I have to take exception with your reader who argued that neither side gets the private equity story right. In reality, the left’s story is generally correct, though incomplete, while the right gets the story wrong because, well, it has to. In addition, a completely accurate telling of the story would include the terms “financial engineering” and “dividend recapitalization.”

Financial engineering is the alchemy that drives the entire private equity industry – by rejiggering a company’s capital structure, a private equity firm purports to “create value” that previously didn’t exist. Like all other forms of alchemy, if it actually happened that simply, it might not be a bad thing. Unfortunately, the processes that create that value for the private equity firm – levering the company’s balance sheet with borrowed money, reducing headcount, cutting costs and, yes, tax arbitrage – tend to whipsaw a company by depriving it of any margin of error (because it has to spend its cash flow on interest payments) while also diverting resources away from future profit-maximizing initiatives (because all of its cash is being spent on interest payments).

This is the legendary “discipline” that private equity apologists cite in these conversations, but there is very little focus on making the business, as the business, run better. Instead, the focus is on freeing up enough cash to service the debt and return cash to the new owners. The end result tends to be a less ambitious company with a far smaller footprint (employees, plants, etc.) and a reorientation away from investment in the future growth of the business and toward like as a “cash cow.” This is the case even when private equity “works.”

Dividend recapitalization is the most insidious subset of financial engineering – the owners take out a loan backed by the assets of the company and use the proceeds from the loan to write themselves a dividend check of roughly the same amount. The company is again forced to focus all of its attention on servicing this new debt, frequently groaning under the pressure. When it fails in that mission and tumbles into bankruptcy, the private equity backers toss the keys to the creditors and walk away, having already recouped most, if not all (or, in some cases, many multiples of all) of their investment. Loans are, fundamentally, supposed to be used to boost investment in productive enterprises, but in this case, the financial/private equity industry has bastardized that premise to funnel money away from productive uses and straight into their coffers.

I have worked around the private equity industry for nearly a decade, and I have never met anyone in it who can tell me with a straight face what productive ends the dividend recap serves (like your other reader, I do not consider tax arbitrage “productive”).

All of this (including the cash cow and tax arbitrage concepts) is complicated stuff that requires a familiarity with finance that not many voters possess, which is why the left has such a hard time explaining what is really going on and instead leaves itself open to charges of demagoguery by focusing on the human cost of Bain’s investments and follow-on decisions. That’s unfortunate, but it does not render false the left’s substantive critiques on the topic, regardless of what Cory Booker and Harold Ford say.

The right, on the other hand, can’t possibly reckon honestly with the pros and cons of private equity, because to do so would be an admission that it consists mainly of financial parlor tricks that benefit a small group of wealthy individuals at the expense of virtually everyone else. They know how that would play with the voters, and so they obfuscate at best, lie at worst and proclaim “class warfare” at every turn.

The Romney campaign hasn’t been urgent in defining private equity and Romney’s tenure at Bain for the public (besides saying he created x amount of jobs), because they really don’t have to be. 

Here are ten of my favorite songs of the year. They’re listed in no particular order with a brief explanation accompanying each track. Follow me on tumblr for more music throughout the year. Enjoy.

Four Tet – “Pinnacles” // Instantly one of my favorites after hearing it on BBC radio in February, “Pinnacles” at first sounds like typical Four Tet: crazy loops, live samples, and a heavy groove. What sets it apart from his other offerings is its polish. Every thing falls into place without sounding like a science fair project. // .mp3

Beyoncé – “Love On Top” // This track makes you want to fall in love and shout it from a rooftop. “Love On Top” is Beyoncé at her best: retro, jubilant, and flexing her vocal cords (the modulations at the end are awesome). Influenced by the Jackson 5 and early New Edition, I’m sure this track will be a staple at future wedding receptions for years to come. Even my Granparents love it. // .mp3

Girls – “Forgiveness” // Father, Son, Holy Ghost has so many great tracks to choose from, and I was determined to put one on this list. While Girls’ “Vomit” is popping up all over ‘best of’ lists everywhere, I prefer “Forgiveness”. For now. Make sure you play it completely through. // .mp3

M83 – “Claudia Lewis” // I first mentioned this song on tumblr back in October, and it’s still just as epic as it was on first listen. One of my favorite things about music in 2011 was alternative/electronic acts, like M83 and Toro Y Moi, digging into 80s R&B. “Claudia Lewis” sounds like Shalamar on acid, and boy is it glorious. // .mp3

