Mitt in the Wringer

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Published on Wednesday, 19 September 2012 15:06

Written by Bill Bonner, Founder and President, Agora Inc.

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The poor Republicans have their Mitt in the wringer. Everyone is ranting and raving against him.

Why?

Romney was at a private fundraiser. The attendees were high-dollar Republicans, many of them from the financial industry. Marc Leder, a private equity fund manager who is said to hold wild bacchanalia at his Hamptons house, hosted the event. Mitt must have felt he had to come up with something pretty hot to compete with Leder's naked women and live sex acts.

So he told his audience that 47% of the American people don't pay taxes... that they see themselves as "victims"... and that these people are essentially moochers living off the government.

Well, he's mostly right. But the 47% that Mitt was talking about don't really live "off the government." You can't live off the government. Because the government doesn't produce anything. Instead, you have to use the government to live off other people. Which is just what the moochers -- aka zombies -- are doing.

Just who are these people? The Atlantic magazine reports:

In 2011, 47% of Americans paid no federal income taxes. Within that group, two-thirds still pay payroll taxes. The rest are almost all either (a) old and retired folks collecting Social Security or (b) households earning less than $20,000. Overall, four out of five households not owing federal income tax earn less than $30,000, according to the Tax Policy Center.

Here's another, slightly wonkier, way to think about the 47%. Divide the group into two halves. The first half is made tax-free by credits and exemptions, the vast majority of which go to senior citizens and children of the working poor. The half that you're left with is so poor, they wouldn't owe federal income taxes even if there were zero tax expenditures.

There are some not-so-poor outliers, like the 7,000 millionaires who paid no federal income taxes in 2011. But for the most part, when you hear "The 47%" you should think "old retired folks and poor working families."

Not bad folks, in other words. Some layabouts. And some chiselers. But mostly ordinary, decent people caught up in the zombie system... just like the rich people listening to Mitt Romney.

Rich Zombie... Poor Zombie

How does the zombie system work?

You're probably getting tired of hearing it. But to make a long story short, the Nixon administration took gold-backed money out of the system in 1971. Ever since, it's been "off to the races" with credit... turning the economy from a productive system (where middle-class workers can earn decent wages by making useful things) to a speculative system (where greasy financiers make millions of dollars without making anything at all).

We don't know how well Leder made out. But the papers report that 25 of his companies went bankrupt since 2008.

Not that we're blaming him... or accusing him of anything. We would have done the same thing if we had been smart enough. The money was flowing fast and furious. Why shouldn't he help himself?

And we're not going to join the crowd and point fingers at Romney either. Au contraire. We rise to his defense, as we do with all mental defectives, drunks... and people who dare to attack the zombies.

Trouble is, many of the people listening to Romney's speech were zombies too -- rich zombies. Marc Faber says that 50% of the U.S. economy is now directed, controlled or run by the federal government.

This zombie economy doesn't really produce anything. Instead, it lives off the efforts of the other half. The poor among them collect food stamps and disability payments. The rich get defense contracts, farm subsidies, bailouts and boondoggles -- such as the millions of dollars given to "green" energy groups... or the billions of dollars given to the banks... or the trillions of dollars pumped into the financial system so that rich people wouldn't lose their money.

Cui Bono?

The Fed has doubled its assets in the last five years. At the rate announced by Chairman Bernanke last week, it will double them again in the next five. That puts a lot of money up for grabs. Who will get it? People who make decent things for decent wages? Or people who figure out some angle... who cozy up to the feds... who have an inside track with the banks... or who know somebody important?

Here's how it works. The Fed prints money. The feds spend it. Where does it go? Over the last four years, the prices of stocks doubled, more or less. So did gold. More or less.

But the poor don't own gold or stocks. At best, they own houses, which have gone down in price. At worst, they own nothing but their time... which has also gone down in price.

The working stiffs... and the stiffs who would like to work if they could find a job... and the shiftless stiffs who prefer to collect food stamps and disability get the short end of the stick. The combination of higher unemployment, lower wages and higher living costs mean most middle-class families are no richer than they were 20 years ago.

In material terms, they've lost two decades of wealth accumulation. With more capital and technology available than ever before, these should have been the most productive years in the history of the planet. Instead, they were a total flop.

But the rich did well. As the Fed pumped more money into the system, their assets -- like boats on a rising tide -- went up. And now they gather at fundraisers for Mitt Romney (as well as Barack Obama).

They make donations, depending on their positions. Those who run shyster law firms, green energy scams, Hollywood studios and bureaucracies tend to put their money on the Democrat. Those who run defense companies, oil firms and tobacco companies tend to go with the Republican. Wall Street could go either way... or both ways... depending on where it thinks it will get the highest rate of return.

Reuters prepared a handy guide to who's buying whom:

RESTORE OUR FUTURE

Total raised as of June 30: $81.2 million (supports Republican presidential candidate Mitt Romney)

