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Coming to a Broke Municipality Near You: The Greek, Um, Jefferson County, Solution

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Jefferson County’s sewer system train wreck is now looking an awful lot like the periphery country in Europe mess.

Jefferson County has been out of the headlines for a while, but the apparent endgame of its sewer system mess is almost certain to be a harbinger for the municipal bankruptcies that are growing like kudzu over the US.

The short story of the Jefferson County mess was that it was required to build a new sewer system in the 1990s because it was oozing raw sewage into the Cahaba River. Rather than repair the leaks, the county commissioner signed a consent decree in 1996 that committed the sewer authority to an insanely high standard of performance, that of having no overflows at all (Jefferson County’s problems seem consistently to boil down to having inept negotiators on their side of the table). But not only was the resulting plant insanely expensive, but the sewer project turned into a Wall Street pillaging event as well. JP Morgan bribed country commissioners to make sure it had the lead role in the financing (it even engaged what by any pre-2000s standard would be a criminal anti-trust violation, paying Goldman $3 million to absent itself) and loaded the county up with a swap-ridden finance confection that it couldn’t begin to understand that predictably blew up.

Even with the stink-to-high-heaven corruption (20 local officials, including the mayor, were convicted), the sewer commissioners did nothing for years rather than default to get Wall Street’s attention or put the system in bankruptcy (I’ve personally suspected that they weren’t far enough from the bad behavior to stand to have their actions scrutinized in litigation). Yet even though a JP Morgan banker was recorded saying that the payment of bribes (laundered through various intermediaries) was the cost of doing business, the bank and its employees got off scot free. To give you an idea of how horrific the financial structure was, we turn the mike over to Matt Taibbi, who recaps the state of play as of late 2009:

For Jefferson County, the deal blew up in early 2008, when a dizzying array of penalties and other fine-print poison worked into the swap contracts started to kick in. The trouble began with the housing crash, which took down the insurance companies that had underwritten the county’s bonds. That rendered the county’s insurance worthless, triggering clauses in its swap contracts that required it to pay off more than $800 million of its debt in only four years, rather than 40. That, in turn, scared off private lenders, who were no longer ­interested in bidding on the county’s bonds. The banks were forced to make up the difference — a service for which they charged enormous penalties. It was as if the county had missed a payment on its credit card and woke up the next morning to find its annual percentage rate jacked up to a million percent. Between 2008 and 2009, the annual payment on Jefferson County’s debt jumped from $53 million to a whopping $636 million.

It gets worse. Remember the swap deal that Jefferson County did with JP Morgan, how the variable rates it got from the bank were supposed to match those it owed its bondholders? Well, they didn’t. Most of the payments the county was receiving from JP Morgan were based on one set of interest rates (the London Interbank Exchange Rate), while the payments it owed to its bondholders followed a different set of rates (a municipal-bond index). Jefferson County was suddenly getting far less from JP Morgan, and owing tons more to bondholders. In other words, the bank and Bill Blount made tens of millions of dollars selling deals to local politicians that were not only completely defective, but blew the entire county to smithereens.

And here’s the kicker. Last year, when Jefferson County, staggered by the weight of its penalties, was unable to make its swap payments to JP Morgan, the bank canceled the deal. That triggered one-time “termination fees” of — yes, you read this right — $647 million. That was money the county would owe no matter what happened with the rest of its debt, even if bondholders decided to forgive and forget every dime the county had borrowed. It was like the herpes simplex of loans — debt that does not go away, ever, for as long as you live. On a sewer project that was originally supposed to cost $250 million, the county now owed a total of $1.28 billion just in interest and fees on the debt. Imagine paying $250,000 a year on a car you purchased for $50,000, and that’s roughly where Jefferson County stood at the end of last year.

We’ll skip over a lot of chapters in this sorry tale. The SEC, in a rare moment of usefulness, charged JP Morgan with fraud and gets it to rescind the $647 million termination fee, pay a $25 million fine, and also pay $50 million towards the county’s displaced workers. The county tried negotiating the debt which has grown to $3.14 billion (see here for a timeline). Jefferson County finally threw in the towel and filed for bankruptcy, the biggest in the history of municipal debt, in November 2011. Keep in mind during the period of wrangling and after the filing, services are being cut. Employee workweeks are cut to 32 hours, some courtrooms are shuttered, and inpatient care and the emergency room at a hospital serving the poor is closed.

