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David Stockman Disses Private Equity Business Acumen on Dylan Ratigan Show

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By dint of news flow, we are having a private equity fest tonight. David Stockman, the former Reagan budget director, made a cogent case against the idea that being at the helm of a private equity firm has much to do with knowing how to run a business on Dylan Ratigan. I thought readers would enjoy this segment, not simply due to the content but also because Stockman is a compelling and blunt speaker.

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39 comments

  1. F. Beard

    Leveraged buyout = using counterfeit money (so-called “credit”) with the victim as collateral to destroy said victim.

    Once again, the government enforced/backed counterfeiting cartel, the banking system, is the root of all sorts of evil.

    1. skippy

      Private sector *owned* government.

      Skippy… Payed for beard, they have receipts. Why don’t you ever go after the owners, but, rather their cover?

      1. F. Beard

        Payed for beard, they have receipts. skippy

        One of the consequences of allowing/supporting a counterfeiting cartel is that the counterfeiters will have lots of money!

        1. skippy

          Any system that runs on false data ( arm chair axioms ), confuses short term false positives for sustainable activity, manipulates human psychology for the benefit of a few, is slower than 0 klevin to acknowledge new fact and observations… etc.

          Yeah, a lot of that around beard.

          Pray TV.

          http://www.youtube.com/watch?v=66Y9xdWD6gI&feature=related

          Skippy… money is just the colored button in your Scott’s box ( mental template ). Thinking is the major problem beard, it proceeds all the rest. Whom controls this… controls every thing.

          1. skippy

            One of the first archeological digs, showing that environmental reduction preceded societal decay was in Israel. Lots of shovels around thingy.

            Skippy… classicists ways reduce everything too – Man unto Man – equations. The actual record shows differently. Politics is more like monkeys picking nits for favors and social ladder climbing. All whilst a world moves on with out them.

  2. sleeper

    Where does David get this reputation as a financial seer ?

    Take a look at the companies he or his fund has managed -

    Collins & Aikman -
    David – Why were you asked to leave the management ?
    Did it have anything to do with plastic resin purchasing contracts ?
    And in the final days of C&A a loan of 175 million turned up missing – Where is the money David ?

    American Axle -
    David – Why were the books cooked on this one ?
    And why the move to Mexico ?

    Please, folks this guy is practitioner of the strip and flip vulture capitalism not a financial seer.

      1. sleeper

        Yes, but should he get national play ?

        But of course America has always had a fascination with criminals –

        I mean I’m sure Al Capone knew what he was talking about.

        1. Winston

          Karl Marx had some correct ideas about capitalism and I’m definitely not a Marxist.

          Jack Abramoff is exposing K Street for what it is and he used to be one of the worst players in it.

          When someone makes clear points based upon FACTS, I don’t care WHO they are or what they USED to be.

          1. readerOfTeaLeaves

            Agree completely.
            I had to pinch myself the first time I watched this, and *love* what he says about the Greenspan Put, and the fact that central banks continue to hold up zombies.

            But I’m convinced that Romney actually believes he was a ‘real’ capitalist and that Stockman simply doesn’t grasp the ‘real’ dynamics of wealth creation. Romney’s what I call a ‘spreadsheet capitalist’: if he sees the numbers on paper, to him that signifies wealth. Nevermind that’s a superficial view; on a spreadsheet, a person can move money to the Cayman’s without a twinge of conscience about the implications for gutting local city, school, law enforcement, or other public services at the place that originated all that ‘spreadsheet wealth’.

            I’m thrilled to see the kind of conversation engaged in throughout this segment finally emerge.

        2. LeonovaBalletRusse

          Can’t we rely on a shrewd player like Stockman to get on the *right side of the market*? Surely he perceives, like a psychic, which way the wind is blowing.

          We need the Turncoats to our side: Stockman and Abramoff, if we can trust them. Many a “loyalist” turned coat in 1776, and they were WISE to do so.

          We do indeed “live in interesting times.”

  3. Non Commercial

    We now live in a bizarre fantasy land in which the Democratic president and his would-be replacements are all being exposed as corporate oligarchs by none other than the architect of Reaganomics.

    The G.O.P., ludicrously, continues to portray Obama as an enemy of capitalism, but Stockman reminds us all that Obama has done nothing to rein in the explosion of banking power that has so enriched the top 0.1%. Stockman speaks of an Inside Job, an Italisn Job, and Screw Jobs; he needs to add a Con Job.

    Americans are told they have a clear choice at the ballot box, but they have no choice at all.

