Wednesday, July 18, 2012

Send all Compton Mail c/o Chapter 9 City, CA, USA,

I remember one of the best business teachers I ever had was a man who taught at the Community College in Steamboat Springs, CO I went to for a year. He was better than most if not all the business teachers who taught me at the 30 grand a year college in SoCal from which I graduated. Perhaps that's because California has a tendency to overspend for worthless things that look valuable. Or perhaps it's because the ski bum culture of Steamboat attracted people with a little more of an eye on community? Either way, the man described his business consultancy as something to pay for his teaching addiction. A smart guy, he told us once that if our government ever defaults on treasury bonds, the loss of money bond-holders would experience would be the least of their problems - the collapse of our national treasury would be much, MUCH worse.

Along those lines, we're currently treading through tough times. European countries, trading partners all of them, are running the very real risk of defaulting on bonds and have even convinced a few bond-holders to forgive those bond debts as the countries try to pull themselves back from the precipice. In America our government, while in quite a bit of debt, is comparatively okay. Our Treasury bonds are low as shit because, in fact, they're seemingly the only bonds we can believe in, that for the low, low benefit of about 1% gains you can lend the US Government money. This of course is to spur borrowing from the government as the government lends out this money to banks to borrow and they need to make at least a little profit but and so it all comes down to the fact that things aren't as bad as they seem. That is, compared to the rest of the world (Chinese growth is stalling, Brazil's falling backwards and Europe, I mean that's just a disaster) our Federal government's fiscally okay.

So on a macro scale we're okay. Comparatively. It's when you start looking at the micro - individual to business to city to county - that you begin to see how our country's rotting from the inside.

It's a basic tenet of laissez faire economics that companies and people take care of themselves. Along those same lines so too do states - why, for example, we're called the United States of America. Traditionally and in the rest of the world a "state" is an individual country. Only in America do we use the term "State" to denote provinces. And that's because part and parcel with the preachings of a free-market and with our bold experiment with Democracy is the idea that centralized power is bad. Or rather, that the head should be no more powerful than the sum of its parts. It's why we have Congress and the Senate, and why individual states deal with their own financial problems. It's why we pay state taxes AND national taxes. And in theory it's sound. But in the last 5 years if we've proven anything, it's that for some reason nobody seems to be able to be responsible for him or herself and that lack of ability extends from the personal level up. Put another way, it's a joke that it's the American way to over-extend ourselves, up to our ears in debt but with all the foreclosures and personal and corporate Chapter 11 filings over the last few years, fewer and fewer people are laughing. Well now that trickle-up is finally gaining momentum. Like a black hole that grows as it swallows more and more, the main street that Tea Partiers are claiming needs no help is crumbling and is now big enough to swallow cities whole. Enter the Chapter 9 epidemic.

The biggest such example is of course Jefferson County, AL who went bankrupt after JP Morgan sold them on massive financing for "the Taj Mahal" of sewage systems which, when the economy tanked, raised taxes beyond what anybody could afford - essentially, JP Morgan ran a county into the ground. You can say it was fair, they asked for it but let's be serious, do you really think the people running a county in Alabama could go toe to toe with, much less understand the wide-reaching ramifications of Wall Street money with all its hedges and derivative swaps in place to guarantee that the lender makes money hand over fist?

And there have been plenty of city and county bankruptcies but in California it's a goddamn disease. Compton just filed for bankruptcy. Yes, THAT city of Compton. If there's any better example of how little concern the establishment has for the poor, just look at this situation - a mixture of unemployment and lack of social programs to educate people in one of the most notorious American ghettoes. Add to that the fact that they had to hire LA County sheriffs because their own couldn't police the heavy gang wars and you have a recipe for disaster and the city's own corrupt, lazy officials with bloated salaries and it's a goddamn tragedy.

