Tuesday, August 7, 2012

Breathtaking Idiocy

Sometimes you read a story and it simply is breathtaking in its idiocy. I want you to take a quick few minutes and have a look a this must read piece, Where Borrowing $105 million Will Cost $1Billion: Poway Schools via the Voice of San Diego.

I have seen some lunacy in my day but this simply breathtaking in its idiocy.

If you choose to skip it here it is in a nutshell;

"The bottom line: For borrowing $105 million in 2011, taxpayers will end up paying investors more than $981 million by 2051, or almost 10 times what the district borrowed" 

The piece references that the district sought the advice of a, as of yet unnamed, financial consultant. What are the odds this consultant has an MBA, better yet a prestigious Ivy league one at that?

 California’s ever-strapped districts have increasingly looked to capital appreciation bonds to raise money for improvements without increasing taxes on current residents. Across the state, districts have borrowed billions this way, using exotic financing to shift the burden for paying for today’s school construction to future generations of Californians.

Sadly this story is not confined to the Poway School district. This something for nothing, kick the can, end run bullshit has become an epidemic around the globe.

I saw it firsthand during the tech bubble when sound analysis was replaced with tales, hype lies and outright deceit. Think Henry Blodget, Mary Meeker, Frank Quattrone, Jack Grubman et al.

Sadly nothing will change so long as the clients, or muppets as they are more accurately described by Goldman Sachs personnel, both institutional and retail continue to accept it period. The phrase "shit for brains" comes to mind for the whole thing. Advisor, client everyone. 

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