{"id":5960,"date":"2015-02-24T06:52:28","date_gmt":"2015-02-24T11:52:28","guid":{"rendered":"http:\/\/olduvai.ca\/?p=5960"},"modified":"2015-02-24T06:52:28","modified_gmt":"2015-02-24T11:52:28","slug":"swimming-with-the-sharks-goldman-sachs-school-districts-and-capital-appreciation-bonds","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=5960","title":{"rendered":"Swimming with the Sharks: Goldman Sachs, School Districts, and Capital Appreciation Bonds"},"content":{"rendered":"<h3><a title=\"Swimming with the Sharks:  Goldman Sachs, School Districts, and Capital Appreciation\u00a0Bonds\" href=\"http:\/\/ellenbrown.com\/2015\/02\/20\/swimming-with-the-sharks-goldman-sachs-school-districts-and-capital-appreciation-bonds\/\" rel=\"bookmark\">Swimming with the Sharks: Goldman Sachs, School Districts, and Capital Appreciation\u00a0Bonds<\/a><\/h3>\n<p>Remember when Goldman Sachs \u2013\u00a0<a href=\"http:\/\/www.rollingstone.com\/politics\/news\/the-great-american-bubble-machine-20100405\">dubbed by Matt Taibbi the Vampire Squid<\/a>\u00a0\u2013\u00a0<a href=\"http:\/\/ellenbrown.com\/2015\/01\/06\/eu-showdown-greece-takes-on-the-vampire-squid\/\">sold derivatives to Greece<\/a>\u00a0so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the\u00a0<a href=\"http:\/\/www.wsj.com\/articles\/SB973204735324482552\">undisputed king of the municipal bond business<\/a>\u00a0epitomize the culture of greed that has ensnared students and future generations in unrepayable debt.<span id=\"more-9100\"><\/span><\/p>\n<p>In 2008,\u00a0<a href=\"http:\/\/articles.latimes.com\/2008\/nov\/11\/business\/fi-goldman11\">after collecting millions of dollars<\/a>\u00a0in fees to help California sell its bonds, Goldman urged its bigger clients to place investment bets against those bonds, in order to profit from a financial crisis that was sparked in the first place by irresponsible Wall Street speculation. Alarmed California officials warned that these short sales would jeopardize the state\u2019s bond rating and drive up interest rates. But that result also served Goldman, which had sold credit default swaps on the bonds, since the price of the swaps rose along with the risk of default.<\/p>\n<p>In 2009, the lenders\u2019 lobbying group than proposed and promoted AB1388, a California bill eliminating the debt ceiling requirement on long-term debt for school districts. After it passed,\u00a0<a href=\"http:\/\/www.ocregister.com\/articles\/bonds-496091-school-bank.html\">bankers traveled all over the state<\/a>\u00a0pushing something called \u201ccapital appreciation bonds\u201d (CABs) as a tool to vault over legal debt limits. (Think Greece again.) Also called payday loans for school districts, CABs have now been issued by\u00a0<a href=\"http:\/\/www.thenewamerican.com\/economy\/economics\/item\/14435-capital-appreciation-bonds-delaying-the-inevitable\">more than 400 California districts<\/a>, some with repayment obligations of\u00a0<a href=\"http:\/\/www.ocregister.com\/articles\/bonds-379193-capital-appreciation.html\">up to 20 times the principal advanced<\/a>\u00a0(or 2000%).<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Swimming with the Sharks: Goldman Sachs, School Districts, and Capital Appreciation\u00a0Bonds Remember when Goldman Sachs \u2013\u00a0dubbed by Matt Taibbi the Vampire Squid\u00a0\u2013\u00a0sold derivatives to Greece\u00a0so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[101,3736,195,1668,376,1167,3733,3735,3734,3732,860],"class_list":["post-5960","post","type-post","status-publish","format-standard","hentry","category-economics","tag-california","tag-capital-appreciation-bonds","tag-debt","tag-derivatives","tag-goldman-sachs","tag-greece","tag-matt-taibbi","tag-municipal-bonds","tag-school-districts","tag-vampire-squid","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5960"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5960\/revisions"}],"predecessor-version":[{"id":5961,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5960\/revisions\/5961"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}