The Bank, The School And The 38-year Loan

Via: The Orange County Register

Published: Feb. 15, 2013 Updated: Feb. 21, 2013 1:43 p.m.
Melody Petersen / ORANGE COUNTY REGISTER

The fliers touted new ballfields, science labs and modern classrooms. They didn’t mention the crushing debt or the investment bank that stood to make millions.
In early 2008, residents of Placentia and Yorba Linda approved a $200 million school construction bond after reading those fliers and being assured repeatedly that “their money will be spent wisely.”

Borrowing through capital-appreciation bonds is helping to pay for a 600-seat performing arts center at El Dorado High School in Placentia. The expensive bonds, which delay payments for decades, were sold by Placentia-Yorba Linda Unified officials after voters approved Measure A in 2008.

What happened instead was that Measure A led to a debt so large and long lasting that it has mortgaged the future of their children’s children.

With no public discussion, the school board had hired George K. Baum & Co. and its staff of political strategists to help push the measure through so the district could continue an ambitious building spree.

After the election, the board allowed the bank to sell some of the costliest bonds ever issued by a California public agency. Just one $22 million borrowing from 2011 will cost taxpayers nearly 13 times that amount – $280 million – to repay.

Those bonds, known to Wall Street traders as capital appreciation bonds, are like a loan for which no principal or interest payments are made for 35 years. Interest is charged on a growing pile of unpaid interest, causing the balance to balloon.

“It’s another method of pushing debt to future generations,” said state Treasurer Bill Lockyer, who compares the bonds to “payday loans.” “I just don’t understand how these board members got away with this,” said Alexandria Coronado, a former member of the Orange County Board of Education. “These people need to be recalled.”

Read more: here

This scam has been played out all over.
Greed isn’t only in Orange County….although there is a lot of it there..
-Moose

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Incredible Video: Beppe Grillo Dissects the Financial System…in 1998

Via: Liberty Blitzkrieg

“Whom does the money belong to?  Who does its ownership belong to?  To the State fine…then to us, we are the State. You know that the State doesn’t exist, it is only a legal entity.  WE are the state, then the money is ours…fine.  Then let me know one thing.  If the money belongs to us…Why…do they lend it to us??”
– Beppe Grillo in 1998

If you really want to know why Beppe Grillo is causing Central Planners throughout the European continent to wet themselves, this video will show you.  There’s a real revolution happening in Italy.  This guy is the real deal and he understands the heart of the whole issue plaguing the world.  All I can say is:  WOW.

Read more: here

Definitely watch the video..WOW is right..
-Moose

Public College Tuition Soars By Most Ever (Or Searching For Deflation In All The Wrong Places)

Via: Zero Hedge

Submitted by Tyler Durden on 03/06/2013

For those who, like Time magazine and its exhaustive treatise on soaring healthcare costs, are shocked and confused how it is possible that prices for some of the most rudimentary staples, among them basic medical care and college tuition, have exploded we have the answer. In fact, we had the answer in August 2012, when we showed our “Chart Of The Day: From Pervasive Cheap Credit To Hyperinflation.” We will take the liberty to recreate the chart from 7 months ago here:

As the title, and chart, both imply, the simple reason why college tuition is up 1200% in 35 years, while healthcare fees have soared by a neat 600% or double the official cumulative inflation, is two words: “cheap credit.” This is also the reason why the BLS and the Fed can get away with alleging inflation is sub-2%: because the actual cost for any of these soaring in price services is never actually incurred currently, but is deferred with the only actual outlay being the cash interest, which as everyone knows is now at the ZIRP boundary thanks to 4+ years of ZIRP and three decades of the “great moderation.”

Of course, if one actually were to calculate inflation by how it should be captured in a world in which half the base money is in the form of reserves which are only used to fund risky asset purchases (for now), which includes nominal stock and bond levels, it would be will in the double digits, but that is an exercise for a different day.

Which is why we are confident it will come as no surprise to anyone, especially not those who have no choice but to follow the herd and pay exorbitant amounts for a generic higher education that has negligible utility at best in the New “Okun’s law is terminally broken”

Normal, that tuition at public colleges jumped by a record amount in the past year!

Read more: here

The Ethics of Repudiation

Via: Ludwig von Mises Institute

Tuesday, February 26, 2013 by John P. Cochran

Do you ever get the feeling that no one in the Washington power elite is willing to seriously deal with the major economic threat to future prosperity facing the United States today: mounting government debt and the associated deficits? The problem, as pointed out by Murray Rothbard over 20 years ago:

Deficits and a mounting debt, therefore, are a growing and intolerable burden on the society and economy, both because they raise the tax burden and increasingly drain resources from the productive to the parasitic, counterproductive, “public” sector. Moreover, whenever deficits are financed by expanding bank credit—in other words, by creating new money—matters become still worse, since credit inflation creates permanent and rising price inflation as well as waves of boom-bust “business cycles.”

