California Free Press

Off the Top of My Head

San Diego Moving Forward With Solution to Homeless Problem

by John Lawrence

The San Diego Union reported:

"The San Diego City Council voted 5-4 Tuesday [June 13, 2023] to adopt a controversial policy to ban homeless encampments on public property after hearing hours of public testimony.

"The ordinance was supported by Councilmember Stephen Whitburn, who proposed it, and Councilmembers Marni von Wilpert, Jennifer Campbell, Raul Campillo and Joe LaCava.

"Mayor Todd Gloria also supported what they referred to as an unsafe camping ordinance, with he and Whitburn saying it would address a public safety issue while also helping to get homeless people off the street and into a shelter and connected to services."

In approximate tandem with this ordinance is the City's plan to provide safe sleeping and camping areas and also to buy 3 motels and convert them to housing for the homeless. Father Joe also plans to build a high rise with additional rooms. The problem is that these additional housing units and camping areas are not ready yet. So this ordinance and the plan to provide additional shelter units will have to be somewhat compromised until the additional units are available. The opposition to the ordinance seemed to be based mainly on the fact that the additional units are not immediately available. The larger question is do the homeless have an unconditional right to live on public sidewalks which trumps the rights of downtown residents and business owners who also would like to use those sidewalks in a clean and safe manner. The answer in my mind is no they do not have an unconditional right to use the sidewalks as living areas. If I went downtown and set up a stand selling something, anything, I would be arrested if I did not have a license. However, homeless advocates would argue that the homeless have an unlimited right to sleep wherever they please on public sidewalks.

Finally, I think the Mayor and the City Council are taking a serious approach to this problem after farting around for decades. It amounts to government admitting that people have a right to housing - public housing or social housing, whatever you want to call it - something that American governments at all levels have never before been willing to concede. Once the units the City has promised come online, they need to expand that program since the proposed units are unlikely to be a once and for all solution. As rents are continuing to increase, the City has to be in the business of providing the SROs that the free market used to provide and now doesn't. Getting people off the streets and into housing or safe camping and parking areas with proper sanitation and other services accomplishes not only more humane conditions for the homeless. It prevents San Diego from becoming a tourist desert. Also residents and businesses will be moving out if the streets cannot be returned to their safe and proper usages. People living and running businesses downtown should have rights too. This argument that the new City ordinance is criminalizing homelessness is entirely bogus. If shelter beds or other accommodations are available, the homeless should be forced to take advantage of them IMHO. On the other hand,to the extent that these resources are not available, they should be cut some slack. That does not mean an unlimited right to park their tents wherever they please.

I noted the story of the parent pushing a stroller who was almost run over by a car because they could not use the blocked public sidewalk. I had a similar experience on Commercial street when my car was almost run over by the San Diego Trolley. The fact that the City will be providing SRO type rooms and other accommodations for the homeless as well as social services does not mean that that will be permanent housing for the contemporary homeless. The social workers will be attempting to reintegrate if possible currently homeless persons and families back into normal society. That means that they will be trying to find them jobs and get them living accommodations that they can pay for in the mainstream of society. Problem is that rents are so expensive that it will be impossible for many people, even if they have a job, to provide housing for themselves especially in San Diego where housing prices and rents are continuing their upward cost progression. That's why the next step for the City should be to do something about affordable housing. This means that the City needs to counteract the free market with respect to housing so that people who are reintegrated into society can at least function within the parameters of that society. The free market tendency for rents to keep on rising needs to be counteracted by the public sector. The free market will continue to make housing unaffordable which will result in more people becoming homeless. What is happening is that hedge funds are buying up housing units, rehabilitating them to some extent and turning them into rental units if they aren't rental units already thus driving up rents. People who in prior years could afford to buy a home now can't in the current environment. This process is turning more and more would be home owners into renters and renters who are devoting more and more of their income to paying rent.

The only way children of long time San Diego residents can buy homes today is if the parents can convert some of the equity in their homes to a down payment on the child's home so that they end up with a mortgage they can afford which is something I was able to do. I bought into the San Diego real estate market exactly 50 years ago for a house that I paid 3% of the market value of that same house today! There are companies that will make a home equity investment in your house which means that they will loan you money that you can use as a down payment on a child's house if that's the way you decide to use that money. There are no monthly payments. When the contract period - which can be as long as 30 years - is up, the house must be sold or the contract settled in some other way and the home equity investment must be repaid in proportion to the equity increase in value over that time period. Since I will probably not be here in 30 years, my heir, who can also inherit the contract, will sell the property and have to split the profits with the home investment company. Meanwhile, the property she bought with the down payment they provided and with a mortgage she can afford is increasing in equity. It's a pretty good solution, but only available to people who bought into the San Diego market when prices were cheap. The Home Equity Investment is like a reverse mortgage, but there is no age restriction and it can be used in conjunction with a rental property.

Off the Top of My Head

The Problem With Climate and Gun Disasters: They're One Offs

by John Lawrence

Instead of attributing a climate disaster to global warming, victims will say, "I've never seen anything like this, and I've lived here all my life. Gun disaster victims will say, "I didn't think it could ever happen here." If they said instead, when interviewed, "I think guns should be gotten off the streets" or "Climate change destroyed my house and we're not doing enough to deal with it", then maybe there would be a general awareness growing among the population. There is not enough of a groundswell among the public to change anything because most of the public is not affected by any particular incident. If a particular climate or gun disaster raised the price of gas, then maybe something would be done of a preventative measure. The latest gun legislation is a total joke. It will do nothing to prevent mass shootings. One off climate disasters will do nothing to raise the national consciousness especially among conservatives who don't even believe in global warming. Instead they will call a flood a 500 year event, one that will only occur every 500 years. But then it occurs again tomorrow. Floods and fires are an almost daily occurrence somewhere in the world. If they happen outside the country, no attention at all is paid to the event although climate change is a problem for the whole world not just for any particular nation. It is not just restricted to national borders. Gun violence, on the other hand, is just restricted pretty much to the US. Every other country has sane gun laws.

Politicians, especially Republicans, are in it for the money and not necessarily to do any good for the general public which can't pay for lobbyists to bombard them with their point of view backed up with generous campaign contributions. The more a country is run by politicians profiting by virtue of their positions, the less democratic it is because they are representing their own interests which often means catering to the interests of lobbyists and not catering to the interests of the general public, not to mention the interests of nature or the environment. Many politicians, especially the Republican party as it's constituted today, are guided only by self interest in the same way as corporations are required by law to maximize profits for their shareholders singlemindedly without any other considerations like taking into account what is equitable ao far as society is concerned. The only way to defeat this pernicious aspect of democracy is to take the money out of politics and provide incentives in such a way that a politician finds it in his best interests to represent the interests of his or her constituents and not the interests of the entity which is lobbying him or her. Perhaps an advocate for the people should be paid for out of tax money.

Obviously, it's not in the interests of the victims of gum violence to have the proliferation of guns especially assault rifles on the streets. However, since those that have not been affected by gun violence don't see it as a problem, nothing major is being done. As far as they're concerned, it's a problem that only happens to other people. Unless they identify strongly with the victims of gun violence or start to think that it is something that very likely might happen to them, nothing will be done since it only affects a minority of people and democracies supposedly are run by the majority of the people. Since empathy is a relatively weak emotion compared to self-interest, especially in the US where people have been groomed to seek their self-interest regardless of the effect it has on others, seriously restricting the use and proliferation of guns goes out the window.

What is happening to the human race as a result of climate change is happening at such a slow pace that most people would rather maximize their profits now rather than setting aside some of them because they might benefit people in the future when they might not even be an inhabitant of the planet at that time. Again the manifestation of climate change so far has been one offs only affecting a small group in any one incidence of a natural disaster. When climate change gets to the point where sea level rise is affecting a large number of major cities in the world simultaneously, then something might be done only it will be too late. At that point the only thing will be to react defensively rather than having taken action in the past that would have forestalled the present event. People would rather eat their cake right now rather than saving it for the future when they might not even be around to eat it.

Off the Top of My Head

Sea Levels to Rise by 200 Feet if Poles Melt

by John Lawrence

Based on 410 ppm which is the concentration of carbon dioxide right now in the atmosphere, the ice on the poles will go completely away albeit at a glacial pace. Concentrations of carbon dioxide have varied between 100 ppm and 300 ppm for hundreds of millions of years, and earth has gone through hot periods in which there was no polar ice and at least one period where the entire earth was encased in ice. Reliable predictions by scientists show that 410 ppm will guarantee the disappearance of ice from the poles and a 200 foot sea level rise which will wipe out most of the east coast including a total disappearance of the state of Florida. The concentration of carbon dioxide in the atmosphere is continuing to increase. It will continue to increase way above the current 410 ppm. Humans are still pouring billions of tons of carbon dioxide into the atmosphere year after year. There has been no diminution of this trend. In fact it is accelerating. The world emits about 43 billion tons of CO2 a year. So already there is enough carbon dioxide in the atmosphere to guarantee that the poles will melt, and the earth will become very hot. And we're still making it worse year after year.

As the oceans warm and the polar ice melts, we are seeing more extreme weather events due to increased water evaporation from the oceans. That increased amount of water in the atmosphere is released in the form of torrential downpours which cause flooding and weather events such as hurricanes. Higher temperatures are also causing droughts and forest fires. Although these events are tragedies for those directly affected, geological history has shown that life can adapt. One of the first major catastrophes the human race will be faced with is the loss of major cities situated close to oceans such as New York, London, Tokyo, Shanghai, Miami and New Orleans. However, humans can adapt to this by just moving further back from the shore lines as sea levels rise wiping out most low lying areas. Of course this will increase anti-immigrant sentiment due to the the number or refugees in the world as humans crowd onto remaining habitable areas. At this stage we will still be better off than Venus which has a runaway greenhouse gas effect and a surface air temperature of 800 degrees F. Its atmosphere is mostly carbon dioxide.

The lesson here is that it is to the advantage of the human race to stop putting carbon dioxide into the atmosphere as quickly as possible. This means major changes to our civilization which human beings are reluctant to make especially in democracies which are governed by the will of the people. While most will give lip service to preserving the planet for future generations, in fact they don't want to do anything that will change their lifestyles or inconvenience themselves in any way. Only when war and pestilence force humans to diminish their numbers on the planet will the human footprint get down to a certain size which, along with the adoption of renewable energy systems, will allow the planet to sustain enough habitable land mass for the furtherance of human life at least for some people. How fast we proceed with changing the human ecosystem in terms of greenhouse gas reduction will determine what kind of a planet future generations will be forced to live on. At the very least it will resemble a hot house earth, similar to conditions which existed millennia ago in which the polar regions were tropical swamps.

Off the Top of My Head

Antarctic Melting Will Inundate Coastal Cities Even If Limits Set by Paris Accords Are Met

by John Lawrence, September 26, 2020

More than half of Earth’s freshwater resources are held by the Antarctic Ice Sheet, which thus represents by far the largest potential source for global sea-level rise as the Earth experiences global warming. If the goals of the Paris Accords are met and the average Earth temperature rises by not more than 2 degrees C, sea levels will still rise by 8 feet. This melting of the Antarctic ice sheet is also probably irreversible due to conditions at the South Pole. “The more we learn about Antarctica, the direr the predictions become,” said Anders Levermann,  a researcher from the Potsdam Institute for Climate Impact Research. “We get enormous sea level rise [from Antarctic melting] even if we keep to the Paris agreement, and catastrophic amounts if we don’t.”

Jonathan Bamber, a professor of glaciology at the University of Bristol said: “This study provides compelling evidence that even moderate climate warming has incredibly serious consequences for humanity, and those consequences grow exponentially as the temperature rises. The committed sea level rise from Antarctica even at 2C represents an existential threat to entire nation states. We’re looking at removing nations from a map of the world because they no longer exist.”