TV On the Radio – “Second Song” // TV On the Radio went through quite a bit in 2011. Along with releasing their follow up to 2008′s critically acclaimed Dear Science, they also experienced the loss of a bandmate, Gerard Smith. Nevertheless, TV On the Radio churned out some great music. The Nine Types of Light opener goes from Tunde Adebimpe giving his best Bill Callahan impression to an epic falsetto laced chorus with a horn section. My favorite band never disappoints. // .mp3

The Weeknd – “What You Need” // This song was actually released in 2010, but I didn’t become aware of it until after I posted my previous ‘best of’ list. Sampling Aaliyah’s “Rock the Boat”, it’s Portishead meets 90s R&B. // .mp3

John Maus – “Believer” // Maus’ organ-like synths layering over a simple baseline sounds like a mushroom-fueled trip to outer space. Play it once, and it’s going to stay in your head for the rest of the day. // .mp3

Bon Iver – “Beth/Rest (Live from NPR’s World Cafe)” // On the song’s meaning, Justin Vernon’s quoted as saying: “It’s about letting that love into your life and letting the part of you that’s selfish die. It’s like a joyful sleep if you will, but it’s a wakening, too.” The live version here improved on what was already a great song, and the meaning Vernon’s trying to convey is highlighted even more by this haunting rendition. // .mp3

Neon Indian – “Suns Irrupt” // “Suns Irrupt” is the drug addict, hipster cousin of LCD Soundsystem’s “Someone Great,” which is a good thing. The bridge is excellent. // .mp3

Real Estate – “Green Aisles” // Real Estate is the stereotypical band everyone discovers on Pandora. And while their previous album had great moments amongst a sea of elevator music, Days brought with it a more seasoned Real Estate who seemed to take notice of past criticisms. During a year of blaring synthesizers and drum kicks, it was nice to have Real Estate and tracks like “Green Aisles” to help you unwind. // .mp3

Mormons are a conservative lot and, for a lot of reasons, they’re a natural fit for the Republican Party. We shouldn’t forget, though, that the most powerful Mormon in the country is Senate Majority Leader Harry Reid, a Democrat. When it comes to politics, I don’t like to critique people’s religious beliefs. Ask me what I think of a particular religion in a private setting and I’ll tell you, but I don’t want to try to score political points by running down someone’s private faith. I understand that a lot of Democrats (e.g., some in the gay community) feel like the Mormons are trying to oppress them and are very willing to fight back with tough language. I sympathize. I do. But even Democrats who fight back against Mormons do so with mockery and snark, not with incitement to fear. Even when Howie Klein, in the above cited piece, cites some history to show that the Mormons have been interested in winning the White House ever since Joseph Smith ran for the White House, he doesn’t say “egads, the Mormons are all out to get you and turn this country into a theocracy.” Yeah, Joseph Smith wanted to do that, but that doesn’t mean that Mitt Romney and Jon Huntsman have the same intention. Nor does it mean that Harry Reid will switch parties to support a fellow Mormon’s presidential campaign.

There’s not a “war” on Mormonism for a few reasons. Most American conservatives have no clue what Mormons believe. Also, there’s a reason the Florida Family Association hasn’t called for advertisers to dump TLC’s Sister Wives as they have All-American Muslim, a show on the same network: the family depicted on Sister Wives still fits the white, heterosexual family mold. What All-American Muslim has done successfully is highlighted a national concerted effort to marginalize Muslims here in the US. No matter how normal or ordinarily they’re depicted on television, conservative groups will still protest the program. No matter how quietly and privately they worship, conservative groups will still protest their right to build new places of worship. No matter how lawfully or peacefully they live their lives, many conservatives will still claim they aren’t doing “enough” to curtail religious extremism. The Republican party nominating Mitt Romney, a Mormon, won’t be a step towards religious tolerance on the right if it’s done merely in response to someone they believe is of questionable religious affiliation or a straight up covert Muslim. Because as the response (and lack thereof) to All-American Muslim and Sister Wives shows, it’s not what’s on the inside that matters.

If you follow politics to any degree, I’m sure you’ve heard all about presidential candidate Mitt Romney’s infamous $10,000 bet during a televised debate this past weekend. As illustrated in the video above, many if not most reporters and pundits agree that this was a pretty unfortunate move by the normally uber-disciplined Romney. But why? The Washington Monthly‘s Steve Benen pretty much sums up the conventional take on the issue:

As a political story, Mitt Romney’s offer of a $10,000 bet on Saturday night has a lot going for it. The story reinforces allegations that Romney is out of touch and unable to relate to middle-class anxieties; it comes at an awful time for Romney as Newt Gingrich surges; and perhaps best of all for the media, “Willard’s Wager” is amusing and easy to understand.

