George Bush: The Unauthorized Biography - Get a Free Blog

National Chairman of Bush's Inaugural Anniversary Dinner. This was a glittering gala
held at the Kennedy Center in Washington for a thousand members of the Republican
Eagles, most of whom qualify by giving the GOP $15,000 or more. The entertainment
was organized as an "oldies night," with Chubby Checker, Tony Bennett, and B.B. King.
When George Bush addressed the Eagles, he was prodigal in his praise for Henry Kravis
as one of "those who did the heavy lifting on this." [fn 5 ]
According to Jonathan Bush, George Bush's brother and the finance chiarman of the New
York State Republican Party, Henry Kravis was "very helpful to President Bush in
fundraisers." According to brother Jonathan, Kravis "admired the President. And also,
significantly, on a personal level, his father, Ray, and [George Bush] were friends from
way back. And that meant a lot to Henry. He wanted to be part of that."
Henry Kravis had married the former Janey Smith of Kirksville, Missouri, who now
called herself Carolyne Roehm. Carolyne Roehm had been introduced into New York
Nouvelle Society by Oscar de la Renta. She and Henry Kravis cultivated a frenetically
sybaritic lifestyle in the company of a social circle that included Bush's patron Henry
Kissinger, American Express Chairman Jim Robinson and his wife Linda, Donald and
Ivana Trump, Anne Bass, corporate raider Saul Steinberg, cosmetics magnate Ronald
Lauder, and Bush's finance operative Robert Mosbacher and his wife Georgette. It was
very much a Bushman crowd. Kravis and his "trophy wife" lived in a Park Avenue
apartment large enough to be a Hollywood sound stage, and also had a 270 acre estate in
Weatherstone, Connecticut. The palatial house there, which is listed in the National
Historic Register, has nine fireplaces. Henry and Carolyne added a $7 million, sixbuilding,
42,000 square foot "farm complex" for their seven horses. This was Henry
Kravis, chief stoker of the bonfire of the vanities, celebrated by Vice President Dan
Quayle as the New York Republican Party Man of the Year.
It was to such an apostle of usury that George Bush turned for advice on public policy in
economics and finance. According to Kravis, Bush "writes me handwritten notes all the
time and he calls me and stuff, and we talk." The talk concerned what the US government
should do in areas of immediate interest to Kravis: "We talked on corporate debt--this
was going back a few years--and what that meant to the private sector," said Kravis.
Henry Kravis certainly knows all about debt. The 1980's witnessed the triumph of debt
over equity, with a tenfold increase in total corporate debt during the decade, while
production, productive capacity, and unemployment stagnated and declined. One of the
principal ways in which this debt was loaded onto a shrinking productive base was
through the technique of the hostile, junk-bond assisted leveraaged buyout, of which
Henry Kravis and his firm were the leading practitioners.
The economist Franco Modigliani had written in the 1950's about the theoretical debt
limits of corporations. Small scale leveraged buyouts were pioneered by Kohlberg during
the late 1970's. In its final form, the technique looked something like this: Corporate
raiders looked around for companies that would be worth more than their current stock
price if they were broken up and sold off. Using money borrowed from a number of