Forwarded from Boots Riley
There is a direct connection between the City of Oakland’s budget deficit and the predatory dealings of Goldman Sachs. Oakland pays 5 million per
year to Goldman Sachs- for nothing- because of a questionable contract
the city entered into. The city’s deficit is $4.8 Million.
Goldman Sachs dissolving the deal, the city refusing to pay, OO forcing
GS to cancel the debt or OO forcing the city not to pay GS- would solve
the yearly deficit. Goldman Sachs has been doing this all over the
country.
Below is a post that Al Osorio wrote, with links to articles about the situation.
Oakland is among many municipalities hoodwinked by Wall St into paying
debt they can’t afford. Currently the city pays 5 million per year on a
derivatives contract to Goldman Sachs, and unless it pays 19 million to
cancel the contract Oakland is stuck til 2021. The city’s deficit is 4.8
million – meaning there would be a budget surplus if not for GS’s blood
money.
The derivatives contract in this case is an interest
rate swap, an exchange between fixed and variable interest rates. GS
assumed Oakland’s floating interest rate on 187 million debt, with
Oakland paying a fixed 5.7%. Apparently this worked in the city’s favor
initially, once the economy slipped and the Fed lowered it’s target
interest rate GS’s payment dropped to less than 1% – meaning the price
flow between GS and Oakland changed radically in GS favor. The debt was
fully retired in 2005 – paid off – so GS no longer pays anything.
Below are several links which may be helpful in this matter. The first
two are articles in the Huffington Post and Fire Dog Lake dealing
directly with Oakland:
http://www.huffingtonpost.com/
http://my.firedoglake.com/
Next is an article in Our Future dealing with derivatives and municipalities:
Here is a link to a PDF which explains in detail the phenomena of
municipalities and interest rate swaps. It’s very dry reading, so don’t
feel bad if it’s hard to grasp. Even the people who sell derivatives
don’t fully understand them – they just know it’s $ in their pockets,
and they can frame them in such a manner that the buyer honestly feels
they are doing the right thing.
Last but not least, here’s a YouTube tutorial on interest rate swaps. Have fun!
Activists Win Against Goldman Sachs’ Greek Style Local Government Ripoffs www.huffingtonpost.com
There are thousands of city and local government that spend hundreds of
billions of dollars each year that are processed through banks. With a
well-organized social movement, we could change the ways banks do
business on Main Street.
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