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Old 11-14-2012, 12:48 AM   #1
DucatiMonster696
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Default God Democrats in California are morons - The Prop 30 scam.

http://www.sfgate.com/opinion/openfo...et-4031472.php

So basically prop 30 was another way to extract money out of the state in order to cover the UC losing Wallstreet dealings which are losing large sums of money because interest rates have been pegged by the Federal Reserve.

Fucking retards! All of you who voted for this bullshit.

Quote:
Prop. 30 funds for UC will go to Wall Street

Adam Goldstein and Jacob Habinek

Published 2:02 a.m., Tuesday, November 13, 2012
Passing Proposition 30 prevented hundreds of millions of dollars in near-term cuts to the University of
California, a laboratory of innovation that fuels our state's economy. But now a large part of that lifeline
might be squandered in payments to Wall Street banks, according to a report released Tuesday by
researchers at UC Berkeley.


[/b]Over the last decade, the UC Board of Regents has engaged in risky deals with Wall Street banks called
interest rate swaps.[/b] Banks sold swaps to the university and other public institutions as insurance against
rising interest rates on variable rate bonds. Under a swap agreement, borrowers such as the university
paid a fixed rate to the bank in exchange for the bank paying the university a variable rate based on the
markets' interest rates for borrowing.

Now these swaps have turned out to be losing bets. UC is taking huge losses because interest rates
plummeted following the financial crisis of 2008
- allegedly in part because of illegal manipulation by the
same banks that sold the swaps - and have stayed at record lows. Swap deals already have cost UC nearly
$57 million, with $200 million more in losses anticipated. Of the $250 million UC expects to receive from
Prop. 30, some $10 million a year will go to swaps payments unless the deals are ended.
In other words, the UC Regents forgot the first rule of casino gambling: The house always wins. Now the
rest of us are paying the price.

It's hard to overstate the cost to students and taxpayers of UC management's financial strategies. In recent
years, the Regents have overseen a threefold increase in in-state tuition, declining in-state enrollment,
reduced course offerings and draconian cuts imposed on UC workers. They also have continued to
increase the number of university executives making more than $200,000 annually.


Even with the passage of Proposition 30, the regents warn of more cuts and tuition increases in the
near future.


All over the country, municipalities, universities and nonprofits fell prey to the swap scam. But many of
these entities (including the Asian Art Museum of San Francisco and the cities of Oakland and Los
Angeles) have undertaken aggressive efforts to renegotiate their swap agreements. Others are pursuing
litigation to hold banks accountable. In contrast, the UC Regents so far have taken little action to stem the
university's losses.

These swap deals are part of a dramatic change in UC's relationship with Wall Street. In 1990, none of
UC's top management or regents had direct ties to the major Wall Street banks. Today, those banks have a
growing foothold among top UC management with direct oversight over UC's finances.
For instance, the chief financial officer, Peter Taylor, came to UC from Lehman Bros., where he was
managing director for public finance until Lehman collapsed in the largest bankruptcy in American
history. While Taylor was at Lehman, the company was hired to help expand UC's debt load. Lehman
ultimately was party to one of UC's interest rate swaps - a bad deal that has already cost the university
more than $23 million.

California taxpayers have entrusted the regents with stewardship of the university, but the regents' cozy
ties to Wall Street raise questions about their financial priorities. It's time for the UC Board of Regents to
stop gambling with California's future.
The millions of Californians who voted for Proposition 30 deserve nothing less.

Learn more

To read the full report "Swapping Our Future," go to:

http://publicsociology.berkeley.edu/...ping/index.php

Adam Goldstein and Jacob Habinek study the economic sociology of financial markets. They are both
doctoral candidates in the department of sociology at UC Berkeley.
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Last edited by DucatiMonster696; 11-14-2012 at 12:55 AM.
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Old 11-14-2012, 12:53 AM   #2
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I saw nothing in the prop 30 law about it paying debts, in fact it specifically stated that none of the new taxes could go to administrative costs which one would assume that's what the above would be considered.
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Old 11-14-2012, 01:05 AM   #3
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Originally Posted by ivwshane View Post
I saw nothing in the prop 30 law about it paying debts, in fact it specifically stated that none of the new taxes could go to administrative costs which one would assume that's what the above would be considered.
There were no guarantees that the fund would go toward paying for anything period related to actually educating children/students. It was sold by the Governor and his supporters with them holding education in the state with a gun to its head and threatening tax payers to "Either pass it or else will make big cuts in education (especially higher education)". Now it looks like they'll be using a good chunk of this money to cover the bets made by the UC regents for bonds that they are losing money in addition to tuition fees and service cuts will still be made to the UC system.
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Old 11-14-2012, 01:11 AM   #4
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Not knowing exactly where the money will go is not the same as saying the money will be going to pay school debt.
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Old 11-14-2012, 01:48 AM   #5
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You conservatives you are dumb as fuck, lol. Literally has no bearing whatever on whether you voted yes or no on Prop 30.
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Old 11-14-2012, 02:01 AM   #6
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FYI, the election was a week ago. You may want to move on with life.
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Old 11-14-2012, 02:04 AM   #7
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You conservatives you are dumb as fuck, lol. Literally has no bearing whatever on whether you voted yes or no on Prop 30.
Prop 30 good
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Old 11-14-2012, 02:33 AM   #8
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Prop 30 good
Good at fleecing the tax payers to pay of the gamble taken by the UC reagents and then holding all of the state's educational system hostage if their proposition did not pass.
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Old 11-14-2012, 02:56 AM   #9
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Originally Posted by rockyct View Post
FYI, the election was a week ago. You may want to move on with life.
Could you try posting that in one of the "Haha republicans lost and are stupid" threads that's littering the forum?
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Old 11-14-2012, 03:05 AM   #10
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Hardly surprising if true although i would like to see more information on it.