Jefferson County emerged from bankruptcy on June 4. The Wall Street Journal tells it is about to enter into another toxic financial deal. The only difference between this one and the variable rate/swaps deal that made its bad financial situation untenable is that this one is structured to strangle the county later rather than close to immediately:

The proposal for the refinancing, which has been approved by a majority of county commissioners, includes a set of bonds that schedule larger debt payments in the later years of the financing. About $474 million are a type of debt called capital-appreciation bonds. Such bonds have been derided by California’s treasurer as “terrible” for their backloaded payments, and Michigan has banned their sale by municipalities.

All told, Jefferson County taxpayers would stand to repay nearly $6.9 billion over the four-decade term of the financing, more than three times the amount the county initially plans to borrow. That is perhaps billions more than they would pay under a plan whose payments would be more evenly distributed, said a potential investor.

MI-BW625_JEFFCO_NS_20130617174203Municipal bonds sold to fund water and sewage projects often cost the issuer no more than two times the initial amount borrowed after about 30 years. At current interest rates, a home buyer with good credit can expect to pay less than double the cost of a home over the life of a 30-year mortgage.

But, more-traditional financing for Jefferson County’s sewer system “would have required higher initial sewer rate increases,” said Jefferson County Commission President David Carrington. “Our rates need to be reasonable.”

Jefferson County plans to pay for the new debt with sewer revenues, which will come from rate increases for its sewer-system customers. Sewer bills are expected to increase about 7% annually for the first four years under the deal, according to the county’s agreement with debtholders.

Now there are some points that may not be obvious from this sorry outcome. First, if a party coming out of bankruptcy is saddled with so much debt that it can’t afford to carry it without entering into a hocus-pocus, clearly kick-th-can-down-the-road-to-see-it-blow-up-later funding structure, that’s prima facie evidence that the bankruptcy deal didn’t write down the debt far enough. But Jefferson County predictably winds up the loser any time it tangles with big city bank shysters (this time via the creditor side of the bankruptcy bar).

It also appears the county didn’t make good use of some leverage it had in the negotiations. The state attorney general weighed in with the county commissioners in November 2012 to argue that the rate increased proposed then (5.98%, lower than the 7% agreed upon) is impermissible because utilities can charge only for costs “prudently incurred” which means all the fraud-related charges should be excluded. I have a strong suspicion that this argument was either not made at all or not made very effectively in the bankruptcy talks.

The other part that the vast majority of readers probably don’t know is the sewer charges in Jefferson County are already high. The county claims it’s $38 per household. I’d love to know how they cooked the numbers to come up with that total. My 85 year old mother lives in Jefferson County. She does not water her yard or have her car washed at home. Her sewer bills are typically $50 a month. And that’s closer to the picture painted by BhamWiki of expected charges per household:

2013: $62.90 ($7.40/ccf)
2014: $67.56 ($7.95/ccf)
2015: $72.57 ($8.54/ccf)
2016: $77.95 ($9.17/ccf)
2017: $92.73 ($9.85/ccf)
2018: $96.38 ($10.24/ccf)
2019: $100.17 ($10.64/ccf)
2020: $104.12 ($11.06/ccf)

Now keep in mind: Jefferson County is generally a poor county. Its biggest employer is the University of Alabama. It has a clutch of affluent communities and income levels drop sharply outside them. Even before the planned hikes, the local TV stations have reported on families having to decide among sewer, electricity, and gas payments, since they can’t afford all three. Some have cut themselves off from the municipal water system, and are bringing in bottled water (don’t ask about personal hygiene…).

Even these increases are deemed to be inadequate. From the Journal again:

Robert Brooks, a finance professor at University of Alabama, said he found Jefferson County’s proposed refinancing deal troubling because the projected sewer revenue growth rate it assumes to pay for the bonds—which for many years is at least 3%—seems ambitious, because the sewer system has only had declining revenue in recent years.

