Jackson Ward 2 City Councilman Melvin Priester, Jr. posted this epistle on his public Facebook page:
I realized why I've been so angry about what's going on with Jackson lately.
I'm frustrated because we've fallen into a trap that we can't get out of unless we do in the short run many of the things that our captors want us to do.
You know how I keep hammering on the fact that Jackson both circumstantially and by choice is gong down the same depressing path as other cities? You also remember how I've been comparing certain municipal banking moves to the same moves an individual makes like getting a payday loan. Let's start there.
Over the last 20 to 25 years, just as Wall Street found creative ways to suck money out of individuals by creating novel fiscal products and getting people who had no business getting loans hooked on credit, Wall Street has been doing the same to cities. Wall Street has basically been riding a vacuum born from the federal government choosing to underfund local and state governments since Reagan. Municipalities in past years rarely to never made moves like tax anticipation notes, heck, they rarely even issued plain old municipal bonds. Beginning in the 1980's, however, "debt-financing and privatized credit, the municipal bond market . . . has been growing at an explosive rate to the point that it is now valued at $3.7 trillion (SEC, 2012). As Kirkpatrick and Smith (2011) have explained, the exponential growth of the muni-bonds market must be understood as one facet of a wider and deeper financialization of urban development and (municipal) governance in the USA." (Tuck, link to source at end).
Put a pin in "financialization."
What does financialization mean?
Financialization refers to how cities like Jackson have come to rely on Wall Street wizardry to cover the fact that we're not able to afford everything we'd like to buy and, frankly, we can't even afford to pay all our bills this month. So along comes Wall Street to offer us a TIF (tax increment financing) or a TAN (Tax Anticipation Note) or a P3 (public-private-partnership).
Why does this matter? It matters because cities are just like individuals who find themselves in a worse and worse position because they got that Capital One credit card instead of just dealing with their budget and not borrowing further. In other words, cities like Jackson make a deal with the devil (i.e. a deal with consequences) when they choose to finance their way into postponing a real reckoning with their financial challenges.
As a result of the financialization of municipal government, cities like Jackson "have become ensnared in . . . . pouring billions of dollars into business attraction and retention, with ever-diminishing returns while being forced into the bond market and all manner of accounting tricks as means of financing not only infrastructure investment but also operating costs. In the process, local-government agencies have become increasingly subject to bond-market disciplines in general and to the judgments of financial gatekeepers, like the ratings agencies."
What does that mean and why is that bad? What that means is that cities have gotten hooked on Wall Street money to cover operating costs and a host of other things. That's bad because of the fundamental rule of dealing with Wall Street.
The fundamental rule of dealing with Wall Street is that Wall Street is out for one thing: maximizing profits for its shareholders.
Step one for Wall Street is getting you hooked in with what they offer.
Step two for Wall Street is to make you pay up by any means necessary.
On the individual front, the pay up stage is the part where the person who got that student loan to study folklore and mythology at an Ivy League school finds themselves eating ramen noodles every day to get by because "I don't want to screw up my credit score any worse than it is, I want to borrow money for a house one day."
On the municipal front, the pay up stage is when municipal leaders are forced to say stuff like "we need to layoff these workers because our bond rating is almost junk and we need to go to the credit market to get a tax anticipation note and we need to borrow against projected tax revenue to do this infrastructure project. Sorry, we have to live within our means because the ratings agencies are watching."
Sound familiar?
Jackson, like so many other cities, is now dependent on Wall Street and its profit motives to survive. That's not a joke. That's not an overstatement. That is a straight fact. To balance our books these last few years, we have had to do a string of debt refinancings and now a tax anticipation note.
That's bad because the longer we use Wall Street to hide our structural problems, the worse the comedown will be when we finally hit the wall.
Look, I've supported these financings because they were what we needed at the moment to survive. But we have got to get off this roller coaster because Wall Street is doing to more and more municipalities (here's looking at you Detroit) what Wall Street and the global financial markets did to countries like Greece: forced austerity.
