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Archive for January, 2011

Housing: Foreclosure Peak Still Ahead

As if local officials want to hear this:

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Kojo Gets His Check

How else to characterize the $55m. raked together by the Uptown crowd for West side schools? What started as a CMS wide initiative quickly narrowed to a West Charlotte feeder focus by the time CMS’ West side school closing list was out by early October. October also being the time the state and local NAACP started to protest the closings and October being a few weeks ahead of the November election which would retain Demcratic control of the Mecklenburg County Commission — thanks in large part to West side votes.

We’ve told you that for weeks the Uptown crowd has been mortified that the bad PR flowing from Rev. Kojo and the local NAACP would scare off the DNC. The DNC Convention being the Official Thing That Will Save Charlotte, according to the Uptown crowd. Well, $55m. should smooth things over, create plenty of positive PR showing just how progressive and wonderful Charlotte can be.

The kicker is no one knows — exactly — how the money would be spent to improve CMS performance. Not that that matters. The PR is all that counts — that and word that the DNC is coming to town. (Psst — wonder what the CRVA has promised to that end?)

Bonus Observation: Why would any shareholder of Duke Energy, Wells, or BAC stand for this kinda political grease? There is no business or philanthropic purpose at all in these gifts.

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The ACC Exposed

As basically a Mid-Major. You often hear of the term “signature win” in college hoops, a win over a ranked team that announces that a team is good enough to qualify for the NCAA. St. John’s drubbing of Duke was just the just the opposite, a signal that Dook, and by extension the ACC, is rather overrated.

Ordinarily, it’s dangerous to read too much into any one basketball game. Not in this case though. St. John’s is a middling Big East outfit but based upon RPI (rank: 28), they are still the best team Duke has played so far this year. And Duke, ranked number 3 in the country in the AP poll at the time, was destroyed.

So yeah, maybe Duke isn’t the third best team in the country. Actually, there was good reason to think they weren’t that even before Sunday. Who exactly did Duke beat this season to earn that number three ranking? Based upon RPI, they’re best win is at home over Boston College (RPI: 34). Don’t believe in RPI and prefer the polls? OK, Dook has played exactly two currently (as of Monday morning, just before the weekly poll update) nationally ranked teams, topping #25 Michigan State and losing to #22 Florida State. Not exactly an endorsement.

This year, much of the ACC’s claims of quality are derived from Duke’s quality as the conference overall only ranks 5th in RPI. So when Duke lost big in NYC, with it went some of Florida State’s claim on a ticket to the Big Dance. After all, their biggest achievement was a win over Duke.

Still, there are 37 a large bid, of which only 10 or so will go to the Big East. So there are bids to be had. Hard to see the ACC getting more than four — if the season ended now, Duke, UNC, Boston College and maybe Florida State — would make it. Miami, Clemson, Virginia Tech, and Maryland all came into Sunday’s play with RPIs of between 65 and 78. That sort of RPI pretty much amounts to “win the ACC tourney or go the NITs.” So figure 10 or 11 conference wins as the minimum need to make the show.

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What If CMS Had Taxing Authority?

Well, for one thing, we’d be denied the entertainment of this uproarious back-and-forth over the Bright Beginnings program with the Mecklenburg County Commission. Little question that CMS is attempting to game the system here with a meta-budget $10m. “grant” request for the county.

But what is really telling is that the sudden push for school district taxing authority has been twinned with the vapid “consolidation” meme. In other words, something for nothing. The Local Powers That Be, confronted with an end of the hot-check, Ponzi-scheme era, faced with “we cannot afford the government we have,” have hit upon changing the letterhead and the name on pay to line as viable solutions.

Shrinking government while improving transparency and accountability is the only way out of the hole the Powers dug for themselves. Those goals would not be served by giving CMS the ability to destroy the local economy. Certainly not on the heels of the cynical gangsterism CMS displayed with the bid to kill middle school sports for the want of $400,000 — couch-cushion money down at the Ed Shed.

Taxing authority? I wouldn’t trust Pete Gorman and his shakedown artists with a lemonade stand.

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Why The Reval Scares SoMeck

Although this should be obvious, I thought I’d spell it all out so that there is no confusion going forward.

First, the property tax is somewhat unique in that it is a tax on wealth — wealth as defined by the taxing authority. Aha, you might say — and some have — the IRS defines your income as well, and taxes you accordingly. Correct. And the income tax taxes that income — a tautology found in the very federal enabling legislation of the tax.

But.

