evading avoiding tactic practiced by the uber-wealthy, the total return equity swap. The total return equity swap is a practice whereby an investor obtains the benefit of owning a given asset without incurring any of the tax liability that occurs when you have to actually claim ownership of that asset on a balance sheet. The example that NYU professor Dan Shaviro uses is as follows: let’s say Wonkette wanted to buy some GE stock but didn’t want to pay taxes on it. We can’t just buy it through a fake company we set up on the Cayman Islands because taxes would be deducted from the dividends. To avoid paying these taxes, we would arrange a swap with a bank so that one year from today, it will pay us interest that we would have owed it on a $100,000,000 loan, and pay an amount equal to the dividends that we would have derived during the same year had we actually owned that GE stock. The bank will also pay us however much $100,000,000 in GE stock had appreciated during the year. In other words, the bank acts as a middleman, purchasing and holding the asset for us for the cost of interest on the loan, and therefore allowing us to report ownership of a derivative rather than of the asset itself. This way, we can reap all of the benefits of owning the asset and have none of the liability.

Is this illegal?

So far, the consensus is that it looks to be legal.

The $100,000,000 Gift

One of the documents in the Gawker data dump is a 2008 presentation (pdf at link) made by a partner at Ropes  & Gray LLP, a fancy law firm that represents Mitt Romney. According to the Wall Street Journal, the presentation focuses on how “private-equity executives could minimize gift and estate taxes by giving family members some of their ‘carried interest’ rights.” Apparently, between the 1990s and early 2000s, estate planning lawyers told their clients that they could transfer carried-interest rights to heirs and avoid tax liability by claiming that the gifts were worthless. It’s very possible that Romney managed to evade avoid taxes on a $100,000,000 gift to the Ann & Mitt Romney Family Trust by reporting the assets as having a value of zero, but this is mere speculation since legally, these trust assets belong to Romney’s heirs and are thus not included in the financial disclosure forms he’s filed as a candidate. So we’ll just have to wait until someone leaks those documents and tell you about it then.

Is this legal?

So far, no one has come out and said it was illegal. So there’s that.

By the way, doesn’t Gawker’s Nick Denton have holdings in the Cayman Islands?

Apparently he does. We’ll be sure to ask him about that when he runs for president, or is appointed to a position that allows him to set tax policy.

So basically, these documents don’t show any concrete evidence of wrongdoing?

For now, all this stuff — carried interest, equity swaps, paper companies in the Cayman Islands, etc — seems to be legal. Although as commenter MissTaken pointed out in the comments on Part 1, Internal Revenue Code Section 457A theoretically disallowed carried interest and 2 and 20 shenanigans, requiring hedge fund managers to take all existing deferrals into income by 2017. Hedge fund managers, realizing that the long-term viability of Medicare and Social Security hangs in the balance, soberly agreed to abide by this rule and in fact, some rushed to implement it sooner.

HA! HA! JUST KIDDING, hedge and private equity funds found ways to exploit loopholes in the law (the mechanics of which you can read about here if interested) and the status quo remained in place.

Anyway, you must be a Poor if you’re even asking about “laws” and “rules” and all that, because those things are beneath people like the Romneys. Note that with the exception of this guy, commentators have been very reluctant to characterize any of these practices as illegal, instead using terms like “shady” and “dubious.” Also, note that even Victor Fleischer, the only guy who has gone on record to unequivocally claim that just one of these practices is illegal, does so on a speculative basis. In other words, he says that such practices “would not” survive a legal challenge, not that they are already definitely illegal by the standards set forth by a given legislative or judicial body.

So if none of this is illegal, isn’t it irrelevant?

Well, a lot of people have taken the position that none of this matters. Kevin Roose over at New York Magazine, for example, claims that not only is there “no scandal” hidden in the pages of these documents, but also that the important point about the data dump is that it “illuminates the huge gap between the average Gawker reader and Mitt Romney when it comes to matters of money.”  Also, he argues, holdings in the Cayman Islands, carried interest, two and twenty — all that stuff just sounds scary because Real Americans don’t know what they are. If financial journalists are “patient” and explain it to them, the scariness will just go away. And of course, as noted in Part 1, Forbes’ Dan Primack is under the impression that these documents are “worthless.” Your Wonkette, however, acknowledges that these practices are probably all legal and above board, but still respectfully disagrees with assessments that the documents are therefore worthless.