Part of Antarctica's ice sheet is also unstable due to the fact that it is grounded on a bed that lies below sea level. This allows warmer ocean currents to get in under it. According to the Guardian:

The warming of the Southern Ocean is resulting in glaciers sliding into the sea increasingly rapidly, with ice now being lost five times faster than in the 1990s. The West Antarctic ice sheet was stable in 1992 but up to a quarter of its expanse is now thinning. More than 100 metres of ice thickness has been lost in the worst-hit places.

A complete loss of the West Antarctic ice sheet would drive global sea levels up by about five metres, drowning coastal cities around the world. The current losses are doubling every decade, the scientists said, and sea level rise are now running at the extreme end of projections made just a few years ago.

The warming ocean is causing melting from below while warming air is reducing ice sheets from above. The weight of the ice sheet is the only thing preventing it from slipping off the bedrock on which it sits. As this weight gets lighter and lighter, a huge amount of fresh water glacier will slip off its bedrock and into the ocean where it will melt and cause the rise in sea levels. As most human civilization is located fairly close to coast lines, coastal cities will have to relocate further inland. Cities such as Tokyo, Mumbai, Shanghai, Rio de Janeiro, New York, New Orleans and Miami are most at risk in the immediate future.

Safe City Study From WalletHub

With fears of falling victim to cybercrime and mass shootings topping the list of crime worries among Americans, according to the most recent Gallup polls, the personal-finance website WalletHub took an in-depth look at 2017's Safest Cities in America. To determine where Americans can feel most protected against life’s hazards, including nonphysical forms of danger, WalletHub’s analysts compared more than 180 U.S. cities across 35 key metrics. The data set ranges from assaults per capita to unemployment rate to road quality.   Safest Cities in America   Least Safe Cities in America 1 Nashua, NH   173 Jackson, MS   2 South Burlington, VT   174 Baton Rouge, LA   3 Warwick, RI   175 Chattanooga, TN   4 Columbia, MD   176 Orlando, FL   5 Gilbert, AZ   177 Little Rock, AR   6 Fargo, ND   178 Detroit, MI   7 Lewiston, ME   179 Oklahoma City, OK   8 Plano, TX   180 San Bernardino, CA   9 Portland, ME   181 St. Louis, MO   10 Brownsville, TX   182 Fort Lauderdale, FL   Safest vs. Least Safe Corpus Christi, Texas, has the fewest hate-crime incidents (per 100,000 residents), 0.31, which is 71.8 times fewer than in Boston, the city with the most at 22.25.   Yonkers, New York, has the fewest thefts (per 1,000 residents), 13, which is 6.8 times fewer than in Salt Lake City, the city with the most at 88.   Washington has the most law-enforcement employees (per 100,000 residents), 639, which is 5.7 times more than in Irvine, California, the city with the fewest at 113.   Aurora, Colorado, has among the fewest pedestrian fatalities (per 100,000 residents), 0.28, which is 27.2 times fewer than in Jackson, Mississippi, the city with the most at 7.62.   South Burlington, Vermont, has the lowest unemployment rate, 2.1 percent, which is 5.2 times lower than in Detroit, the city with the highest at 10.9 percent.   Pearl City, Hawaii, has the lowest share of the uninsured population, 3.8 percent, which is 9.1 times lower than in the Brownsville, Texas, registering the highest at 34.6 percent.   To read the full report and your city’s rank, please visit:  https://wallethub.com/edu/safest-cities-in-america/41926/

 

The Hidden Wealth of Cities

To find it, a new book says, localities need look no further than their roads, airports and convention centers.

BY LIZ FARMER | AUGUST 9, 2017 From Governing.com

Downtown San Diego, with a view of the convention center. (Shutterstock)

 

In the years since the Great Recession, there’s been a lot of effort made to ensure a government is sharing its complete fiscal picture. In many cases, this transparency push has resulted in a government’s bottom line going from a surplus to a shortfall thanks to the introduction of things like pension and retiree health benefit liabilities to annual balance sheets.

But some think governments are still leaving a few things off the ledger. Dag Detter and Stefan Folster, co-authors of the new book The Public Wealth of Cities, say localities are failing to realize the true value of the public assets they own, such as airports, convention centers, utilities and transit systems, just to name a few. “The public sector owns a lot of commercial assets,” says Detter, a Swedish investment advisor and expert on public commercial assets.

But, he adds, it doesn’t manage the risk of increased costs associated with those assets very well. Then, “the inclination is to give [management] away to the private sector,” he says. “But when you do that, you also have to give away the upside.”

RELATED

Minimize Political Influence, Maximize Wealth?Is It Time for an Infrastructure Garage Sale?Should Economic Development Focus on People or Places?

The solution, according to the authors, is independent management and governance. Detter says cities could realize their hidden wealth potential if their commercial assets were bundled together and managed by a politically independent “urban wealth fund.” Such a structure, Detter says, would allow these assets to be turned into bigger profit-generators for cities.

As an example, Detter points to Cleveland, which reported capital assets of more than $4 billion in 2014. To him, there are several flaws with this estimate. First, thanks to a legal quirk, many assets acquired before 1980 are not accounted for at all. Second, the city reports the value of its assets based on historic costs instead of the likely market value, which Detter estimates could be three or even seven times more. If Cleveland put its assets into an urban wealth fund, a modest yield of 3 percent on a fund with a market value in the neighborhood of $30 billion could amount to an income of $900 million a year. That’s nearly double what the city earned in tax revenue in 2014 and is money that could be spent on infrastructure, health care and other critical needs.

Doing such a thing in the U.S. would require a lot of work. For instance, a city or county would not only have to determine all its assets’ market value, but it would also have to develop a strategy for them. The example Detter and Folster give in their book is Copenhagen, which through a publicly owned, privately driven urban wealth fund revitalized its waterfront and financed a citywide transit system without raising taxes.

 John Ryan, principal of the infrastructure recapitalization firm InRecap LLC, says U.S. cities could adopt a piecemeal approach by lumping a handful of similar assets together for a mini urban wealth fund. What’s more, many localities could utilize existing quasi-public development corporations by expanding their focus from just new development to existing assets.

Ryan adds that urban wealth funds don’t necessarily have to be as profit-driven as Detter envisions. To him, the larger point is that governments aren’t focused enough on their long-term wealth. Ignoring that part of the balance sheet, he says, causes officials to make short-term decisions about finances.

“If you think all you have to work with to deal with emerging long-term liabilities are short-term cash and whatever assets you have on the shelf, then it will seem that there’s not much choice but to use gimmicks or kick the can,” he says. “But if instead you believe that you have some long-term assets that maybe aren’t so obvious but could be the raw material for good long-term solutions, at least you’ll start to look for better, more sustainable options.”

Liz Farmer | | [email protected]  |  @LizFarmerTweets

2017’s Most Diverse Cities in America

From WalletHub, May 4, 2017

America is undergoing an extreme makeover, thanks to rapid demographic diversification. By 2050, you won’t even recognize her. But America’s transformation is more than skin-deep — it’s economic, too. Not only have waves of immigration changed the face of the nation, they’ve also ushered in fresh perspectives, skills and technologies to help the U.S. develop a strong adaptability to change.

Economies generally fare better when they openly embrace and capitalize on new ideas. Conversely, those relying on old ways and specialized industries tend to be more susceptible to the negative effects of market volatility.

Culminating the diversity study series, this final installment combines household diversity and religious diversity with the previous reports on socioeconomic diversity, cultural diversity and economic diversity. WalletHub’s analysts tallied the scores across the five major diversity categories for 501 of the largest cities in order to determine the most kaleidoscopic places in America.

1 Main Findings

 

2 Detailed Findings

 

3 Rankings by City Size

 

5 Methodology

 

Overall Rank City Total Score 'Socioeconomic Diversity' Rank 'Cultural Diversity' Rank 'Economic Diversity' Rank 'Household Diversity' Rank 'Religious Diversity' Rank 1 New York, NY 71.73     68 5 250 76 152 2 Jersey City, NJ 71.56     43 1 365 98 252 3 Houston, TX 71.51     116 28 132 100 41 4 Dallas, TX 71.25     139 43 187 109 21 5 Silver Spring, MD 71.1     1 4 200 314 304 6 Aurora, IL 71.09     11 49 357 368 27 7 Gaithersburg, MD 71.04     2 3 309 247 304 8 Los Angeles, CA 70.84     85 18 66 68 208 9 Germantown, MD 70.75     5 2 266 373 304 10 Long Beach, CA 70.71     92 21 72 58 208 11 Stamford, CT 70.67     12 23 340 254 160 12 Chicago, IL 70.57     108 36 270 242 76 13 Danbury, CT 70.49     54 40 146 146 160 14 Arlington, TX 70.48     142 42 153 151 89 15 Sandy Springs, GA 70.44     28 86 475 416 2 16 San Jose, CA 70.39     10 8 334 297 291 17 Clifton, NJ 70.25     94 26 230 240 167 18 New Rochelle, NY 70.24     4 47 265 244 178 19 Yonkers, NY 70.21     89 33 279 75 178 20 San Diego, CA 70.2     16 17 189 182 296 21 Alexandria, VA 70.07     3 37 305 439 157 22 Roswell, GA 69.99     23 122 440 425 2 23 Norwalk, CT 69.96     22 58 183 261 160 24 Johns Creek, GA 69.95     77 46 482 500 2 25 Austin, TX 69.91     21 70 151 309 138 26 Bridgeport, CT 69.69     343 14 271 19 160 27 Elgin, IL 69.65     88 63 301 293 101 28 Anaheim, CA 69.57     63 41 175 138 273 29 Charlotte, NC 69.56     71 82 337 184 90 30 Washington, DC 69.44     13 107 410 455 17

Detroit, and the Bankruptcy of America’s Social Contract

by Robert Reich

Saturday, July 20, 2013                

One way to view Detroit’s bankruptcy — the largest bankruptcy of any American city — is as a failure of political negotiations over how financial sacrifices should be divided among the city’s creditors, city workers, and municipal retirees — requiring a court to decide instead. It could also be seen as the inevitable culmination of decades of union agreements offering unaffordable pension and health benefits to city workers.

But there’s a more basic story here, and it’s being replicated across America: Americans are segregating by income more than ever before. Forty years ago, most cities (including Detroit) had a mixture of wealthy, middle-class, and poor residents. Now, each income group tends to lives separately, in its own city — with its own tax bases and philanthropies that support, at one extreme, excellent schools, resplendent parks, rapid-response security, efficient transportation, and other first-rate services; or, at the opposite extreme, terrible schools, dilapidated parks, high crime, and third-rate services.

The geo-political divide has become so palpable that being wealthy in America today means not having to come across anyone who isn’t.

Detroit is a devastatingly poor, mostly black, increasingly abandoned island in the midst of a sea of comparative affluence that’s mostly white. Its suburbs are among the richest in the nation. Oakland County, for example, is the fourth wealthiest county in the United States, of counties with a million or more residents. Greater Detroit — which includes the suburbs — is among the nation’s top five financial centers, the top four centers of high-technology employment, and the second-biggest source of engineering and architectural talent. Not everyone is wealthy, to be sure, but the median household in the region earns close to $50,000 a year, and unemployment is no higher than the nation’s average. The median household in Birmingham, Michigan, just across the border that delineates the city of Detroit, earned more than $94,000 last year; in nearby Bloomfield Hills — still within the Detroit metropolitan area — the median was more than $150,000.

The median household income within the city of Detroit is around $26,000, and unemployment is staggeringly high. One out of 3 residents is in poverty; more than half of all children in the city are impoverished. Between 2000 and 2010, Detroit lost a quarter of its population as the middle-class and whites fled to the suburbs. That left it with depressed property values, abandoned neighborhoods, empty buildings, lousy schools, high crime, and a dramatically-shrinking tax base. More than half of its parks have closed in the last five years. Forty percent of its streetlights don’t work.