This follows in line with what’s said in the video above. The Washington Post‘s Greg Sargent goes further:

While the $10,000 moment is politically problematic and revealing in some ways, it doesn’t really deserve to rise to the level of national narrative. What’s more deserving of a national storyline about Romney is his serial dishonesty, his willingness to say and do anything to win. […]

More broadly, political reporters and commentators are always tempted to seize on such moments as the $10,000 bet as defining of a candidate’s character. But this moment is ultimately almost as trivial as was John Edwards’ $400 haircut…. This broader pattern [of dishonesty] is what deserves the status of national narrative about Romney’s character, not some throwaway line about a bet.

While both make valid points, I feel there’s more to this story. More specifically, this incident could be put towards better use besides merely being a passing jab at Romney. The defining issue of the presidential election will ultimately be the economy and whether Americans support Obama’s continued push for infrastructure stimulus and consumer protection or the Republican candidate’s push for deregulation and austerity measures. “Willard’s Wager” highlights this choice.

Romney’s $10,000 bet illustrates why our fiscal policy shouldn’t be centered around fickle millionaires and billionaires like him. A future of deregulation that leaves the economy and consumers vulnerable and measures that cut programs targeted for the middle class would only further the gap between the have and have nots, and that is much more relevant to what’s at stake in next year’s election than how out of touch Romney is. It’s also a winning argument politically and at the heart of why Romney’s bet should be an eye-opener for Progressives.

The Republican ticket wants to put the fate of the economy in the hands of those who can afford to make five-figure wagers like Romney. And as long as our economy’s success is primarily dependent upon a rich person’s capricious discretion, like whether to invest in jobs or make silly bets on national television, inequality will remain and the middle class will continue to rot away.

In case you haven’t heard, yet another woman has come forward today detailing inappropriate, sexual advances from Republican Presidential hopeful Herman Cain. What makes this particular allegation more significant is it came with a public appearance from the victim[1] and the fact that the allegation itself sounds more like sexual assault than mere harassment.

I admit when Cain first announced he was running for the Republican nomination, I assumed he’d be a no-name candidate vying for a fraction of a percentage point. His lack of command of the facts and outrageous, often nonexistent policy stances made him appear as someone looking for a regular seat on Fox News than legitimately attempting to be President one day. Six months later, he’s matching presumed frontrunner Mitt Romney in the polls. Unfortunately for him, the new accusations have an opportunity to not only derail his Presidential hopes (which isn’t hard to do), they could also damage his public image enough to repel Fox and other conservative outlets, hurting potentially lucrative post-election opportunities.

Earlier this year, Cain’s unreleased gospel album entitled Sunday Morning[2] leaked online. It was recorded in the 1990s, which is ironically in the same time period as the allegations are said to have taken place. This wouldn’t be the first time a politician’s put forth such a public display of personal spirituality and morality only to couple it with inappropriate, contradicting actions behind the scenes (especially in the ’90s). Included on it is “I Must Tell Jesus” (above, mp3) which features a swaying piano and baseline carrying a baritone Cain singing about being over-burdened and seeking compassion.

I wonder what Cain’s telling Jesus these days. So far, he’s told everyone else conflicting accounts of the alleged events masked in baseless cries of racism. So far, he’s shown no compassion for the burdened victims (or women in general, considering his stances on women’s reproductive rights). Better yet, what did Cain tell Jesus when confronted with an urge to approach the alleged victims? Ironically, Cain left off a verse from the century old song which contained a few lines addressing that very issue:

…What must I do when worldliness calls me? What must I do when tempted to sin?…

If the answer was to put those events behind him and run for President anyway, he should seek better advice.

1. Lots of the victim-blaming thus far stupidly revolves around the anonymity of other accusers.
2. Album cover designed by me. I was bored.

Are Republican politicians just more interested in ideas? Not exactly. What they’re interested in is big, sweeping ideas. Not technocratic fixes, not proposals for a new agency, but ideas that upend the bases of how we think about politics and what we consider reasonable and insane. Democrats, not so much.

He makes some valid points, and I highly recommend reading his post. However, I feel he didn’t quite hit the nail on the head. The difference between the right and left aren’t the size and scope of ideas. What’s different is a disconnect between the idea makers and policy makers on the left.

Conservative thinkers, while quite fond of big, sweeping (and wrong) ideas, are much more pragmatic, and they tune ideas specifically for the politics at the time. During the Bush years, conservative thinkers were still writing in support of decreasing debt and the size of government. Yet were the same people also publicly criticizing Bush for drastically increasing both? Largely, no. The right is much more willing to look past old ideas and adopt new ones to push an agenda. While noble, the left simply isn’t.

