Yeah, banksters own your parking spaces, thanks to your corrupt spendthrift city officials. What's it to you?!

Many Chicagoans still remember with bitter discontent the outrageous deal that Chicago mayor Daley forced on the city in December 2008 which transferred control of 36,000 of the city's parking meters and public parking spaces to Morgan Stanley.  The deal was sold to the equally irresponsibly Chicago city council as an absolutely must-do emergency parachute that could only be considered for mere three days, and that would save the day by generating $1.16 Billion, which the city, of course, desperately need to waste on more programs on which Chicago habitually wastes hundreds of millions of dollars.  Of course, it is history now, but the deal was approved.  Here's what was said at the time:

"...we're taking steps that no other city or state is taking to cushion our taxpayers from the bad economy and keep our city moving forward," (mayor) Daley said."

"I think it's a fair price" for the parking meter system, said Dana Levenson, head of North American infrastructure banking for Royal Bank of Scotland, who helped negotiate the parking lot lease in his former position with the city.

Now, interestingly, at the time Morgan Stanley was freshly minted a "bank holding company" for the first in its entire history as an investment bank.  If you'll remember, this is was a magical statutus granted to several investment banks (Goldman Sachs, Morgan Stanley) and even credit card companies (Captiol One, American Express) which was the sole discretion of the Federal Reserve, and which then allowed these non-bank companies to receive billions in TARP funding--TARP funding which Congress had authorized for banks only.  So, Paulson and Geithner and Bernanke just made everyone a bank!   Morgan Stanley received $10 Billion, and without the money, the irresponsible, toxic MBS-ladden firm would have met the bankruptcy it so honestly deserved within weeks of the bailout.   But, of course, this is sadly true of several other fantastically irresponsible banks (Wells Fargo, BoA, JPMorgan Chase, GS) which were likewise saved by head bankster Hank Paulson and his cohorts at the FRBNY and FRS, Mr Geithner and Mr Bernanke.   Still, it is worth remembering...

So, fast-forward to today, almost two years later.  It appears the city finally got around to reading the contract.

According to a Bloomberg report today, the "fair price" and "good deal" mayor Daley had assured Chicago of regarding the massive 75-year transfer of parking spaces to Morgan Stanley is, indeed, a very "fair price" and "good deal," but not for Chicago.  What, then, is the price tag on how much the deal will cost Chicago drivers, and how much revenue has the city itself surrendered to the bank of Morgan Stanley?

$1 Billion, $2 Billion?

Try $11.6 Billion.

That's right--a 10:1 ratio of costs to benefits.  Of course, this is only assuming that Morgan Stanley stays within a standard deviation or so of the normal parking space prices, which is no guarantee, as the city even surrendered to the bank any review or input on the price increases the bank imposes!  Morgan Stanley may very well make twice this estimate, as they have no apprehension, and no legal restriction, for jacking parking prices sky-high.  Chicagoans saw this first hand, as within weeks of the transfer, Morgan Stanley increased the parking rates by 400%!  So, as there are no contractual limits on what Morgan Stanley can charge for the 36,000 spaces it now controls for another 73 years, this $11.6 Billion number is likely a very low-ball estimate.  

Furthermore, the profits are a cake-walk: the Daley deal has granted Morgan Stanley an amazing minimum estimated return of 80 cents for every dollar paid for parking: compared to other contracts in the city, such as at the airport, the average revenue is below 5 cents on the dollar.  In other words, for every $1 a Chicagoan is paying for parking, 80 cents are returned to Morgan Stanley in pure profit.  When reviewed from the City's perspective, this means that Daley and the City could have sold the contract to Morgan Stanley for more than ten times as much as the original $1.16 Billion tag and still kept within the norm for private leases of public property within the city; or, to put in term that Chicago gangster-banksters might understand better, Daley and the City left over $9 Billion on the table, and let Morgan Stanley lapped it up. 

Now also please remember (as no truck driver can forget, given in huge increase in tolls since) that in 2004 the City and this same mayor Daley likewise leased out the Chicago Skyway for 99 years to a Spanish  company, the private-equity infrastructure consortium known as Cinta.  This is the same Cinta company that is so heavily involved in the "non-existent" North American corridor project.  The practice of leasing toll roads has become too common in these days spendthrift cities and states, and as evidenced in Pennsylvania, some governors are even trying to transform non-toll roads  into toll roads for the express purpose of then leasing the roads to banks  and investment groups!   