In other words, much in modern America depends on where you draw boundaries, and who’s inside and who’s outside. Who is included in the social contract? If “Detroit" is defined as the larger metropolitan area that includes its suburbs, “Detroit" has enough money to provide all its residents with adequate if not good public services, without falling into bankruptcy. Politically, it would come down to a question of whether the more affluent areas of this “Detroit" were willing to subsidize the poor inner-city through their tax dollars, and help it rebound. That’s an awkward question that the more affluent areas would probably rather not have to face.

In drawing the relevant boundary to include just the poor inner city, and requiring those within that boundary to take care of their compounded problems by themselves, the whiter and more affluent suburbs are off the hook. “Their" city isn’t in trouble. It’s that other one — called “Detroit."

It’s roughly analogous to a Wall Street bank drawing a boundary around its bad assets, selling them off at a fire-sale price, and writing off the loss.  Only here we’re dealing with human beings rather than financial capital. And the upcoming fire sale will likely result in even worse municipal services, lousier schools, and more crime for those left behind in the city of Detroit. In an era of widening inequality, this is how wealthier Americans are quietly writing off the poor.

TOXIC U.S. INTEREST RATE SWAPS: “UNJUST ENRICHMENT”

 by Frank Thomas

When is a Deal NOT a Deal?

Ellen Brown has raised an excellent damage recovery option for cities across America – e.g., Oakland, California – that have entered into “interest rate swap” contracts which in essence have become quasi-contracts or not true contracts. This option emanates from the  Common Law of restitutionary obligations for “unjust enrichment” of the defendant (e.g., the Goldman Sachs) at the plaintiff’s expense (e.g., the Oaklands) … and imposes on the defendant a duty to pay for unfair benefits under the principle of restitution.

In brief, the Law of Obligations covers contractual, tort, and restitution obligations (liabilities) … in effect, these obligations represent three interests deserving legal protection as identified by Professor Lon Fuller in 1936: expectation, reliance, and restitution.         

Contractual liability is generally not making things better by not rendering the expected performance – which is Not the Oakland situation. Tort liability is generally for action(s) making things worse or reliance on the acts of another that results in a worsening change for the other – which MIGHT BE the Oakland situation. Restitution liability is for unjustly taking the defendant’s money triggering a  restitution obligation of making good to the aggrieved party – which IS the Oakland situation!

In the Oakland interest swap deal, unjust enrichment is a deal where a benefit is obtained from another that is not legally justifiable for which the beneficiary must make restitution. Such a deal is not a true contract and in fact falls outside the area of contract law. A restitution obligation in the Oakland case may be created by law when money (e.g., an above market interest rate) has been obtained unjustly by one party (the  defendant, Goldman Sachs) at the expense of another party (the plaintiff, Oakland) under circumstances that in equity and good conscience the defendant party (Goldman Sachs) ought not to retain the benefit received.

 STANDARD TEXT EXAMPLE of UNJUST ENRICHMENT:

Bart plants shrubbery under a contract with Joan. Joan dies before Bart is paid, and Gail buys Joan’s house. Gail must pay Bart for the shrubbery, for if she does not, she will be unjustly enriched and Bart will be out the value of the plantings.

CORRELATING EXAMPLE OF UNJUST ENRICHMENT IN OAKLAND INTEREST SWAP DEAL WITH GOLDMAN:

Oakland signs a variable interest rate contract with a bank for 5.7%. Goldman Sachs subsequently signs an interest swap contract with Oaklandthat for a fee insures latter for a fixed interest rate of 5.7%.  This means Goldman accepts all risk if interest rates go higher and Oakland pays Goldman if interest rates fall below 5.7%. BUT, then comes the Fed’s deliberate move in colluding concert with the big banks (and very likely  knowledge/support of Goldman) to save the big banks by artificially retaining historically very low interest Fed rates for a long period to prevent further financial chaos.                                                       

Result? In a major mini-depression crisis, Oakland is forced to pay the exorbitant unjustified high market interest rate for the sake of Oakland’s (and California’s)  financial stability—while Goldman makes out like a bandit as city  policemen, firemen, and teachers are fired en masse to correct deficits. Goldman has thus been unjustly enriched.  Oakland can sue to be recompensed by  Goldman for the excess interest costs Oakland paid starting from the moment abnormally low interest rates and fraudulent LIBOR rate manipulations were set  in effect. Restitution is equitable and proper for Oakland’s monetary injury as a result of Goldman’s unjust enrichment.

Of course, there are defenses to restitution claims for unjust enrichment. Goldman can argue the financial crisis was not “foreseeable.” That retaining the very low Fed interest rates was not their responsibility in a financial crisis situation. Goldman could claim (however, seemingly ludicrously) that its position has changed in some negative way by incurring costs in reliance on a monthly contractual interest payment received from Oakland. Goldman can argue Oakland is unjustly reversing the contractual allocation of risks by non-contractual actions and/or market conditions beyond Goldman’s control.

Generally, all contract damage awards are subject to the requirement of “causation” and “certainty.” The plaintiff is responsible for showing that the injury for which restitution is sought actually resulted from the defendant’s breach of contract, as well as showing the money cost of such injury with reasonable certainty. The type of injury claim must also be “foreseeable” (as noted above) to the defendant at the time the contract was made. HOWEVER, there are numerous types of ‘general damages’ where the “foreseeability” of which is taken for granted as a matter of law. Only in the case of ‘special’ or “consequential” damages does the plaintiff have to prove the defendant knew (or had reason to know or should have known) of the possibility of an injury resulting from breach of contract.

Despite these defendant defense arguments, I believe Ellen Brown is on solid legal grounds in suggesting that “Goldman Sachs was unjustly enriched  by the collusion of its banking colleagues and the Fed” in setting very low interest rates bearing no relation to market demand. The law should take its course and impose a duty on the Goldman Sachs’ types to pay compensation to cities across the U.S. to stop the non-transparent toxic interest swap casino of trillions of dollars and other “I win , you lose” financial products bankrupting our nation.

When will we ever marshal the integrity and courage to call an end to our multi-faceted parasitic banking system in the common interest of ALL Americans ? We desperately need state banks like in North Dakota and banking cooperatives focusing primarily on regional interests. The global giants must be broken up.                                                                      

Do we need another financial crisis to effect these changes?

Frank Thomas
The Netherlands
July 22, 2012

How Wall Street and LIBOR Are Bankrupting California Cities

by John Lawrence

 

We blogged earlier about how traders from JP Morgan Chase and Goldman Sachs descended on European cities such as Casino, Italy and even nunneries selling them interest rate swaps.. Interest rate swaps were also responsible for bankrupting Jefferson County, the county seat of Birmingham, Alabama. Now the same big banks are bankrupting California cities. Stockton, San Bernadino and Mammoth Lakes have already gone down. Oakland is fighting Goldman for its very life.

But what does this have to do with the LIBOR scandal, you say? A lot, it turns out. LIBOR stands for the London Interbank Offered Rate, a benchmark that most other interest rates are tied to including interest rate swaps, the very derivative financial instruments that are now bankrupting California cities. The LIBOR scandal has failed to attract the interest of many Americans because it's so "over there" in London. What does that have to do with us here in the US? The same interest rate swaps that JP Morgan Chase sold to nunneries in Europe, they've sold to Stockton and San Bernadino and Oakland and many other US cities, school districts, hospitals and perhaps even to a few US nunneries.

It has recently come to light that the LIBOR has been fraudulently manipulated by London based Barclays bank and possibly quite a few others. CEO of Barclays, Bob Diamond, has been forced to resign and Barclays has had to pay a $456 million penalty. Diamond (unlike his US counterpart, Jamey Dimon, of JP Morgan Chase who sports Presidential cuff links) has had to eat humble pie in front of the English Parliament. What this means is that interest rates for credit cards, mortgages, student loans and almost every other kind of loan imaginable including interest rate swaps have been fraudulently set for years. A trader at Barclays petitioned a submitter, whose job it is to report accurately on the interest rate, to lower the LIBOR on a certain day so that he could make a killing on his Credit Default Swap, a bet that the LIBOR would go down on that day. When it did and the trader cashed out, he phoned up the submitter and said, "Dude. I owe you big time! Come over one day after work and I'm opening a bottle of Bollinger."

It's too late for Stockton, now that it's surpassed Birmingham as the nation's largest municipal bankruptcy, and for San Bernadino, but Oakland is fighting back demanding that Goldman terminate the interest rate swap deal without penalties. Recall that Casino, Italy took JP Morgan Chase to court and eventually won a settlement of a half million euros.  Oakland entered into an interest rate swap with Goldman in 1997. They convinced Oakland officials that it would protect taxpayers against the possibility that interest rates would rise on variable rate bonds that the city planned to issue the next year. Oakland's deal with Goldman Sachs converted floating rates on $187 million of bond debt into a fixed 5.6 percent. If the interest rate tied to the benchmark LIBOR went below 5.6%, then Oakland had to pay Goldman, and if it went above 5.6% Goldman had to pay Oakland. Since then, however, the Federal Reserve has kept interest rates near zero so Goldman had made out like a bandit and Oakland has had to pay through the nose taking money away from teachers, firefighters, policemen and garbage workers and funneling it to Goldman. This collapse in city finances is bankrupting the city. If rates stay artificially depressed due to the Federal Reserve's decisions, Oakland will owe Goldman Sachs another $20 million between now and 2021. That's on top of the $26 million the city has already paid.

In all fairness Goldman would say that nobody forced the city of Oakland to enter into the interest rate swap. Oakland made a bet that interest rates would rise and it lost. It's as simple as that. However, Oakland wasn't counting on manipulation of interest rates by the Federal Reserve and by the LIBOR so the deal sucks all the way around. In fact it stinks to high heaven. Leaders of some of Oakland's largest churches are uniting with community organizers, Decolonize Oakland, and Occupy Oakland activists to focus on how "predatory" banks are draining Oakland's budget and causing cuts to vital city services. Oakland can get out of the deal with Goldman by paying a $16 million penalty, but that seems unfair to Oakland's leaders. They say that Goldman got bailed out by the TARP while government money has failed to bail out Oakland. Wall Street got bailed out. Cities got sold out. Federal policies keeping interest rates low are resulting in extracting wealth from cities and transferring it to Wall Street.

On top of that the state of California is taking monies back from cities' Redevelopment Agencies to fund its own budget deficits. A controversial new law terminates all redevelopment agencies and authorizes the seizure of $1.7 billion of their property tax revenue to alleviate the state's own budget deficit. Oakland, however, uses redevelopment money to cover at least some portion of city workers’ pay. Mayors and city councilmembers who oversee redevelopment projects may receive part of their salary from the agency. Funding police services is also consistent with redevelopment law as long as those services are used to mitigate gang activity, graffiti abatement and other causes of community blight. The Oakland Redevelopment Agency has funded full time police officers for five years. With the state clawing back Redevelopment Agency funds and property taxes, city workers including police officers are likely to be laid off.

What's happening in Oakland and many other US cities is similar to what's happening in Greece and all over the world. This is from Occupy Oakland Media:

"The banking deception hits close to home, as Oakland and San Francisco pay millions of extra dollars annually in inflated interest payments to Goldman Sachs and JP Morgan while cutting funding for education, after-school programs, healthcare and infrastructure. Oakland will pay nearly half the amount of its budget deficit to private banks over the next few years because of high interest rate obligations stemming from interest-rate swaps with banks such as Goldman Sachs. This is tantamount to redistribution of wealth from the poorest people in Oakland who will give up education and healthcare to millionaire bankers.

