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This page contains a single entry from the blog posted on August 26, 2010 8:49 AM. The previous post in this blog was The other bus project. The next post in this blog is Please Mr. Postman. Many more can be found on the main index page or by looking through the archives.

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Thursday, August 26, 2010

Drunk on debt

I really don't get this: Governments behave as if it's a legal or moral imperative for them to rush out and borrow every last penny they can get someone to lend them. And to encourage local businesses to do the same.

You hear it all the time. "How will we pay for this?" "Don't worry -- it will come from bonds." Or, "We've got plenty of bonding capacity for that [pet] project."

Gee whiz, people, it's borrowed money. You have to pay it back some day. Even if you get a good interest rate, you need to think about that before you sign up.

I get mortgage and credit card come-ons in the mail all the time. I'm sure I could get some great rates on money that I could borrow for all sorts of stuff. But like most responsible people, I'm smart enough to throw the offers away, because I just can't afford them.

Comments (13)

You have to pay it back some day.

And therein lies the difference. One never exercises as much care with someone else's money as with one's own money.

Re: "But like most responsible people, I'm smart enough to throw the offers away, because I just can't afford them."

Consider, as an alternative: remove your name and other identifying information from as much of the paper as you can, then stuff the paper into the postage-paid envelope and send it back to the bank offering the card. (Alter the small black bars on the envelope, too.) Add a terse, polite note if you feel so inspired.

(JPM)Chase has been especially excessive with their credit card offers of late, perhaps because things have not been going very well for them in the WaMu bankruptcy hearings in DE: JPM cannot seem to provide a list of asset valuations for all they took when the FDIC gave them the bank for $1.888B, a deal for which the closure date is, surprisingly, next Monday, the 30th.

"JPM cannot seem to provide a list of asset valuations for all they took when the FDIC gave them the bank"

Banks can't admit the real valuations of their assets, or else we little people would realize the entire banking system is insolvent.

That's what gets me about Jack's main point. We (the U.S.) are still completely screwed with debt on every level, public and private. The State has finally gotten the message that the deficit is very real and very big, but localities (at least the CoP) are still whistling past the graveyard.

All this talk about the $1 billion state deficit, and "what are we going to cut", is coming to a local level in a big way. Spending even a dime on something like bioswales will seem completely laughable two years from now.

One never exercises as much care with someone else's money as with one's own money.

Not only that, but the politicians that sign off on loading up the taxpayers' credit card also know they will not likely be around long enough to have to care about paying it off in the long run or worry that it could cause a fiscal disaster for their successors some undefined time in the future.

One of the plans apparently and has worked very well for "some" is to debt swamp our country and citizens.

The lure was too great to resist for some.

Unfortunately, for others cards were used for emergencies. and/or to keep a roof over their heads and food on the table.

There is more than one way to debt swamp an entire nation.

For those who didn't read the article, the City of Portland is sitting on $20 million in bonds. Even though it hasn't used the money, it hit the state up for $30 million so it could subsidize Sam's favorite windpowered Dutchmen (no, not Wim Wiewel, I'm talking about Vestas).

The whole game for the banks right now is to try and keep from having to admit that their balance sheets are trash until after the election when whichever team of corporate servants holds the House and Senate will need to replenish their coffers. If the US makes it through September and October without a cataclysmic crash, stand by for a VERY nasty November surprise and nothing but coal in our stockings for Christmas.

We'll see Dow 3,600 before we get to that fabled Dow 36,000.

If CoP were a publicly traded corporation and assets and debt were mishandled, wouldn't the managing board and CEO be subject to legal action? But when local politicians do the same thing, they can just walk away leaving everyone else on the hook.

I think what's happened is we've lost faith we handle the challenges of modern civilisation or don't want to bother, so we elect/allow confident and usually arrogant people with fistfuls of degrees, studies, and reports to run the show for us.

Unfortunately, being arrogant also means they are always right and never take responsibility for a failure. And, as long as the state AG says no actual laws have been broken, they can always just pack up their credentials and move on to the next host organism if needed.

Snards and GAS, one understanding of the debt problems among the too-big-to-fails in the summer of 2008 that seems to be emerging from the bankruptcy hearings for WaMu is that JPM, which invented derivatives, was on the verge of insolvency when Bushleague Treasury Secretary and Goldman Sachs fratboy Henry Merritt "Hank" Paulson, Jr, encouraged the FDIC's Sheila Bair to disregard the Office of Thrift Supervision's judgment and obtain WaMu's $307B in assets for $1.888B. It has certainly emerged that WaMu was solvent when seized and that JPM has been making huge profits on WaMu's "toxic" assets since the first quarter after obtaining WaMu.

Resolution of the WaMu bankruptcy could well return the House of Morgan to a precarious condition, with difficult consequences for an economy not at all recovered from years of plunder by the too-big-to-fails.

"How will we pay for this?"

I dunno, ask your grandkids when they ride the streetcar home from their 3-day school year about 20 years from now.

Just don't give them a glass of water, that'll cost you $5.

That's interesting Gardiner. I obviously have to catch up with that case.

I started to divert my eyes from the banks in mid-2009 when the same bankers who blew up the global economy started paying themselves record bonuses again with our tax dollars.

"Banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."
Sen. Dick Durbin, 2009

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)

I'm becoming more fond of Andrew Jackson all the time.

The last president to seriously take on the banks and win.

Name me one local politician that even understands the banking issues- let alone can voice them to the public.


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