Trading Parking "Birthright" for a Mess of Pottage?

Chicago & Privatized Parking

In an effort to streamline unethical practices and boost illegal profiteering, Mayor Richard M. Daley announced sweeping new plans Monday to overhaul his city's "antiquated" system of graft.

According to Daley, Chicago's once-great fraudulent institutions have grown obsolete, and City Hall is no longer bilking taxpayers out of as much money as it once did.

"It's been business as usual for too long in Chicago, and now it's time to find more efficient ways to misuse authority for personal gain," said Daley, who has served as Chicago's mayor since 1989. "We must modernize our illegitimate activities right now, today, before it becomes impossible for public officials to act in my best self-interests."

--"City 0f Chicago to Modernize Outdated Graft Programs"; The Onion (3/27/2010)

So, a financially strapped government facing a yawning budget deficit enters into a deal -- brokered by Wall Street -- to sell its rights to a steady stream of cash payments in perpetuity for a one-time, lump sum payment.

Greece, right?

Try, the City of Chicago and its parking system.

Since striking the extremely unpopular deal last year, Mayor Richard Daley has been castigated for selling the rights to the parking system for a relative pittance.

Exacerbating matters: the private corporation now in charge immediately raised parking rates city-wide, and extended metered hours (they now include Sundays, till 9 p.m.!).

Except instead of parking meters -- which were all removed -- there are now kiosks in the middle of each block (pictured above) that dispense stickers with timed expiration dates.

What's the significance of that?

With no more marked parking spaces, you can squeeze in more cars. And it does away with driver #2 inheriting any "unused time" left on driver #1's meter.

Good thing Minneapolis is running a budget surplus, and won't be tempted by such short-term gimmicks!

Saving States & Countries vs. Investment Banks

Discretionary vs. Non-Discretionary Bailouts

Watching the latest round of debt problems emerge -- this time involving sovereign states like Greece -- reminds me of my not-so-happy experience as a "newbie" landlord a few years ago (turned off by the experience, I quickly sold the property).

Immediately after taking title, my (long-term, holdover) renter started presenting me with a long list of not-so-dire problems: a squeaky shower door one week, worn (but still decent) carpeting the next, etc.

Interested in keeping her happy, I erred on the side of being accommodating. Too accommodating.

No sooner were the "discretionary" items addressed, than the real, non-discretionary items showed up: a major plumbing issue that was brewing, an expensive HVAC problem that the former owner had thoughtfully deferred, etc.

It could just have been my imagination, but I quickly discerned a strategy: my renter "led" with the discretionary items, because she knew my patience (and money) would be depleted by the "big ticket" items if those were addressed first.

Cue Greece

What's all that got to do with Greece, and broke U.S. states (like California and New York)?

In the big scheme of things, "recapitalizing" (translation: showering with money) then-teetering banks like Goldman Sachs and J.P. Morgan Chase was akin to fixing a squeaky shower door: a nice thing to do -- for them -- but certainly not required for the long-term health of the world financial system.

As numerous financial experts have opined, there were many, less expensive alternatives to shoring up the financial system, starting with actually focusing on saving the system, rather than individual entities. A system which, trillions later, arguably still needs fixing.

Of course, now that trillions have been committed (borrowed, really) toward making Wall Street whole -- surprise, surprise! -- the truly systemic threats to the global financial system have come into plain(er) view.

Those include the plight of sovereigns like Greece, and over-a-barrel states like California and New York -- entities whose duress, incredibly, have been exacerbated by shady credit instruments created by guess who?

Maybe we tell the latest busted entities -- truthfully -- that Wall Street already got their bailout money.

Call it the "I gave at the office" excuse.

Financial "Miranda Warning" for Goldman Sachs Clients?

Oops, They Did it Again!

If we're not going to shut down rogue investment banks like Goldman Sachs, or break them up into smaller, less economy-threatening pieces, how about at least requiring that they give their clients (hard to believe they still have any) the equivalent of a financial "Miranda warning."