What this means is that Jefferson County doesn’t have a real solution. It’s Greece lite. Leech the public as long as you can until the financing becomes untenable, and restructure the debt. But unlike the traditional idea of restructuring, where the borrower was to emerge with a level of indebtededness it could live with, here it’s blindingly obvious the banks and their lawyers will be back to rip more fees out down the road. It might be as late as twenty years when the rate shock hits or less than a decade if the economy does a swan dive, but Jefferson County is never going to escape the lash of its new financial lords and masters.

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45 comments

  1. jake chase

    Once again we see how go’mint actually works. A handful of shysters get control of the political reins, cash in mightily themselves, sell out the public to bankers peddling toxic financial products, and send the public into a black hole. Law doesn’t seem to hold anybody back, perhaps because white collar criminals don’t energize whatever enthusiasm public prosecutors have left. We are reliving the 1880s in post modern drag. For those enjoying mobility, its probably time to consider voting with one’s feet. I’ve heard some good things about Costa Rica.

    1. Klassy!

      This must be some of that innovation that Mankiw was talking about.
      I do believe that the commissioners were not just poor negotiatiors, however. They were corrupt and probably had elusions of grandeur. They did not understand that they were small time enough to go to jail.

      1. ambrit

        Dear Klassy!;
        This is the Deep South after all. What I’m puzzling about is, where are the Night Riders? Traditionally, they should have shown up by now. (This being the New South, the NRs are equal opportunity.)

      2. hermanas

        Tango takes two
        Comm’s do time/Banks run free?
        Jake, call someplace paradise, kiss it good-bye.
        wwt.ticotimes.net

    2. KnotRP

      If this is going to drive everyone to leave (perhaps
      selling their property at fire sale prices), perhaps
      the obvious consequence is also the long range goal? Perhaps
      the Bankers want to milk everyone to the point of misery,
      in the short term, and then take the land that surrounds
      the University on the cheap in the end….

      It sure sounds like the typical Banker playbook.

  2. AbyNormal

    they must tack these penalties onto the bills…cause its not curbing the ongoing destruction

    Bank of America paid a $137 million settlement on allegations of conspiring to rig bids involving 88 municipal bond contracts. Wells Fargo got stuck paying $148 million to settle muni bid-rigging cases tied to Wachovia Bank, which it had acquired. JPMorgan Chase paid $211 million to settle allegations it rigged bids on muni bonds and cheated governments in 31 states. UBS paid $160.2 million in a bid-rigging probe. Earlier this month, three former executives of General Electric affiliates were found guilty of rigging bids with financial institutions and insurance companies for contracts for investing municipal bond proceeds, and last year GE agreed to pay $70.4 million to settle criminal and civil claims that it overcharged state and local governments through bid rigging on municipal bond deals.
    http://blogs.star-telegram.com/investigations/2012/06/want-a-slice-of-the-business-from-a-big-municipal-bond-deal-pay-up-and-keep-quiet-such-secret-deals-have-been-used-to-steer.html

    1. Hal Roberts

      Thanks for the link Aby it fit right in.

      Stories like these are why you don’t bail out Crooked Bankers. Just look at what they do to the public when they are kept alive. They just want to steel all the money they can get to bankrupt the Nation.
      Damn our Leaders ( terrorist invested in these banks), anyone with half a brain can see what they are doing. Terrorist Bankers and Government is backing them up with a rigged justice system.

    2. nick b

      I think the article downplays the corruption angle too much. Yes, Jeff co. Al, got itself in a hell of a mess, but not through normal municipal finance. Jeff co was buried by a corrupt JPM banker, who served time in prison for the same crimes in Philadelphia, and a slew of corrupt Jeff co. officials who probably did not know, or understand, the complex financial instruments they agreed to. They had their palms out, they were greased, the deals were signed. This is not a normal situation. Laws in place were broken. When everyone in the hen house is a fox, what do you expect? I guess my point is, that Jeff co. Al is an exception and not a rule in US municipal finance. It’s the result of tremendous corruption. There’s a Jefferson County in almost every state in the union. If they were all imploding financially from their municipal debt, then maybe it would be a harbinger of something “Greece-like” (Grecian?). But that’s not the case.