One Tax Code For Job Creators and One Tax Code for You People

Although Romney may not have done anything illegal or out of the ordinary for someone of his means, these documents give You People a small peek into what the tax code looks like for Job Creators, as well as exactly what kinds of maneuvers are outside the reach of Real Americans who want to evade avoid taxes.

Furthermore, it’s ironic, and by ironic we mean disgusting, that the guy who wants to turn Medicare into a voucher program and raise the retirement age to 69 is the same guy who has evaded avoided paying millions of dollars in taxes and refuses to endorse policies that will increase the capital gains tax (or at least tax carried interest as income instead of capital gains) though both of these low tax rates weaken the financial situation of Medicare and Social Security.

“I have friends who own NASCAR teams”

The fact that Romney continues to do all of these financial acrobatics — which, as even New York Magazine’s Kevin Roose notes, sound scary to Real Americans — tells us something pretty important about Romney and about the company he keeps: Romney has had presidential aspirations since at least 2007, and has still engaged in all of these exotic and strange financial maneuvers to decrease his tax liability. So either he is so greedy that he cares more about saving a few million bucks than about being president, or he’s become so accustomed to Quiet Rooms that these kinds of behaviors are totally normal to him. Or both, but the fact that so many financial reporters are “scratching their heads” over the significance of these documents speaks to the widespread normalization of tax avoidance schemes for the insanely wealthy.

“What I learned at Bain Capital”

If you haven’t had the pleasure of reading the Wall Street Journal this weekend, let your Wonkette inform you that Romney has written a delightful op-ed called “What I learned at Bain Capital” wherein he talks all about how his experience at Bain will help him improve the economy. And it is SO TRUE. For example, turn to page 559 of the Gawker documents, wherein the Bain partners are treated to a presentation on how many jobs they have created that year and how many of these jobs pay above a living wage and offer full benefits. OH JUST KIDDING HA HA, there is no such document, because the purpose of Bain wasn’t to create jobs or even to make products or services that would be of any practical use to anybody, it was to make the Bain partners craploads of money. Like, for example, the time that Bain bought KB toys, laid off 3,000 people, and yielded a 370% return for Bain on its “investment,” or that other time Bain illegally crushed a pilot’s union at a small airline in the 1980s because dealing with labor negotiations would have been a pain in the ass.

So judging from Bain’s track record, President Romney would first fire all federal workers (including Congress and the military) and outsource their jobs to a factory in China and have the American workers first train their Chinese replacements so as to insure a smooth transition. After that, he’d sell off our oil reserves and national parks to investors–taking 20% as a transaction fee and accepting payment in the form of carried interest–and setting up the U.S. Treasury as a shell company to avoid any tax liabilities. Then, he’d value the Statue of Liberty at zero and give it to Tagg as a gift and finally, after four years of an impressive return on investments, he’d retroactively pretend step down from the office of President. We can’t wait.

[Gawker]

 

Hola wonkerados.

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{ 120 comments }

Designer_Rants August 27, 2012 at 9:00 am

I can haz $100,000,000 now?

I'll create jobs with it. For a Scrooge McDuck-style money bin construction crew.

Terry August 27, 2012 at 9:18 am

In my family, a huge inheritance includes some Hummel figurines and a vintage electric roaster*.

* – Can't beat them for serving massive amounts of stuffed cabbage to a crowd.

An_Outhouse August 27, 2012 at 9:42 am

the one with the frayed cord? (if you position it correctly it will NOT blow the circuit breaker one?) It works great with hobo beans, too.

Terry August 27, 2012 at 9:49 am

The one I'm inheriting is in GREAT shape. I'm going to take the liner from the beaten up roaster so that I'm a woman with options! Stuffed cabbage (gwumpkies/golabkis), one batch out in the roaster for serving and one batch in the kitchen as back up. I'm inheriting something better than pure gold there.