In 1992, when Rothbard wrote the above, the US debt was approaching $4 trillion (now nearing $17 trillion) and Federal Reserve policy was relatively benign compared to the current quantitative easing, which is effectively monetizing a significant portion of newly created government debt. The “peace dividend” from the end of the Cold War and the false prosperity from two Fed-created economic booms made the problem appear less urgent and allowed politicians to kick the can down the road. A solution is now urgent, but not likely. David Henderson’s “Must Default Be Avoided at All Costs?” is a great place to start in order to reinvigorate a serious discussion on a moral approach to shrinking the size of the federal government down to a less destructive level.

Read more: here

The Ethics of Repudiation

Via: Ludwig von Mises Institute

Tuesday, February 26, 2013 by John P. Cochran

Do you ever get the feeling that no one in the Washington power elite is willing to seriously deal with the major economic threat to future prosperity facing the United States today: mounting government debt and the associated deficits? The problem, as pointed out by Murray Rothbard over 20 years ago:

Deficits and a mounting debt, therefore, are a growing and intolerable burden on the society and economy, both because they raise the tax burden and increasingly drain resources from the productive to the parasitic, counterproductive, “public” sector. Moreover, whenever deficits are financed by expanding bank credit—in other words, by creating new money—matters become still worse, since credit inflation creates permanent and rising price inflation as well as waves of boom-bust “business cycles.”

In 1992, when Rothbard wrote the above, the US debt was approaching $4 trillion (now nearing $17 trillion) and Federal Reserve policy was relatively benign compared to the current quantitative easing, which is effectively monetizing a significant portion of newly created government debt. The “peace dividend” from the end of the Cold War and the false prosperity from two Fed-created economic booms made the problem appear less urgent and allowed politicians to kick the can down the road. A solution is now urgent, but not likely. David Henderson’s “Must Default Be Avoided at All Costs?” is a great place to start in order to reinvigorate a serious discussion on a moral approach to shrinking the size of the federal government down to a less destructive level.

Read more: here

Recovery: Disposable Income Takes Biggest Plunge Since Monthly Records Began in 1959

Via: Bloomberg

By Michelle Jamrisko – Mar 1, 2013 6:18 AM PT

Consumer spending in the U.S. rose in January even as incomes dropped by the most in 20 years, showing households were weathering the payroll-tax increase by socking away less money in the bank.

Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.1 percent gain the prior month, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 76 economists called for a 0.2 percent advance. Incomes slumped 3.6 percent, sending the saving rate down to the lowest level since November 2007.

 Jonathan Golub, chief U.S. market strategist at UBS Securities LLC, talks about the outlook for the U.S. economy, the possible impact of federal budget sequestration on consumers and fiscal policy. He speaks with Tom Keene, Sara Eisen and Robert Litan on Bloomberg Television’s “Surveillance.” David Riley, managing director at Fitch Ratings, also speaks. (Source: Bloomberg)

Employment gains, the rebound in housing and growing demand for autos will probably keep supporting consumer spending in the first quarter as the world’s largest economy picks up from an end-of-year slowdown. Even so, rising gasoline prices and the need to rebuild nest eggs may make it difficult for households to match last quarter’s performance.

“It’s going to be touch and go for the consumer for the next few months,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, who correctly projected the 3.6 percent drop in income. “The consumer is going to be able to support the recovery, but they’re not going to be able to take it” to a higher level, he said.

Read more: here

Recovery: Disposable Income Takes Biggest Plunge Since Monthly Records Began in 1959

Via: Bloomberg

By Michelle Jamrisko – Mar 1, 2013 6:18 AM PT

Consumer spending in the U.S. rose in January even as incomes dropped by the most in 20 years, showing households were weathering the payroll-tax increase by socking away less money in the bank.

Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.1 percent gain the prior month, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 76 economists called for a 0.2 percent advance. Incomes slumped 3.6 percent, sending the saving rate down to the lowest level since November 2007.

 Jonathan Golub, chief U.S. market strategist at UBS Securities LLC, talks about the outlook for the U.S. economy, the possible impact of federal budget sequestration on consumers and fiscal policy. He speaks with Tom Keene, Sara Eisen and Robert Litan on Bloomberg Television’s “Surveillance.” David Riley, managing director at Fitch Ratings, also speaks. (Source: Bloomberg)

Employment gains, the rebound in housing and growing demand for autos will probably keep supporting consumer spending in the first quarter as the world’s largest economy picks up from an end-of-year slowdown. Even so, rising gasoline prices and the need to rebuild nest eggs may make it difficult for households to match last quarter’s performance.

“It’s going to be touch and go for the consumer for the next few months,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, who correctly projected the 3.6 percent drop in income. “The consumer is going to be able to support the recovery, but they’re not going to be able to take it” to a higher level, he said.