"This has been happening in states all over the country says economist Michael Hudson, “Because what’s happening in Greece is a dress rehearsal for what’s going on in the United States. … What’s happening in Greece in the last week is exactly what’s happened in Minnesota with the close-down of government. And the demands of privatization – thatGreece sell off its roads, its land, its port authority, its water and sewer – is just what Illinois’s been doing, what Chicago’s been doing, what Minnesota’s been told to do, and what American cities are trying to do.

"What if the United States had bailed out the states instead of the multi-national banks? We could have retained funding for education, infrastructure and social programs that could have stimulated local economies and kept people in their homes, where the majority of the people’s wealth is held, since the banks that would have foreclosed upon them would have been stuck in bankruptcy court."

So to recapitulate, California cities are being bankrupted by Wall Street largely due to interest rate swaps which are tied to the LIBOR which we now know has been fraudulently manipulated by the big banks on Wall Street and in London. The result is austerity for the people of Oakland just as it has been for the people of Greece. LIBOR, the rate at which banks borrow from one another, is the basis for roughly $800 trillion worth of loans, financial instruments and derivatives including interest rate swaps. When banks manipulate LIBOR rates lower, they are borrowing money for less while their counterparties in interest rate swap contracts like the City of Oakland are stuck paying them much higher rates.

 

 

Screwed in Scranton: Why Is This Just a Local Fight?

Published on Sunday, July 15, 2012 by In These Times

by Roger Bybee

“Did he [President Obama] not get the message in Wisconsin [the June 5 recall vote]? [He wants] more firemen, more policemen, [and] more teachers. The American people did. It's time for us to cut back on government.”—Mitt Romney, Council Bluffs, Iowa, June 8, 2012

(Mitt Romney’s vision of radically depleted, enfeebled public institutions for America is so extreme that even union-busting Wisconsin Gov. Scott Walker felt obligated to distance himself from it. But the Romney formula for reducing government is being enthusiastically applied in Pennsylvania, where Republican Gov. Tom Corbett is letting fiscally troubled cities like Scranton struggle for survival completely on their own, while lavishing huge tax breaks on corporations like Royal Dutch Shell.

In Scranton, the mayor of the long-struggling city recently slashed the pay of 398 public workers to the legal minimum wage of $7.25 an hour. “Under the plan, the average firefighter in Scranton would see his yearly salary drop from $55,910 to $15,080 -- below the federal poverty line for a two-person household,” The Huffington Post reported.

Scranton’s problems are actually typical of the financial death spiral facing many mid-sized towns in Pennsylvania and across the United States (see here, here and here) after three decades of deindustrialization and a halting economic recovery with continuing wage cuts. "Cities like Scranton have been hit hard by the loss of manufacturing and a loss of population, so that they are left trying to maintain services with a smaller tax base," economist Stephen Herzenberg, director of the Keystone Research Center, a progressive think tank in Pennsvlvania, says. "But when the quality of services like education fall, better-off families will move out, and these cities won’t attract industry."

The draconian, suddenly imposed pay cuts have generated enormous national attention. But stunningly, comments by the local combatants and former Pennsylvania Governor Ed Rendell, a pro-corporate Democrat, have almost entirely neglected the larger context of America’s glaring income inequality, its long-suffering industrial cities,  and Pennsylvania’s shamelessly pro-corporate budget priorities.

The immediate outcome of the unilateral pay cuts has largely been an intramural struggle confined to the local Democratic players in Scranton. Mayor Chris Doherty, a Democrat, argues that the pay cuts are a temporary necessity to improve the city’s credit rating and line up a bank loan. Doherty promises to pay the workers back once the crisis has been resolved, but has defied a court order reinstating the old wage structure contained in the unions’ contracts. Doherty's eagerness to do the bankers' bidding brings to mind a Third World nation being strong-armed by the International Monetary Fund.

Doherty has been opposed by the overwhelmingly Democratic City Council members, who opposed Doherty’s earlier call for substantial property tax increases of 78% over the next three years to fill the city’s revenue gap. Instead, they favor remedies like “alternative revenue sources, such as increased contributions from nonprofits and commuter, sales and payroll taxes.” While well-intentioned, this hardly sounds like a plan that will fill a fiscal gap estimated of over $16 million for a city of 76,000 people.

Meanwhile, three city unions—International Association of Firefighters Local 60, the Fraternal Order of Police E.B. Jermyn Lodge 2, and the International Association of Machinists and Aerospace Workers Local Lodge 2305—have filed suit against the wage cuts and the mayor's failure to abide by a court order to pay full wages. The Scranton Times-Tribune reports:

The unions…are not persuaded that slashing wages is necessary. They see the mayor's move as an effort to bully Scranton's city council into approving the tax increase the local banking community, wary of the city's unfunded debt, has demanded in return for any loan.

Along with filing the lawsuit, the unions have reached out to the Obama Administration (Vice President Biden was born in Scranton). Fire Fighters Local 60 President John Judge explained,
"With Scranton and Pennsylvania being such a hot bed for the next election, we want to make sure that they know there's a Democratic mayor that's not taking care of his public safety unions

"We know that President Obama and Vice President Biden have been staunch supporters of police and fire, and we wanted to make sure they were aware of how our unions were being treated up here."

But the unions have apparently forgotten that the Obama administration infamously refused to take a firm stand with workers against a widely reviled Scott Walker in Wisconsin. Thus, there appears little chance that Obama or Biden will step into the midst of a dispute among Democratic constituencies so close to the fall elections. Nor can Obama, hamstrung by a Republican-controlled House, unleash the kind of federal assistance that dozens of cities like Scranton need.

“What we need now is further revenue sharing from the federal government,” says Herzenberg. “Instead, we’re getting austerity economics. So when a local government in Scranton cuts back on public workers’ pay, it hurts the local private economy because there is weaker demand for their products. It’s obviously devastating for the city workers themselves, but it harms the overall economy.”

For Republicans like Gov. Corbett, such an intense, locally focused battle offers the delicious prospect of election-season in-fighting among Democrats. (Further, Corbett and his allies have also enacted restrictive "Voter ID" laws that GOP majority leader Mike Turzai openly boasted would deliver Pennsvlvania's crucial electoral votes to Romney).

Gov. Corbett is rarely mentioned when diagnosing the problems afflicting the state's troubled cities (here's an exception), despite his willingness to let cities like Scranton twist slowly in the wind. Nor is the shared fate of Scranton and other cities across the nation discussed with any frequency. Insolvent Harrisburg, Penn., is dominated by a Corbett-appointed receiver, not unlike the anti-democratic method by which Michigan Gov. Rick Snyder is using bankruptcy to impose "fiscal martial law."

While cutting back aid to local governments in line with the “starve the beast” (see here and here) gospel of Grover Norquist, Corbett has lavished enormous long-term tax breaks for hugely profitable firms like Royal Dutch Shell Oil, laying out $1.7 billion over the next 25 years. Not only will Shell be bringing a relatively small number of jobs to Pennsylvania, but it will be attacking the safety of its water supply with the use of technology and chemicals of unknown toxicity to fracture (also known as “fracking”) shale deposits containing natural gas. Shell has been awarded enormous tax breaks for this "public service," while Corbett and co. enacted a law depriving localities of a democratic voice in the fracking issue.

Viewed against a national backdrop, the cruelly ripped-off workers in Scranton cannot afford to wait around for salvation by Democratic politicians. Nor can they fight their case in isolation from the larger trends of income inequality, attacks on public workers and institutions, and insidious efforts by corporations and the Right to undermine democracy. A much bolder and broader vision of the battle is desperately needed in Scranton. Corbett and his sponsors like Shell offer inviting targets, if labor is willing to engage in a protracted, far-reaching and imaginative struggle.

© 2012 In These Times

Roger Bybee is a Milwaukee-based freelance writer and progressive publicity consultant whose work has appeared in numerous national publications and websites, including Z magazine, Common Dreams, Dollars & Sense, Yes!, The Progressive, Multinational Monitor, The American Prospect and Foreign Policy in Focus.

Looting Main Street

How the nation's biggest banks are ripping off American cities with the same predatory deals that brought down Greece

by MATT TAIBBIPosted Mar 31, 2010 8:15 AM in Rolling Stone magazine

If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.

As public services in and around Birmingham were stripped to the bone, Pack struggled to support her family on a weekly unemployment check of $260. Nearly a fourth of that went to pay for her health insurance, which the county no longer covered. She also fielded calls from laid-off co-workers who had it even tougher. "I'd be on the phone sometimes until two in the morning," she says. "I had to talk more than one person out of suicide. For some of the men supporting families, it was so hard — foreclosure, bankruptcy. I'd go to bed at night, and I'd be in tears."

Homes stood empty, businesses were boarded up, and parts of already-blighted Birmingham began to take on the feel of a ghost town. There were also a few bills that were unique to the area — like the $64 sewer bill that Pack and her family paid each month. "Yeah, it went up about 400 percent just over the past few years," she says.

The sewer bill, in fact, is what cost Pack and her co-workers their jobs. In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71 — but that was before the county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase. The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — "the Taj Mahal of sewer-treatment plants" is how one county worker put it. What happened here in Jefferson County would turn out to be the perfect metaphor for the peculiar alchemy of modern oligarchical capitalism: A mob of corrupt local officials and morally absent financiers got together to build a giant device that converted human shit into billions of dollars of profit for Wall Street — and misery for people like Lisa Pack.

And once the giant shit machine was built and the note on all that fancy construction started to come due, Wall Street came back to the local politicians and doubled down on the scam. They showed up in droves to help the poor, broke citizens of Jefferson County cut their toilet finance charges using a blizzard of incomprehensible swaps and refinance schemes — schemes that only served to postpone the repayment date a year or two while sinking the county deeper into debt. In the end, every time Jefferson County so much as breathed near one of the banks, it got charged millions in fees. There was so much money to be made bilking these dizzy Southerners that banks like JP Morgan spent millions paying middlemen who bribed — yes, that's right, bribed, criminally bribed — the county commissioners and their buddies just to keep their business. Hell, the money was so good, JP Morgan at one point even paid Goldman Sachs $3 million just to back the fuck off, so they could have the rubes of Jefferson County to fleece all for themselves.

Birmingham became the poster child for a new kind of giant-scale financial fraud, one that would threaten the financial stability not only of cities and counties all across America, but even those of entire countries like Greece. While for many Americans the financial crisis remains an abstraction, a confusing mess of complex transactions that took place on a cloud high above Manhattan sometime in the mid-2000s, in Jefferson County you can actually see the rank criminality of the crisis economy with your own eyes; the monster sticks his head all the way out of the water. Here you can see a trail that leads directly from a billion-dollar predatory swap deal cooked up at the highest levels of America's biggest banks, across a vast fruited plain of bribes and felonies — "the price of doing business," as one JP Morgan banker says on tape — all the way down to Lisa Pack's sewer bill and the mass layoffs in Birmingham.

Once you follow that trail and understand what took place in Jefferson County, there's really no room left for illusions. We live in a gangster state, and our days of laughing at other countries are over. It's our turn to get laughed at. In Birmingham, lots of people have gone to jail for the crime: More than 20 local officials and businessmen have been convicted of corruption in federal court. Last October, right around the time that Lisa Pack went back to work at reduced hours, Birmingham's mayor was convicted of fraud and money-laundering for taking bribes funneled to him by Wall Street bankers — everything from Rolex watches to Ferragamo suits to cash. But those who greenlighted the bribes and profited most from the scam remain largely untouched. "It never gets back to JP Morgan," says Pack.

If you want to get all Glenn Beck about it, you could lay the blame for this entire mess at the feet of weepy, tree-hugging environmentalists. It all started with the Cahaba River, the longest free-flowing river in the state of Alabama. The tributary, which winds its way through Birmingham before turning diagonally to empty out near Selma, is home to more types of fish per mile than any other river in America and shelters 64 rare and imperiled species of plants and animals. It's also the source of one of the worst municipal financial disasters in American history.

