Matt Taibbi isn’t some schlemp, and he writes a fantastic story about the pitfall of these bonds;
I remember years ago, I attended a charity banquet at a local hospital, and someone running for county council came over and said, “I was told I should come over and introduce myself to you.” He then proceeded to talk about what wonderful things he did for charities, and what a humble man he was. I stopped him: “I’m sure you’re very nice to your wife and family, and I’m sure your dog loves you. But you’re a municipal bond dealer, and that’s really all I need to know about you.”
Am I the only one worried about the EC deal?
The dominos are starting to fall. We’re at the precipice of a municipal bond crisis. Who knows how it will impact SF. The City has a great credit rating, but ya never know…
http://endoftheamericandream.com/archives/10-signs-that-america-is-on-the-verge-of-a-horrible-municipal-debt-crisis
Bond, how long haven’t you lived in SF? and BTW, say hi to the wifey, I remember her being a wonderful artist, hope she is still painting.
Amazingly, I warned the last administration about racking up debt. I think when Munson took over the debt was at $90 million and when Munson left it was hovering at $280? Now with the events center bonds and other quality of life bonds we should be at around $500 million. It amazes me that a city so small has racked up $400 million in debt over 10 short years. If we are in such great financial shape how can this be even logical? You have to realize something to, something I warned people about during the mayoral race, CC execs shouldn’t be in office, I thought we would have learned that during the Munson administration. Instead of using our economic boom to make investments for the city they turned it around to use our credit rating to put our city in debt. The scary part is that we are breaking ground in a couple of months and we have yet to explain how or who is going to subsidize the place. If you think this place is going to be self-sufficient thru sales, you better be prepared to pay about $300 a ticket to see the circus.
I did a guest post here in mid-april. The Reno Gazette Journal newspaper (a Gannett Co.) reported on how Goldman Sachs muni’s forced Reno NV into bankruptcy. The facts are strikingly parallel to Sioux Falls. I spoke with an Argus (also Gannett) reporter citing the article. Maybe the city is the biggest advertiser in the Argus but, sooner or later, they’re going to have to report on this. Mike Huether is the mayor with all the power. He must be held responsible for all the blame. Non-competitive bid process and questionable consulting fees qualifies for legal action. Maybe citizens haven’t recognized this man is a crook but lots of 28% interest credit card holders have.
Link to the post please. We should thank Huether. Finally, when the city defaults, the city employees gravy train ends. Retirees will have to go back to work as Walmart Greeters. Cut city staff half and mandate they live in Sioux Falls. Private council approved contracts for most services. Finally, repeal home rule. Lessons learned the hard way.
We are bonding (going into debt) like crazy on ‘quality of life’ projects (read: optional toys). I am not opposed to some quality of life items. Just pay for them. I use the bike trails. A lot. They aren’t ‘necessary’ and they are for quality of life. So I don’t want to be pegged as anti-anything. However, going into debt over and over for all these ‘fun’ things is bad policy and dangerous. Debt = risk – period. The current administration keeps saying we’re in great financial shape as justification to leverage up. This charade only works if everything goes as planned. Any downturn in tax receipts, unexpected expenses, and we’re in big trouble. And even if it does ‘work’ (no catastrophes), all of this debt service means a lot of city revenue has to pay this back, first. Its not optional. Need to do a major repair of a sewer system? Need a new fire station now? Sorry, you have to make your event center payment first.
Oh, did I mention we’re about to pay about 6 million out of the second penny in debt service I think in 2013, and topping out at over 8 million in 2016-2017 for the privilege of having an event center that because of its (in my view) massive operating loss will probably suck another million or two (or more) out of operating revenues (entertainment tax)? Hope you enjoy the concert, because its going to cost a lot, in more ways than one.
6 million out of the 2nd penny that is supposed to be used for roads.
Yup, a road right up to the soon to be congested EC parking lot.
I can’t wait for the clusterfuck that already happens when o’gorman has their big football extravaganza.
People go to that? Dumb.
This town wastes so much on fake, feel good competitions. All or nothing wins. Is kind of reminds me why a majority of South Dakotans are registered Republican’t. It makes them feel more superior if they win at any cost in a fake battle.
They will allow Sub-prime Mike and his lackeys run roughshod all over the city’s bond rating so they can have a palace for their collective egos to fill. The city finance department run election was to fulfill the cash drawer needs of special bond sellers and Sub-prime at our expense.
I enjoyed the story today about the Dakota Bowl moving because the school district thinks they can up the annie on insurance coverage at Howard wood because they build some new locker rooms. Dumbasses.
l3wis- it’s been awhile…not long enough to stop giving a rip though, I guess. The wife says hi. I hope we get a chance to chat next time I’m back.
Chat?! Full out wrestling match. Bitch!
Bottomline: if your community was in the municipal bond market from 1996 to 2006, or even later, there is an almost certain likelihood the taxpayers were ripped off for at least tens of, or hundreds of thousands, or millions of dollars.
Here’s a link to the full story:
http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620?print=true
Another to an interview by Bill Moyers:
http://billmoyers.com/segment/matt-taibbi-and-yves-smith-on-the-follies-of-big-banks-and-government/
But relax; it’s just taxpayer’s money that either should be going into the local community or staying in taxpayers wallets – instead its paid mafia-like bribes to government officials and Wall Street banksters. The free market is an illusion. Competition is little more than a rigged pea-and-shell game.