Sunday, January 25, 2009


Will Wall Street buy the bonds to pay for Hawaii’s road improvements? Goldman Sachs must think this is hilarious.

by Larry Geller

When I saw that the state’s proposed road improvements (Advertiser, $4B highways plan would set drivers back $170 a year, 1/23/2009) are to cost each of us $170 per year, I thought, “why now?” In the middle of a severe economic recession, even those who still have jobs are scared for the future. If the state says $170, you can bet they’re low-balling it. $4 billion? They’ve got to be kidding.

The idea, dear state, is that the feds are supposed to give you incentives. That’s right, the feds, who can print money, not we taxpayers, who cannot. Not us. We can’t fund your massive construction bailout. We don’t have the money. Why didn’t they think of this when the state had a surplus? The Lingle administration is cutting essential social services, and now we are to pay for roadwork?

Check again the disappeared news in an earlier article, Merry Christmas Hawaii but no Happy New Year—Wall Street is betting against us with “credit-default swaps," in which I described how Wall-Street firms are talking down Hawaii and ten other states in order to assure their derivatives, called “credit-default swaps,” will pay off,

Goldman’s strategy of shorting municipal bonds of fiscally depressed states could ultimately result in even more problems for taxpayers. Concerns about a state’s credit quality often means bond prices go down. In turn, that can drive up the interest rate states and municipalities must pay to borrow money. And it all affects taxpayers. An increase of one percentage point on a $1 billion bond issue translates into a cost to taxpayers of an additional $10 million a year in interest. [Maddox Hargett & Caruso website, Goldman Sachs Profiting From Financial Problems Of Some States, 12/10/2008]

Yes, they consider us to be a “fiscally depressed state” and are betting on the failure of our economy.

Unless something has changed in the couple of weeks since that story broke, they are just waiting for us to run into trouble and fall flat on our fiscal face.

Maybe the road improvement extravaganza is our last move before checkmate.


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