Monday, August 09, 2010

On The Plus Side

I see that Hizzoner is finally realizing his life-long dream of ruining running the City like a business. (From Bloomberg News with a h/t to Roger Ebert):

Morgan Stanley's $11 Billion Makes Chicago Taxpayers Cry

Chicago drivers will pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what Mayor Richard Daley got when he leased the system to investors in 2008.

Morgan Stanley, Abu Dhabi Investment Authority and Allianz Capital Partners may earn a profit of $9.58 billion before interest, taxes and depreciation, according to documents for a $500 million private note sale by their Chicago Parking Meters LLC venture. That is equivalent to 80 cents per dollar of projected revenue. Standard Parking Corp., which runs 30,000 spaces at the city’s O’Hare and Midway airports, earned 4.84 cents on that basis last year, data compiled by Bloomberg show.

The deal illustrates how Wall Street banks, recipients of more than $300 billion in taxpayer bailouts in the worst credit collapse since the Great Depression, are profiting from helping states and cities close record recession-induced deficits by selling bonds and leasing public properties. Chicago gave up billions of dollars in revenue when it announced in 2008 that it leased Morgan Stanley its 36,000 parking meters, the third- largest U.S. system, for $1.15 billion to balance its budget, said Alderman Scott Waguespack.

On the minus side, the business he has chosen to run it like is the hellbeast mutant spawn of WalMart and Enron.

If you're interested in a little, local, foul-mouthed and highly subjective back-story from yours truly regarding how my city got this fucked up, may I suggest:

The First Rule of Clout Club.

Of Sin Eaters and Parking Meters.

Plate Sin with Gold.

The Clout Burglars.

And in case you were worried, no, this will have no effect whatsoever on Hizzoner's future bid for a seventh term as Mare For Life of the Great City of Chicago: a campaign in which I fearlessly predict he will run for a few weeks as a -- no kidding --maverick outsider populist, during which he will publicly debate no one, and after which he will once again triumph with numbers so lopsided they would make the late Saddam Hussein blush.

Proud member of The Windy Citizen


Glen Tomkins said...

A tax farm

What a clever and novel idea. Sell off various govt assets and operations to meet short-term budget needs with a gimmick that provides a one-time payoff, but doesn't require any actual needed reform of the budget, until you're down to selling the right to the collections of the fees and taxes that govt uses to run its operations.

It's an even better deal for the business enteprises that purchase the collection franchises. Not only do they get to purchase a cash cow for a song, because you know you have govt over a barrel if it's even thinking about selling off tax and fee collections, they get to be good corporate citizens by doing so. You see, this sort of thing is perfectly calculated to destroy whatever vestige of confidence in and respect for govt that people may have left. And if you were to make a list of things that threaten the American way of life in 2010, you would have to head that list with that last residual of belief in govt that may, unaccountably, linger in some Americans. No greater service to America than to kill it off once and for good.

Oh, wait, that last point reminds me that this isn't really a new idea. The ancien regime of Bourbon France hit on the same scheme, of a tax farm, to make their budgetary ends meet. That didn't end well.

I remembered because my ancestors, with the business and political acumen that has been our hallmark ever since, had the brilliant idea to buy into the tax farm just before the end. This was a non-smooth move of the highest order, because the tax farm, and all the fermiers who owned a bit of it, became dangerously unpopular with the Revolution. The Terror actually snagged mostly small businessmen for war profiterring, as the politics involved were remarkably politics as usual, and big fish from the ancien regime were as immune to accountability for their crimes under the ancien regime as any American politician today. The sole exception were fermiers, proprietors of the tax farm, so great and uncontrolled was the hatred on all sides for this one institution, when the ancien regime did not lack for abusive insitutions.

Not to worry, my ancestors were prescient enough to liquidate their holdings in time to skip the country with the profits. Unfortunately, they were sufficiently lacking in circumspection that they chose to buy a large plantation in Haiti with the loot, just a few years before that unfortunate business with l'Ouverture made the French Revolution seem like Sunday School.

Where do you think that Daley and crew will set down after the blow up?

KWillow said...

Once the Private Companies have run the business into the ground, the government will step in and take over the failing enterprise.

It happens all the time. Rapid Transit and Stadiums are good examples. Gov't builds them, gets them running efficiently tho not at a profit, and then Private business swears they CAN make a profit, and Gov allows them to take it over. Pffft.