      1. harry

        And you think its an exception cos you havnt heard of any others?

        Anyway, tell me about Stockton. Or Victorville? Or the pretty much any recent deal for new prison construction.

        Its like cockroaches. There is never just one cockroach.

        1. nick b

          As far as I know, Victorville, Ca, is not in Chapter 9. Stockton, in my opinion was not a victim of corruption but too much spending in good times. In my opinion, and this is just my opinion, the actual reason for the flurry California chap 9 filings were to bust contracts with municipal labor unions. Notice That the city of Vallejo paid their debt obligations throughout bankruptcy. The debt, or its structure, was never the real issue.

          Then you have one offs like Mammoth Lakes, who used chap 9 to avoid a huge legal fine.

          You are 100% spot on regarding private prison financing. In my opinion, tax exempt financing for these operations is misuse of the subsidy. Fortunately, most of these deals are revenue based and not tied to the general obligation financers of cities or counties. If you see one that is, there’s a problem.

        2. harry

          I never understand why it is virtuous to break a contract with a municipal union, and heinous to break one with a lender of funds. But luckily we can just wait and see. I dont own any municipal paper. As far as I can see whole stretches if this country and slowly depopulating. I have no way to do the credit research which will identify which are good and which are bad.

          1. nick b

            Harry, there’s a lot more information available to you than you might imagine. My first look is always the local newspaper.(the internet is awesome) However, it’s my opinion that endless QE has artificially reduced interest rates to the point where no one is adequately compensated for their risk any more. I don’t think you’re missing anything.

          1. nick b

            Poway is not currently in chapter 9. It is the school district that has problems, not the town. It’s a small distinction, but significant in terms of debt and creditors.

  3. sleepy

    As a relatively poor county that needs investment in schools, medical care, housing, transportation, etc., just think of the lost opportunity costs in throwing $6.9 billion down the rathole–aside of course from the immediate pain of residents not being able to afford water.

    Yves, no doubt you’ve read Diane McWhorter’s “Carry Me Home: Birmingham, Alabama, the Climactic Battle of the Civil Rights Revolution”.

  4. harry

    Its up to the good people of Jefferson County to avoid being raped by their fellow americans. I think the end game is for salt to be ploughed into the land or default. If they pretend the default will not happen then anyone who buys real estate in J-county will lose money, as they will be liable for the debt that will not be paid.

    Who is that dumb? Well I guess poor americans.

    In the meantime the bankers will put some time between them and the crime and maybe the statute of limitations saves them. You gotta love these guys. Rape and pillage and no conscience or consequences at all. Fantastique!

    When did you say the heyday of political corruption in the US was?

    1. nick b

      Harry,
      Not trying to be argumentative here, but the two bankers involved in the Jefferson County deal are still being prosecuted. They’re in a lot of trouble. If convicted, it wouldn’t be the first time in prison for one of them.

      1. ambrit

        Nick b;
        That’s not the point. These ‘deals’ are being allowed to carry on to haunt future Jefferson County residents. Why isn’t anyone seriously talking total default on these bonds? If enough municipalities did this within a short period of time, perhaps the Vulture Banks would die off from starvation. The prosecuted banksters are a sort of propitiatory sacrifice, not an earnest attempt at solving the problem.

        1. nick b

          It’s a continuing process, ambrit. More than one argument has been made that the debt is illegitimate and should be voided. It’s winding its way through the courts now. This isn’t over, the mess is still being cleaned up. JPM owns over a billion dollars of Jeff co. Al, debt. They recently agreed to accept about an $850 million write off. This is significant, for they had originally rejected an earlier proposed number of $750 million. I can’t predict how the taxpayers of Jeff co. will eventually make out, but the process grinds forward.