Bezoar August 27, 2012 at 10:05 am

Hey, that sounds good and I'm hungry, could you post your cabbage recipes? I can still afford cabbage.

tessiee August 27, 2012 at 12:33 pm

'Stuffed cabbage (gwumpkies/golabkis)"

My grandmother used to make these, but she called them halupkies. Was she mispronouncing it (she was from Italy, but a lot of the neighbor families were Polish/Slavic/Czech), or is this another word for the same thing?

tessiee August 27, 2012 at 12:24 pm

^^
^
Cabbage AND beans?
Are you trying to save on heating bills in your house, or what?

HistoriCat August 27, 2012 at 1:02 pm

They never have problems with vermin in that household.

SorosBot August 27, 2012 at 10:27 am

But then, Scrooge McDuck actually earned his money, dealing with race cars, lasers, aeroplanes; it's a duck-blur; he'd solve a mystery, or rewrite history, woo-oo.

ChernobylSoup August 27, 2012 at 9:01 am

Is this going to be on the final?

actor212 August 27, 2012 at 9:05 am

Bain needs a pooper scooper, Scoop.

keepwalkin August 27, 2012 at 9:06 am

I still want to know about Stericycle's dead fetuses!

How many did Romney actually eat??

actor212 August 27, 2012 at 9:19 am

None. That would have destroyed the tax deduction.

FlownOver August 27, 2012 at 9:51 am

Not if it was a business dinner. Tasty feti, dew picked and flown from Iraq, cleansed in finest quality spring water, lightly killed, and then sealed in a succulent Swiss quintuple smooth treble cream milk chocolate envelope and lovingly frosted with glucose.

Bezoar August 27, 2012 at 10:07 am

Try them tempura battered and deep-fried, with that sauce they use with pot-stickers. Mmmm!

actor212 August 27, 2012 at 10:34 am

I prefer mine in a thin, thin, thin 16mm shell.

tessiee August 27, 2012 at 12:35 pm

I like them steamed and served over radicchio, drizzled with a remoulade reduction, and garnished with a sprig of fresh fennel.

Or donuts. Fetus donuts are good, too.

Designer_Rants August 27, 2012 at 10:20 am

All together now: ALL OF THEM, KATIE!

freddymcmurray August 27, 2012 at 1:03 pm

It's as easy as ABC…

A = Total # of ABORTED fetuses
B = # of fetuses eaten by BAIN
C = # of fetuses eaten by CHENEY

B = A – C

There is no trick, it's just a trick.

actor212 August 27, 2012 at 9:07 am

If financial journalists are “patient” and explain it to them, the scariness will just go away.

Just like showing endless videos of the Twin Towers made us all confident in our liberty and security, thus preventing the need for a trillion-dollar boondoggle called Homeland Security and two wars that cost us three times that.

sullivanst August 27, 2012 at 9:23 am

"Listen, children, this is why you are going to have to work until you die, and hope you never get sick."

Yeah, that'll take the edge off.

memzilla August 27, 2012 at 9:07 am

The time has come to take a page from Karl Rove and the Rethuglican spin machine, and use the word "Romney" as a pejorative. Examples:

"Hey, I heard your company just got Romneyed (sold off)."

"Yeah, they Romneyed (offshored) the whole division, too. The whole company is probably going to go Romney (declare Chapter 11 bankruptcy)."

"But at least you can take a Romney (evade avoid) on your taxes, right?"

"No, my accountant says that, financially, I'm totally Romneyed (completely f**ked)."

noodlesalad August 27, 2012 at 9:17 am

This comment made me laugh out loud, then my boss came over and I got Romneyed.

actor212 August 27, 2012 at 9:21 am

You're lucky. Mine made me Ryan (make a presentation to the staff dictating benefit cuts) our 401k. Then I got Christie'd, Palin'd, and Jindal'd.

ChernobylSoup August 27, 2012 at 9:23 am

Then I got Christie'd, Palin'd, and Jindal'd.

So now you're fat, lazy, and stupid?

actor212 August 27, 2012 at 9:25 am

And pregnant, cuz it wasn't legitimate rape.

thatsitfortheother1 August 27, 2012 at 9:34 am

"Toten hosen" is a German chick's phrase for a boring date (literally, dead pants).

"Romney" is more succinct.

tessiee August 27, 2012 at 12:36 pm

Marklar?

