With capitalism, cities in USA work like this: The Mayor and City council front the money men who write up bonds for projects (tunnels, bridges, light rail) that are way overcosted, and then experience cost overruns. The bonds allow the lawyers, bankers, construction companies etc to bank their profits up front, immediately, while the taxpayers fork over money to pay for these overpriced boondoggls, and for the vast infrastructure of city government to manage all of the bizzy-ness. Nothing good comes form it, it is almost all malinvestmnet and misallocation.
Take a look at this bridge being built across Lake Washington in Seattle. Way over priced to begin with, engineering screw ups have added massive costs (more bonds to write... ka-ching!) and guess where it is going? Yes, toward Seattle, and they tore down a museum for a place for the bridge to land... but no one knows where the ten lanes will go next. Not the legislature, not the engineers, not the taxpayers, nobody. And if you look at some places, there really is not place for it to go. It gets better! There is no money to have it go anywhere. We also have a multibillion dollar tunnel stuck in the mud.
http://www.wsdot.wa.gov/Projects/SR520Bridge/financing.htm
Now Mish comes with an article on Chicago financing, and let me trim one sail:
Tax increases, when passed to save a bad budget, always backfire. House prices in Chicago will fall, valuations will fall, tax revenue as a percent will drop, and it will be a downward spiral. Lower property values, lower tax take, unfunded pension liabilities greater, situation worsens.
If you own a house in Chicago (or Seattle soon enough) you'll owe higher taxes on a house worth less, and soon underwater mortgage wise. 2008 was just a warm-up for what is next.
There is a huge, untapped free market, and so relax and get used to losing "everything you worked for" over the last whatever years. If you indeed lose it in capitalism, you'll be happier resuming your work in the free market.
Capitalism is based on the usury bond, it is inherently destructive, and is now in its death throes. It has a long ways to go, but never too soon to move over to what is more natural.
Feel free to forward this by email to three of your friends.
Take a look at this bridge being built across Lake Washington in Seattle. Way over priced to begin with, engineering screw ups have added massive costs (more bonds to write... ka-ching!) and guess where it is going? Yes, toward Seattle, and they tore down a museum for a place for the bridge to land... but no one knows where the ten lanes will go next. Not the legislature, not the engineers, not the taxpayers, nobody. And if you look at some places, there really is not place for it to go. It gets better! There is no money to have it go anywhere. We also have a multibillion dollar tunnel stuck in the mud.
http://www.wsdot.wa.gov/Projects/SR520Bridge/financing.htm
Now Mish comes with an article on Chicago financing, and let me trim one sail:
The payments would compete with $28.3 billion of city and overlapping debt and billions of dollars of escalating pension contributions for funding. Basically, if you are in Chicago, your property is about to become more expensive....
"It is not a balance sheet test, but a cash flow test. Municipality has to be in a position where it cannot make near-term payments on obligations as they come due (like within six months). This is one of several eligibility criteria. So Chicago is not bankrupt by definition (yet) and has a huge tax base. The biggest risk to residents (now) is that they are in for an absolutely massive property tax hike to pay for debt and pensions," says Culpepper.Tax hikes will not make property more expensive, quite the opposite, it will lower property values since bidders will take into account the total cost of ownership, including taxes, when offering to buy a house. Chicago taxes will not be secret, and home buyers, and indeed their bankers, will not allow themselves to pay more than they can afford overall, especially when credit continues to dry up.
Tax increases, when passed to save a bad budget, always backfire. House prices in Chicago will fall, valuations will fall, tax revenue as a percent will drop, and it will be a downward spiral. Lower property values, lower tax take, unfunded pension liabilities greater, situation worsens.
If you own a house in Chicago (or Seattle soon enough) you'll owe higher taxes on a house worth less, and soon underwater mortgage wise. 2008 was just a warm-up for what is next.
There is a huge, untapped free market, and so relax and get used to losing "everything you worked for" over the last whatever years. If you indeed lose it in capitalism, you'll be happier resuming your work in the free market.
Capitalism is based on the usury bond, it is inherently destructive, and is now in its death throes. It has a long ways to go, but never too soon to move over to what is more natural.
Feel free to forward this by email to three of your friends.
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