Back in the early 1990s, the county's sewer system was so antiquated that it was leaking raw sewage directly into the Cahaba, which also supplies the area with its drinking water. Joined by well — intentioned citizens from the Cahaba River Society, the EPA sued the county to force it to comply with the Clean Water Act. In 1996, county commissioners signed a now-infamous consent decree agreeing not just to fix the leaky pipes but to eliminate all sewer overflows — a near-impossible standard that required the county to build the most elaborate, ecofriendly, expensive sewer system in the history of the universe. It was like ordering a small town in Florida that gets a snowstorm once every five years to build a billion-dollar fleet of snowplows.

The original cost estimates for the new sewer system were as low as $250 million. But in a wondrous demonstration of the possibilities of small-town graft and contract-padding, the price tag quickly swelled to more than $3 billion. County commissioners were literally pocketing wads of cash from builders and engineers and other contractors eager to get in on the project, while the county was forced to borrow obscene sums to pay for the rapidly spiraling costs. Jefferson County, in effect, became one giant, TV-stealing, unemployed drug addict who borrowed a million dollars to buy the mother of all McMansions — and just as it did during the housing bubble, Wall Street made a business of keeping the crook in his house. As one county commissioner put it, "We're like a guy making $50,000 a year with a million-dollar mortgage."

To reassure lenders that the county would pay its mortgage, commissioners gave the finance director — an unelected official appointed by the president of the commission — the power to automatically raise sewer rates to meet payments on the debt. The move brought in billions in financing, but it also painted commissioners into a corner. If costs continued to rise — and with practically every contractor in Alabama sticking his fingers on the scale, they were rising fast — officials would be faced with automatic rate increases that would piss off their voters. (By 2003, annual interest on the sewer deal had reached $90 million.) So the commission reached out to Wall Street, looking for creative financing tools that would allow it to reduce the county's staggering debt payments.

Wall Street was happy to help. First, it employed the same trick it used to fuel the housing crisis: It switched the county from a fixed rate on the bonds it had issued to finance the sewer deal to an adjustable rate. The refinancing meant lower interest payments for a couple of years — followed by the risk of even larger payments down the road. The move enabled county commissioners to postpone the problem for an election season or two, kicking it to a group of future commissioners who would inevitably have to pay the real freight.

But then Wall Street got really creative. Having switched the county to a variable interest rate, it offered commissioners a crazy deal: For an extra fee, the banks said, we'll allow you to keep paying a fixed rate on your debt to us. In return, we'll give you a variable amount each month that you can use to pay off all that variable-rate interest you owe to bondholders.

In financial terms, this is known as a synthetic rate swap — the spidery creature you might have read about playing a role in bringing down places like Greece and Milan. On paper, it made sense: The county got the stability of a fixed rate, while paying Wall Street to assume the risk of the variable rates on its bonds. That's the synthetic part. The trouble lies in the rate swap. The deal only works if the two variable rates — the one you get from the bank, and the one you owe to bondholders — actually match. It's like gambling on the weather. If your bondholders are expecting you to pay an interest rate based on the average temperature in Alabama, you don't do a rate swap with a bank that gives you back a rate pegged to the temperature in Nome, Alaska.

Not unless you're a fucking moron. Or your banker is JP Morgan.

In a small office in a federal building in downtown Birmingham, just blocks from where civil rights demonstrators shut down the city in 1963, Assistant U.S. Attorney George Martin points out the window. He's pointing in the direction of the Tutwiler Hotel, once home to one of the grandest ballrooms in the South but now part of the Hampton Inn chain.

"It was right around the corner here, at the hotel," Martin says. "That's where they met — that's where this all started."

They means Charles LeCroy and Bill Blount, the two principals in what would become the most important of all the corruption cases in Jefferson County. LeCroy was a banker for JP Morgan, serving as managing director of the bank's southeast regional office. Blount was an Alabama wheeler-dealer with close friends on the county commission. For years, when Wall Street banks wanted to do business with municipalities, whether for bond issues or rate swaps, it was standard practice to reach out to a local sleazeball like Blount and pay him a shitload of money to help seal the deal. "Banks would pay some local consultant, and the consultant would then funnel money to the politician making the decision," says Christopher Taylor, the former head of the board that regulates municipal borrowing. Back in the 1990s, Taylor pushed through a ban on such backdoor bribery. He also passed a ban on bankers contributing directly to politicians they do business with — a move that sparked a lawsuit by one aggrieved sleazeball, who argued that halting such legalized graft violated his First Amendment rights. The name of that pissed-off banker? "It was the one and only Bill Blount," Taylor says with a laugh.

Blount is a stocky, stubby-fingered Southerner with glasses and a pale, pinched face — if Norman Rockwell had ever done a painting titled "Small-Town Accountant Taking Enormous Dump," it would look just like Blount. LeCroy, his sugar daddy at JP Morgan, is a tall, bloodless, crisply dressed corporate operator with a shiny bald head and silver side patches — a cross between Skeletor and Michael Stipe.

The scheme they operated went something like this: LeCroy paid Blount millions of dollars, and Blount turned around and used the money to buy lavish gifts for his close friend Larry Langford, the now-convicted Birmingham mayor who at the time had just been elected president of the county commission. (At one point Blount took Langford on a shopping spree in New York, putting $3,290 worth of clothes from Zegna on his credit card.) Langford then signed off on one after another of the deadly swap deals being pushed by LeCroy. Every time the county refinanced its sewer debt, JP Morgan made millions of dollars in fees. Even more lucrative, each of the swap contracts contained clauses that mandated all sorts of penalties and payments in the event that something went wrong with the deal. In the mortgage business, this process is known as churning: You keep coming back over and over to refinance, and they keep "churning" you for more and more fees. "The transactions were complex, but the scheme was simple," said Robert Khuzami, director of enforcement for the SEC. "Senior JP Morgan bankers made unlawful payments to win business and earn fees."

Given the shitload of money to be made on the refinancing deals, JP Morgan was prepared to pay whatever it took to buy off officials in Jefferson County. In 2002, during a conversation recorded in Nixonian fashion by JP Morgan itself, LeCroy bragged that he had agreed to funnel payoff money to a pair of local companies to secure the votes of two county commissioners. "Look," the commissioners told him, "if we support the synthetic refunding, you guys have to take care of our two firms." LeCroy didn't blink. "Whatever you want," he told them. "If that's what you need, that's what you get. Just tell us how much."

Just tell us how much. That sums up the approach that JP Morgan took a few months later, when Langford announced that his good buddy Bill Blount would henceforth be involved with every financing transaction for Jefferson County. From JP Morgan's point of view, the decision to pay off Blount was a no-brainer. But the bank had one small problem: Goldman Sachs had already crawled up Blount's trouser leg, and the broker was advising Langford to pick them as Jefferson County's investment bank.

The solution they came up with was an extraordinary one: JP Morgan cut a separate deal with Goldman, paying the bank $3 million to fuck off, with Blount taking a $300,000 cut of the side deal. Suddenly Goldman was out and JP Morgan was sitting in Langford's lap. In another conversation caught on tape, LeCroy joked that the deal was his "philanthropic work," since the payoff amounted to a "charitable donation to Goldman Sachs" in return for "taking no risk."

That such a blatant violation of anti-trust laws took place and neither JP Morgan nor Goldman have been prosecuted for it is yet another mystery of the current financial crisis. "This is an open-and-shut case of anti-competitive behavior," says Taylor, the former regulator.

With Goldman out of the way, JP Morgan won the right to do a $1.1 billion bond offering — switching Jefferson County out of fixed-rate debt into variable-rate debt — and also did a corresponding $1.1 billion deal for a synthetic rate swap. The very same day the transaction was concluded, in May 2003, LeCroy had dinner with Langford and struck a deal to do yet another bond-and-swap transaction of roughly the same size. This time, the terms of the payoff were spelled out more explicitly. In a hilarious phone call between LeCroy and Douglas MacFaddin, another JP Morgan official, the two bankers groaned aloud about how much it was going to cost to satisfy Blount:

LeCroy: I said, "Commissioner Langford, I'll do that because that's your suggestion, but you gotta help us keep him under control. Because when you give that guy a hand, he takes your arm." You know?

MacFaddin: [Laughing] Yeah, you end up in the wood-chipper.

All told, JP Morgan ended up paying Blount nearly $3 million for "performing no known services," in the words of the SEC. In at least one of the deals, Blount made upward of 15 percent of JP Morgan's entire fee. When I ask Taylor what a legitimate consultant might earn in such a circumstance, he laughs. "What's a 'legitimate consultant' in a case like this? He made this money for doing jack shit."

As the tapes of LeCroy's calls show, even officials at JP Morgan were incredulous at the money being funneled to Blount. "How does he get 15 percent?" one associate at the bank asks LeCroy. "For doing what? For not messing with us?"

"Not messing with us," LeCroy agrees. "It's a lot of money, but in the end, it's worth it on a billion-dollar deal."

That's putting it mildly: The deals wound up being the largest swap agreements in JP Morgan's history. Making matters worse, the payoffs didn't even wind up costing the bank a dime. As the SEC explained in a statement on the scam, JP Morgan "passed on the cost of the unlawful payments by charging the county higher interest rates on the swap transactions." In other words, not only did the bank bribe local politicians to take the sucky deal, they got local taxpayers to pay for the bribes. And because Jefferson County had no idea what kind of deal it was getting on the swaps, JP Morgan could basically charge whatever it wanted. According to an analysis of the swap deals commissioned by the county in 2007, taxpayers had been overcharged at least $93 million on the transactions.

JP Morgan was far from alone in the scam: Virtually everyone doing business in Jefferson County was on the take. Four of the nation's top investment banks, the very cream of American finance, were involved in one way or another with payoffs to Blount in their scramble to do business with the county. In addition to JP Morgan and Goldman Sachs, Bear Stearns paid Langford's bagman $2.4 million, while Lehman Brothers got off cheap with a $35,000 "arranger's fee." At least a dozen of the county's contractors were also cashing in, along with many of the county commissioners. "If you go into the county courthouse," says Michael Morrison, a planner who works for the county, "there's a gallery of past commissioners on the wall. On the top row, every single one of 'em but two has been investigated, indicted or convicted. It's a joke."

The crazy thing is that such arrangements — where some local scoundrel gets a massive fee for doing nothing but greasing the wheels with elected officials — have been taking place all over the country. In Illinois, during the Upper Volta-esque era of Rod Blagojevich, a Republican political consultant named Robert Kjellander got 10 percent of the entire fee Bear Stearns earned doing a bond sale for the state pension fund. At the start of Obama's term, Bill Richardson's Cabinet appointment was derailed for a similar scheme when he was governor of New Mexico. Indeed, one reason that officials in Jefferson County didn't know that the swaps they were signing off on were shitty was because their adviser on the deals was a firm called CDR Financial Products, which is now accused of conspiring to overcharge dozens of cities in swap transactions. According to a federal antitrust lawsuit, CDR is basically a big-league version of Bill Blount — banks tossed money at the firm, which in turn advised local politicians that they were getting a good deal. "It was basically, you pay CDR, and CDR helps push the deal through," says Taylor.

In the end, though, all this bribery and graft was just the table-setter for the real disaster. In taking all those bribes and signing on to all those swaps, the commissioners in Jefferson County had ­basically started the clock on a financial time bomb that, sooner or later, had to explode. By continually refinancing to keep the county in its giant McMansion, the commission had managed to push into the future that inevitable day when the real bill would arrive in the mail. But that's where the mortgage analogy ends — because in one key area, a swap deal differs from a home mortgage. Imagine a mortgage that you have to keep on paying even after you sell your house. That's basically how a swap deal works. And Jefferson County had done 23 of them. At one point, they had more outstanding swaps than New York City.