And austerity lets me get to why I'm so frustrated.
Jackson, through a combination of circumstance and choice, is hooked on Wall Street to make ends meet. We, as a city, are thoroughly financialized.
Because we are throughly financialized, we have to keep playing the game of cut to keep Wall Street happy, raise taxes to keep Wall Street happy or we won't get that loan or refinancing we need from Wall Street to get by.
For the near term, that's what we have to keep doing. In the long term, however, we have to stop being addicted to the Wall Street model of government. For Jackson to thrive and get out from under the thumb of banks, we have to manage what we have more efficiently and learn to function independent of the fiscal wizardry that is saving us. In some ways that will, ironically, require more cutting than even the banks and ratings agencies presently request. But, in the long run, the way a city gains its freedom from Wall Street is no different than the way an individual gains his or her freedom from credit cards and student loans: spend wisely and stop borrowing.
Kingfish note: The councilman is going to blame Jackson's problems on Wall Street? Even if Wall Street was offering bond crack, Jackson didn't have to smoke the crackpipe. There will always be those willing to lend money to cities but it's the responsibility of city leaders to just say no.
It wasn't Wall Street that raised the city minimum wage, blew money on consultants, or millions of dollars on Farish Street "revitalization". Wall Street didn't hold a gun to the head of Jackson and force it to go into the hotel business. Those are small examples bad decisions made by city fathers over the years but you get the idea. All Wall Street has said is that Jackson should get it's financial affairs in order. One can only wonder what would happen if Wall Street wasn't around to issue such warnings.
But hey, it is much easier to blame Wall Street.
Thursday, October 6, 2016
Priester blames Wall Street for Jackson's woes.
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49 comments:
Sounds like he doesn't know the meaning of leadership. No one made the Jackson officials spend more money that they had coming in. No one made the officials in Jackson borrow money. No one is making them do it today or any day after today.
The leadership in Jackson chose to do these things. Just like some people get a payday loan. Not everybody, or even most, fall for the payday loan scheme.
The lack of competent leadership is their problem.
Priester must be reading Yanis Varoufakis.
pointing out a symptom of a problem is not pointing blame, it only acknowledges that the problem exist.
but hey it seems to be much easier to point the finger at the folks trying to clean up the mess.
Before Priester uses code words to blame whites (actually he's blaming "the Jews") for Jackson's ills, perhaps he could wax eloquently about the "majority" of citizens who refuse to take responsibility for anything and won't even pay their damn water bill.
I was going to vote for him if he ran for Mayor, after reading that I just changed my mind.
While somewhat true, Wall Street didn't make Jackson take the money. What about towns like Brandon, setting a special tax allocated just for certain improvements and having the money to start them in a few short years, such as the ball park renovations with the amphitheater to boot? No Wall Street loan there. If you want to address the pink elephant in the room, then you need to look at the number of people using the cities services versus the amount of taxes or bills paid by those in the municipality. I would bet a shiny new nickel there are MANY not paying their fair share in taxes in Hinds County.
Mr. Priester has gotten very fair treatment from this website. JJ has posted his Facebook posts regardless of whether or not this correspondent has agreed with them.
He forgot Step Three: Support Hillary because I'm part of a group that group thinks my vote, and in turn support the greed of Wall Street as I talk out of both sides of my mouth.
The other option is to hold city leadership directly responsible for their actions. Something nobody white or black wants to do if they want to ever be elected or reelected in this city. This situation is a direct result of stupid, near criminal, and criminal actions by elected officials and other city figures. Workers that do not perform their jobs, supervisors in over their heads due to being political appointments and not a competent hire, and leadership that cannot enact policies that follow high school level math and economics because it might hurt the feels of people that don't pay any meaningful taxes anyway.
Mr Priester. Cut spending. Terminate employees. Downsize government to appropriate size for population and tax base. Collect water bills, ALL of them.
Your job is not to fund everything people 'want'. And Jackson isn't going to get the same deal on its financing that the Mayor got on his house. Someday the borrowed money will have to be paid back.