    1. AddiCted

      That isn’t true. Let’s not make the mistake of conflating the Dems with Repubs again (I can’t believe people still do this after 2000).

      That being said, the difference between terrible and slightly less terrible is slight, but it is a difference nonetheless

      1. Benedict@Large

        The claim that there’s no difference between the two parties is of course an exageration. It’s simply that as the ideological divides between the two increasing narrow, more and more real issues are removed from consideration by the voters. In this case, we are not being allowed to vote on whether or not the middle class survives; only on how fast we would like its demise. One’s answer doesn’t depend upon one’s fondness for the middle class, but rather upon which option one believes will eventually provide for its recovery: Being nickeled and dimed endlessly, or crashing, burning, and then rebuilding.

        1. Lambert Strether

          There are differences between the two parties, much in the same way that there is a difference between burnt coffee from Starbucks and slightly less burnt coffee from Seattle’s Best. Two brands, one owner.

      2. MACH1513

        The lesser of two evils is still evil. I’ll be “on strike” on election day, November 2012. No reason to vote for any of these bastards…

    2. Yves Smith Post author

      You need to read Stockman’s book. He went over his role in getting the budget cuts passes. He makes it clear he was naive and he honestly believed tax cuts would be accompanied by spending cuts. Instead all they got passed were the tax cuts, and the economic justification seems to have been made up on the fly.

      1. Jim

        The Atlantic Monthly piece that forever earned him the enmity of the GOP…

        http://www.theatlantic.com/magazine/archive/1981/12/the-education-of-david-stockman/5760/

        While ideology would guide Stockman in his new job, he would be confronted with a large and tangible political problem: how to resolve the three-sided dilemma created by Ronald Reagan’s contradictory campaign promises. In private, Stockman agreed that his former congressional mentor, John Anderson, running as an independent candidate for President in 1980, had asked the right question: How is it possible to raise defense spending, cut income taxes, and balace the budget, all at the same time? Anderson had taunted Reagan with that question, again and again, and most conventional political thinkers, from orthodox Republican to Keynesian liberal, agreed with Anderson that it could not be done.

        But Stockman was confident, even cocky, that he and some of his fellow conservatives had the answer. It was a theory of economics—the supply-side theory—that promised an end to the twin aggravations of the 1970s: high inflation and stagnant growth in America’s productivity. “We’ve got to figure out a way to make John Anderson’s question fit into a plausible policy path over the next three years,” Stockman said. “Actually, it isn’t all that hard to do.”

    3. LeonovaBalletRusse

      Non, who knows “How It Works” better than Stockman? He’s become an Elder, closer to his death. Couldn’t this motivate him to do better?

  4. Susan the other

    Thanks for that clip. It, and everything else imploding in the R party (and maybe more quietly with the Ds), is teaching me to love super pacs. Maybe the supremes weren’t so fatuous after all. Just look at Mitt and Newt “hurling” accusations at each other. God I love it. Let the Hurl begin.

    1. MACH1513

      Right on! MORE, BIGGER super-pacs. The more “political blood” in the streets, the better. The more the whole fatuous, insincere, disgusting system implodes like a dark star sucking everything around it into a black whole. Negative political matter.
      YES!

  5. Benedict@Large

    Stockman’s material is mostly on target, but again (like his appearance on Bill Moyer’s last week), he attributes too much blame to the Fed for the economy’s cuurent distress. The Fed is simply not going to act in a fashion that ecourages the failure of the TBTF banks, so it is largely stuck with options on propping them up. In effect, the Fed has been “captured” by the inactivity of Congress and the Executive, while Stockman himself is captured by his ideological bias for hard money. But a hard-hitting criticism, and mostly accurate.

    1. readerOfTeaLeaves

      Check out Bill Fleckenstein’s “Greenspan’s Bubble.” His documentation of Alan Greenspan’s phenomenal incompetence will absolutely blow your mind. Greenspan seemed to think that there was some kind of magic in the air in the 1990s, so he kept interest rates absurdly low. We are still living with the ramifications.

      I’m not qualified to critique the Fed, but Fleckenstein’s book is chock full of citations (as is Yves, as is Nomi Prins, as is Kevin Phillips’ ‘Bad Money’) and I strongly suspect that future historians will wonder how US Presidents appointed Greenspan, to say nothing of how he held that position so long. If you look at the accumulating pile of documentation, what I’ve seen strongly supports what Stockman is saying.

      1. LeonovaBalletRusse

        reader, of course Greenspan believed in *magic*. He was/is a besotted idolator of Ayn Rand, enthralled by her *magic*.

  6. LeonovaBalletRusse

    To David Stockman: “You’re good, you’re awful good.” Supertelegenic, too.

