Matt Taibbi’s Rolling Stone article describing how Jefferson County, Alabama, borrowed itself into bankruptcy can be read as a tragi-comedy or farce. Worse, it can be read as prophecy. Jefferson County, under pressure from community activists and environmental groups, decided it would reduce its sewage flows into the Cahaba River to nothing. That lofty engineering goal required it construct the mother of sewage systems, which turned out required the mother of all funding. But what with cost padding and local corruption jacking up the totals astronomically, even rate rises proved unequal to paying for it. So the county borrowed a staggering sum from Wall Street to cover it, on terms which reduced immediate payments at the cost of bloating them later, like one of those deals where you can buy a leatherette sofa with no payments until 2012 — at which time it will cost more than the Mona Lisa. And since people who buy leatherette sofas on installment usually can’t afford a Leonardo da Vinci, Jefferson County found itself defaulting on its payments.
Taibbi says that thousands of county employees now simply have to go without “so that Wall Street banks could be paid.” Politicians are now facing jail time. The place is bankrupt. Capitalism has failed the county, he claims, because even though corrupt government officials got them into this mess, it simply wasn’t fair for business to let them do it? Where’s the corporate responsibility?
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. …
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.
But maybe that’s because — while we’re on the subject — s**t flows downhill. In a racket it’s normal for someone to get caught holding the bag, usually the slowest of the gang. Because if the 20 guys convicted in federal court had their druthers, wouldn’t they prefer that JP Morgan took the rap and they remained untouched? However that may be, it takes two to tango. Unfortunately while the music plays someone will get up to dance. Some government officials, knowing their limits, have in lucid moments implored the taxpayers not to lead them into temptation. John Stossel, in an article entitled “Stop Me Before I Steal Again” captured the allure of the irresistible.
Earlier this week we got a rare moment of honesty from a politician, when Congressman Tom Perriello (D-VA) said:
“The only way to get congress to balance the budget is to give them no choice… whether it’s balanced budget acts or pay-as-you-go legislation, the only thing — if you don’t tie our hands, we will keep stealing.”
Couldn’t have said it better myself. In the same clip he gives an accurate description of the problems with Medicare:
“Part of what has happened with Social Security and Medicare is that when they were set up, life expectancy was such that people would be on it for 2 or 3 years, not 15 or 20 years…”
That’s true. And as a result, the unfunded liability of Medicare alone is $36 Trillion. It’s the country’s biggest ponzi scheme, and I will devote a show to the subject soon.
Despite Rep. Perriello’s honesty, he doesn’t seem too eager to keep Congress from stealing more. He voted for the Stimulus, Cap-and Trade, and Obamacare — though he says he’s undecided about that one now that it’s coming up for a vote again.
So how would one keep the tragedy of Jefferson County from being replayed everywhere? Taibbi wonders why no one stopped the train wreck from proceeding.
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.
Now there’s an idea. Maybe someone can stop Wall Street from corrupting the politicians by putting the politicians in charge of Wall Street. Find someone from Chicago who can do it. Or, if that doesn’t work, abolishing capitalism will get results so that in the first place there’s no money to corrupt anyone. Either more government or no business. That’s sure to work in the same sense that you can avoid cancer entirely by having all your organs removed.
But if that doesn’t appeal, there is Rep. Perriello’s proposal, “give them no choice” but to be honest. Perriello, perhaps stepping outside of himself, can see what an alcoholic in his more lucid moments knows must be done. “Keep it out of my reach. Stop me before I do it again.”
Jefferson County is an example of what happens after the party’s over. Even government jobs proved to be no safe haven. When the bottle’s dry that feeling on the tip of your tongue isn’t the last drop of gin trickling down the neck. It’s the glass itself. Now what? Taibbi writes:
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.
No money for nothing. Well, at least the new sewer system saved the earth. The county probably won’t be hearing from environmentalists for a while. Or maybe not. When the trash starts piling up in the streets, someone’s got to collect it, right? A few more protests, a little more militancy — the money’s in there somewhere. It’s got to be. Oh, did someone mention the money?
At least there’s the Social Security lockbox. Thank God some things are too big to fail.
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