Re "Risky bonds tie schools to huge debt," Nov. 29
While reading the article about school districts selling bonds that saddle them with massive amounts of debt, I thought of those interest-only loans issued during the housing bubble (but here, not even the interest is paid for a while). And we all know how that turned out.
Albert Einstein is said to have declared compound interest the universe's most powerful force. All the districts had to do was consult a middle school math teacher to see the long-term costs.
The schools' dire funding situation is a direct effect of Proposition 13, but that does not justify this sleight of hand. No doubt little effort was made to inform the electorate of the true costs of these bonds. California's attorney general should investigate this practice.
The front-page article on risky school bonds reminded me that no meaningful action has taken place on setting up a state bank.
Californians, like people in many states, have asked their legislators to look into writing their own bonds as a way to ensure that no hidden tax burdens await them. The answer to the usurious conditions of capital appreciation bonds is not to use them if there is a better choice. Chartering a state bank, in which the public good will be served, is an unpopular idea with powers that be.
Competition is good, even with Wall Street.
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