Immediately you might have people screaming out "communist!" Lecturing me that these people should be responsible for themselves and I have to agree with you. There are programs out there to educate Americans and in spite of the fire and brimstone echoing across the land the fact remains that job loss has slowed and slowly given way to job gain ever since Obama became president. So surely these bastards should be able to find a job. And on the other hand there's a much bigger issue here, one about the culture prevalent in America's big ghettoes, which WIRE showrunner David Simon described as "Cysts" based on his extensive experience in the ghettoes of Baltimore. This issue is a deep-seeded cultural socioeconomic thing that will take a lot of time and money which, admittedly, just isn't really available in America right now. Especially the way things stand. Which brings us back to the status quo - everybody just going out to do things the best way they can, trying to work hard and gain the level of success and status we desire for ourselves limited only by our minds, work ethics, and what we're willing to do. But what we don't realize is that this problem isn't just affecting a ghetto most Americans have all but written off already anyway. In fact Compton is the 4th charter city to file for Chapter 9, joining the ranks of San Bernardino, Mammoth Lakes, and Stockton. These are all charter cities - essentially cities who run themselves independently of larger governing parties, true American independence in action. In fact, of the 80 charter cities in California - wait, let's limit this, out of the 25 LA County alone, 20 are in the red for the year. It's a combination of fallen taxes from wage-earners to high expenses for city employees - especially for those fatty police and fireman pensions.
LA County Grand Jury report chart

In the case of Mammoth Lakes, a resort town for rich Californians from San Diego to San Fran, their bankruptcy is due to legislation from a land developer. The developer had entered into a deal with the city to build a complex around the town's small airport as long as the town made improvements on the airport. The FAA refused to let the city make the improvements so the soulless bastards, Mammoth Lakes Land Acquisition, sued the city for breach of contract to the tune of $43M (the city makes about $17M annually). When Mammoth Lakes tried to enter mediation the developers refused. That'll mean no more free shuttle through the whimsical ski town. No more sheriff maybe (look out for the townies and the Grenerds, taking over the town with a ravenous thirst for gaper blood). No more tourist-gathering festivities, nothing like that. But in the developers' defense, they're saying they said the city could spread it out over 30 years, they've made offers. But it must be noted that, following one of the worst snow seasons in recent history, the city has to be hurting. And bastards like this who are suing not to refund their costs but because of a breach of contract that was essentially out of the city's hands - they can't get around the ever-powerful FAA - they just seem like scumsucking bastards springing a trap and refusing to work with this city to prevent them from going down.

So what's the point? The point is that this isn't how people are supposed to be. Everybody suing each other, throwing others aside - and the cities, shame on you for spending more than you make. Or for not passing higher taxes for the services your citizens obviously need. Or for simply not squaring your fucking books and being downright corrupt (Vernon, I'm looking at you). But seriously, we're all in this together. Supposedly we've evolved past slavery, past inhumane conditions and subjugated classes beneath gilded robber barons. If we keep picking each other apart eventually this great experiment we call American Democracy will crumble, that I can guarantee.

I believe in cutting government costs. And thing is, in a lot of cases they're not going broke because of their social programs. In some cases it's because of blunders but if we learned anything from Enron and Lehman Brothers (not to mention Goldman Sachs, JP Morgan, BofA, Countrywide, who were bailed out or purchased back from the brink) it's that even the best and the brightest make mistakes - theirs just cost everybody else much more and yet somehow they stayed afloat. But no, a big reason for this is because people are living longer; it's because the pensions we've promised to firefighters and cops for risking their lives for us, not to mention all the politicians who keep our trash and sewers running and our streets in somewhat clean order, are ballooning as more survive later into life and as pension funds shrink from bad investments (see: Mortgage Backed Securities). And as such we're overpaying for people who used to work for us while still having to pay for the people who protect and serve us now. What do we do with that? Red or blue, ass or elephant, there's one thing we all agree on - a certain level of respect and worship of the cops and firefighters. Police corruption, racial profiling, we keep those people on salary, give them partial pension and maybe we need to be that much harder on police infractions - demanding dismissal without pension when bad cops get paid leave. Cut in half those asshole cops who patrol rich cities with nothing to do but harass citizens driving after a certain hour (Laguna Beach PD, I'm looking at you - fuck you, I was dead sober and you looked pretty pissed about that). We pay meter maids for a service which doesn't make much fiscal sense. There's a lot of overhead spent on authorities in areas that don't need them - except to keep the criminal element from entering the neighborhoods. Which brings me to the main point here.