    Is he the Republican Candidate? DAVID STOCKMAN 2012: Why not?
    Susan Webber: Vice President
    Chris Hedges: Secretary of State
    Paul Krugman: Secretary of the Treasury

    Then, Occupy Charlotte 2012 for:

    WILLIAM K. BLACK 2012: The People’s Champion, Q.E.D.
    Susan Webber: Vice President
    Chris Hedges: Secretary of State
    Paul Krugman: Secretary of the Treasury

    (or some combination thereof)

    TOTAL JUSTICE for We the People: IF NOT NOW, THEN WHEN?
    (chanted as obligato over “Fifty Ways to Leave Your Lover”)

  7. Conscience of a conservative

    Obama is salivating at the chance of running against Mitt Romney. He’s a sitting target on the question of health care considering his Mass. experiment and his Bain Capital resume does not support that of job creator for the reasons pointed out by David Stockman. Plus Mitt comes across as defensive. Like him or not, the guy Obama is afraid of is Newt.

    1. LeonovaBalletRusse

      Conscience, time to flip Obama out for breach of contract.

      Occupy Charlotte 2012. Get REAL, PEOPLE.

      BILL BLACK/SUSAN WEBBER 2012: GET REAL
      Chris Hedges: Secretary of State
      Paul Krugman: Secretary of the Treasury
      General Shinseki: Secretary of Defense

  8. bc

    Cool. It’s like interviewing an oligarch from the British trading companies in India. “So he said, “Well mates, I’m building a railroad through the Kmir pass”. So I said, “Right, then I’ll buy the land surrounding.” and then Quinn said,”Right then. I’ll buy up the mineral rights.”, And then Quartermain, a dim bulb he was, says, “Count me in gents.”, and we all laughed. Like we was going to share our deals with the likes of him.”

  9. Vei

    Wow, I remember back in the 80s when eveyone was deriding David Stockman… think he had a nickname that was none to flattering.

    And now the man is back. Good for him…

  10. James

    Well I always admired the guy for telling Ronnie to F-off halfway through his first term, if for nothing else. Took a lot of balls back then in the halcyon days of the first R-Revolution.

  11. LeonovaBalletRusse

    Having just viewed the interviews of David Stockman and Gretchen Morgenson by Bill Moyers on “Moyers & Company Show 102: On Crony Capitalism” I can report that moments of candid expression on David Stockman’s face were showed truly grave concern over the corrupted state of our nation.

    Moreover, both Stockman and Morgenson state: “It WILL happen again” — referrng to what happened in 2008 — since there has been NO correction of the grave problem of Government by Crony Capitalists and their Pol Shills.

    People of NC, MUST We the People passively wait for it to happen again?

    If there is to be a tragic outcome, let it by by guillotine and *heads on pikes*.

    Let our voices ring from the rafters, unto highest heaven:
    “We’re mad as hell, and we’re NOT gonna take this any more!”

    Paddy Shayevsky and “Network” gave us the lines we must use and mean, as a Call to Arms as serious as the best if them in 1776. If WE the People don’t ACT on our own behalf right now, we will be DONE by the same criminals who DID US before. Are we going to take it lying down?

    This is a fight to the death of the Global Crony Capitalist Class: “Us or Them” — which one of us shall prevail in the Unites States of America: the Government of/for/by We the People?

    WILL our *patriots* in the armed forces of the military/security/police conduct a MUTINY against their pathological bosses and join We the People for victory of the People at last? If so, NOW is the time to ACT according to your solemn Oath to “preserve, protect, and defend the Constitution of the United States.”

    “What is your life worth?” CITIZENS, LET’S ROLL! We have nothing to lose but our pathetic fear.

    LeonovaBalletRusse, 24 January 2012

    “The desires of the heart are as crooked as corkscrews,
    Not to be born is the best for man;
    The second-best is a bailiff’s order,
    The dance’s pattern; dance while you can.
    Dance, dance, for the figure is easy,
    The tune is catching and will not stop;
    Dance till the stars come down from the rafters;
    Dance, dance, dance till you drop.”

    (the final chorus of W.H. Auden’s “Death’s Echo” – September 1936)

    YVES?

    1. James

      Leonova,

      Ahh, a TRUE idealist I see. Of which I consider myself of a stripe. Unfortunately, this devil’s dance has got a whole lot more descending to do before it hits critical mass (as evidence: the current and ongoing propaganda-fest on “state” TV.) Bread and circuses indeed! Self-congratulatory and self-referential bullshit! TRULY the LAST brand ever invented!

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