• Sheldon Adelson -- billionaire Las Vegas casino magnate who built the Venetian hotel and casino. Donation: $5 million
• Miriam Adelson -- Sheldon's wife. Donation: $5 million
• Bob Perry -- Houston builder who was a major donor to Swift Boat Veterans for Truth, a group that helped undermine 2004 Democratic presidential nominee John Kerry by attacking his Vietnam War record. Total donations: $6 million
• F8 LLC and Eli Publishing -- Provo, Utah-based firms that share an address. Both have been linked to former executives of Nu Skin, a Utah-based skin care and cosmetics company. Total donations: $2 million
• Oxbow Carbon -- a Florida-based firm run by Bill Koch, third brother of conservative financiers David and Charles Koch and also a donor. Total Oxbow Carbon and Koch donations: $2 million
• Julian Robertson -- hedge fund industry legend at Tiger Management. Total donations: $1.3 million
• Frank VanderSloot -- Idaho businessman who runs the nutritional and cosmetics company Melaleuca. The firm and its subsidiaries have also donated. Total donations: $1.1 million
• Kenneth Griffin -- Chicago-based hedge fund manager and CEO of Citadel LLC. Total donations: $1.1 million
• Huron Carbon -- a private firm that shares its address in Florida with Oxbow Carbon. Donation: $1 million
• Crow Holdings -- Dallas-based investment firm managing the wealth of the family of the late Dallas real estate mogul Trammell Crow, whose sons Harlan and Trammell S. Crow are also donors. Total Crow Holdings and Crow donations: $1.3 million
• John Paulson -- a prominent New York hedge fund manager at Paulson and Co. Donation: $1 million
• John Kleinheinz -- Texas hedge fund manager for Kleinheinz Capital Partners Inc. Donation: $1 million
• Edward Conard -- a New York investor and former executive at Bain Capital, a private equity firm co-founded by Romney. Donation: $1 million
• Paul and Sandra Edgerly -- Paul Edgerly of Brookline, Mass., is an executive at Bain. The Edgerlys each have given $500,000. Total donations: $1 million
• Robert Mercer -- New York hedge fund manager at Renaissance Technologies. Donation: $1 million
• Paul Singer -- hedge fund manager who helped fund efforts to legalize gay marriage in New York. Donation: $1 million
• Rooney Holdings Inc -- private investment firm formed in 1980s to acquire the Manhattan Construction Co. and since expanding into many areas. Total donations: $1 million
• Richard Marriott -- chairman of Host Marriott International. Total donations: $1 million
• J.W. Marriott Jr. -- chairman and CEO of Marriott International, brother of Richard. Total donations: $1 million
• Steven Webster -- private equity executive at Avista Capital in Houston. Total donations: $1 million
• John Childs -- founder of private equity firm J.W. Childs Associates LP in Florida. Donation: $1 million
• Robert Brockman -- executive at Reynolds and Reynolds, a Dayton, Ohio-based car dealership support company that shares a P.O. Box with CRC Information Systems Inc., Fairbanks Properties LLC and Waterbury Properties LLC, which split the donation three ways. Total donations: $1 million
• Miguel Fernandez -- chairman of MBF Healthcare Partners, a private equity firm. MBF Family Investments also donated to the Super PAC. Total donations: $1 million

PRIORITIES USA ACTION

Total raised as of June 30: $19.9 million (Supports Democratic President Barack Obama)

• Jeff Katzenberg -- chief executive of DreamWorks Animation. Donation: $2 million
• Irwin Mark Jacobs -- former CEO of Qualcomm Inc. Donation: $2 million
• Fred Eychaner -- Founder of Newsweb Corp. Donation: $1.5 million
• Bill Maher -- stand-up comedian. Donation: $1 million
• Morgan Freeman -- Hollywood actor. Donation: $1 million
• Service Employees International Union Committee on Political Education -- union representing more than 2 million workers. Donation: $1 million
• National Air Traffic Controllers Association -- union representing more than 16,000 workers. Donation: $1 million
• Kareem Ahmed -- chief executive at Landmark Medical Management in California. Donation: $1 million
• Amy Goldman -- writer and heiress to the New York real estate fortune of Sol Goldman. Donation: $1 million
• Steve Mostyn -- Houston attorney. Donation: $1 million
• Franklin Haney -- Owner and CEO of FLH Company, a Washington-based real estate company. Donation: $1 million
• Barbara Stiefel -- retiree in Coral Gables, Fla. Donation: $1 million

AMERICAN CROSSROADS

Total raised as of June 30: $40.1 million (Supports Republican candidates for federal offices)

• Harold Simmons -- billionaire Dallas banker and CEO of Contran Corp who has contributed to PACs supporting Rick Perry and Newt Gingrich. Total donations: $11 million
• Bob Perry -- Houston homebuilder. Total donations: $4.5 million
• Joe Craft -- Billionaire coal executive from Tulsa, Oklahoma, CEO of Alliance Holdings, which is also a donor. Total donations: $2.1 million
• Contran Corp -- Simmons' Dallas-based maker of titanium components. Total donations: $2 million
• Jerry Perenchio Living Trust -- a trust of billionaire television tycoon A. Jerrold Perenchio, who is a former chairman of Spanish-language broadcaster Univision. Donation: $2 million
• Crow Holdings -- Dallas-based real estate investment firm. Total donations: $1.5 million
• Robert Rowling -- an Irving, Texas, businessman and a conservative and active Republican donor. Donation: $1 million
• TRT Holdings Inc -- Rowling's company that runs Omni Hotel and Gold's Gym chains. Donation: $1 million
• Robert Brockman -- executive at Ohio-based Reynolds and Reynolds. Similarly to Restore Our Future, three firms sharing a P.O Box -- CRC Information Systems Inc, Fairbanks Properties LLC and Waterbury Properties LLC -- split the donation three ways. Total donations: $1 million
• Whiteco Industries -- Indiana-based company involved in advertising, construction entertainment and hotels. Donation: $1 million
• Philip Geier -- New York executive. Total donations: $1 million
• Irving Moskowitz -- a Florida bingo magnate who runs a charity in California and is known for his support of Jewish settlers in East Jerusalem. Donation: $1 million
• Kenneth Griffin -- Citadel Investment Group chief executive. Total donations: $1 million

Editor's Note: Forget Obama, Gerald Ford is about to crush your retirement!

When President Gerald Ford signed a bill into law most Americans hardly paid any attention to... That gave the fat cats on Wall Street an unprecedented opportunity...

To take control of U.S. citizens' retirement money! Let me explain how...