Judgment Day was coming — just like it was for the Delaware River Port Authority, the Pennsylvania school system, the cities of Detroit, Chicago, Oakland and Los Angeles, the states of Connecticut and Mississippi, the city of Milan and nearly 500 other municipalities in Italy, the country of Greece, and God knows who else. All of these places are now reeling under the weight of similarly elaborate and ill-advised swaps — and if what happened in Jefferson County is any guide, hoo boy. Because when the shit hit the fan in Birmingham, it really hit the fan.

For Jefferson County, the deal blew up in early 2008, when a dizzying array of penalties and other fine-print poison worked into the swap contracts started to kick in. The trouble began with the housing crash, which took down the insurance companies that had underwritten the county's bonds. That rendered the county's insurance worthless, triggering clauses in its swap contracts that required it to pay off more than $800 million of its debt in only four years, rather than 40. That, in turn, scared off private lenders, who were no longer ­interested in bidding on the county's bonds. The banks were forced to make up the difference — a service for which they charged enormous penalties. It was as if the county had missed a payment on its credit card and woke up the next morning to find its annual percentage rate jacked up to a million percent. Between 2008 and 2009, the annual payment on Jefferson County's debt jumped from $53 million to a whopping $636 million.

It gets worse. Remember the swap deal that Jefferson County did with JP Morgan, how the variable rates it got from the bank were supposed to match those it owed its bondholders? Well, they didn't. Most of the payments the county was receiving from JP Morgan were based on one set of interest rates (the London Interbank Exchange Rate), while the payments it owed to its bondholders followed a different set of rates (a municipal-bond index). Jefferson County was suddenly getting far less from JP Morgan, and owing tons more to bondholders. In other words, the bank and Bill Blount made tens of millions of dollars selling deals to local politicians that were not only completely defective, but blew the entire county to smithereens.

And here's the kicker. Last year, when Jefferson County, staggered by the weight of its penalties, was unable to make its swap payments to JP Morgan, the bank canceled the deal. That triggered one-time "termination fees" of — yes, you read this right — $647 million. That was money the county would owe no matter what happened with the rest of its debt, even if bondholders decided to forgive and forget every dime the county had borrowed. It was like the herpes simplex of loans — debt that does not go away, ever, for as long as you live. On a sewer project that was originally supposed to cost $250 million, the county now owed a total of $1.28 billion just in interest and fees on the debt. Imagine paying $250,000 a year on a car you purchased for $50,000, and that's roughly where Jefferson County stood at the end of last year.

Last November, the SEC charged JP Morgan with fraud and canceled the $647 million in termination fees. The bank agreed to pay a $25 million fine and fork over $50 million to assist displaced workers in Jefferson County. So far, the county has managed to avoid bankruptcy, but the sewer fiasco had downgraded its credit rating, triggering payments on other outstanding loans and pushing Birmingham toward the status of an African debtor state. For the next generation, the county will be in a constant fight to collect enough taxes just to pay off its debt, which now totals $4,800 per resident.

The city of Birmingham was founded in 1871, at the dawn of the Southern industrial boom, for the express purpose of attracting Northern capital — it was even named after a famous British steel town to burnish its entrepreneurial cred. There's a gruesome irony in it now lying sacked and looted by financial vandals from the North. The destruction of Jefferson County reveals the basic battle plan of these modern barbarians, the way that banks like JP Morgan and Goldman Sachs have systematically set out to pillage towns and cities from Pittsburgh to Athens. These guys aren't number-crunching whizzes making smart investments; what they do is find suckers in some municipal-finance department, corner them in complex lose-lose deals and flay them alive. In a complete subversion of free-market principles, they take no risk, score deals based on political influence rather than competition, keep consumers in the dark — and walk away with big money. "It's not high finance," says Taylor, the former bond regulator. "It's low finance." And even if the regulators manage to catch up with them billions of dollars later, the banks just pay a small fine and move on to the next scam. This isn't capitalism. It's nomadic thievery.

[From Issue 1102 — April 15, 2010]

'The Cleveland Model': Democracy, Community, and Economic Vision

Published on Monday, February 15, 2010 by The Nation

New Models for A New Economy: Large-Scale Worker Cooperatives

by Gar Alperovitz, Ted Howard & Thad Williamson

Something important is happening in Cleveland: a new model of large-scale worker- and community-benefiting enterprises is beginning to build serious momentum in one of the cities most dramatically impacted by the nation's decaying economy. The Evergreen Cooperative Laundry (ECL)--a worker-owned, industrial-size, thoroughly "green" operation--opened its doors late last fall in Glenville, a neighborhood with a median income hovering around $18,000. It's the first of ten major enterprises in the works in Cleveland, where the poverty rate is more than 30 percent and the population has declined from 900,000 to less than 450,000 since 1950.

Image: Tim Robinson

"The only way this business will take off is if people are fully vested in the idea of the company," says work supervisor and former Time-Warner Cable employee Medrick Addison. "If you're not interested in giving it everything you have, then this isn't the place you should be." Addison, who also has a record, is excited about the prospects: "I never thought I could become an owner of a major corporation. Maybe through Evergreen things that I always thought would be out of reach for me might become possible."

These are not your traditional small-scale co-ops. The Evergreen model draws heavily on the experience of the Mondragon Cooperative Corporation in the Basque Country of Spain, the world's most successful large-scale cooperative effort (now employing 100,000 workers in an integrated network of more than 120 high-tech, industrial, service, construction, financial and other largely cooperatively owned businesses).

The Evergreen Cooperative Laundry, the flagship of the Cleveland effort, aims to take advantage of the expanding demand for laundry services from the healthcare industry, which is 16 percent of GDP and growing. After a six-month initial "probationary" period, employees begin to buy into the company through payroll deductions of 50 cents an hour over three years (for a total of $3,000). Employee-owners are likely to build up a $65,000 equity stake in the business over eight to nine years--a substantial amount of money in one of the hardest-hit urban neighborhoods in the nation.

Thoroughly green in all its operations, ECL will have the smallest carbon footprint of any industrial-scale laundry in northeast Ohio, and probably the entire state: most industrial-scale laundries use three gallons of water per pound of laundry (the measure common in industrial-scale systems); ECL will use just eight-tenths of a gallon to do the same job. A second green employee-owned enterprise also opened this fall as part of the Evergreen effort. Ohio Cooperative Solar (OCS) is undertaking large-scale installations of solar panels on the roofs of the city's largest nonprofit health, education and municipal buildings. In the next three years it expects to have 100 employee-owners working to meet Ohio's mandated solar requirements. OCS is also becoming a leader in Cleveland's weatherization program, thereby ensuring year-round employment. Another cooperative in development ($10 million in federal loans and grants already in hand) is Green City Growers, which will build and operate a year-round hydroponic food production greenhouse in the midst of urban Cleveland. The 230,000-square-foot greenhouse--larger than the average Wal-Mart superstore--will be producing more than 3 million heads of fresh lettuce and nearly a million pounds of (highly profitable) basil and other herbs a year, and will almost certainly become the largest urban food-producing greenhouse in the country.

A fourth co-op, the community-based newspaper Neighborhood Voice, is also slated to begin operations this year. Organizers project that an initial complex of ten companies will generate roughly 500 jobs over the next five years. The co-op businesses are focusing on the local market in general and the specific procurement needs of "anchor institutions," the large hospitals and universities that are well established in the area and provide a partially guaranteed market. Discussions are under way with the "anchors" to identify additional opportunities for the next generation of community-based businesses. Evergreen Business Services has been launched to support the growing network by providing back-office services, management expertise and turn-around skills should a co-op get into trouble down the road.

Significant resources are being committed to this effort by the Cleveland Foundation and other local foundations, banks and the municipal government. The Evergreen Cooperative Development Fund, currently capitalized by $5 million in grants, expects to raise another $10-$12 million--which in turn will leverage up to an additional $40 million in investment funds. Indeed, this may well be a conservative estimate. The fund invested $750,000 in the Evergreen Cooperative Laundry, which was then used to access an additional $5 million in financing, a ratio of almost seven to one. An important aspect of the plan is that each of the Evergreen co-operatives is obligated to pay 10 percent of its pre-tax profits back into the fund to help seed the development of new jobs through additional co-ops. Thus, each business has a commitment to its workers (through living-wage jobs, affordable health benefits and asset accumulation) and to the general community (by creating businesses that can provide stability to neighborhoods).

The overall strategy is not only to go green but to design and position all the worker-owned co-ops as the greenest firms within their sectors. This is important in itself, but even more crucial is that the new green companies are aiming for a competitive advantage in getting the business of hospitals and other anchor institutions trying to shrink their carbon footprint. Far fewer green-collar jobs have been identified nationwide than had been hoped; and there is a danger that people are being trained and certified for work that doesn't exist. The Evergreen strategy represents another approach--first build the green business and jobs and then recruit and train the workforce for these new positions (and give them an ownership stake to boot).

Strikingly, the project has substantial backing, not only from progressives but from a number of important members of the local business community as well. Co-ops in general, and those in which people work hard for what they get in particular, cut across ideological lines--especially at the local level, where practicality, not rhetoric, is what counts in distressed communities. There is also a great deal of national buzz among activists and community-development specialists about "the Cleveland model." Potential applications of the model are being considered in Atlanta, Baltimore, Pittsburgh, Detroit and a number of other cities around Ohio.

What's especially promising about the Cleveland model is that it could be applied in hard-hit industries and working-class communities around the nation. The model takes us beyond both traditional capitalism and traditional socialism. The key link is between national sectors of expanding public activity and procurement, on the one hand, and a new local economic entity, on the other, that "democratizes" ownership and is deeply anchored in the community. In the case of healthcare the link is also to a sector in which some implicit or explicit form of "national planning"--the movement toward universal healthcare--will all but certainly increase public influence and concern with how funds are used.

Whereas the Cleveland effort is targeted at very low-income, largely minority communities, the same principles could easily be applied in cities like Detroit and aimed at black and white workers displaced by the economic crisis and the massive planning failures of the nation's main auto companies. Late in October, in fact, the Mondragon Corporation and the million-plus-member United Steelworkers union announced an alliance to develop Mondragon-type manufacturing cooperatives in the United States and Canada. Says USW's Rob Witherell: "We are seeking the right opportunities to make it work, probably in manufacturing markets that we both understand."

Consider what might happen if the government and the UAW used the stock they own in General Motors because of the bailout to reorganize the company along full or joint worker-ownership lines--and if the new General Motors product line were linked to a plan to develop the nation's mass transit and rail system. Since mass transit is a sector that is certain to expand, there is every reason to plan its taxpayer-financed growth and integrate it with new community-stabilizing ownership strategies. The same is true of high-speed rail. Moreover, there are currently no US-owned companies producing subway cars (although some foreign-owned firms assemble subway cars in the United States). Nor do any American-owned companies build the kind of equipment needed for high-speed rail.

In 2007 public authorities nationwide bought roughly 600 new rail and subway cars along with roughly 15,000 buses and smaller "paratransit" vehicles. Total current capital outlays on vehicles alone amount to $3.8 billion; total annual investment outlays (vehicles plus stations and other infrastructure) are $14.5 billion. The Department of Transportation estimates that a $48 billion investment in transit capital projects could generate 1.3 million new green jobs in the next two years alone. There are also strong reasons to expedite the retirement of aging buses and replace them with more efficient energy-saving vehicles with better amenities such as bike racks and GPS systems--the procurement of which would, in turn, create more jobs.

President Obama has endorsed a strategy for making high-speed rail a priority in the United States. In a January 28 appearance in Florida he announced support for rail expansion in thirteen corridors across the nation based on an $8 billion "down payment" for investments in high-speed rail included in last year's stimulus package. The administration plans an additional $5 billion in spending over the next five years. Interest at the state level is also strong; in November 2008 voters in California approved a $10 billion bond to build high-speed rail.