Stuff like this is why I was against prop 30 -- money is fungible! The idea that money of amount (x + y) will go only to (y + z) and that increasing x will have no bearing on y but only on z is simply crazy. All the money (and then some) will be spent.....and quickly.
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Old 11-14-2012, 03:47 AM   #11
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Thank god I'm done with school. You can pretty much learn anything you want on the internet. School just forces you to do it.
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Old 11-14-2012, 04:29 AM   #12
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Quote:
Originally Posted by DucatiMonster696 View Post
Good at fleecing the tax payers to pay of the gamble taken by the UC reagents and then holding all of the state's educational system hostage if their proposition did not pass.
Tax payers pass it. Know it raises taxes. Not care. Prop 30 Good
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Old 11-14-2012, 11:44 AM   #13
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OP created misleading thread title, trying to link 2 unrelated items and failing to show causality.

Hope you are not a journalist*


*Although Newsmax/Fox would gladly hire you for your "unbiased" "reporting".
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Old 11-14-2012, 12:09 PM   #14
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Quote:
Originally Posted by ivwshane View Post
I saw nothing in the prop 30 law about it paying debts, in fact it specifically stated that none of the new taxes could go to administrative costs which one would assume that's what the above would be considered.
I doubt that investment losses would be considered administrative expenses.
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Old 11-14-2012, 12:35 PM   #15
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I voted no.
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Old 11-14-2012, 12:42 PM   #16
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The swaps seemed like a good thing in the past in part because of IRS regulations. The UC issued variable rate bonds, but as a non profit entity the VRDO bonds have significant excess arbitrage rebate risk. The reality is without the swaps the UC could have paid huge sums of money to the IRS instead for Tax-Exempt Bond arbitrage violations.

The reality though is variable bonds with swaps were sold is a the best thing for municipal entities, no risk at all, cheaper than fix rate bonds. A bunch shit now we know. Should have stayed with simple fixed rate bonds, no real risk there.
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Old 11-14-2012, 12:44 PM   #17
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I doubt that investment losses would be considered administrative expenses.
Swaps are not investments, but they are also not admin cost either.
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Old 11-14-2012, 01:53 PM   #18
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Quote:
Originally Posted by ivwshane View Post
I saw nothing in the prop 30 law about it paying debts, in fact it specifically stated that none of the new taxes could go to administrative costs which one would assume that's what the above would be considered.
Money is fungible.
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Old 11-14-2012, 02:53 PM   #19
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Don't blame me, I voted against the prop. The state has been balancing the budget on the backs of students for years without making similar cuts to police, prisons and other expensive programs. Time to spread the pain.
But you may notice that "The vast majority of the Regents appointed by the Governor historically have consisted of lawyers, politicians and businessmen.[1] Over the past two decades, it has been common that UC Regents appointees have donated relatively large sums of money either directly to the Governor's election campaigns or indirectly to party election groups."
At least 11 of the 26 regents were appointed by Republican Gov Scwarzenegger.
To somehow claim that the problems are all caused by Democrats is a lie, Republicans have been hostile to education funding forever.
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Old 11-14-2012, 03:04 PM   #20
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Quote:
Originally Posted by ivwshane View Post
I saw nothing in the prop 30 law about it paying debts, in fact it specifically stated that none of the new taxes could go to administrative costs which one would assume that's what the above would be considered.
money is fungible
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Old 11-14-2012, 04:08 PM   #21
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a) Why are you angry at wall street banks, rather than the Regents that made those decisions

b) These transactions were hedges, presumably the university has issues some floating rate debt and was concerned about the growing liability if rates go up. So while they have to pay money on swaps, they still get to pay the lower interest rates on said floating rate debt.
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It seems like people want to bend reality any way they wish. Jobs are created by economic activity, and this economic activity happens because of self-made people of all races and colors that are motivated by greed. The sooner we understand it the better we are.

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Old 11-14-2012, 04:16 PM   #22
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Originally Posted by DCal430 View Post
The swaps seemed like a good thing in the past in part because of IRS regulations. The UC issued variable rate bonds, but as a non profit entity the VRDO bonds have significant excess arbitrage rebate risk. The reality is without the swaps the UC could have paid huge sums of money to the IRS instead for Tax-Exempt Bond arbitrage violations.

The reality though is variable bonds with swaps were sold is a the best thing for municipal entities, no risk at all, cheaper than fix rate bonds. A bunch shit now we know. Should have stayed with simple fixed rate bonds, no real risk there.
Are you sure the arb edge isn't just the counterparty exposure on the swaps?
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Old 11-14-2012, 05:43 PM   #23
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liberals are bad at math and / or complicit in mass fraud. Look at any state run by liberals and you have a smoke and mirrors mess.
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Old 11-14-2012, 05:44 PM   #24
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liberals are bad at math and / or complicit in mass fraud. Look at any state run by liberals and you have a smoke and mirrors mess.
Through tea colored lens, I am sure.
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Old 11-14-2012, 07:16 PM   #25
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liberals are bad at math and / or complicit in mass fraud. Look at any state run by liberals and you have a smoke and mirrors mess.
Well surely you can give us specifics?

No?
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