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"A comprehensive, collaborative elections resource."
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The A.I.G. hurt comes to Wisconsin
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| Contributor | Penguin |
| Last Edited | Penguin Mar 18, 2009 08:07pm |
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| Category | Opinion |
| Media | Newspaper - The Isthmus |
| News Date | Thursday, March 19, 2009 02:00:00 AM UTC0:0 |
| Description | When it comes to comprehending the global economic crisis, Kenosha has a leg up on much of the rest of the world.
The Kenosha Unified School District is one of five in southeastern Wisconsin that have lost a lot of money by investing in something called synthetic collateralized debt obligations, the same absurd financial maneuver that has brought A.I.G. to the brink of collapse and made it a symbol for excess and corporate welfare.
Collateralized debt obligation investments are essentially bets on other people’s debts -- mortgages, car loans, business loans, etc. If the debtors pay their bills, the investors get a kickback in exchange for agreeing to cover the debt should the debtors default.
In case you haven’t heard, there has been a lot of defaulting these days. Kenosha’s $37.5 million “investment” is now worth perhaps $950,000 or less. Altogether, the five Wisconsin school districts -- Kenosha, Whitefish Bay, Waukesha, West Allis and Kimberly -- borrowed $200 million via a network of German, Irish and Canadian lenders to make the investments, and have, by most accounts, lost almost all of it.
If you think the school districts lost all their money because they were rubes lost in the world of high finance, think again. A.I.G., the world’s largest insurance company, lost hundreds of billions doing the very same thing.
Elected officials and corporate lobbyists have engineered a massive wealth shift in this country, through 30 years of policy changes in favor of Big Business, tax shifts away from corporations and the wealthy, mergers, acquisitions, deregulation and union busting. While economic growth over the last three decades has been substantial, wages have been flat. |
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