But getting back to the issue of parking spaces, the Bloomberg story breaks today because of the fact that two other major cities--Indianapolis and Pittsburgh--are both themselves in the process of negotiating deals.  Pittsburgh needs the money to meet its ballooning pension obligations, and recently rejected a deal with yet another corrupt bank that is a plague on the American taxpayer and the entire world, JP Morgan Chase.  Conversely, Indianapolis is not in as urgent need of cash-flow as Pittsburgh, but this city too is negotiating a deal with Xerox subsidary, Affiliated Computer Services for control and updating of the city's parking meters.

The vote in Indianapolis is tonight.  Charges of cronyism have been flying for some time, as the mayor's office, the city council president, and Xerox seem a little too close for comfort:

"ACS is a powerful player in government contracting and already plays a role in Indiana's welfare-services modernization. And the mayor's office and ACS have shared a lobbyist at Indianapolis law firm Barnes & Thornburg. Council President Ryan Vaughn works at the firm as an associate but does not perform any work for ACS, he says.

Such connections make some critics uncomfortable, even if ACS, the law firm and the mayor's staff insist that the lobbyist, Joe Loftus, didn't participate in parking-meter negotiations.

(City Council president) Vaughn, who has faced pressure to recuse himself, plans to vote in favor because he views the deal as important for his Broad Ripple district.

He acknowledges an appearance of a conflict of interest.

"But it's one that I've gone to great lengths to explain," he said.

He doesn't view his firm's association with ACS as violating the council's ethics rules. Those require recusal if a council member or a business in which he or she has an interest would directly benefit by more than $1,000."

At the least Indianapolis is deal is not a billion-dollar commitment.  Still, it is not a direly-needed project, either.  Cities need to much more carefully consider these "partnerships" before they go selling off their public property for decades at a time.  There is a long line of banksters who are just dying for the chance to get hold of infrastructure, and Morgan Stanley's Chicago strategy is their model.

Morgan Stanley says the D-word is "Inevitable;" Can the US ever default?

Citing the obvious aging populations and difficulties in collecting adequate revenue for the various massive social welfare programs in nations worldwide, former zombie-investment-bank-turned-zombie-"commercial"-bank Morgan Stanley today resurrected the d-word--default! Simply seeing the word "default" in a Bloomberg headline is encouraging in our fight against the banksters...but don't get too excited.

According to a article by Bloomberg, the Morgan Stanley has rendered a prediction that default by certain nations on the debt owed to their bondholders is "inevitable." The bank's debt analysts cite the overwhelming burden on future generations, including even the current generation who is now paying into but not receiving full social welfare benefits: they find that these generations will simply be unable to foot the multi-trillion dollar bill. As more and more workers leave the workforce for retirement and working families have fewer and fewer children--children who would increase the tax base once working themselves--the simple rules of arithmetic are catching up to the pipe dreams of government-funded checks in the dozens of social welfare-based nations worldwide.

On the top of this list are, of course, many European nations. It is mathematically inescapable (a "mathematical tautology") that some nations will be forced to default on the huge amounts of debt outstanding, debts which they acquired largely to fund their current and future entitlement liabilities. Morgan Stanley cites Greece as an example. But there is one little complication that develops when applying this same conclusion to all governments, because some governments need not subject themselves to that silly math stuff. Why, when the principles of mathematics are accepted by humanity worldwide, and when everyone know that you can't get blood from a turnip? Well, easy, silly--because some nations have printing presses! Ah yes, you might not be able to get blood from a turnip, but you can get trillions from a printing press, and if you do it electronically, you don't even have to pay for ink!

Those with well-lubricated national printing presses--including that of US--will always have the magical option of currency dilution and devaluation before outright default. You'll get your dollars, alright, and good luck using them. Morgan Stanley's assessment, therefore, applies most aptly to those nations without the power of the press, and most specifically, to those nations of the European Union. As evidenced by the ongoing Greek debt crisis (see Greek bailout V1 and Greek bailout V2), a nation (ah-em, Greece) without control of the currency in which its debt is repaid (ah-choo! euros) has, basically, three options when the revenue spigot runs dry:

1.) Raise taxes and cut services in an attempt to collect more money, in an attempt to pay off your debtholders, in an attempt to keep them from taking over your nation.
2.) Beg your bankster masters, especially your currency-issuing central bank, to please, please, please print you up some money, and quick!
3.) Call Morgan Stanley. Default.

Greece has tried options 1 and 2, and though like any good drug, these measures worked quite well--for a very short period of time. Also like a drug, of course, the high has diminished rapidly. Today, less than four months since the €110 Billion ($146 Billion) bailout of Greek bondholders, the spread between German bunds and Greek paper is back to its crisis-like spread of over 900 basis points (that's a stunning 9%; during the depths of the crisis just before the bailout was announced, the spread was over 14%). Morgan Stanley is suggesting that the likelihood of option 3 is, well, more than a likelihood for Greece and others, and is apparently an inevitability. The d-word might become a widespread reality.