Read more: here

A Primer On Discharging Student Debt

Via: Zero Hedge

Since the Fed is doing all it can to relieve the big banks and all legacy debtors of their debt obligations, it is only fair that those incumbered with student debt – impacting those who can least afford it – and which is at least on the surface nondischargeable, are afforded the same opportunity.

So here is a primer for the rest of us – those who don’t have $1.8 trillion in very fungible reserves holed up with the Federal Reserve. As Christopher Glazek and Sean Monahan note, discharging student debt is a black-box dilemma. While bankruptcy protocols are always complex, student debt is loaded with its own special brand of illegibility. Debtors are misled by the media into thinking that discharging student loans is impossible and shamed into treating the mere notion of relief as a form of extravagant welfare-queenism – however, there is a way (or 12 ways) to show your future life prospects are characterized by a “certainty of hopelessness.”

CERTAINTY OF HOPELESSNESS: A PRIMER ON DISCHARGING STUDENT DEBT
By CHRISTOPHER GLAZEK SEAN MONAHAN,

Discharging student debt is a black-box dilemma. While bankruptcy protocols are always complex, student debt is loaded with its own special brand of illegibility. Debtors are misled by the media into thinking that discharging student loans is impossible and shamed into treating the mere notion of relief as a form of extravagant welfare-queenism.

Our original intention was not to create a satire, but rather to map the possibilities for broke postgrads interested in taking a more adversarial approach to dealing with their debt. Guides like Strike Debt’s Debt Resistors Operations Manual help combat the vili!cation of debtors and address pragmatic concerns about keeping loans out of default. For hundreds of thousands of ex-students, though, default is inevitable and discharge is the goal.

Bankruptcy filers have the option of calling for a special separate hearing, called an “adversary proceeding,” during which a bankruptcy judge determines whether a student loan can be considered in a broader bankruptcy claim. To clear the legal hurdle, debtors must not only demonstrate that they are currently unable to pay – they must also demonstrate that their future life prospects are characterized by a “certainty of hopelessness.”

Read more: here

Money Is A Form Of Social Control

Via: ICH

Most Of Us Spend Our Entire Lives Trapped In An Endless Cycle of Debt That We Never Escape Until We Die, Those That Own Our Debts Keep Getting Richer!

By Michael Snyder

February 20, 2013 “Information Clearing House” – Is America really “the land of the free”? Most people think of money as simply a medium of exchange that makes economic transactions more convenient, but the truth is that it is much more than that. Money is also a form of social control. Just think about it. What did you do this morning? Well, if you are like most Americans, you either got up and went to work (to make money) or to school (to learn the skills that you will need to make money).

We spend a great deal of our lives pursuing the almighty dollar, and there are literally millions of laws, rules and regulations about how we earn our money, about how we spend our money and about how much of our money the government gets to take from us. Not that money is a bad thing in itself. Without money, it would be really hard to have a modern society. Unfortunately, our money is based on debt, and debt levels in the United States have exploded to absolutely unprecedented levels in recent years.

The borrower is the servant of the lender, and if you are like most Americans, nearly every major purchase that you make in your life is going to involve debt. Do you want to get a college education so that you can get a “good job”? You are told to get a student loan. Do you want a car? You are encouraged to get an auto loan and to stretch out the payments for as long as possible. Do you want a home? You are probably going to end up with a big fat mortgage. And of course I could go on and on and on.

The cold, hard truth of the matter is that most Americans are debt slaves. Most of us spend our entire lives trapped in an endless cycle of debt that we never escape until we die, and meanwhile our years of hard labor are greatly enriching those that own our debts.

Have you ever found yourself wondering why you can never seem to get ahead financially no matter how hard you work?

Read more: here

Americans Are Using Their Houses as ATMs Again

Via: CNBC

CNBC.com | February 08, 2013 | 11:04 AM EST
 

Nearly 11 million borrowers are underwater on their mortgages, owing more than their homes are worth, according to CoreLogic, and yet home equity lines of credit are suddenly on the rise again.

During the housing boom of the last decade Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans, and home equity lines of credit. The latter allowed them to use their homes like an ATM. They spent the money on cars, televisions, vacations and fancy home upgrades. It was seemingly endless equity, until suddenly that equity was gone.

Read more: here

Americans Are Using Their Houses as ATMs Again

Via: CNBC

CNBC.com | February 08, 2013 | 11:04 AM EST
 

Nearly 11 million borrowers are underwater on their mortgages, owing more than their homes are worth, according to CoreLogic, and yet home equity lines of credit are suddenly on the rise again.

During the housing boom of the last decade Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans, and home equity lines of credit. The latter allowed them to use their homes like an ATM. They spent the money on cars, televisions, vacations and fancy home upgrades. It was seemingly endless equity, until suddenly that equity was gone.

Read more: here