MLHencken August 27, 2012 at 9:08 am

How dare anyone insinuate that Mittens employ a mechanism for tax avoidance.

memzilla August 27, 2012 at 9:13 am

The last time Mittens "employed" anything was a pair of scissors on a gay guy's hair.

SavageDrummer August 27, 2012 at 9:51 am

What about the illegals he employed to cut his grass for Pete's sake?

RadioBowels August 27, 2012 at 9:33 am

he's a good and decent man.

sbj1964 August 27, 2012 at 9:09 am

Mittens is the Tony Robins of politics."I made millions$$$$,and you can to.Elect me ,and I'll show you the secret formula to my greatness".

RadioBowels August 27, 2012 at 9:34 am

not paying any taxes is a good start.

sullivanst August 27, 2012 at 10:47 am

How to make a million dollars:

First, start with a million dollars
Second, pay no taxes
Third, pat yourself on the back, you did it.

Now, buy my book. Oh crap I just gave away the ending, oops.

BZ1 August 27, 2012 at 9:10 am

What, what, my head hurts.

noodlesalad August 27, 2012 at 9:11 am

1000 pages to explain what Leona did in 5 words: "Taxes are for poor people."

ChernobylSoup August 27, 2012 at 9:40 am

Perfect!

kittensdontlie August 27, 2012 at 10:29 am

The Dump Simply Explained(along with the inevitable Trickle Down effect): In the morning, Williard rises from his slumber and pours a bowl of bran cereal, then…viola…throughout America a similar refrain is heard, "Dear, is that rain and hail I hear on the roof…?"

ChernobylSoup August 27, 2012 at 9:11 am

This topic is off limits. Please limit your questions and observations regarding the Romney campaign to Ann Romney's charitable work or the 3 day period in March 1974 when Mitt was in bed with the flu.

actor212 August 27, 2012 at 9:19 am

You people! He was in bed for only TWO days!

Doktor Zoom August 27, 2012 at 9:46 am

Totally unfair–You can also ask about how he saved the SLC Olympics.

sullivanst August 27, 2012 at 11:03 am

You mean, "by being there when all the money that was already committed before he even arrived rolled in, and also by violating the conflict of interest policy he signed"?

I'm sure he words it a little differently.

BerkeleyBear August 27, 2012 at 12:20 pm

Just don't mention where the uniforms were made.

eggsacklywright August 27, 2012 at 9:15 am

Mormon law will be much more fun than Sharia, also. Because money.

CarolinaStewPie August 27, 2012 at 10:37 am

We all get to wear that sexy underwear?

Terry August 27, 2012 at 9:15 am

"Mommy Benson, who holds an MBA in accounting, put it this way: “while you’re slogging away on your blog or whatever it is you do and paying Social Security tax on your income, these people get to pay the 15% capital gains tax rate on their income because they are job creators, except they aren’t creating jobs, they are creating crap.” Indeed."

Mommy Benson is awesome.

MissTaken August 27, 2012 at 9:55 am

I like Mommy Benson.

actor212 August 27, 2012 at 9:18 am

Apparently, between the 1990s and early 2000s, estate planning lawyers told their clients that they could transfer carried-interest rights to heirs and avoid tax liability by claiming that the gifts were worthless.

Minor quibble: not "worthless," just not producing income, which could actually be correct since the hedge funds and private equity investments were probably writing off massive amounts of intangible assets (as we as depreciating and amortizing tangible ones) which builds cash but destroys a P&L statement.

sullivanst August 27, 2012 at 9:31 am

Doesn't the IRS consider the value of the gift to be the fair market value of the asset at the time of the transfer? Mittens is going to say there was no market at the time because the fund was closed to new members, but that only justifies marking to asset value, not marking to zero. That's a transparent fiction for the sole purpose of tax avoidance, which if it isn't completely illegal, means we're even more totally fucked than I'd realized.

actor212 August 27, 2012 at 9:36 am

They accept the valuation of the asset by an appraiser. If the asset throws off no income, the appraiser can justify a near-zero value. Plus, there's a 35% discount for lack of marketability.

sullivanst August 27, 2012 at 10:37 am

Well that's entirely absurd and nonsensical in its own terms. If I put a million dollars in a no-interest checking account, it bears no income, but is transparently not worth $0. If I buy a brick of gold, it bears no income, but is transparently not worth $0.