          1. ambrit

            nick b;
            Ah ha, the wheels of justice grind slowly indeed.
            I guess I’m wondering about; if an individual, (let’s call him or her a Madoff,) sets up an abusive financial scheme and gets caught, the Madoff loses everything. If a bank does a similar abusive thing, it gets bailed out or has its abusive practices validated and enabled by the ruling elites. A clear violation of the equal protection clause of the Constitution, (no, not the one floating in Charlestown Harbour, and by the way, check out the squib at the beginning of the Frigates web site; [To better plan your visit, please read our security procedures and identification requirements to board the ship..])

          2. nick b

            Ambrit, A good question. How does one deal with an organization considered so massive, that meaningful prosecution of its alleged crimes cannot be undertaken because of its enormous systemic impact? I have no good solutions, just a knowledge that situation exists and it’s not good.

            However, I don’t think that is necessarily the case in the example of Jefferson County. The corruption involved was clear, and the court process moves forward toward some sort of resolution. Whether that involves jail time for anyone else, I can’t predict. But prosecutions and remediation are on going.

          3. ambrit

            nick b;
            I do get your point. An old and hallowed concept being that, to quote Lord Hewart CJ from the famous ‘ex parte Mcarthy’ case, “…justice should not only be done, but should manifestly and undoubtedly be seen to be done.”
            This looks to be becoming a “rule of Law” issue.

          4. nick b

            The eternal optimist in me wants to believe in the ‘rule of law’. But my inner cynic tells me ‘some animals are more equal than others’.

  5. Downunderer

    This put me in mind of a local-government mess in New Zealand (where I live). Kaipara District (think ‘county’, large rural area with about 12-15,000 households) needed a sewage system for Mangawhai (small coastal community, many second homes for urban Aucklanders http://www.stats.govt.nz/Census/2006CensusHomePage/QuickStats/AboutAPlace/SnapShot.aspx?id=3505021). [The following from memory, as I'm on the road and typing on a netbook in my lap, but available in detail at kaiparaconcerns.co.nz]

    Back about 2005, the Council made a deal to build it for about $25 million, going through the usual mechanisms of hiring experts to do reports and holding meetings for consultations with the affected community that would be paying for it. But over the next few years, the deal kept growing, with no further public notice or consent, becoming a multiple of its original cost. Kaipara ended up with an unsustainable $80 million debt for this one small town’s sewage system(http://en.wikipedia.org/wiki/Mangawhai)

    The national government removed the Kaipara Council and replaced them with some Commissioners to clean up the mess. But there has been no investigation of where the money went that the people supposedly owe, and no effort to find out how much was legitimate-if-unwise cost, and how much if any may have been criminally taken. The debt is presumed valid, and the only question has been “Who pays”?

    Among other improprieties, the old Council failed to follow the law in setting the rates (property taxes) for the years in question, which were therefore not legal demands, and many courageous ratepayers have been refusing to pay, on that basis.

    The government response so far? A bill recently introduced before Parliament that will retroactively make all the illegal actions legal, including the rates and the late-payment penalties.

    Nobody can suggest how these few people can ever pay off such a debt, but official discussion continues as if that is the only serious issue. There are many more complications than I can detail here, but the pattern seems to fit the one illustrated by this NC post.

  6. Banger

    Well, fraud, con games have always been a part of our culture but we are at a point now when it is no longer charming and it is so pervasive and the stakes are so high that we need to have mandatory jail sentences for perpetrators of crimes like the ones described in addition to larger fines. JP Morgan, to the degree the organization sanctioned the deal should be seized and its assets sold off.

    However, the corruption is so vast and so much a part of Washington politics that there is no possibility of any action coming out of that—until we stop supporting the two ultra-corrupt political parties.

    1. ambrit

      Dear TC;
      Why not make the Wall Street Tax track the national average municipal sales tax? That’s a good bit higher than 2% and generally is regressive in its’ effects.