The property tax is an income tax as well. All taxes must be paid out of income. Your wealth — as defined by government — may set your property tax liability, but you still must pay that liability out of your actual income. Now do you see where we are headed?

Actual incomes across South Meck have fallen since the 2008 crash — we don’t know how much, but we know there has been a marked decline. But the reval will show an increase in wealth across the Southern tier — the value of most folks single largest asset, their house — since the 2003 reval. As a result the property tax liabilities in SoMeck will claim a much larger percentage of actual income than was previously the case — perhaps was ever the case.

Put another way, if you are making $100K and pay a 10 percent income tax and get an actual income boost to $125K you are not going to view the additional tax you pay as a tax hike. (So long as the tax rate does not go up.) You have more income out of which you can pay the tax. Not so with the 10 to 15 percent property tax hikes coming for many South Meck residents.

Their incomes have not increased, and may well have fallen, in recent years. As a result an additional $400, $800, or $1200 a year in property tax is going to feel like a massive hit on their incomes. Add in $3 to $4 gas and creeping inflation in food and you begin to understand the fear and upset.

It seems to me that local government officials and boosters are trying to talk themselves out of this reality — that local government just needs to “capture” a tiny slice of what has been a massive run up in wealth, that local taxpayers really won’t feel it or care, that the “vital services” charade will once again carry the day.

The problem is that crazed government spending during the boom years already threw away all that wealth.

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CLT’s Public Safety Woes Go Global

Bloomberg details the city of Charlotte’s trouble with its public safety budget for the world to see. The usual suspects inside the 277 loop cannot be pleased with some actual myth-busting reportage.

The simple fact is that the city foolishly thought the banksters hot-check economy would go on forever and deliver nearly double-digit increases in tax revenue every year.

It didn’t.

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Who Will Put Treasury Officials in Jail?

Chris Whalen is back asking impolite questions of the nation’s financial sector, particularly the notion that the Treasury Department is free to pump a hollowed out AIG to the public:

The recent Goldman Sachs fiasco involving FaceBook, where those special masters of the universe did not seem to understand that doing a private placement for a prominent internet company is pretty nigh impossible, the Treasury’s handling of the sale of shares in AIG and other zombie companies seems to confirm that none of these people know their business — or care. In both cases, the elementary legal requirements of executing a public offering of securities in the US seems to have escaped the notice of the responsible adults at the Treasury and GS. Does anyone at the White House know or give a damn?

See, I’d take the GOP Congress somewhat more seriously if it paid attention to this sort of stuff.

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One Home Invasion, Two Convicted Felons

Surprise. East side home invasion and not one but two convicted felons.

Anthony A. Robinson even had felony armed robbery charges from 2008 go poof.

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Ken Lewis Wanted Subsidy to Buy Lehman Bros.

Not that much the Financial Crisis Inquiry Commission is telling us is all that shocking — more fleshing out of solid suppositions — but this is still pretty amusing.

Dick Fuld of Lehman was so desperate to get a deal that Mrs. Ken Lewis had to intervene in those heady days of 2008:

Former Bank of America CEO Ken Lewis told the FCIC that Treasury Secretary Paulson had called him on Wednesday, September 10, and asked him to take another look at acquiring Lehman, assuring him that Fuld was ready to deal.

Paulson and Geithner had arranged for Fuld and Lewis to discuss an acquisition in July, but Fuld had not been interested in selling the entire firm at that time. Because of this history, Lewis expressed his concerns to Paulson that Fuld would not want to sell the entire company or would not be willing to sell at a realistic price.

Still, a team of Bank of America executives began reviewing Lehman’s books, and on the next day, Fuld sounded optimistic about a deal.

But Bank of America determined that Lehman’s assets were overvalued, and Lewis told Paulson there would be no deal without government assistance. Undeterred, Paulson told Lewis—as Lewis informed the FCIC—to put on his “imagination hat” and figure out a deal. His insistence kept the Bank of America executives working, but on Friday, September 12, Lewis called Paulson to repeat his assessment—no government support, no deal.

Apparently Fuld had been kept out of the loop, and began to call Lewis at home. Lewis’s wife told Fuld that Lewis would not come to the phone and to stop calling.

In retrospect, the Fuld full-court press had to make the Merrill deal that much harder for Lewis to walk away from — and he should have sprinted away.

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Marcus Jackson Civil Cost to Taxpayers: $575,000

Plus litigation/legal expenses. Yet Rodney Monroe still has a job.

Only in Charlotte.

Update: Make that $617K total — with other settlements still pending.

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