A share in a fund is just that – a claim to a share of the value of the assets in the fund. The fund has a calculable value, so the share has a calculable value, entirely separate from whatever dividend it may or may not have paid this year, and which is obviously very different from zero. To claim it has no value is an obvious lie, and lying to the IRS is something that would get you or I in a tremendous amount of trouble.

BerkeleyBear August 27, 2012 at 12:27 pm

True, but if you create a shell corp, assign it future profits and current liabilities (which aren't real liabilities because you have various agreements in place for other entities to buy the liabilities as contingent swaps against tax exposures) you can pretty much give it whatever value you want. Think of it as a reverse Enron – by pushing off realization of value and accelerating loss, you can even make a million bucks in cash appear worthless.

Quite the magic trick.

SavageDrummer August 27, 2012 at 9:54 am

My thoughts on this: If it's legal and totally above board, why did this practice stop in the early 2000s?

BerkeleyBear August 27, 2012 at 12:31 pm

Legal, yes. In the sense there is no controlling authority to the contrary. Above board? In the sense you'd want just anyone to know? Oh heaven's no.

I'm guessing that there was less call for this sort of exotic transactions with W in the White House. Between the Bush tax cuts, the rise in the estate exemption and the 1 year elimination of estate taxes, a little smart planning cut way down on the marginal value of such ploys. Plus some guys did get a little freaked out by Sarbannes Oxley and Arthur Andersen imploding for about a second and may not have wanted what they were doing to become the next sacrificial lamb.

sullivanst August 27, 2012 at 9:19 am

We need a law like the UK has, only with actual enforcement: any transaction whose primary purpose is tax avoidance, is taxable to the amount of tax avoided.

BerkeleyBear August 27, 2012 at 12:34 pm

We have the law, or a similar set of penalties in various areas. Lot's of people, for example, got nailed when certain tax shelters were declared non-legit/tax avoidance schemes. But that requires a set of regulations with teeth, a well staffed IRS and understanding of the exotic products, which Wall Street routinely frustrates by lobbying and hiring off anyone who actually seems to understand this stuff.

sullivanst August 27, 2012 at 12:38 pm

So, much like the UK then – the law's not completely awful, it's the "actual enforcement" part that's the problem?

sullivanst August 27, 2012 at 9:22 am

Oh BTW, I'm gonna go out and say that the zero-valued-gift thing is flat-out illegal. There's no planet on which you could conceivably justify valuing those assets at zero.

freakishlywrong August 27, 2012 at 9:24 am

And Seamus ate his tax returns. Tough shit, we people.

actor212 August 27, 2012 at 9:37 am

Mitt Romney: More protective of his tax returns than of his dog.

Geminisunmars August 27, 2012 at 11:20 am

I hope all this info will end up shitting on him too.

tessiee August 27, 2012 at 12:45 pm

WIN!!

SorosBot August 27, 2012 at 9:27 am

Of course, these people wouldn't hide their income as capital gains to avoid paying their fair share of taxes if we just taxed capital gains by the same amount as real income that people actually earn.

actor212 August 27, 2012 at 9:31 am

But that would destroy jobs!

Oh. Wait.

mavenmaven August 27, 2012 at 9:28 am

In other words, these dudes have enough money to pay for someone to figure out how to squirrel away even more money.

ManchuCandidate August 27, 2012 at 9:32 am

Jeebus, he even outsourced his banking.

SorosBot August 27, 2012 at 9:33 am

And hey, dumbasses in the media; the fact that this may all be legal doesn't mean that there''s no scandal here – the fact that all this shit is legal is the scandal, and it's a huge one.

ChernobylSoup August 27, 2012 at 9:36 am

No blowjob, no scandal.

- Your Media Elites

thatsitfortheother1 August 27, 2012 at 9:45 am

We must find the blue Gap tax returns.

tessiee August 27, 2012 at 12:47 pm

No Democrats, no scandal.
– your complicit media elites

MissTaken August 27, 2012 at 9:56 am

It's totally legal for Rep Weiner to send pictures of his dick to hot girls on twitter and that was 'horror scandal of the decade!' so maybe you're correct. I do hope you are.