  7. ndfine

    Greetings from Jefferson County. The especially fun part about the whole fiasco is that it is actually only one of two county-level governance problems occurring. Alabama, while daring to defend its rights as a state, does not care for real local power and counties do not have home rule and cannot raise revenue without approval at the state level (often by referendum, and so we are asked to vote on some middle of nowhere county’s desire to tax themselves so that they can actually provide needed services). Jefferson County managed to have a 1 percent occupational tax struck down due to a couple of reasons: 1) rich white people from neighboring Shelby County (recently notorious as the plaintiff in Shelby Co v Holder, the Voting Rights Act case before SCOTUS) resented paying the tax, and 2) the state-level elected representatives resented not being able to direct how all that tax money was spent. So, basic county functions have been cut dramatically which meant an increase in unemployment and frustratingly long lines to do things like register a new car.

    We do have lovely people and some very excellent restaurants though. :)
    > The county claims it’s $38 per household. I’d love to know how they cooked the numbers to come up with that total.

    That is interesting, as the story says it’s the “average sewer bill” because when I saw your language of “per household” I thought I knew *exactly* how they were cooking those numbers: a large portion of households in Jefferson County are on septic systems, and are not directly attached to the sewer system. So, if it really is the “average sewer bill,” I suspect someone’s just lying (even if by omission).

    There was briefly some chatter about charging “user fees” to every household on the municipal water system (which is a different entity than the sewer system; though they are billed together) justified by the fact of external costs, etc. A big stink was raised and it didn’t go anywhere, but I would expect to see it back, especially as this new debt gets more expensive in the future.

    1. ambrit

      Dear ndfine;
      Do hope that Jefferson County doesn’t go the way of the three coastal counties of Mississippi. Under a consent decree with the Feds, every dwelling and business within the three aforesaid counties is mandated to hook up to centralized water and sewer. We no longer live on the coast, but still own a property there. We pay $20.00 per month just for the privilege of being serviced by the local utility. (We do indeed feel like we’re being serviced!)

  8. ep3

    Yves, I know a person who sells trim to construction projects (from single homes to large subdivisions and so on). He says when a school district decides to build a new school, it becomes a feeding frenzy. Every contractor comes out of the woodwork. To give an example, a school a few years ago that was built had a special area constructed for their dumpsters, with a gate and lock. My trim person said that he could price the lock at $125 (hinges and all hardware). The school paid $1200 for the same thing.
    My point is that there is fleecing on all ends of these deals. And I think that helps to mitigate populace resistance.

  9. steelhead23

    This story makes me mad as a hornet. When a municipality goes through a bankruptcy it is imperative that the interests of property owners are represented. Bondholders have an interest in the outcome and are represented. Sure, the county is represented, but whose interests does the county government represent? A settlement that includes onerous debt restructuring is likely to not only affect water and sewer rates well into the future, but by so encumbering the county, which is primarily supported by property taxes, it reduces the real value of property. The outcome you describe is horrible for property owners in Jefferson County. Absurd.

  10. kevinearick

    Military Selectivity: Patience Employing Ignorance

    The empire majority bridges insolvency with exploitation, until it can’t. The solution is in the empire reject pile. You can’t reject the rejects and everyone gets a second chance. Diplomacy is rejecting war, until you can’t. That’s mom.

    The problem is the solution, from a different perspective. We learn by exploratory mistake, not by replication to avoid the mistake of learning. Let the gossiping herd build up steam in the opposite direction, while you learn to prepare for war, against its replication.

    Measure twice and solve the problem once, on the third iteration. That’s dad.

    The empire accelerates demographic replication into artificial borders, to produce artificial scarcity as MAD insurance. Labor creates temporary doors out of time / tune with empire, which naturally seeks to eliminate privacy in response. And empire employs the new process technology to reboot itself when the old box explodes.

    The empire is like the tile game. If labor does not provide virtual circulation, the majority locks itself up with proprietary extortion, in a line of lines, with central control, waiting to pass through a dwindling number of vacant spaces, and the empire implodes. The states are already borrowing against projected Internet tax revenues, guaranteed by the Fed, and booking future leverage and current revenue.

    The kids are said to be stupid by their predecessors, who are watching their non-existent pensions go down the virtual drain, because empire is already controlling the Internet into obsolescence. An empire is a lose-lose, divide and conquer proposition, separated linearly by time relativity.