Even more dramatic possibilities for a new industry organized on new principles are suggested by experts concerned with the impact of likely future oil shortages. Canadian scholars Richard Gilbert and Anthony Perl, projecting dramatic increases in the cost of all petroleum-based transportation, have proposed building 25,000 kilometers (about 15,000 miles) of track devoted to high-speed rail by 2025. Along with incremental upgrades of existing rail lines to facilitate increased and faster service, they estimate total investment costs at $2 trillion (roughly $140 billion each year for fifteen years).

All of this raises the prospect of an expanding economic sector--one that will inevitably be dominated by public funds and public planning. In the absence of an effort to create a national capacity to produce mass-transit vehicles and high-speed-rail equipment, the United States in general, and California and other regions in particular, will likely end up awarding contracts for production to other countries. The French firm Alstom, for example, is likely to benefit enormously from US contracts. The logic of building a new economic sector on new principles becomes even more obvious when you consider that by 2050 another 130 million people are projected to be living in the United States; by 2100 the Census Bureau's high estimate is more than 1 billion. Providing infrastructure and transportation for this expanding population will generate a long list of required equipment and materials that a restructured group of vehicle production companies could help produce--and, at the same time, help create new forms of ownership that anchor the economies of the local communities involved.

As reflection on transportation issues and the current ownership structure of General Motors suggests, the principles implicit in the nascent Cleveland effort point to the possibility of an important new strategic approach. It is one in which economic policy related to activities heavily financed by the public is used to create, and give stability to, enterprises that are more democratically owned, and to target jobs to communities in distress. The model does not, of course, rely only on public funds; as in Cleveland it serves a private market and hence faces the "discipline" of the market.

We are clearly only on the threshold of developing a sophisticated near-term national policy approach like that suggested for transportation--to say nothing of the fully developed principles of a systemic alternative. The Cleveland experiment is in its infancy, with many miles to go and undoubtedly many mistakes to make, learn from and correct. On the other hand, as New Deal scholars regularly point out, historically the development of models and experiments at the local and state levels provided many of the principles upon which national policy drew when the moment of decision arrived. It is not too early to get serious about the Clevelands of the world and the possible implications they may have for one day moving an economically decaying nation toward a new economic vision.

© 2010 The Nation

John & Judy's Vacation 2007 - Part 4 - Seattle

We left Coeur d'Alene and cruised 30 mile on I-90 to Spokane, a major, inviting looking city I wish we had had time to explore. After stopping at the YMCA for a swim and a mocha, we continued on I-90 through the Yakima Valley and over the Cascade Mountains via Snoqualmie Pass. What a scenic drive. We stopped at the Snoqualmie Pass rest area to find free coffee and cookies waiting for us. Also all the rest areas we stopped at in the state of Washington had free Wi-Fi. What a progressive state! There was snow on the mountains. Here are a few pictures of our drive to Seattle. Remember you can click on any picture to see a larger version.

Finally, we're in Seattle. We settled into our hotel room at the Sixth Street Hotel disappointed to find no free internet access for the first time on our trip. The advantage was that there was a pretty good restaurant in our hotel which saved us from having to go out in the rainy weather. In Seattle there's a Starbucks on every street corner and sometimes there's one mid-block too.

The next day Judy wanted to go to the Rosalie Whyel Doll Museum in Bellevue. While Judy perused the dolls, I took some pictures outdoors.

Later that day we went to Pike Place Market, Seattle's main tourist attraction, where they throw and catch the fish. We weren't too impressed. We didn't actually see them throw any fish, and there were too many tourists there. So we walked down the street and had dinner at  McCormick and Schmick's Seafood Restaurant. We'd been to one in San Francisco last year and the food was as good this year.

The next day Judy wanted to rest in the hotel room while I checked out some of the downtown Seattle attractions. My first stop was at the brand new Seattle Public Library, an impressive, unorthodox structure designed by Dutch architect Rem Koolhaas built in 2004.  Of course they have free internet accesss on their computers or your laptop and a coffee bar right in the library. I  actually did a blog entry from there, the one on Einstein. This is actually the  coolest and most  impressive  library I've  ever been in except perhaps for the one in Paris, the Bibliotheque Nationale de France. Check out the pictures. The geometrical patterns are fantastic!

After I checked out the library I went to the Seattle Art Museum. The Seattle Art Museum (SAM) just opened its new expanded version this year. It has been in the same location since 1991 in a high rise and as time goes by it has taken over more floors of the high rise. It still has room for expansion as it owns the four floors located directly above it. The rest of the building is owned by WaMu.

The above photo is the cafe at the art museum. After I toured SAM (no photos were allowed), I headed for the monorail station for the ride to Seattle Center where the space needle is located and site of the World's Fair in 1962.

Finally, it was time to head back downtown on the monorail.

The next day we took the ferry to Bainbridge Island.

We could barely see Mt. Rainier through the haze. Mt.  Rainier is an active volcano about 50 miles from Seattle, and on this day, for the first time in Seattle, the weather was not rainier.

On the trip back to Seattle the sun came out. I couldn't resist snapping a few more pictures of the Seattle skyline.

Here's a few other shots taken around town. For the complete Seattle picture album, click here.

 

The next day, October 9, 2007, Judy and I headed for the SeaTac Airport. We had one more adventure in store - the Seattle Transit Tunnel. Seattle busses are free downtown so we boarded a bus outside our hotel which dropped us off at the entrance to the Seattle Transit Tunnel, an underground transit system for busses. Here we picked up the bus for SeaTac for the outrageous fare of $1.35 apiece, I think it was. In 2009 they will have both busses and light rail utilizing the tunnel, the only underground transit system in the US which will be shared by both bus and rail. The rail connection will then link downtown with SeaTac Airport.

Judy was tired and couldn't wait to get home. After we got through security at the airport, she perked up and we had an uneventful (the best kind) flight to San Diego, just a short hop on Alaskan Airlines. They served Seattle's Best coffee on the plane, a definite plus.

The Vintage Streetcars of San Francisco

In addition to San Francisco's well-known cable cars, there is also a fleet of vintage streetcars plying the route known as the F-line from the Castro district through downtown on Market Street to the Embarcadero and thence to North Beach and Fisherman's Wharf.

The following are some pictures I took on a recent trip:

For the full San Francisco photo album, click here.

Chicago, that Toddlin Town

I recently stopped off for a days in Chicago before continuing on to the East Coast. I had changed planes in Chicago many times, but I had never really "been" to Chicago. From O'Hare Airport I took the Blue Line train to my hotel in downtown having to change trains only once. I checked in at the Essex, the cheapest hotel I could find in downtown but one which I would highly recommend. They played jazz in the lobby - some great Charlie Parker licks I had never heard before, and there were art reprints on all the walls. The TV remote actually worked! Also it was centrally located on Michigan Avenue just across the street  from Grant Park, Chicago's Central Park (pardon the NYC centric-ness). The only unfortunate thing abouut the hotel was that the pool, which was very nice, was closed for remodeling. So I had to get up early and take the Red Line subway to the New City YMCA in north Chicago where I got to swim for free with my San Diego Y card.  In fact I swam for free at all  the various Y's I used on this trip including Summit, NJ and the Sussex Count Y, located near  Hamburg, NJ. Such a deal! By the way click on any picture to make it larger.

Michigan Avenue is one of the finest streets in Chicago: many fine hotels and restaurants. Just up Michigan Avenue from the Essex is the Art Institute of Chicago, my primary destination and one of the finest art museums in the world, certainly the best in the US for European art from the Impressionist era. They were having a special exhibition: "Vollard: From Cezanne to Picasso." Vollard was the art dealer who handled most of the Impressionists' and post-Impressionists' stuff and got rich in the process although the same couldn't be said about most of the Impressionists. But more about that in a separate blog just about the Art Institute. For now the photo album is available here.

After checking in, I headed up Michigan Ave to Millenium Park, a new and glitzy part of Grant Park featuring a stage and area for outdoor concerts and other productions. Along the way I got some neat shots of some of Chicago's signature landmark buldings such as the Aon Center, Prudential Plaza, CNA Plaza (painted bright red).Then I did a little walking tour around the circumference of Grant Park. Not as well developed as Central Park in NYC, neverthelesss, the park contains an assortment of monuments and fountains including the most famous: Buckingham Fountain. As it was gettting dark, I headed north on Michigan Avenue and back to my hotel.

The next day I walked around downtown snapping pictures (my favorite thing to do) until it was time for the  Art Institute to open. There are a lot of architecturally splendiferous buildings including the  Sears Tower, the tallest building in the world till 1996 and since the demise of the World Trade Center, the tallest building in North America. I circumnavigated downtown along the Chicago River staying mostly on Wacker Ave (wonderful Wwwackerrrr, I couldn't help saying that, with apologies to George Carlin). There are lots of gleaming towers in downtown Chicago such as 311 South Wacker, and lots of famous department stores including Sears Roebuck, of course, as well as Macy's (formerly Marshall Fields), and Carson Pirie Scott as well as all the usual mall varieties such as Bloomingdale's and Nordstrom's.

There are some unusual condos along the Chicago River and Trump (who else!)  is building more.

The "El" an elevated train makes the  rounds around downtown known as "the Loop." There is also a subway containing  the  blue line, the  red line and an assortment of other colors.

After my day at the Art Institute I took a brief nap at my hotel and then headed out again. I decided to walk the "Magnificent Mile" that stretch of Michigan Ave located north of the Chicago River which is the premium shopping area of downtown Chicago. Additionally, there's the  Wrigley Building, the Chicago Tribune building and the John Hancock building among others.

 

Figuring I'd walked a good ten miles that day including the 5 hours I spent at the Art Institute, I retired to my hotel. That night a serious storm blew in off Lake Michigan. The next morning I seriously wondered whether I should go to the Y and swim or not. But I decided, what the heck, and ventured out. I never came so close to being blown off my feet. The snow  was blowing horizontal!  I made it to the Y (one of few who did), then, on the way ba, got off the Red Line at Jackson for a Starbucks I'd recently found (I'd had to settle for Dunkin Donuts the previous day), got back on the Red Line and went one stop to Harrison, the closest stop to my hotel. I got my stuff, checked out, and gingerly walked the 4 blocks back to the Harrison subway stop in the slush almost getting blown off my feet again.

After changing to the Blue Line, I arrived in plenty of time for my 1:50 PM flight to Newark only to find out my flight had been canceled.  I finally got on a flight 10 hours later.  I had booked a rental car with Enterprise in Newark; then I noticed from my printout that their office closed at 11 PM. I inquired what would happen if my flight was arriving later than the office was open, and Enterprise told me they would cancel my reservation and I could come back the next day and see if anything was available.  I immediately rebooked a rental car with Hertz whose office was open 24/7 at Newark Airport. Live and learn:  the  cheapest rental car is not always the best deal!

For the complete Chicago photo album click here.

New York City: A Monday in Manhattan - Part III

In Part II we got as far as the Cafe Carlyle at 76th and Madison Ave, the penultimate epicenter of New York sophistication where Bobby Short played and sang for 30 years or more and Woody Allen plays clarinet with his dixieland band on Monday nights. We recall George Russell's record, "New York, New York", a "city so nice they had to name it twice," Jon Hendricks' poetic lyrics in between the instrumentals. By the way, you can click on any picture to make it larger. We are exploring the Upper East Side -"no one would call it the beauty and the beast side - not the east side" - with our destination at Carl Schurz Park where the Mayor's home Gracie Mansion is located. However, Mayor Bloomberg doesn'y live there perhaps because it's a hole compared to where the real money in Manhattan lives and Bloomberg doesn't lack for real money. Our next goal is a visit to Elaine's Restaurant on 2nd Ave. Elaine's is where Paul Desmond, who was a member of the Dave Brubeck Quartet used to hang out. Paul wrote a jazz hit, Take 5, and lived off the royalties in his later life during which he hung out at Elaine's and didn't perform much. For a review of Paul's biography, Take 5, see the right hand column of this blog. Going to Elaine's is sort of a pilgimage to a shrine made famous by Paul Desmond's hanging out there.

