February 15, 2013
When considering how to satirize England's policies that for centuries condemned the great majority of Ireland's people to abject poverty, Jonathan Swift could think of no better vehicle than the plan of having the well-off solve the problem of poverty (as well as grace their tables with a "most delicious, nourishing, and wholesome food") by paying Irish mothers to fatten their children for slaughter.
This perfectly revolting act of cannibalism, however, need not be limited to attacking the evils of imperialism; for used metaphorically, it may 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 spending and promises binge unprecedented in its history while kicking responsibility for it down the road not just to its children but those not yet born, the once upright United States is now guilty of such monstrous depravity.
And monstrous depravity it certainly is when a nation already up to its federal and state noses in unsustainable debt and mathematically impossible promises feels compelled to invent the abominable 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 burdening future generations with debt the current citizens don't want to pay but placing on their backs repayment amounts astonishingly greater than those required by a conventional bond.
To illustrate how a financial stratagem that could have been conceived and concocted only in hell eats the lives of children whose future financial situation is completely unknown at present, we can first turn to an ordinary home mortgage calculator.
Whatever number we enter at 3.5% for 30 years, we find that the repayment amount is 1.62 times the sum borrowed, with the factor rising to 1.82 at 4.5%, 2.2 at 6%.
With that information in mind, we can consider the following, reported by Ian Lovett (NYT) about the $35 million in capital appreciation bonds issued by California's Santa Ana Unified School District in 2009.
"Not a cent is owed until 2026. But taxpayers will eventually have to pay $340 million to retire that $35 million debt."
Lovett also 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."
In both cases, the 10-1 ratio of repayment to amount borrowed represents an act of perversion so horrid in its shamelessness it dwarfs into near nothingness the three penny tax that sent the farmers of Lexington and Concord running for their muskets.
Moreover, reports Lovett, those two districts are not unique; 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 rottenness is mightily exacerbated by the fact that hyenas within the financial industry are earning millions in fees, commissions, and interest payments as they rip and tear at the lives of innocent children with rapacious amorality.
And just when we think the stench can't get any worse, we learn from a variety of sources, including californiawatch.org, that because bond issues must be approved at the ballot box in California, those hyenas join their brethren from the legal, architectural, construction, and other industries that stand to benefit from bond money in contributing to political committees urging an ill-served, thoroughly duped public to vote "YES!"
California Watch also performs the invaluable public service of informing us that "Since 2007, school districts and other government agencies in at least 27 states and Puerto Rico have financed projects with capital appreciation bonds," with Texas home to the greatest number of issuers (590), the ironically nicknamed Golden State second (404), and Ohio third (202).
Having insinuated itself into a number of states, the capital appreciation bond requires yet another battle to be fought by citizens who believe along with Ben Franklin that when a people become "corrupted," they will "need despotic Government."
However, as we fight, we must never fail to admit that a fearsome problem inevitably arises whenever we use Swift's "Modest Proposal" to attack every moral outrage that eats our children's lives--
Big spending, big borrowing politicians ultimately in love with statism regard the brilliant work as a useless joke.
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