Something like this perhaps:

You have the right not to borrow or otherwise do business with us. However, if you do, everything we learn about your financial condition can and will be used against you, by us or our affiliates, to maximize our profit. Oh . . . and the financial products we sell you . . . may be dangerous to your financial health (and everyone else's!)

In the unfolding saga of Greece's sovereign debt mess, consider -- once again -- who seems to be at the dirty little epicenter (and apparently, cashing in again):

Goldman Sachs and J.P. Morgan, and perhaps others, sold financial instruments to Greece that were designed to artificially depress its borrowing and budget deficits.
Goldman and Morgan declined to comment. Greece says what it did was legal at the time.

Now Greece is under attack in the markets, and the major countries in the euro zone are trying to force it to clean up its act and to keep it from defaulting. There is little agreement on how to do that. Traders who bet against Greece — by shorting Greek bonds while buying German ones, for example — have made a lot of money as the market realized just how much trouble Greece was in.

The European Union is now asking Greece for details of what it did. But it should go further. It should seek to find out if the banks that helped Greece lie — and thus knew its numbers were false — made money betting against it. If so, do those banks deserve to keep those profits?

--Floyd Norris, "Helping Governments Deceive"; The New York Times (2/16/2010)

One more time, louder and all together:

A-r-r-g-h-h!

"Perfectly Legal": AIG Redux

Goldman Sachs & the 4 Not-So-Little PIIG's

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal.

--"Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis"; The New York Times(2/14/2010)

We all know the basic story line by now.

Some systemically-important entity is left, hemorrhaging and in financial shock, on the side of the road, the victim of (yet another) financial hit-and-run.

Yesterday, it was AIG; now, it's Greece.

Tomorrow, it will be one or more of the other "PIIGS" (Portugal, Italy, Ireland, Spain).

The license plate of the well-appointed, luxury car just disappearing over the crest clearly reads "Goldman Sachs." The forensic evidence at the crime scene (make that "non-crime scene") further implicates it.

Yet when the cops pull over the speeding, inexplicably damaged vehicle, the driver explains, quite calmly and rationally, that "no laws were broken."

And the cops -- and the rest of us -- are left scratching our collective heads.

(Actually, that last part about the financial cops is wishful thinking -- it turns out that they work for Goldman Sachs, used to . . . or want to).

"Non-Crime Scene"

As always, Goldman Sachs' defense is a bit more subtle and multi-layered (see the "It's Not My Dog Defense.")

Appearances notwithstanding, Goldman Sachs was actually speeding to get help.

Oh, and the injured pedestrian was carelessly walking in the road.

Or they suddenly ran in front of the car, deer-like, and there wasn't time to stop.

Because, after all, driving conditions were terrible.

Which brings up the possibility (likelihood?) that other cars may have been involved.

Which doesn't really matter, anyways, because the patient, now lying near death, was already suffering from terminal cancer.

And even that doesn't matter, because Goldman Sachs had Greek law changed to make committing financial hit-and-run . . . perfectly legal (Oops! That would be U.S. law).

And so on.

A-r-g-g-h-h!! Enough already!!

Chapter 2: Different this Time?

What's different this time is that apparently it's up to ordinary Germans to decide whether to front Greece the money it foolishly promised to re-pay its Wall Street loan sharks, led by Goldman Sachs.

Of course, when the prey was AIG, Goldman Sachs merely had to pick up the phone (walk down the hall?) to make sure that it's predatory bets were made good by the U.S. government (and the taxpayers standing behind it).

But what sway does Goldman Sachs have over 80 million German taxpayers?

Perhaps more to the point, what leverage does Goldman Sachs have over the German government?

Here's a guess: its best instrument and lever is none other than the very same, bought-and-sold U.S. government that delivered Goldman Sachs -- rather amply -- from the fallout resulting from its disastrous AIG hit-and-run.

How much more of this does anyone possibly need before revoking Goldman Sachs' driver's license, for good??

How and whether to save the PIIG's remains to be seen.

This time, however, the entity that should be presented with the clean-up bill -- whether it's for the funeral or the hospital -- is Goldman Sachs.