First of all, I am printing the important part of the Daily Star article here, since they only keep them up for 7 days:
Rio Nuevo bond money shifted again
By Rob O'Dell
Arizona Daily Star
Tucson, Arizona | Published: 02.19.2009
advertisementRio Nuevo has changed course again. The City Council voted 6-0 Wednesday to redirect money from its recent bond sale to projects "like" revamping the Tucson Convention Center and a new convention hotel.
Details of what projects will get more money, or lose funding — or even when the city will have the new plan ready — were not available, other than the money should go toward infrastructure and revenue- and job-generating projects.
The council also criticized a Sunday Arizona Daily Star story that estimated it will cost taxpayers $10 million more in interest because the city went to the bond market in December, when interest rates were highly volatile and other communities were postponing bond sales.
Shawn Dralle, the city's bond adviser, said the markets were so chaotic toward the end of 2008 that no one could predict future interest rates. To look back in hindsight at the sale eight weeks later is "disingenuous," Dralle said.
Star Managing Editor Therese Hayt said the newspaper stands by its story. "They went into the market when it was sky-high. Taxpayers are now on the hook for all that interest, which is not in the taxpayers' interest," she said.
On StarNet: Check out a searchable database of where the Rio Nuevo money went at azstarnet.com/special/rionuevosummary
I want to draw attention to something here. The Council wanted to "jump-start" the Rio Nuevo project (and keep it alive) by stimulating it with 80 million dollars. Dollars gained through bonds. Now, governments have three ways of raising funds: raise taxes, sell bonds (at interest), or print money. Well, there is no tax base in Tucson right now since there is no business, and the only group that can print money is the Feds, so City Council sold bonds.
At a ridiculous rate.
Since NO ONE is buying bonds right now.
And Tucsonans are upset that we wasted all this money starting projects that are only partially funded or have no funding. And that it's going to cost Tucson $10 MILLION in interest to pay off these failed projects. Again: ""Taxpayers are now on the hook for all that interest, which is not in the taxpayers' interest," she said."
Fast forward a few years, if you will.
The U.S. has spent $750 BILLION on stimulating the economy by starting programs or providing intitial funding on thousands of pet projects. $750 BILLION that is raised in three ways - raising taxes, selling bonds, or printing money. Raising taxes on a society that is struggling will stall any kind of recovery quicker than anything. Printing money will create hyper-inflation and/or stag-flation. So we sell bonds.
Bonds that nobody wants to buy.
How do we make them buy the bonds? Make it lucrative to do so. And how? Issue them with a high interest rate. A rate that will come back to haunt us, just like the Rio Nuevo bonds of just last December are hauting us already!
By the way, $750 Billion is 9,375 times bigger than $80 Million. Again: ""Taxpayers are now on the hook for all that interest, which is not in the taxpayers' interest," she said."
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