A.J. DiCintio
February 17, 2013
Bonds that eat our children's lives
By A.J. DiCintio

When considering how to satirize England's policies that for centuries condemned most of Ireland's people to abject poverty, Jonathan Swift could think of no better vehicle than a plan by which the well-off solve the problem of the poor (as well as grace their tables with "delicious, nourishing, and wholesome food") by paying Irish mothers to fatten their children for slaughter.

Swift's brilliant satirical device, however, need not be limited to attacking the evils of imperialism; for it may properly be aimed at every nation whose moral decline impels it to feed its vast, insatiable, destructive selfishness by eating the lives of its children.

Having succumbed to a binge of spending and promises unprecedented in its history while kicking responsibility for paying the piper down the road not just to its living children but those not yet born, the United States is now guilty of such monstrous depravity.

Just how madly monstrous the depravity has become is revealed when we consider that a nation already up to its federal and state noses in unsustainable debt and mathematically impossible promises has felt compelled to invent the governmental debt instrument called the capital appreciation bond.

Put simply, a capital appreciation bond is like any other municipal or school bond, except that its entire cost is pushed decades ahead, thereby not just selfishly burdening future generations but placing on their backs repayment amounts astonishingly greater than those required by a conventional bond.

To understand how a financial stratagem that could have been conceived and concocted only in hell eats the lives of children whose future financial situation is impossible to know, we can turn to information reported by Ian Lovett (NYT) regarding the $35 million capital appreciation bonds issued by California's Santa Ana Unified School District in 2009.

Specifically, Lovett informs us of this stunning fact:

"Not a cent [in repayment] is owed until 2026. But taxpayers will eventually have to pay $340 million to retire that $35 million debt."

In another example of the perversion, Lovett reports that California's Poway Unified School District "borrowed $105 million. . .which local property owners will be paying off until four decades from now at an eventual cost of nearly $1 billion."

To put those moral and fiscal atrocities into perspective, let's consider that a home buyer who takes a 30 year, 3.5% mortgage will repay 1.6 times the amount borrowed, with the ratio rising to 1.8 if the interest rate is 4.5%, and 2.2 if 6%.

Aware of that reality, we immediately perceive the 10-1 ratio the school districts laid on future generations as an act so vilely pathological in its selfishness its equivalent would have sent the farmers of Lexington and Concord running for their muskets at speeds that leave our modern Olympians in the dust.

Moreover, reports Lovett, those two issuers far from stand alone; for since 2007, "hundreds of school districts and community colleges across California have used capital appreciation bonds to raise nearly $7 billion for various construction projects. . ."

The stink of this civic rottenness is mightily exacerbated by the fact that rapacious hyenas within the financial industry are earning millions in fees, commissions, and interest payments as they rip and tear at the lives of children.

And just when we think the stench can't get any worse, we learn that because bond issues are subject to voter approval in California, those hyenas, together with their brethren from the legal, architectural, and other industries that stand to benefit from the bond sales, never miss an opportunity to contribute to political action groups that urge an ill-served, thoroughly duped public to vote "YES!"

We shouldn't, however, deem the capital appreciation bond exclusively a California problem; for it is widespread, as revealed by data (californiawatch.org) showing that since 2007 the corrupt scheme has been used by school districts and government agencies in 27 states and Puerto Rico, with Texas home to the greatest number of issuers (590), the Golden State second (404), and Ohio third (202).

In closing, it is essential for the American public to engage the battle to put an end to an outrage that eats our children's lives, all the while being aware the fight is really against the frightful, formidable devils who represent humanity's greatest scourge – politicians consumed by the love of power and money.

© A.J. DiCintio

 

The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)

Click to enlarge

A.J. DiCintio

A.J. DiCintio posts regularly at RenewAmerica and YourNews.com. He first exercised his polemical skills arguing with friends on the street corners of the working class neighborhood where he grew up. Retired from teaching, he now applies those skills, somewhat honed and polished by experience, to social/political affairs.

Subscribe

Receive future articles by A.J. DiCintio: Click here

Latest articles