The municipality bailout was a given once Biden won. This should clue people into the other reason for government lockdowns in 2020. The more revenue damage that could be attributed to covid, the better the marketing for a bailout. These are stopgaps meant to shore up finances on the hopes a new boom can fill the rest of the payments gap. There will be no reform of municipal finances until an outside force exerts enough pressure.
Over a decade ago, the privatization craze like the ‘90s Russian looting spree started in blue cities and states. Assets that would generate revenue in perpetuity were auctioned off to private firms to temporarily fix short term budget problems. Mayor Rahm in Chicago happily signed away assets to not feel any pain in the current budget year. His gentrification attempt would take care of the rest. Didn’t work out. Now Chicago and Illinois faces huge problems due to long term liabilities.
There are only so many assets. Assets can also only be auctioned off one time. Usually, the contracts auctioned off last thirty, forty or fifty years. Parking meters go private and suddenly rates go up. The great thing about municipal assets are that they are natural monopolies. To make them open to a private owner, suddenly prices can go up. Where else are people going to park? This kind of looting is more like a predator pushing a mammoth into a tar pit and letting it get stuck to be killed much easier. The banks load the munis with debt, and then buy the assets or finance the company that buys the assets once the muni is in trouble.
This is where the muni bailout comes in. Money goes straight from central federal coffers to the different blue dystopias. It’s why Pelosi wouldn’t agree to a second covid deal with Trump. Just hurt his electoral chances and get what you want when Biden wins. They held the covid stimulus checks hostage to adding it to a muni bailout bill to soften the messaging that the feds bailed out Chicago. Billions are being shoveled to the munis and billions more will come as long as the Democrats hold the trifecta and the FED keeps the printer running. This will keep going until the whole damn thing runs out of money. They are all in it together.
It is not just the munis all in it together. Really it’s that the bondholders and the muni unions are on the same aide politically and neither wants to take a haircut. Bondholders will not take a hit on the safe bonds they’ve been accepting lower yields on long past the date when the game should’ve been up, and the unions are not taking a hit. The courts are already talking about the sanctity of the contract with those union deals. Those contracts matter. Those are SEIU bargaining wins.
Our infrastructure may be crumbling but every pension will be fulfilled.
On to the links…
Frank on Misinfo – Thomas Frank pours cold water on the liberal hysteria about misinformation from the right.
Jordanian Plot – Jordan is a stable ally for America in the Middle East so this is odd. It is also odd timing with the potential deeper dive into Syria since Jordan is where we based troops and trainers for the rebels we supported.
Archegos as a Financial Weapon – This essay spins the Archegos blow up as a possible financial weapon that the Chinese are using. Pure speculation, but it will be something to watch for the future.
Border Kabuki or Real Pivoting – The Biden admin says it will build wall to plug gaps and Mayorkas says they will fight sanctuary cities. This could all be messaging to head off what is a problem and may grow bigger, or it might be a pivot on one issue while the admin goes woke on everything else. I assume empty words until proven otherwise.
Coalition of the Un-Woke – This is a little wishful thinking because elite opinion matters, and they are all in on woke. What is laid out here is the idea of the centrist left to join with the right to stop the woke. This would be like looking at those political mountain distribution graphs and noticing that the right is pretty consolidated and tight while the left is a longer slope with a woke peak. If the left’s centrist normie types can get over the ick factor with the right, the voter coalition will be there. Question remains if the elites will show up to stop the woke before the golden goose is dead.