Blaming it on the federal government and Reagan doesn't work either. The federal governments job is not to fund municipal governments, just because Jimmy Carter tried to do that with his "Revenue Sharing" programs of that wonderful economic model of the late 70's.
Wall Street has its role and business model, like you say with their profit motive as its guide. And they serve an appropriate purpose. Just as it is OK for a family to borrow money to purchase their house -a long term investment - certain things like a new treatment plant or a major highway are appropriate for financing. But not just because borrowed money is available do you have to take it so that you can keep a golf course open or maintain a duplicate museum or pay the annual operating costs of a treatment plant.
Leadership means making hard decisions and sticking with them even when the cries arise from those still stuck to the title of wanting everything, expecting others to pay for them. Show some.
Quite surprised that a usually cogent Priester suddenly lurches to blame the drug dealer for the drug addiction problem.
@DonnerKay: P.S. Don't diss #Detroit to me. After what I've learned, I'll cut you just like I do people who trash Jackson. With words, of course.
Don't worry Melvin. You're in good company. The Kenyan just doubled our national debt in less than 8 years but unlike you, to your credit, he doesn't give a damn about digging the hole deeper.
Maybe next time you could blame Jackson's debt woes on global warming. It caused the Syrian "civil war" you know.
People like Priester and Claptrap epitomize the word "DIM-O-KRAT" with emphasis on "DIM"....
I am sympathetic to uneducated individuals who get tied up in payday loans.
I am not sympathetic to the elected leaders of municipalities who do the same, then claim that mean old Wall Street gave them choices they weren't informed or mature enough to make.
I'm not from Jackson or live in Jackson, but I can read. I appears that this guy is just informing readers of what's going on, and I did not read, where he is it is Wall Street fault, but he did state the obvious of what Jackson had done to get in the mess. Don't be so quick to put words and thoughts into someone's statement. Hell, I'm glad he informed us. We all know the leadership sucks, and that's pretty much what he was saying, not blaming Wall Street. As in the words of Trump "I love the uneducated", In my words "Uneducated people keep hate and racism going, black or white"
12:53 - he starts with the premise that municipalities are in trouble because in 1980's the feds took them off the tit. So, his first premise is wrong - it is not the federal government's job to feed the mouths of local governments that don't want to take care of themselves.
And, if you are not from Jackson, maybe you don't know what is going on in Jackson. They don't have the money to keep the basic operations of the city operating (police, streets, water/sewer) but they complain because they can't have a golf course that cannot even collect $8 green fees and get the money to the bank. The city cannot collect the water bills from its users - or for that matter, they cannot even get the bills sent out in many cases. But they still want to maintain all of the programs that have been here for decades. Why? Because they were here when the other folks were running the city so they should continue now even though we don't have any money any more. And to do so, we can borrow money to do it because Wall Street is feeding our habit.
He is not 'just informing' the readers, he is trying to transfer the blame from our 'leaders' to the 'dealers'.
"Uneducated people keep hate and racism going, black or white"
Since you can read and recognize the obvious and know a mess when you see one ... don't be so quick to monger.
12:53, try going back and reading it again. Especially the 4th paragraph. We are not putting words in his mouth. He is running his mouth so much most people do not even read what he says. You are one of the people who do not read what he says.
"Chil' please!" (As pronounced In the street dialect)
From Mr. Priester: "Financialization refers to how cities like Jackson have come to rely on Wall Street wizardry to cover the fact that we're not able to afford everything we'd like to buy and, frankly, we can't even afford to pay all our bills this month."
Case described.
"not able to afford everything we'd LIKE to buy and, frankly, WE CAN'T EVEN AFFORD TO PAY OUR BILLS THIS MONTH"
Solution obvious.
Don't buy it. Just because Wall Street offers you a new credit card, you can do like responsible people and throw the mail in the trash.
Priester must be reading the Bryant / Tater playbook.
