Friday, March 18

Victorville, California insolvent

The city of Victorville, California has 111,000 residents and a total bond debt of...500 million bucks???

Total annual general revenue for the city last year was something like $58 million--and one assumes virtually all of that goes to fund water, sewer, trash, cops, fire, city utility costs (you lefties DO know that cities have to pay for the electricity used by traffic lights and street lights, right?) and the hundreds of city employees that do other but allegedly vital jobs.

So how in the hell did the city leaders ever think they could handle half a BILLION dollars of bond debt?

Two possible answers come to mind: The first is that none of the city officials understand math and finance. So when some jake-leg says "Hey, I gotta friend who says we can get a bunch of free money by doing something called a 'bond issue'," everybody jumped on it without understanding the *details* of what was going to have to happen.

The second possibility is pure corruption: Here in my poor state in flyover country we had agents from bond underwriting companies bribing every politician they could, to get them to approve bond issues. Typically the bribe was actually a kickback after the issue was approved.

School bonds, sewer and water treatment bonds, turnpike bonds, airport improvement bonds, bonds to build a new city hall, new fire stations, bonds issued by universities to expand the student union, paid off by student "activity fees"-- the list is almost endless. With each issue, the underwriting company made a health fee, which of course was the reason for all the lobbying and bribery.

In any case, Victorville is a small-scale example of what the U.S. government is facing. And it was all made possible by politicians who knew a lot about elections but only a little about the specifics of cash flow and future obligations.

Pols who wanted to build the Next Big Project figured out how to do it--by making the future pay for it. Anyone who pointed out that this wasn't a good way to do business was shouted down or ignored, allowing the pols to keep piling debt on future citizens.

Repeat until insolvency.

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