Rag Hand

Read this story in the New York Times then see if you can find anybody in a position of power willing to talk about it.

NYT – The Swaps That Swallowed Your Town:

Like the credit default swaps that hid Greece’s obligations, the instruments weighing on our municipalities were brought to us by the creative minds of Wall Street. The rocket scientists crafting the products got backup from swap advisers, a group of conflicted promoters who consulted municipalities and other issuers. Both of these camps peddled swaps as a way for tax-exempt debt issuers to reduce their financing costs.

Now, however, the promised benefits of these swaps have mutated into enormous, and sometimes smothering, expenses. Making matters worse, issuers who want out of the arrangements — swap contracts typically run for 30 years — must pay up in order to escape.

That’s right. Issuers are essentially paying twice for flawed deals that bestowed great riches on the bankers and advisers who sold them. Taxpayers should be outraged, but to be angry you have to be informed — and few taxpayers may even know that the complicated arrangements exist.

There you have it in a nutshell. Your school district uses swaps, courtesy of our good friends on Wall Street, to reduce debt, but what the “swap advisers” didn’t tell them was that they all worked on commission and the only way they got paid was if there was a transaction and the bigger the transaction the bigger their commission.

Now our cities are drowning in debt and the people who conned them into the deal are making nothing but money, because of early termination fees in the millions of dollars. -Makes Verizon look kindly, generous and honorable doesn’t it?

The part of this whole fiasco that rankles is, as pointed out in the article, nobody has bothered to inform the people who invariably get stuck with the bill -the taxpayers- exactly what arraignments exist and why their counties, school districts, and cities are suddenly facing bankruptcy.

Oh no. Under no circumstances should the common man be allowed to know about the deals that were made. To make this public would risk our elected officials and their cronies being held accountable and we can’t have that.

In the mean time the robber barons of Wall Street get fatter and richer, with nothing to show for destroying our economy and in fact the economy of entire countries, except huge bonuses.