We try to pretend that we can live independent of each other. That the social experiment is working, that we can ignore the plight of cities falling into bankruptcy but that's a fallacy. Because as cities fall into bankruptcy, so too eventually fall counties. Counties to states and if this keeps up, imagine what an impact a bankrupt California would have on our fucking national economy.

Even more, if we turn away from these struggling burgs, if we continue to look to the private sector to solve our problems and thereby cut government spending we actually end up deeper in debt (look at Mammoth's lawsuit with the private developer and think about how many of the most successful cities in the country were built not by private builders but by public infrastructure projects - just look into the connection between the WPA and Manhattan. Even more, look at those terms - the city had no right signing a contract with a penalty they couldn't possibly pay but they probably just saw all the dollar signs from the developer). On the other hand, look at the company - Mammoth Lakes Land Acquisition isn't even based out of Mammoth Lakes but rather in Santa Monica (which, I must add, is also in the red). So if you turn to the private sector, turn to the private sector within your own fucking boundaries and stop outsourcing like a jackass - to a certain extent, it serves the city right for agreeing with these outside bastards. Demand your city do that.

But basically, as cities fall we're faced with raising taxes or dropping costs. Look at the line accounting, it's not social services that are killing the budgets, it's bloated police forces, pensions gutted in the Wall Street shitstorm, and unemployed citizens. And as labor is shipped overseas by large companies we're left with job opportunities only for the educated which kills the taxes from the poor or lower middle class the Right touts so much - so that makes it a responsibility to educate these people so they can contribute to our new management/executive society. Which isn't possible when they're cutting school and social funding. And so on.

You can say "Tough". We all have shit to deal with. Some of us are working hard and dealing with it. For some of us, our parents dealt with it, or our grandparents, and we have a level of God-given privilege they fought for and as such we are entitled to. But some of us are struggling to do the best with the meager shit God gave us, the great cosmic crap shoot. And in this day and age, with employer loyalty and employee skill development programs at all time lows, that's harder and harder to do. And as these cities collapse we're left with a frightening specter on the horizon - Tijuana.

Ever been to Tijuana? There are some nice houses. They have massive steel gates, patrolled by heavy security, and the wealthy only get by with regular bribes to authorities and druglords. And with such precautions, and as long as you don't venture out into the streets too often, you don't have to worry about the plight of those less fortunate and so on. Just don't look beyond the gates. Live like a prisoner within your own city.

It starts with you. Take it upon yourself to look at your city's finances - they're all posted, all publicly available. If they're not spending responsibly, say something. If you don't agree with their expenditures - whether it IS social services or most likely bloated bureaucracy fees - tell those fuckers. And especially if they're in or could soon be in trouble - and Vernon, Lancaster, Cerritos, Signal Hill, Whittier, Industry, Inglewood, Pasadena, Glendale, Torrance, Palmdale, Pomona, Redondo Beach, Downey, Irwindale, Alhambra, Culver City, Santa Monica, Arcadia, I'm looking at you - go to a city council meeting. Especially if you're an accountant. Because the way things are going, if more and more cities declare chapter 9, we'll have something much worse than poor people in our streets. If a city goes bankrupt, look to drive down potholed roads with crime and fires on both sides, poor people looting because it's damn easy when you can't pay cops to protect Main Street. And maybe just don't whine when your city taxes and fees go up a few percentage points. Because a bankrupt city is the beginning of dystopia.

- Ryan

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