Just look at the reaction to the President’s upcoming jobs speech. If this were a Republican president, Republicans would be out in full force with talking points and showing a willingness to hear and support whatever ideas the President would offer. Despite being set up specifically to present (what I hope are) large, sweeping ideas for job creation, the left largely views next week’s speech as useless. While it’s true that the Republican-controlled House will likely block every measure the President presents, the left’s reaction to the event only further discourages Democratic policy makers from incorporating new ideas.

Imagine if liberal writers and pundits grasped onto one idea the President presents next week (of which they agreed with) and pushed it publicly in unison. We’d have a better chance of controlling the discussion in Washington and perhaps implementing that idea down the line. Yet, liberal writers would rather talk about ideas the President didn’t present or how pushing the speech back a day made the President look weak. Another example is the public option. Because of conservative Senate Democrats, it had no chance of passing. Yet the reaction on the left hasn’t been to further articulate the benefits of a public option in hopes that the public or press catches on. It’s blaming the President for somehow not persuading Dems to vote for it.

The big ideas are present on the left, but they’re being held back by a base more concerned with purity than political expediency and an opposition party willing to evolve its own ideas to win.

Steve Jobs chose the perfect time to resign. Apple is in its prime. High off the success of the iPhone 4 and iPad 2, Apple briefly pushed past Exxon earlier this month to become the world’s most valuable company in terms of market cap. The iPhone 5 is set to be released in October with rumors of Sprint being added as a carrier. They made $7.31 billion in profit last quarter alone. Jobs has no doubt solidified his icon status by turning Apple and Pixar into institutions of innovation and leadership in their respective industries. However as Jobs resigns as Apple’s CEO, it’s his philosophy that can leave the biggest mark, above any iconic product he introduced to the world. And if there’s anyone that should take a closer look at Jobs’ approach, it’s our government.

The federal government and Apple are two very different entities. A CEO doesn’t have to share power with two other branches of leadership. Apple isn’t a company in gridlock due to competing factions. Yet, there’s so much our political leaders can learn from Jobs’ tenure at Apple. The US is currently facing many of the same challenges Apple faced in the early ’90s. Apple was losing to an exploding competitor, Microsoft. Their OS was stagnant and out-dated. Their stock was tanking. Apple needed more than a jolt of fresh products. It needed a new philosophy. In Apple Confidential 2.0: The Definitive History of the World’s Most Colorful Company by Owen W. Linzmayer, the newly appointed Apple CEO Jobs is quoted as saying:

“The cure for Apple is not cost-cutting. The cure for Apple is to innovate its way out of its current predicament.”

Today, the US is going the route of a Jobs-less Apple in the early ’90s. It’s choosing austerity over investment, contraction over transformation. Indeed, the cure for the US is not cost-cutting. The cure for the US is to innovate its way out of its current predicament. The solution is not closing factories and schools. It’s finding and creating new industries, rebuilding our infrastructure, and investing in education to produce the world’s brightest leaders and innovators.

Steve Jobs defies the “conservative business leader” image our political culture and media are so fond of. At a time when many feel traditional conservative business thinking is the answer to the US’ current predicament, Steve Jobs is living proof of the opposite. Anil Dash says it best:

So, who is this man? He’s the anchor baby of an activist Arab muslim who came to the U.S. on a student visa and had a child out of wedlock. He’s a non-Christian, arugula-eating, drug-using follower of unabashedly old-fashioned liberal teachings from the hippies and folk music stars of the 60s. And he believes in science, in things that science can demonstrate like climate change and Pi having a value more specific than “3″, and in extending responsible benefits to his employees while encouraging his company to lead by being environmentally responsible.

Every single person who’d attack Steve Jobs on any of these grounds is, demonstrably, worse at business than Jobs. They’re unqualified to assert that liberal values are bad for business, when the demonstrable, factual, obvious evidence contradicts those assertions.

Louisiana made its annual dismal showing in the Kids Count Data Book, which ranks states on a list of indicators of overall child well-being such as children living in poverty, infant and child mortality, the rate of school dropout and births to teens. Louisiana ranked 49th nationwide, a ranking it’s received for at least 10 years. Neighboring Mississippi is No. 50, a ranking it’s held for at least a decade in Kids Count data, which has been released yearly by the Annie E. Casey Foundation for the past 22 years.

Meanwhile, Louisiana politicians are calling for even more cuts to social programs, state leaders are making efforts to gut public education, the state continues to get redder, and Governor Jindal is cruising to reelection. No one is holding state leaders responsible, and state Democrats don’t seem to budge unless the oil industry is involved. Louisiana is ripe for progressive leadership. Until it appears, Louisiana will remain at the bottom of such lists. To no surprise, of course.