    Empires are built from the bottom up and operated from the top down. Government is the agency intermediary. It’s like discounting marginal utility on a flight after the premium seats are sold, to justify building more Dreamliners, and guaranteeing the airplane resale price to ensure NPV growth. Work harder for less money so the welfare police state can grant its responders with more toys for compliance.

    Priming the pump can only be done in private, so you can adjust the gravitational pole at will. Children don’t come with a book because they are unique and integral. Direction is set at the prime, when you reconnect the new multiplexer to the retimed event horizons.

    Development is a derivative of process, which is a derivative of that which is unique in you, which you are developing relative to the zombie zone. The physical development is the final derivative set, of which you are going to let the empire majority steal the second derivative.

    Empire nature is to employ your development against you, with reverse engineering. From its own perspective, the empire moves incrementally forward to feed its ponzi. From your perspective, it falls further back in time, subjecting itself to natural quantum reversion, with increasingly complex and irrelevant specialties.

    Work for skill, not money, its derivative. Jobs in empire expansion, backwardization, are temporary bridges to self-employment. The payoff is quality of life, which the empire is incapable of computing, or taxing. Tune your development in and the empire out. The only difference between voltage and amperage is resistance, which works both ways, unless you are the empire.

    Empire employment is directly related to positioning the compliance breeding ponzi, “it’s not what you know, it’s who you know,” blah, blah, blah. Set up your hash table multiplexer to collect pieces of your skill bridge from the empire event horizons in parallel. Each hash is your exit, and the robots assume you have been destroyed, because you lost your place in the circular queue binding them.

    The brain is a muscle. The proper response to a robot is a robot. Employ intellect to rule out that which is not instinct, to develop building block skills amidst ignorant gravity. Balance to present no separation of charge and your exit will present itself, as the robots seek to eliminate your privacy, in their programmed attempt to eliminate free will.

    Your ability to enter and exit at will depends upon your observation prism, the amount of bias you apply, the extent to which you yourself seek self-confirmation in the empire mirror. As your physical and intellectual mobility increases with skill, the empire automatically attempts to limit you with self-destructive force, implosion.

    The empire majority tracks social variance characteristics and outlaws them indirectly. Human robots, being creatures of habit replication, will allow behavior modification in their ‘paid’ public life to cross over into their ‘unpaid’ private life, until they have no private life and expect others to be subjected to the same law, equal opportunity to be retarded in time by peer pressure, intellectual or physical prison.

    If you do not employ your subconscious, the empire will be happy to do it for you, until you have no conscious. If you just want a job, any job, apply with the state as a child support representative, because the empire’s primary mission is to dissolve the labor family, and the state is always hiring to feed itself.

    CSRs are also in the best position to view the middle class pump stations, which accounts for their attitude. While you are looking, examine the demographics of at each station over time. All jobs are rigged accordingly. The cyclops shark is a digital machine; it knows what it is told. Don’t poke it in the eye with a stick or alert it to the work of others and expect a happy outcome for yourself.

    Take a $10/hr empire job, to build skill, which you will find wherever you go, and, sooner or later, you will be able to charge the empire $125/hr. When you see me having a double before work, ignore me and I will give you a ride when you get to the elevator. Everyone else takes the stairs, and the herd always travels down stairs. Build your community while others sleep.

  11. Lune

    This story is different than Greece in one aspect though: the local officials have apparently been convicted and could possibly face punishment for their corruption.

    Greek officials who were just as complicit / corrupt in the fleecing of their citizens by greedy bankers have yet to be brought to justice.

  12. Walter Map

    The contracts are fraudulent. Why haven’t the contracts been voided and suits initiated to compensate for damages? A few of the crooked players have been challenged, but evidently only a few.

    Q: How deep does the rabbit hole go?

    A: All the way to the bottom.

  13. Egmont Ouerveture

    SEVENTEEN GODDAMN PARAGRAPHS before you tell people where Jefferson County IS.

    How many Jefferson Counties ARE THERE in the USA?

    TWENTY-SEVEN.

    LEARN how to write.

