IS A VULTURE CAPITALIST COMING TO SAVE US?

You all know we don’t like most politicians, most big corporations, or private equity firms like Bain Capital.  Mitt Romney is counting on your ignorance of finance (and not doing your own research), and quite honestly, we think he’s succeeding. 

There were people that predicted (or foresaw) the financial crisis of2008, but no one was really listening.  Part of the reason was most people have absolutely no idea about things like finance, or economics, or how the economy works, or what WallStreet is about, or have knowledge about credit default swaps, or derivatives, leveraged buyouts, etc.

What they do know is that they don’t know how to budget, that they try to keep up with the Joneses, that the price of gas has gone up, … basically they know they are screwed because they know nothing about finance, or Wall Street, or how the economy works, or debt and deficits, or how to live within their means. 

The Joe Scarboroughs, and FOX (cable) news idiots (although there was one Fox smart guy), and CNBC whoevers, and contributors to Forbes, financial journalists, etc etc etc still are completely clueless how we prevent 2008 from happening again, and wouldn’t recognize the signs again, even if it smacked them in the face.  All they seem to care about are a bunch of people making money and huge profits, and essentially that’s all Mitt Romney cares about when it comes to the economy.

What he does know, is how to use other people’s money (borrowed money) to loan it to businesses, so he can siphon off some of the profit (or most of it depending on what it says in the contract) and collect a fee; but that’s not creating a healthy economy, … Is it?

It’s disingenuous and hypocritical to hear people like Romney talking about debt and deficits, when basically he got filthy rich using investor's (borrowed) money to loan it to businesses (so they’re now in debt). 

We’ve got a few videos for you to watch.  Definitely watch MattTaibbi’s segment on “Democracy Now”, and the video about debt/deficits.

All Things Mitt


Debt and Deficits

That Damn Tax Levy and Those Pesky Municipal Bonds

City government administrations and city council ask residents to approve levies every now and then (usually dealing with schools and safety departments); and  they will also take out loans (for big projects) by issuing bonds.

Did You Know?

"A levy gives a local government a claim on a specific property; and if the taxpayer does not repay the levy, the government can foreclose on the taxpayer's house and sell it to pay off the levy. If the taxpayer sells his house, the new home owner will have to make the future levy payments. Existing levies can make properties in an area more difficult to sell."(1)

Scary ... right?

There can be sound reasons for levies and sound reasons for issuing bonds; however, I ask you ... why do they always come to the property owner for help in times of fiscal trouble?  And further, how do you justify asking property owners and other tax payers to fix past mistakes, or fund things, when residents are losing their homes and their jobs, sometimes because of those past mistakes? 

What to think about before issuing a bond: What's the bond for?  Is the community stable? Can the project wait til the community is financially stable before issuing a bond? What kind of bond will it be? Is the bond insured (if it is, by whom, and who is responsible for the insurance payments?)  Who will be the bondholders? With what are the bonds secured?  What happens if your city defaults? (Think back to 2008)

Note: "GO bonds are secured by the full faith and credit of the issuer, meaning that the borrower is committing to raise taxes and other revenues sufficient to cover the amount owed".

If you're going to say "yes" on some tax levy your city administration and school system ask for, ask them (mayor/city council/school superintendent/ whoever is asking) to take a cut in salary and/or benefits first.(2)

Also consider: 
Are property values stable?  Is the community stable, and the population and number of homes stable and growing?  What are the projections for property values?

Whatever the city administration and city council (or superintendent of a school via mayor) ask you (tax payers) to do, ... as stated before, ... those levies will usually be paid on the backs of property owners. And with bonds, tax payers will pay the interest until the bond matures.  When it does mature, and if you can't pay, you may be able to refund; however, you can't refinance the loan forever.  

(1)Bonds and Levies

(2)MHSD

(2)Superintendent Keenan in 2011

This post is not meant to give investment advice, it just points out risks to bond issuers.