Priester makes one huge unforgivable mistake in his analysis of a cycle of fiscal opportunism that works in Wall Street's favor-He uses the word "Reagan". To evoke St. Reagan along with any claim of corporate opportunism is to invite the ire of his many worshippers and to totally erase the remainder of his observation. I totally agree that a drug addict must take responsibility for his own actions before blaming the pushers for his addiction, but I also understand that pushers are in business and make their product openly available hoping that some weak or stupid individual will get caught in the cycle of dependence. If they can promote the dependence, so be it. That's business. Just because some sucker recognizes the dependence cycle does not mean he cannot accept responsibility for his own actions or his need to make painful corrections. Had Preister simply said, "the cycle began when during administrations like Johnson's and Carter's, cities took bloated federal funding for granted" his observations would have been universally accepted by this bunch. Instead he started a timeline with the Reagan cuts instead. That means he's whining. Reagan-sacrilege or not, it still doesn't change the fact that Wall Street is in a predatory business and cities like Jackson are credit junkies who need to wise up. That, in summary is what Preister said. At least Preister smells what's cooking.
I took it to mean that what we are doing is borrowing one-time money, just like Obama does. It is just like charging groceries. There is no way to ever get out of the "loop". Yes, Jackson must do better on collections, not just the so-called water bills (they include sewer service and garbage pick up) but also the large amount of fines. We would come out ahead to hire bill collectors for 50% of what they collect -- absolutely no expenses or liability offered to them. They collect at their own risk.
Ok...cities used Wall Street money to expand and used too much....muni bonds became sexy investments for pension funds...the cycle repeated itself.
What is the answer? The city owes the money...and it cannot pay the money with its current residential composition.
It sounds like Mel is just about through with Chapter 8 and may be getting ready to open up Chapter 9....where he might find a few solutions.
Priester's anger is slightly misplaced.
Behold your friendly neighborhood crack dealer:
http://kingfish1935.blogspot.com/2011/03/uh-oh-bond-pimp-is-back.html
Unfortunately, Jackson bought what he was peddling. Whose fault is that?
How dare this young upstart characterize our Wall Street financiers
as hustlers and payday loan sharks. Hustlers don't graduate from Harvard and loan sharks wear pinstripe suits and pointy-toe patent leather shoes. Jeez
I have no problem with him pointing out some pretty important facts. Bottom line is that you have elected officials who cannot make reasonable fiscal decisions. We don't have enough reasonable people (of any color or background) to competently elect our own government. You could argue the opposite, but the continual fiscal mismanagement does not lie.
It is really simple. Tithe 10%, save 10% and live on less than you make. If you don't make much, such as minimum wage, then put a plan together and execute it to facilitate future opportunities to improve your income. Don't sit around, bitch and blame others. First and foremost, it is a spending problem, after that, it is an income problem.
Melvin is a Harvard alumni and went to Stanford for law school. He then worked in banking and financial law in CA according to his official bio on the Jackson Official gov website. I think Melvin realizes how bad it will look for his professional resume to be associated with the failure of the Jackson City government. He has identified only half the problem. It is true that Wall Street much like the mob will supply the money if you go to them. The problem is they will also send the leg breakers. And the real problem is that Jackson no longer has a tax base that can support their desired standard of living. Eddie Fair pointed it out but I am not sure they were listening...business has left and is leaving. With the business goes tax paying residents. A double whammy. This is real simple accounting 101. They want to throw up all kinds of blame but the buck or the lack of them rest squarely on a city government that does not function and never will.
I think the Devil is to blame
Your cart is before your horse. The businesses follow the rooftops.
only Jackson leader who has any accurate comprehension of ANYTHING.
Some of you are holding Mr. Priester responsible for changes that he well describes but that took place before he was born...literally. He deserves a great deal of credit for trying to understand how the hell this happened.
He's trying to point out that the system is broken and has put us all in a Catch 22.
The " just don't buy what you can't afford" and " cut spending" and " slice government" mantra is ridiculously simplistic. One would think none of you had a mortgage or a car loan and had always paid for everything in cash! Would you say to your sick child, " you'll have to suffer or die because we have a cash flow problem and can't pay the doctor"?
