Jan 7, 2013
Two hundred school districts in California are saddled with debt that requires them to pay back, on average, about six times as much as the amount they borrowed! According to a Los Angeles Times investigation, Poway Unified School District in San Diego County borrowed 100 million dollars, and will have to pay back about 10 times as much – nearly one billion dollars! The West Contra Costa district near San Francisco issued 2.5 million dollars worth of bonds and will pay 34 million dollars, or almost 14 times as much.
These districts issued what are called CABs (Capital Appreciation Bonds), in order to put off debt payments for years. As a result, decades later, the interest on the loans alone will have surpassed the principal many times.
CABs are “the school district equivalent of a payday loan or a balloon payment that you might obligate yourself for,” said California state treasurer Bill Lockyer. As every worker knows, if you are forced to take out payday loans, you'll pay a heavy price, because you have fallen into the jaws of sharks.
“This is part of the 'new' Wall Street,” Lockyer added, “it has done this kind of thing on the private investor side for years, then the housing market and now it’s public entities.”
Taxpayers, that is, working people, will have to pay for this, and many times over. All so that the banks can make more and more profit. That’s the beauty of capitalism – for the sharks, that is.