SorosBot August 27, 2012 at 10:02 am

It's apparently much worse than illegally hiring hookers to make you wear diapers, while being a "family values" politician who hates gays and non-subservient women; so who knows.

Bezoar August 27, 2012 at 10:16 am

Would I be wrong to assert that this behavior is criminal according to the essential concept of criminality?

SorosBot August 27, 2012 at 10:24 am

It's certainly stealing money that belongs to the American people; just because it's legal doesn't mean it's not theft, much more of a theft than "stealing" a copy of a song, TV episode or movie in a way which deprives no one of anything they have.

sullivanst August 27, 2012 at 11:07 am

Ah, but is it lawful?

BerkeleyBear August 27, 2012 at 12:38 pm

Remember Enron? There was about 2 seconds there when the media actually acted like it gave a shit about this sort of game – or how companies avoided taxes by buying and leasing back sewer rights in foreign countries to generate purely paper losses. But then no one gave a shit for nearly another decade, and they probably figure since no one could sustain anger over credit default swaps long enough to actually give Dodd-Frank teeth it isn't a ratings winner.

Well, that and the fact that most media talking heads who know anything about this shit learned it from their financial planners while doing just this kind of crap.

tessiee August 27, 2012 at 12:50 pm

"most media talking heads who know anything about this shit learned it from their financial planners while doing just this kind of crap."

DINGDINGDING!!

"You don't look under the bed unless you've hidden there yourself"

sullivanst August 27, 2012 at 12:52 pm

Well, no-one could sustain anger over credit default swaps in part because the media never properly explained what they were and how they threatened complete meltdown of the global financial system. All we really got was that they were somehow bad but everyone did them. We did not get that they were used in ways that were entirely indistinguishable from straight-up bets, except for who was doing it, used to deliberately increase banks' exposure to the risk profile of the mortgage market when there weren't enough actual mortgages being written to sate their ravenous appetite for the profits they had been making while the bubble was inflating. It was not explained in the MSM that banking and shadow-banking entities had built up trillions of dollars of exposure without ever having to put it on their books, and without there being any hope in hell of ever meeting their obligations if ever there was a correlated increased in default risk, such as occurs when a housing bubble pops.

I think if the population had understood that the entire financial sector was making pure bets they couldn't hope to pay out on and never had to reveal to shareholders or investors, and that it was completely legal because Phil Gram wanted to help Enron fuck the state of California, the anger would have been sustainable, and the media wouldn't be able to use the fact that people weren't that mad about stuff the media abjectly failed to explain as an excuse not to bother even trying to explain stuff any more.

An_Outhouse August 27, 2012 at 9:39 am

"If financial journalists are “patient” and explain it to them, the scariness will just go away."

If this was explained to people, then they would also have to try to defend these practices. Mitt and his clique know that they're all scum bags but public shaming would make them feel bad. That's why its important that only the right kind of people discuss this in quiet rooms.

kittensdontlie August 27, 2012 at 9:43 am

That's it, I have heard enough of this dribble. I moving to the Caymans to set up an off-shore debt avoidance scheme in the U.S.

sullivanst August 27, 2012 at 11:01 am

Silly kittie, you don't move to the Caymans, you just "move" to the Caymans.

LibrarianX August 27, 2012 at 9:43 am

Nixon must be really pissed that he took a fall for a lousy $86k when he could have had Romney launder, er – handle it for him.

SorosBot August 27, 2012 at 9:46 am

But Bain did a great job with KB Toys, I mean look how well they're doing today!

Steverino247 August 27, 2012 at 9:46 am

And congratulations to MissTaken for being smart enough to understand all this and get cited in Part II.

MissTaken August 27, 2012 at 9:57 am

Ah shucks, thanks!

SorosBot August 27, 2012 at 10:01 am

I do love it when you talk shop and get all expert-y.

TootsStansbury August 27, 2012 at 9:49 am

Ethics schmethics.

Weenus299 August 27, 2012 at 9:51 am

Rominate (RAHM-i-nayt, v): to sack; to purchase and immediately sell off at a profit to theseller, without concern for the property; to screw.

Romney (RAHM-nee, n.): The businessman's gambit that nobody outside of business is going to understand this shit, thus making document dumps completely meaningless.

