Newark Mayor Cory Booker’s honest screed against the Obama campaign’s assault on private equity was the kind of refreshing moment that makes you go, “Ah…”
Exactly 13.8 seconds after he finished that screed, the Obama campaign kidnapped Booker and drove him blindfolded in a windowless van to a secret location from which they filmed and broadcast on YouTube a hostage video of Booker partially reneging on his earlier comments. Even Newark doesn’t mess with Chicago.
Despite Booker’s outburst, and some criticism from the media, Obama will continue to go after Romney’s past at Bain Capital. Obama will do this because despite a seemingly bipartisan and bimedia agreement that private equity is good, the concept is still fuzzy. Many explanations involve a lot of financial jargon like credit default swaps and leveraged buyouts, which causes a normal person’s eyes to glaze over. Thanks to the ghosts of 2008, there’s a sense of this large, foreboding, and unwieldy thing that takes on a mysterious and frightening aura, seemingly its own parallel universe of mathematics and laws of physics, a universe that when it implodes will take down our own personal universe with it.
In light of this, Old Frick’s going to take a crack at simplifying it. So here’s a rough analogy on the movement and allocation of capital, i.e. Bain Capital 101:
You own an old windowless Ford Econoline van that you use for pizza delivery, despite the fact that it creeps out parents of local schoolchildren. Delivering pizza is decent money, and the economy’s good, so tips are up. But you’re not satisfied. After reading Rich Dad, Poor Dad for the fifth time, you have an idea for a new business model, a mobile pizza van. Cha-ching! Continue reading