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This article explains how Romney's "business" works. He buys a company with borrowed money, then gets the company to borrow more money to pay off the initial loans and also pay huge "management fees" to himself. Meanwhile he spends as little as possible on actual operations. This keeps going until the company has so much debt that it can no longer survive. Then Romney dumps it, the company goes bankrupt, and the folks who made the last loans don't get their money back.

Am I the only one who sees that this is just a Ponzi/pyramid scheme with different labels on the participants? Why hasn't Romney been prosecuted for multiple counts of conspiracy to defraud?
Nelson Minar's profile photoCelia Chapman's profile photo
Yes, that is the worst case scenario and really not the explicit goal of that type of investing. It oversimplifies and distorts. Agree that the Planet Money podcasts will give a more balanced view.
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