Money is either well spent or poorly spent. Congress can either make it easier or harder for you, individually or as a state or local government to make good decisions about how you spend your money. Congress can make it easier or harder for you to be bilked by financial institutions.
Some of you are apparently too young to remember when your pensions, your investments your insurance, and your money in a bank account could not be used for high risk schemes and those who had control of your money had a fiduciary responsibility enforceable by law not to con you out of it to enrich themselves! Once upon a time when one corporation bought out another, they were legally required to honor the commitments made by the business they bought. Once upon a time, interest rates for all credit was tied to the prime. Anything over 5% more than prime was usury/loan sharking.
So you know what the prime is today and yet credit cards from retail corporations and money lenders are charging 28-33% interest rates legally. They do have to " confess" now in fine print how much more you'll really pay over time but they offer you sweet short term deals and don't mention the long term consequences. The same is true of cellular service or WiFi , etc. We used to call that a crime.
What you don't know hurts you as well as being so blinded by partisanship that we can't have a real discussion about what changes need to be made to fix our broken systems.
I applaud Mr. Priester for trying to start an serious dialogue about the specifics of how we all got to the mess in which we find ourselves.
Regan! Really how many liberal democratic Presidents have we had since then? Who has managed and run these cities for so long? Lots of blame to go around but Regan, give me a break.
Hey, let's blame Obama for Jackson's financial condition.
Priester is just like all of the other leaders the citizens elected to do a job. He is not qualified to do the job and does not have the ability or inclination to learn. Why should he, he would be out of a job if the people of Jackson actually elected people with knowledge and experience.
The only people left in Jackson are those who live off the govt. They know nothing of paying bills and balancing a budget as they have never done it. They elect pretty much the same type people. Jackson can never do any better. The only thing that would help is working people returning to Jackson and voting, which is not going to happen.
Priester paints with too broad a brush, which makes me worry that he has an agenda here. TIF's and PPP's have absolutely nothing to do with the fact that the City is currently spending too much money. TIF's are a way of encouraging private sector development by allowing the developer to offset infrastructure costs against anticipated increases in property tax revenue. PPP's enable cities with poor credit ratings to partner with private entities (with good credit) and issue tax-exempt bonds for long-term infrastructure projects. They've been used successfully thousands of times around the country. Detroit didn't go down the crapper because of those type deals, and it's wildly disingenuous to suggest it did.
Priester IS correct to say that tax anticipation notes (TAN's) are a problem, because they're just borrowing against next year's revenues to pay this year's bills.
Mark my words - by mixing all these things up and lumping good financial deals in with bad ones, Priester is just laying the groundwork to oppose decent projects that he wants to kill for ulterior motives. I just don't trust the guy anymore.
@ 4:35 AM - Not always. In an improving economy business growth generally follows residential or "rooftops" as you say. In a declining market where business is leaving you will see rooftops follow. You can look to Detroit as one example. You can look at Las Vegas as another. As job opportunities died in one city the residents left for work and as jobs became available in the other the residents showed up after.
To suggest that Priester is "not qualified" or that everyone left in Jackson does not work is at best a gross exaggeration and at worst racist stupidity. Priester is probably one of the most intelligent and talented young men to enter municipal government in the history of this city, especially when you consider some of the brilliant scholars like Allen Thompson and Ed Cates. Priester may however, have an agenda for some self-serving projects or he may wish to align
himself with certain political powers that be. Hopefully, Priester will devote his considerable talents to saving a drowning city rather than personal advancement, but to suggest that a person as capable of cogent analysis as Priester is "unqualified" raises more questions about the person making the suggestion than about Preister's background.
@ 2:12 PM. Priester CANNOT save Jackson! Only private investments coupled with gentrification CAN save Jackson!
2:12, you may be impressed with him but most people only see him as part of the group of clowns. Just reading what he said puts him right smack in the clown car. He may be the driver but it is still a clown car full of clowns.