  14. Marc Andelman

    People in Alabama incarcerate themselves at a rate of about one per hundred, probably a world per capita record. I guess is saves from having to spend money on education or dentists It would be nice if we could do the same for the banksters. Also,Yves mentioned that it was too much overkill to have zero overflow into the Cahaba River. I disagree. That is probably an ecosystem that deserves world heritage status. Too bad it is in Alabama, which nornally does not care about things like the evironment. They probably only built such a good plant as a way to pay off their cronies.

    1. Yves Smith Post author

      Zero overflow is way way beyond the normal standards for sewer systems. Zero anything is pretty much impossible to meet. A specified % (0.05% or somesuch) is a different matter.

      Australia is pretty stringent and it allows for overflow:

      Sewerage systems commonly have designed overflow points. These act as safety valves to stop sewage backing up into homes and businesses when a sewer is overloaded, a pipe is blocked or there is a problem at a pumping station. Designed overflows generally allow sewage to discharge at a planned location, usually the nearest natural waterway or stormwater drain.
      The EPA has developed a model licence for sewage treatment systems, which will control the discharge of untreated or partially treated to the environment, whether from a designed overflow point or elsewhere in the system. In this context, therefore, ‘sewer overflow’ is used to describe discharges from both sources. The model licence will be available on the EPA website.

      http://www.environment.nsw.gov.au/resources/water/stslicensingguidelines.pdf

  15. Linus Huber

    WHEN MEN BECOME RATS
    (Longterm effect of inflationary monetary policy on society)
    Issued by Linus Huber on Jan. 30, 2013

    I still am able to remember certain events taking place during my childhood and value those episodes, simply due to the fact that they stayed in my memory like for ever and, therefore, they must have made a great impression onto my still developing personality. It is not a matter of assessing those experiences in themselves but to consider their significance in how they influenced my future conduct as adult. It also explains the notion that changes in the individual’s behaviour take place in a very slow motion as we were exposed to past principles during the years when our personality was formed.

    Monday was the most important work day in my father’s working life. Furnished with a substantial amount of cash he went early morning between 3 and 5 a.m. on his way to collect all those calves he purchased the previous week by driving from farmstead to farmstead in order arrive with the fully loaded truck at the marketplace by latest 8 a.m. As earlier as better, as the purchasing agents of slaughter houses and feeding operators may otherwise have covered their needs already. Of course, his long experience and net work was helpful to him, nevertheless, a minor doubt seemed to always remain, as he had to work hard to arrive at the present situation in his life when he dared the first step into independence after having worked as a simply employee at the train station where, beyond other duties, he was assigned to attend the station’s large weighing scale and consequently was able to establish some contacts within and knowledge of the cattle trade. He was fully aware that the wellbeing of his 6 children and wife at home depended on his success. His irregular anxiety attacks during the prior evening often produced a relentless itching sensation on the bottom of his feet and he treated those symptoms with the rigorous employment of a rather rough cloth-brush.

    These episodes signify the fact that risk taking can produce a great deal of stress and …

    More here:

    http://www.mpettis.com/2013/06/10/how-much-investment-is-optimal/#comment-23728

  16. Adam Eran

    Notice that this is similar to the “Shock Doctrine.” De-funding / bankrupting little local governments makes for plenty for the jackals to plunder.

    …And professional sports, IMHO, provides an important vulnerability. These leagues have an antitrust exemption so they can extort stadiums / subsidies from municipalities because they’re the “only game in town.” The City of London has 13 soccer teams, and no one is extorting stadiums…(be reassured, they have other problems).

    …So Sacramento proposes to sell its parking revenue for the next 50 years for 50¢ on the dollar to fund a private team’s stadium. No, not to purchase a controlling interest in the team and let the owners buy a stadium… It’s so crooked that virtually every politician in the region has signed on.

    Sacramento should thank its lucky stars it’s not Chicago, though. There, they sold the parking revenue for 10¢ on the dollar just to balance the budget. Strangely enough, they sold it to Bear Stearns, where Mayor Rahm Emmanuel just made millions in his pre-government days…!

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