Romnic (RAHM-nik, adj): hypocritical; viewpoint-shifting; chamelion-like; opportunistic.

Despite this Romney, Romney's Romnic stances will win the day and we'll all get Rominated.

tessiee August 27, 2012 at 12:52 pm

I hope you're romney, but I have a dreadful romney that you may actually be romney, and this makes me very romney about our country's romney.

superdave August 27, 2012 at 9:57 am

A really epic post. Very interesting and informative. Needs moar buttsecks.

Steverino247 August 27, 2012 at 12:55 pm

Who doesn't?

Bezoar August 27, 2012 at 10:09 am

I'll tell you something, no matter his wealth, Romney can't get any better laughs than I get for free here.

sullivanst August 27, 2012 at 11:05 am

That's OK. Mittbot3000's programming does not include a need for this human thing you call "laughter".

Estproph August 27, 2012 at 10:11 am

What gets me the most is why so many people who have little to no means keep supporting Romney and his efforts to continue this. We have a presidential candidate who sold off some of his stock to pay for college, and his biggest backing group is a bunch of dumbasses who think graduating highschool is for elitist smartypants.

Bezoar August 27, 2012 at 10:21 am

It is that personality disorder at work called 'authoritarianism', the blind worship of authority, which is denoted by either money or celebrity.

sullivanst August 27, 2012 at 11:06 am

As always, Bob Altermeyer is recommended reading.

tessiee August 27, 2012 at 12:53 pm

"There are two kinds of Republicans: rich people and stupid people. The stupid people want to keep the rich people rich, and the rich people want to keep the stupid people stupid."

DahBoner August 27, 2012 at 10:51 am

950 pages of Bain Capital records

Excuse me! But I don't like SCAM.

Do you happen to have any records with a little less SCAM in them?

anniegetyerfun August 27, 2012 at 11:22 am

Well, the hubster and I were struggling to come up with a name for our fetus, but "Carried Interest" has stolen my heart!

eggsacklywright August 27, 2012 at 11:42 am

A vast improvement over Carried Nation.

Iam_Who_Iam August 27, 2012 at 11:31 am

I read every word and followed every link and now know way more about tax avoidance than I have ever had any desire or dream of knowing, and all of it was worth it entirely for the gift wrapped beauty that is the last paragraph. I am going to copy and paste that bit absolutely everywhere.

Guppy August 27, 2012 at 11:46 am

If financial journalists are “patient” and explain it to them, the scariness will just go away.

Just like if expert witnesses are patient and explain the video evidence to the jury, the scariness of the Romney King beating will just go away.

tessiee August 27, 2012 at 12:22 pm

So, short version, all of the existing rules are absurdly favorable to the 1%, and all of the convoluted ways that Romney has taken to get out of paying even those taxes are only unethical, not flat-out illegal?

Like when Dumbass bush pulled all kinds of strings to get "military service" that consisted of sitting on his ass in an office, and then couldn't even be bothered to show up for that?

Well, all righty. then.

Bezoar August 27, 2012 at 12:28 pm

By the way, a sincere thanks, Kris E. Benson, for all the work that went into this post.

tessiee August 27, 2012 at 12:40 pm

Wow, you know you really suck donkey balls when the best your entire team of bullshit artists can come up with was, "Er, uh… [scuffles toe of shoe on ground] We didn't *technically* do anything that's actually illegal".

BerkeleyBear August 27, 2012 at 12:49 pm

This infuriates me because I know that right now, there are a ton of senior citizens who are gonna pull the lever for Romney, then return to the reverse-mortgaged houses (or worse Medicaid paid for living arrangements) that guarantee their kids won't get shit in terms of generational wealth transfer. And be smug and justified in that they, who have always "done the right thing" by paying their "fair share" are somehow supporting the "fiscal conservative" instead of the "welfare president." GAHHHHHHHHHHHHHHHHHH!

And this is in no way influenced by trying to explain to my father that if he doesn't actually use his completely normal, blessed by the IRS and everything lifetime gift exception to put money in his grandkids' trust accounts now (one of which is a special needs trust to take care of my son's long term medical care), there won't be anything for them once his third heart attack means he has to have round the clock nursing care. These are the suckers Mitt is relying on.