When attacking a problem, some people believe the problem and it's cause should be identified.
Some others believe the important thing is to deflect and place blame somewhere other than where it belongs.
The first is taken from a study of Root Cause Analysis. The second is taken from the Community Organizer Handbook.
In this market businesses are following rooftops and have been for 30 years. You must not live here to suggest otherwise.
1:21 pm In what universe do you live? The federal government has played a role in helping local governments since conception. How do you think goods and services got from the docks to towns? How do you think gas lines got financed into homes before the Civil War? How do you think electricity got to homes? How do you think large damns got built? How do you think running water happened?
12:53 pm You are right. The lack of reading comprehension skills and failure to understand that sentences don't stand alone but have connection and context is pretty stunning in many of these comments. There's even an inability to recognize the subject.
8:22 - damn what an answer! I'm awed at your comprehension. Yes - the federal government has built highways, and made loans to (some) entities for electric lines. And the federal government has built dams. The feds have done a lot of other things too while you are at it - they financed armies, and to some extent have protected our borders.
But that is not what Priester was referring to, dumbass. He was wanting to go back to the democratic policies of the Great Society of LBJ, and Revenue Sharing of Jimmie Carter - where the federal government sent dollars to cities to pay for policemen, and day care centers, and CETA programs, etc. etc. Those policies made dependents out of local governments just like LBJ's other Great Society programs made dependents out of the poor in our country.
'
All those programs you mention are still carried on by the feds - so pack your tears back in your eyes and try to find a better argument.
Sounds like an opportunity for a sequel to "The Big Short." There could be a lot of money made when all these Democrat-lead cities fold under.
In defense of Mr Priester, he did make a statement right off the bat acknowledging that poor decisions of the past are to blame for the situation he was about to describe.
"You know how I keep hammering on the fact that Jackson both circumstantially and BY CHOICE is gong down the same depressing path as other cities? You also remember how I've been comparing certain municipal banking moves to the same moves an individual makes like getting a payday loan. Let's start there"
From my cursory research, other entities who have fallen victim to the "wiles" of wall street and their associated minions. Folks with a lot more "qualifications" than the leaders of the City of Jackson.
1. City of Pearl Mississippi having trouble making stadium bond payment, gets lower bond financing rating.
Jackson Jambalaya: Bloomberg: How the Braves (and their Wall Street minion) fleeced Pearl
kingfish1935.blogspot.com/2016/04/bloomberg-how-braves-fleeced-pearl.html
2. Lehman Brothers (founded 1850) went broke
https://en.wikipedia.org/wiki/Lehman_Brothers
3. Merrill Lynch, AIG, Freddie Mac, Fannie Mae, HBOS, Royal Bank of Scotland, Bradford & Bingley, Fortis, Hypo and Alliance & Leicester all came within a whisker of doing so and had to be rescued.
https://www.theguardian.com/business/2008/dec/28/markets-credit-crunch-banking-2008
4. General Motors Federal bailout due lack of access to cash during Wall Street meltdown(among other things, but lack of cash was the catalyst).
GM in Crisis—5 Reasons Why America's Largest Car Company ...
www.popularmechanics.com/cars/a3748/4292379/
5. EVERY individual, business and government agency in the US, and some evidence indicates worldwide as well, suffered from the Wall Street scheme and meltdown. All of them. All of us!
6.Also, please remember that Wall Street is a faceless, nameless and unaccountable creation on paper. The true culprits are the individuals who created, lead and engineered and greatly benefited this theft. There names are not secrets. Read your Forbes for their names, and their family connections. Those individuals are the true villains; not your local stockbroker
Yes , bottom line is the leaders of all of these entities, including Jackson, should have been wary of the Wall Street "Masters of the Universe", bearing gifts. However let's be fair. A lot of "experts" got "fleeced".
I applaud Councilman Priester for giving this history so we may not go down the same or similar path again. More importantly, I applaud and commend Mr. Priester for publicly, vocally and loudly, leading the way for Jackson's future financial recovery and prosperity
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