Our response: we can only hope so!

Default is a good thing. Repeat: default is a good thing! Default is how a real market prevents overzealous financiers from financing ridiculous overexpenditures--particularly from governments who have no money to make promises they cannot possibly satisfy. One of the many reasons the ECB and its bizarre child, the euro, was sold to member nations in Europe as the panacea to economic instability was that both the ECB and euro would end the manipulation of national currencies by each country, manipulations that were usually devaluations. This is ridiculous, of course, because the ECB itself has a printing press, and its bizarre child euro creation itself is the first-ever purely fiat currency on the planet, so if devaluation has ever seen a body, it is the euro. Printing presses, and their electronic incarnations, are all the euro has ever had as parents. The euro itself is a default of the original currencies that were surrendered to it, in the opinion of many skeptics (Bankster Report included). It is a very untrustworthy currency, even among a group of utterly untrustworthy fiats.

And evidence of this untrustworthiness appeared this year. The ECB effectively allowed/precipitated the devaluation of the euro to save the Greek bondholders: check out the euro's move from over US$1.36 in April to $1.19 by June (and no, I'm not blaming this all on the ECB, I'm just pointing out that the ECB, like all central banks, will happily devalue their euro before it lets it reckless shareholder banks get burned). The ECB should have let Greece default in May. Instead, it extended loans to the nation of Greece, and direct bailouts to the bondholders (read: banks) holding the paper, because the ECB cannot stand to have a single investor bank punished for its stupid, stupid, stupid decisions.

You see, if you are a bank in, say Greece, and you're standing next to a Greek politician who is, say, lighting his cigar with a couple of rolled up thousand-euro notes, and you're listening to him promise to provide every Greek citizen with free healthcare and 14 months per year of pension payouts and free this and free that, and he asks you for another couple of k-notes to light another stogie because that first one "didn't taste right," and you open up your billfold and give him three k-notes instead (just to be sure), then, according to the ECB, you were taken advantage of!

ECB: "How dare that Greek son-of-biscuit act so fiscally conservative right before your eyes when he was really a spendthrift crook! Why, we'll teach him to be so reckless with money--we'll steal a bunch of money from other people who aren't even Greeks, and give you more money to give that Greek rascal for his stogie-smoking spending sprees! Yes, we'll teach him!"

Which is why, again, default is good. Had Greek defaulted in May, then their stogie-smokin'-Mediterranean spending spree would have come to a close, and the idiotic financiers of it would have been duly burned. Instead, it continues. So the next question is, what about these United States and our instrinsically anti-parsimonious federal government? Can the US ever default?

The answer is we already have. The United States government official defaulted on debt domestically when Roosevelt signed the Gold Confiscation executive order in 1933 and subsequent legislation in 1934 which magically "relieved" the US government from fronting gold species in return for its issued paper notes. Internationally, the same default happened in 1971 when Nixon ended the dollar-gold peg. So, the US has a history of default, though like any good druggie, we'll deny it. But this, I understand, is not what people mean when they ask the question, "Can the US default?" The question is whether or not the United States federal government will ever be unable to meet the minimum interest payments (debt financing) of outstanding debt, that is usually what people are asking. The answer to this is more difficult to define.

Since the Federal Reserve prints up money at its own prerogative, then technically the US government could always get the Fed to print up more money to lend to Congress to pay off debt holders--even if the Fed itself is the debtholder to be paid off (the Fed currently owns nearly a trillion in US Treasuries--that they admit to owning). Since US debt is quelled in US dollars, as long as something is printing up dollars, then technically the debt can be quelled in. But, of course, only in perpetuity, and only at the cost of issuing more debt, as it is a go-nowhere treadmill because every time the Fed makes up new money out of thin air, it is charging the US Treasury for it. So, since 1913, the US has been an inevitable state of default. If the US took over the Fed and printed up trillions of dollars to pay off all the debt in a year or whatever, then it would be a total tanking of the dollar--a tanking which is, clearly, also an inevitability. So, the United States and other nations that still have quasi-independent currencies under sort-of their own control are in a very different position than the euro nations like Greece. Devaluation, not default, will be the tool of choice for the US.

It is almost pointless to have this conservation, however, because its all made-up money at any rate and by any cut. We can only wish that the future response to national bankruptcy is actual bankruptcy, or default. Only then will financiers take the pain that they helped cause, and only then will this worldwide bankster debt-based fascist-socialism hybrid be discredited and disabled. Even allowing individual banks to default and crumble into bankruptcy would be a nice start, but Congress, at the direct expense of taxpayers and complete benefit of reckless banksters, has been preventing this for years. Debt is now and has always been a poisoned field, and nothing grows of it but more and more debt.

So have a nice day, now!