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The $154,000,000 High School. Did Your School District Build One? Maybe.

Written by Gary North on February 5, 2013

Over 1,000 school districts and local government agencies have built projects with something called capital appreciation bonds. These are high-interest bonds that require no payments for 20 years — and then: Whammo! Huge payments for the next 15 years.

Here is the story of a California school district that built a high school without voters’ approval. When it is all paid for in 2049, it will have cost $154,000,000.

But of course, it will have been built for free. Why? Because the city will declare bankruptcy. “Sorry, suckers!”

There will be a Great Default. Then creditors will get a lesson in the risks of lending money for capital appreciation bonds.

Click the link. See how really stupid investors are throwing away big money.

Continue Reading on www.sfgate.com

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11 thoughts on “The $154,000,000 High School. Did Your School District Build One? Maybe.

  1. If those big investors make enough bad decisions, they will just whine in unison: "We need a bailout!"

  2. The problem is those big investors are probably a big Public Pension fund.

  3. Tea Party Marine says:

    Another example of the quality of the politicians that the sheeple voted for! They could care less about the future because they won't be here to have to deal with it. This progressive buy now and pay later crap has to stop. Our kids and grand kids will pay for this their whole lives. Stop voting for these democrat nut jobs!

  4. Sorry Dr. North, but it's not the "city" that will declare bankruptcy, it's the School District, a separate government entity with it's own elected officials (the School Board) and it's own taxing authority. School districts are not congruent with cities or townships and frequently encompass more than one city, township, village, etc. within their boundaries.

  5. It looks like another Bankster scam like the Mortgage Loan Frauds. And they love you so much that they want to take your 401Ks and put them into Government programs. (Because they're so good with our money, right?)

  6. Gary North has a history of not using all the facts and substituting his own speculations where he finds it convenient.

  7. Public and private alike, everyone's retirement savings are being looted.

  8. Interesting that this is being done to circumvent limits on the amount of debt service they are allowed to carry and to avoid having to obtain taxpayer approval. Just another posion pill our debt-addicted society has swallowed.

  9. Shane has a history of being Gary North’s biggest troll. He masterfully out-speculates Gary North.

  10. Figures public school in CA. Just one more story of how screwed up the employees of ours are in CA. Seems to run from local government employees of ours to the failure type employees of ours in our federal goverment. All of these employees work for us kind of makes one sick knowing we have dolts spending our money.

  11. Brooklyn emigrant says:

    What IS inescapable, is that more taxes, fees, assessments would be needed. Taxpayers will resist via various means, and bottom line: these huge amounts will not be fully, or at all paid. Those duped and scalped will howl mightily, to little or no avail.
    First 'newsworthy' case will send shivers immediately to all present and future potential suckers (oops, "investors") drying up funding pools rapidly. Use of public workers pension funds could be contemplated perhaps.