“This is a tough game. You can’t be intimidated. You can’t be frightened. And as far as I’m concerned — the Tea Party can go straight to hell,” Waters told an Inglewood, California audience at a “Kitchen Table Summit” Saturday night, according to Los Angeles television station KABC.

And she should be. Waters has sponsored thirteen bills during this session of Congress, ranging from foreclosure prevention and increasing funding for treatment of diabetes and alzheimers patients to “honoring Bishop Noel Jones for his 17 years of service to the City of Refuge Church.” Whether justifiable or trivial, none of Waters’ bills have passed the House. I, too, would be upset if every bill I sponsored was DOA due to an opposition party hellbent on destroying the President politically instead of creating jobs and aiding struggling Americans. And although telling the Tea Party to go to hell isn’t the most productive way of gaining some awareness for your issue, at least the focus is correct. That focus was a little different a few days prior:

U.S. Rep. Maxine Waters (D-Los Angeles) called on President Obama on Thursday to pay more attention to black Americans, saying she and other members of the Congressional Black Caucus are “not just frustrated with the president -– communities are hurting.”

“The economy, the loss of jobs, the pain is real. We’re talking about indisputable facts,” she said on MSNBC’s “Morning Joe.”

“We’ve got to be in the discussion. We want to be part of the solution. We cannot continue to go on watching everybody talk about what the solutions are without us being included in it,” she said.

One of the negatives Obama has encountered since being elected is having some on the right claim every progressive idea or legislation he puts forth is a handout[1] simply because it addresses low income citizens, while others, like Waters, on the left claim he isn’t doing enough for minorities due to scaling back measures in hopes of increasing its chances for passage. While the White House’s strategy is certainly debatable, the lack of help for black Americans isn’t due to Obama ignoring them or Waters. In fact, Obama has passed more bills sponsored by Rep. Waters than any of the two prior White Houses combined. Three of Waters’ bills passed the House under Clinton’s (whom Waters and the Congressional Black Caucus are quite fond of) eight years, while none were signed to law. Fourteen Waters-sponsored bills passed the House under Bush, with only one (a post office naming) being signed into law. In the first session under Obama, eight Waters’ sponsored bills passed the House, with two being signed into law: H.R. 4573: Haiti Debt Relief and Earthquake Recovery Act of 2010 and H.R. 5569: National Flood Insurance Program Extension Act of 2010.

Waters isn’t being ignored by the President. He clearly supports her and House Democrats’ efforts. The point is their bills are being prevented from reaching him. A CBC bus tour focusing on jobs is a great idea, as long as it focuses on the country’s needs (jobs) and those preventing the country from receiving them (Congressional Republicans). Vague insults and demands for things beyond the President’s control are useless, and they hurt their party’s chance of regaining the Dem majority the country so desperately needs.

1. This is clearly an allusion to the welfare queen stereotype many, such as Newt Gingrich, are so fond of.

(1) They are more submissive than most to their leaders, and they take direction without question; (2) they are easily frightened and their leaders keep them that way; (3) they wear their self-righteousness on their sleeves, e.g., with their assertion that they are “the true Americans;” (4) they are highly aggressive, so they lash out at those with whom they do not agree; (5) critical thinking and logic escapes them, and they rely upon simplistic slogans to answer complex questions; (6) they inflate problems, and they find an endless supply of our “biggest problems”; (7) they hold conflicting and contradictory beliefs, which does not trouble them, because their thinking is compartmentalized; (8) double standards are totally acceptable to them, so they can be highly critical of others who do exactly what they do, or have done;  (9) they feel empowered when in groups, and gain strength by remaining together with like-minded others; (10) they are highly dogmatic, since they do not know why they believe what they do, and they do not question themselves; (11) they are ethnocentric and constantly judge others and events from an “us versus them” point of view; and (12) they are prejudiced, and often racist, although some do not realize it or believe it when confronted.

You could definitely spot some of those traits during the debt ceiling fight. Many vowed to vote against raising the debt ceiling, regardless of the US economy being brought to its knees by not doing so. Since then, Standard and Poor’s downgraded the US’ credit rating from AAA to AA+, specifically citing political uncertainty due to Republicans’ insistence on not allowing any revenue increases as a reason. Also, new polling shows public disapproval of Republicans at a record high. So where does the Republican party go from here? If you go by the above criteria, the Tea Party won’t be backing down any time soon. And while the public obviously doesn’t care for the them, the Tea Party will have a large say in who’ll become the Republican nominee. That nominee must then earn votes from Independents as well as court a Tea Party movement that seems to move more to the right everyday.