snip
One final question out of left field. What do you think would be an appropriate investment, more sophisticated than bonds, for a city looking to raise money for street repair?
-river
I'll do the other part very soon.
Tucson has a street repair problem.
Fro relaxation, I can chat a little about local governamce's ability to deal with local opportunities.
We have a new major who formerly worked in Tcuson as a professional. He decided to "give something back". So not Tucson is the victim of his largese.
We have about a million folks here and they work at local companies or are retired
We also have Councils and Departments and a city manager and a Mayor.
So our streets have fallen into disrepair as a consequence. The rough price tage spoken of is about 1 billion to fix the streets
Our small group od deliberators set up by the powers that be recently decided to get the "squeaky wheels" taken care of.
We did to 400 million is bonds to fix the streets. Residential streets were not a high priority. But residents make noises. My neighborhood is a red box area since we signed form letters to get our streets fixed. WE squeaked the loudest apparently.
So 6 million was pealed off to deal with local neighborhood streets
And the local TV news came to our neighborhood to inverview the form letter collector. Her husband also tripped in a pot hole .
Ad the TV crew was packing up, came along wlaking and taking data on lninear mile pothole rate of occurances (6 per day per mile). I have a curb piling method to prevent double counting.
I was motioned to the reporter's presence.
Could I answer some questions???
I had prepared a city wide no cost solution and given it to the form letter collector a year prior (and could not get an meeting with our local neighborhood board (the solution I worte was thought to be humor).
Now a reporter wanted toply me with questions.
I was wearing a Calvin Klein wseat shirt and dsigner jeans.
He asked if the new residentila repair stories had cought my attention. I chuckled.
He asked why.
I said the 870mundred million dollare problem was being attacked with 6 million over two years. I said "do the math".
What math?
I replieldd: Sub tract 6 from 870 and see the small 864 still lefts to do after two yers pass.
"Oh" I heard. "don't you think muni's work/"
I said "yes they are good for digging holes but we need the holes in streets fixed instead."
I added that muni's have to be paid back along with interest.
He puzzled away and said "you think there is a finacial problem in Tucson???"
A said yes.
And then he asked what you asked.
LOL.
He said the TV needed to do an educational programm to get the public to understand what was really going on.
Econometrically fixing the roads in Tucson has a multipier of about 6. That is, putting a billion into road work circulates 6 billion through our local community.
The small bridge I designed to do this was 200 miliion a year for 5 years.
to earn 200 million at a hedge fund the fund needs 1 billion dollars.
Pick a hedge fund that wants 1 billion dollars.
Now the reader has to pay a little attention.
The key is to guarrantee the performance of the HF.
This is done with a form letter. Tucson has people who are skilled in getting signatures of form letters. "Stand Up Tucson" is the name of a person who has signed.
Back to the key issue. The HHF has to perform. And the performance has to be guaranteed.
So picking a HF that does not fail is a place to start.
I chose GS.
the leter says:
Dear GS
!, ________. guarantee your performance to use capital; to make proifts for the next five years. If you lose, I will pay to coer the loss. My committment to guaranttee is _______ dolars.
sincerely,
_____________
My net worth is _______________
So now we look at 1 million people and their employers doing 1 billion dollars of guaranteeing.
We use the Russian peasant method for multiplication. One factor is doubled and the other is halved. repatedly until an answer may be found
Below are some steps
1. 1 million x 1,000
2. 500K x 2, 000
3. 100k x 5,000 Fewer people more guarnatee'd. Somme people in private neighbor hoods spend 5,000 a year now. Money lost.
Throw in some big businesses here.
4, air force "bone yard" old aripplanes from many wars. 1 million guarantee.
we need 1,000 such guarantors.
IBM, IBM equivs, Motorola, VA hospital 87 buildings,
10 million each we need 100 of these.
400 million unspend bond issue . We have 1 of these
By getting 400 mllion unspent
then US gov't business 100 million more in guarantees
the busineses 200 million more
we need people and small businesses to cover 300 million in guaranttees
5 K shots by 30,000 people
10K shots by 10,000 people.
Now , we have 200 million per year for 5 years.
Cut all the above in half and spend 10 years fixing the streets.
At the end of gettin the 1 billions, the pieces of paper are returned to the proffers.
The risk analysis:
GS doesn't fuck up and never has. So add 20% overage to be safe.
So with a 1 billion dollars od performance guarantee's what doas GS do? They raise the capital to make more than 20% a year and split to excess profite with inversotrs and GS.
So now we see money hitting tucson. How does the 6X economitric effect change the size of the street problem. Only by how much of the 6X is put into taxable contexts.
How can this added capital circulation be maxed out?? B local incentives to do stuff that contributes to the tax base.
It there a chance that Tucson can have "Stand UP Tucson"? Power to the people will begin it on any scale. If you want your streets fixed, sign a guarantee. If you want your empoyees streets fixed sign a guaranttee. People wh do not want their streets fixed can buy the municipal bonds and watch the bond rating of tucson die.