We proceed up Madison Ave to 82nd St where we turn right and go over to 2nd Ave where we turn left. Elaine's is at 2nd and 88th. After we reconnoiter Elaine's for awhile, we walk back to 86th St and turn left. There are some colorful shops and restaurants around here.

This is called the Yorkville section of New York.

It's only a few more blocks to Carl Schurz Park.

We pass a shop that advertises "Appetizing Smoked Fish." I guess that's as opposed to your unappetizing smoked fish. Here's a cool place to live near which I bought a banana from a stand on the corner:

On East 86th Street and East End Avenue is the Henderson Place Historic District (pictured above) right across the street from the entrance to Carl Schurz Park. As we enter Carl Schurz Park, the first thing we notice is its dog-friendliness. A lot of people use the park to walk their pooches. There are big pooches, little pooches, all kinds of pooches who all seem to get along on a more or less friendly basis. After all going to the park is a social outing for them.

There are people just sitting and enjoying the view of the East River, people strolling along the sidewalk, people strolling little ones in strollers, people reading, people talking on cell phones:

There are runners, joggers, kibbitzers, people getting a breath of fresh air, people seeking solitude, squirrels...

The bridge in the above photo is the Queensboro Bridge connecting to Manhattan at 59th St. Below is a view looking south to Roosevelt Island and one looking north to the Triboro Bridge:

 

Finally, I walk back to 86th and Lexington to catch the subway back to Times Square. Here are evening pictures of Times Square:

Walking from Times Square to Port Authority, I catch the Park Ride bus back to the North Bergen Park Ride lot. On the bus, just having emerged from the Lincoln Tunnel, I snap one final picture of New York City. Worldwide Plaza, the Chrysler and Empire State Buildings are visible.

At the Park Ride lot I pick up my car and head for Springfield, NJ to have dinner with Morty and Renee Geist having walked more than 60 blocks on a beautiful fall day in Manhattan!

New York City: A Monday in Manhattan - Part II

In Part I of this series I had arrived at Port Authority Bus  Terminal on 8th Ave and done a brief tour of the West Side before walking east on 42nd St to Grand Central Station, and then walking through the station on my way to the Upper East Side. You can walk directly from Grand Central into and through the Met Life building next door.  The Met Life Building abuts Grand Central Station, and then just north is the Helmsley Building now owned by the United Arab Emirates. It straddles Park Avenue. Park Avenue emanates from under the Helmsley Building having made a 90 degree turn inside the building! The Helmsley Building was formerly owned by Leona Helmsley, the Queen of Mean. She had become notorious for her gross mistreatment of employees at many of the Helmsley hotels across the United States. I always wanted to get this shot looking south along Park Avenue with the Helmsley Building in the foreground and the Met Life Building in back of it and Park Avenue disappearing into the Helmsley Building. It is quintessential New York! The Helmsley Building was bought in 2005 for $705 million by the royal family of Dubai, along with the Essex House. When Dubai Ports tried to purchase several American ports there was a big outcry, but no one seems too concerned that they own a prime piece of Manhattan real estate located next to the Met Life Building and Grand Central Terminal.

We continue up Park Avenue and very soon come to another landmark - the Waldorf-Astoria - at 301 Park Ave. Below is a view of the interior of the Waldorf.

According to the Waldorf's website,

"The Waldorf Astoria is a privileged environment of eminent elegance, and has hosted distinguished visitors from around the world for decades. It's unparalleled luxury and impeccable service indulges the most discriminating of travelers with an exclusive hotel experience." Evidently, all this pretentiousness doesn't include access to a good grammarian since the compound subject "unparalleled luxury and impeccable service" should take a plural verb "indulge." I didn't inquire about the room rates.

The next stop was at the Seagram Building at 375 Park Ave. Architect Ludwig Mies van der Rohe built this simple, bronze and glass tower in 1958. Don't plan on peeking inside the venerated Four Seasons Grill and Pool Room though. Security at most New York skyscrapers is extremely tight. Chances are you won't get beyond the lobby unless you have a good reason to be there.

The Sony Bulding at 550 Madison Ave is distinguished by the circular cut-out at the top of the building. The first floor arcade is home to Sony Style electronics stores.

Pathetically, here in the world capital of commerce, they can't even give you a decent demo of a Windows Media Center Edition computer interacting with a Sony HDTV. A sales person was attempting to give one to a well-heeled looking group, but, when the woman asked to see what an internet website looked like on the TV, the salesman had to admit "it wasn't hooked up" to the internet. Then she said well just bring up a Word document then. When he couldn't even do that, he was forced to admit that the TV was not only not hooked up to the internet, it wasn't hooked up to the computer's hard drive either! Very disappointing as I had also tried to get a similar demo from a Sony Style store in San Francisco a week earlier with similar disappointing results. How do they expect to sell this stuff if they can't even give a decent demo? They should train their salesmen better! On the right is a photo taken inside the Sony Building looking out.

The next building of interest is the Citicorp Center on Lexington Ave between E 53rd and E 54th Streets. It can be distinguised by its large angled top as seen below. Don't count on seeing much inside the building though. They made me go through security just to get into the atrium, and there were security guards everywhere. About the only things I had access to were a couple of shops and restaurants. You needed a badge to actually go anywhere inside the building. According to a recent documentary, after they got the Citicorp building built, someone discovered that the whole building could actually collapse in a sufficiently high wind storm. Without publicizing it they went through and retrofitted the whole building so now it's safe supposedly!

Here is a photo of the entrance to the building:

Tucked into a corner of the Citicorp building is St. Peter's Church which is known for its support of jazz. As you can see from the following photo of their program, they have jazz vespers, jazz memorials, jazz by the Duke Ellington Society etc. etc. St. Peter's doesn't look like much from the street, but it goes down underground several stories and is really quite extensive. It supports the arts as well.

Now I proceed north on Madison Ave toward my next stop at the Whitney Museum of Art, Madison Ave and 75th St, at which I was planning to spend some time especially since they were featuring my favorite American artist, Edward Hopper. Unfortunately, the Whitney is closed on Monday. But this was just as well since I was already late getting to my final destination, Carl Schurz Park.

Here is a picture of my favorite Hopper painting, Nighthawks:

Here are some pictures of the shopping available along Madison Ave between 59th and 79th Streets. You can click on any picture to get a larger version of it.

We will make one more stop in this part of Monday in Manhattan, and that is at the Cafe Carlyle at Madison Ave and 76th St. The Cafe Carlyle is where the well-heeled denizens of the upper east side go for the most sophisticated entertainment. Mr. Sophistication himself, Bobby Short, played and sang here for over 30 years. Since he died in 2004, they have even named a nearby street after him. Singer Barbara Cook and Woody Allen perform here as well. Woody Allen plays clarinet on Monday nights with his Dixieland band.

We have to leave it here for now. In Part III, we'll continue north to 82nd St and then head east to Carl Schurz Park on the East River.

New York City: A Monday in Manhattan - Part I

On a Monday morning in October, 2006, I headed for New York City, Manhattan Island to be exact, for a day doing my favorite pastime - walking around, exploring and taking pictures. "New York, New York: a city so nice they had to name it twice." I  recall the lyric by Jon Hendricks on one of my favorite jazz albums by George Russell, the epitome of sophistication, especially Bill Evans' work on it. From rural upstate NJ, I headed down route 23 for the by now familiar ritual: 23 to 46 to 3 to Secaucus, parking at the North Bergen Park Ride and taking the bus through the Lincoln Tunnel to the Port Authority Bus Terminal at 8th Ave and 42nd St. This is the only way I've gone to NYC for years because 1) for a senior rate of $5.00, you get to park all day and a free bus trip to and from Manhattan, 2) you don't have to pay the toll for the Lincoln Tunnel ($6.00), and 3) you don't have to drive (let alone park) in NYC which is an excruciating experience because you have to fight off a million taxicabs and unruly pedestrians. Instead, it's a pleasure to take the subway which goes everywhere. Get yourself a subway map (free) and you've got the city in the palm of your hands. You can also get an all day "Fun Pass" for $7.00 which allows you unlimited use of the subways and busses.

I wanted to walk and take pictures so I didn't get a fun pass. I would eventually take the subway back to Port Authority after my feet were tired and so I could make my dinner date with Morty and Renee Geist. Morty was my music teacher at Wantage. My goal for the day was to cover the upper East Side documenting sites that are meaningful to me - mainly jazz or art-related, but skyscrapers as well. "It's not the beauty and the beast side, not the East Side."

But first, after hitting the street, I did a brief detour to the West Side in the Hells Kitchen area. First stop - the Ayres building at 410 W 47th St. I had just seen Bob Ayres at our class reunion the previous Saturday. Bob was a great musician who graduated from Sussex High School and Julliard, played with a number of different symphonies, and now owned or leased this 5 story building and rented out musical equipment.

My next stop was the landmark Worldwide Plaza building, 825 Eighth Ave, the most visible building on the West Side in midtown Manhattan. Built in 1989 this 50 story skyscraper is one of New York's icons. By the way there is a Starbucks on the ground level. Although my girlfriend had given me a $25.00 Starbucks card before my trip, I had already had Dunkin Donuts in Franklin, NJ (they don't have Starbucks in Sussex County) before I started my trip so I didn't overindulge by having my favorite - a grande mocha!

The building of One Worldwide Plaza was documented in a BBC/PBS mini-series and a companion book Skyscraper: The Making of a Building by Karl Sabbagh. I'd seen the documentary and wanted to verify that this was the actual building. The building is crowned by a copper roof known as "David's Diamond" after the architect, David Child. There are two smaller buildings on the site also.

From here I headed over towards Times Square and my original planned route starting at 42nd St and heading east toward Grand Central Station. Times Square is always a good place to snap a few pictures. It's the center of Manhattan,  the center of all the hubbub, feverish activity and the capital of capitalism. The picture above was taken along the way. I was lucky to have such great picture taking weather - a perfect sunny day!

Bryant Park is located on 42nd St just behind the New York Public Library. By the way you can click any of these pictures to make them larger. If you click on the New York Public Library, you'll see that it actually says New York Public Library right on the building.

Continuing east on 42nd St we see the Chrysler Building looming up. It's located just past another NYC landmark, Grand Central Station, at the intersection with Lexington Ave. There was a big competition in the 20s between the skyscraper builders to see which building was going to be the tallest and which building was going to be finished first. The Chrysler Building pulled even with H. Craig Severance's 40 Wall St, and then Severance added two floors to his building to claim the title of world's tallest building. But not for long. Not to be outdone, architect William Van Alen secretly constructed the 185 foot spire inside the Chrysler Building and then hoisted it into place to present  New York with a fait acccompli and the world's tallest building until the Empire State Building came along and built a humungus TV tower on top to claim the title. Both the Empire State and the Chrysler are examples of art deco architecture, and the Chrysler Building comes complete with "hood ornaments." By the way Chrysler stiffed Van Alen on his fee. Why, I don't know. I think the Chrysler Building has the better location in  midtown Manhatttan close to Grand Central Station. 40 Wall St is now owned by Donald Trump.

Finally, we reach our goal on 42nd St: Grand Central Station. From here we go north on Park Avenue to our eventual destination, Carl Schurz Park on the Upper East Side. But I think I will stop here and rest for now. Here are a couple of pictures of Grand Central Station. We will continue in Part II.