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View Diary: Wall Street is Doing it Again: The Looting of America Continues (128 comments)

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  •  so.....they're balloon payment loans? (3+ / 0-)
    Recommended by:
    Sparhawk, nextstep, FG

    that's what we're supposed to be outraged about?

    •  terrible, terrible journamalism: (2+ / 0-)
      Recommended by:
      Sparhawk, nextstep

      " a repayment rate of about 9.4 to 1. "

      the only relevant term is the interest rate, and of course that's the only thing they don't tell us.

      •  If so, the true villains are the public officials (3+ / 0-)
        Recommended by:
        johnny wurster, Sparhawk, elwior

        who agree to such outlandish terms.

        "The way to see by faith is to shut the eye of reason." - Thomas Paine

        by shrike on Fri Feb 01, 2013 at 05:58:14 AM PST

        [ Parent ]

        •  No doubt. (5+ / 0-)
          Recommended by:
          saluda, Ray Pensador, No Exit, FG, Kickemout

          It's part of the systemic problem w/ municipal financing: the people approving the issuance won't be in office when the notes come due, so why would they care what sort of hole they're digging for themselves.

          W/ that sort of structural problem, strong state regulation is necessary to make sure that dopey local officials don't do the sorts of dumb things that they'd do otherwise.

      •  It's basically 10 to 1 in a 30 year frame johnny (6+ / 0-)

        not to difficult to see the robbing in times of historic low interest rates.


        One may live without bread, but not without roses.
        ~Jean Richepin
        Bread & Roses

        by bronte17 on Fri Feb 01, 2013 at 06:06:14 AM PST

        [ Parent ]

        •  Like I said, it depends on what that means (0+ / 0-)

          the rate is.  We can do the math, but if the point of journalism is to inform, the article does a lousy job.

            •  nah... there's a wild swing in the rates (2+ / 0-)
              Recommended by:
              elwior, CA wildwoman

              from these capital appreciation bonds. What should be 2 to 3 times the principal amount is anywhere from 9 to 16 to 23 times the original amount borrowed. Zero coupon bonds? Inflation indexed? Gah...

              So CA and TX and OH are paying rates locked in TODAY that are comparable to Slovenia and South Africa and Ireland... higher than Portugal and Spain... and not far from Greece's rate.

              And no taxes paid on those billions and billions in interest by the banks and private financial entities issuing these bonds.

              And voters are totally unaware of the details of the bond measures they passed.

              Michigan has outlawed these bonds.

              CA and TX and OH otoh are playing with fire.

              Talk about people absolutely hating teachers... the superintendents of these school districts should be horse whipped and tarred and feathered.


              One may live without bread, but not without roses.
              ~Jean Richepin
              Bread & Roses

              by bronte17 on Fri Feb 01, 2013 at 10:37:42 AM PST

              [ Parent ]

      •  Um, no. (8+ / 0-)

        If the agreement requires repayment of 9.4x principal, it's prima facie a bad deal. Even if repayment begins 30 years down the road. The payoff had to be excessively huge to account for investorvrisknin the intervening years, but that only makes it a worse deal for communities entering the deals. If they're cash-strapped now, just wait until repayment begins. Privatization on steroids is the likely result.

        The road to Hell is paved with pragmatism.

        by TheOrchid on Fri Feb 01, 2013 at 06:16:52 AM PST

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        •  Rates on these range from 6 - 8% or so. (2+ / 0-)
          Recommended by:
          Sparhawk, nextstep

          In the case of Alvord, the interest rates on their cap appreciation bonds are the same as the rates on their standard bonds.

          They're just deferring the interest payments on it.

          •  You can't just focus on rate... (2+ / 0-)
            Recommended by:
            elwior, CA wildwoman

            ...to establish fairness.  You're ignoring the rest of the deal, which is structured precisely so that (1) consequences occur long after approving civil servants have retired or died, and (2) it is practically impossible to pay off without massive privatization.

            By your logic, the "negative amortization" loans popular around 2005 were great deals because of their low rates.  But they ended up blowing up pretty badly.

            If you focus only on the apparent rate, no one will take you seriously.

            The road to Hell is paved with pragmatism.

            by TheOrchid on Fri Feb 01, 2013 at 08:17:06 AM PST

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            •  Re (0+ / 0-)
              You're ignoring the rest of the deal, which is structured precisely so that (1) consequences occur long after approving civil servants have retired or died, and (2) it is practically impossible to pay off without massive privatization.
              So I imagine that you oppose public pensions, then, for the same reasons?

              (-5.50,-6.67): Left Libertarian
              Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

              by Sparhawk on Fri Feb 01, 2013 at 08:57:20 AM PST

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            •  johnny wurster is likely (1+ / 0-)
              Recommended by:
              TheOrchid

              heavily invested in these types of bonds.

              The banks have a stranglehold on the political process. Mike Whitney

              by dfarrah on Fri Feb 01, 2013 at 09:11:01 AM PST

              [ Parent ]

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