MiniMencken August 27, 2012 at 12:49 pm

Let's see. Popular Presidents Washington and Jefferson made loads of money by buying kidnapped Africans and then forcing them to do uncompensated labor. That was legal. So, nothing to look at here, folks. Just move it along.

tessiee August 27, 2012 at 12:49 pm

Yeah, we certainly wouldn't want them to feel bad about being… what is the word I want?… thieves.

sullivanst August 27, 2012 at 1:22 pm

At least the likes of Blackbeard reveled in their outlawry.

fuflans August 27, 2012 at 1:33 pm

whoa now wait just one second: FIRE CONGRESS!?!?!

mull_man August 27, 2012 at 3:05 pm

A bit of a rant here.

The role of finance in the economy is to allocate capital and reduce transactions cost. It is not an end product/service. Think of it as a cost center for the overall economy. Considering that < 3% of the workforce is in finance while >30% of corporate profits are in finance, either a) rather than being super efficient and competitive, we TOTALLY suck at finance, or b) great swaths of finance are no different than the mafia. Clearly, all evidence points to b.

So we've tried a couple of decades of "light touch) regulation (I always laughed at the term "light touch" in regards to banking, given what "touch" can also mean.). This is what made Bain/Romney possible. It is reactive regulation to what cancerous sores like Romney can dream up. It sets up a regulatory race that the government will always lose, because cancerous sores will employ armies of high priced attorneys/accountants/lobbyists to apply overwhelming force to fewer resource-starved bureaucrats. It is a recipe for fuckdom on the general populace, and great riches to people are smart, free of ethics, and happen to have parents that are governors, wealthy, etc.

Banking should be treated like a utility, with either rate of return or price regulation, and separation of functions (investment banking hived off from commercial). You know, kind of what worked for 50 years until Saint Ronnie the Senile & Marquis de Clinton listened to the likes of Don the Twat Regan, Buggering Bob Rubin & Fat Fuck Larry Summers. Think of it, if we had retained and updated the regulations, we would not quite be in the particular pile of shit we find ourselves today, AND cancerous sore Romney would not have been able to buy his nomination, but rather have been more like his father, just another a magic underwear wearing primary loser.

ttommyunger August 27, 2012 at 8:47 pm

I know, I know, but he's WHITE!

spareme August 27, 2012 at 10:52 pm

Today, I received in the mail, a friendly letter form the IRS. They tell me I cannot deduct my sons's college tuition from my 2010 tax returns, and that I owe them about 3 grand.

Which I will pay if I have to. However, my kid has been in and out of college – since 2002 – mainly because he has a full blown case of Asbergers. He does the best he can, and normally its real good, but he has to take some time off to do what he can do. (Can you say 4.3 average?)

So, tomorrow I am sending this all over to my CPA, and let him figure this out. And whatever happens happens. But I have to tell you – after reading this post – I do not see any rational behind this. I kinda got a huge case of the red ass going on here. But whatever. I guess there is nothing out there for those of us, who have invested heavily into their childs well being – at all. Actually, red ass doesn't discribe how I feel right now.

noodlesalad August 27, 2012 at 9:34 am

If I said I could top that, I'd be Roving.

Terry August 27, 2012 at 10:16 am

It's too hot to make gwampkies right now. Just shred your cabbage and do a quick pickle. Rice vinegar, red pepper flakes, salt, whatever seasoning you like. In a ziplock with all the air forced out, let the cabbage soak in the fridge for a couple of days. Eat. Very good.

Geminisunmars August 27, 2012 at 11:12 am

You guys think you are so clever. Well….you are all a bunch of Bushes.

sullivanst August 27, 2012 at 12:34 pm

In other words, "we can beat the IRS in a game of 3-card monty, so it's all hunky dory"

Fucking MBAs. I hate them with a passion. Except Mommy Benson of course. She cool.

sullivanst August 27, 2012 at 1:59 pm

BTW, doesn't this effectively transfer Mitt's capital gain liability to his children?

Mitt Romney: hates paying taxes so much he'll make his sons do it for him.

What a guy!

Terry August 27, 2012 at 12:46 pm

That's another word for them. Remember that there are a range of Slavic languages and dialects within those languages, then you run them through a generation or two of immigration.

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