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Archive for February 8th, 2011

Super Bowl: NFL Greeds Out

Wow. Someone else makes the link between the Dallas mega-stadium and the looming NFL lockout. WaPo scribe Sally Jenkins:

This Super Bowl was the future, and it set some lousy precedents. Every owner in the league wants a stadium like this one, and they will be pitching – maybe even extorting – their communities to help them build one. They want ever-larger luxury suites and bigger restaurants, and giant scoreboards and TVs, so they can replicate this Super Bowl, and sell standing room space in plazas and blocked views of a big screen for $200.

“Of the 100,000 and change tickets they sold, how many of those people actually had seats, and how many could actually see the field?” asks Neil deMause, a stadium-financing watchdog who co-authored the book, “Field of Schemes.” He adds: “That’s revolutionary if you can sell tickets to not actually watch the game. That’s a whole new ballgame. So obviously everybody is saying, ‘Hey, we want to get one of those.’ ”

It’s the shiny new toy in the league. New stadiums are such a priority for owners that it’s a critical piece of the labor negotiations taking place with the players’ union. A major reason owners resent the 60 percent cut of revenue that goes to players is because it’s not easy to finance stadium projects.

We’ve been screaming the same point for months, trying to explain that Jerry Richardson sees himself as the champion of the small market teams who cannot afford billion-dollar stadiums — not without public money that is just not going to be there for the foreseeable future. As such the lockout is as much about breaking the union and its spend-thrift members as it is giving NFL communities a scary preview of life without pro football. Don’t want that to become the future of Jax, Buffalo, Minnesota, Charlotte — better get ready to pony up billions for football palaces just as soon this all simmers down.

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Post Your Reval

I’ll go first, 6.8 percent increase.

CORREX: Make that 7.2, I rushed thru the math.

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MNI Spins Horrid Year, Quarter

How many times is McClatchy CEO Gary Pruitt going to be allowed to skate with the “Florida and California are so horrible” excuse? Take a look at year-to-year ad revenue for MNI’s Southeast ops — which basically means the Carolinas. Down 6.4 percent.

The company is a train-wreck top to bottom, coast-to-coast because 1) The exec team is clueless and 2) Publishers have active contempt for their customers.

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Patrick McHenry is Not a Conservative

Not if McHenry is defending the bankers and bond dealers when an analyst stands up and calls bullcrap on the muni market.

Meredith Whitney no doubt hit the banksters in the wallet by predicting massive defaults in the municipal sector. Money has run for the exits in recent months. And? So? This merits a Congressional investigation? Only if McHenry is a wholly-owned subsidiary of Big Money.

Municipal debt ratings have long been inflated by and benefited from the assumption that governmental entities had rock-solid revenue streams. Well, the last two years have proven that many governments (ahem) have relied on positively fantastic revenue assumptions. And the ratings agencies and deal placers went right along with those assumptions. It was fraud on a massive scale. Now, someone comes along to point out that the New Normal might not throw off enough revenue to pay the massive debt bills — off with her head!

Check the supposed “solution” the banksters tout to prove Whitney is wrong and defaults cannot happen. State-imposed financial control boards that would seize tax dollars as they come in to pay down debt, essentially jumping the bond holders to the front of the line, ahead of local taxpayers and citizens. This is an admission that in many cases AAA ratings were a joke, that the political risk of non-payment of the debt was not properly priced into the offering. This gets us to the heart of the matter, if Rep. McHenry cares to pay attention.

Muni debt sky-rocketed pre-crash because of a happy convergence of goals. Governments wanted to spend money without raising taxes and bond traders wanted commissions on bond placements. It was in no one’s interest to point out potential problems in servicing the debt. The higher the rating, the bigger the placement, the more money for everyone. The political risk of ever-larger debt service eating into operating budgets was massaged away with rosy revenue and tax-base growth assumptions — we’ve certainly seen that in Mecklenburg County. Dedicated revenue streams were double and triple promised to multiple issues will little attention paid to the overall debt burden. The emphasis was making the deal “work” not on the long-term financial health of the government unit.

As a result, in 2011, we actually have the chairman of a subcommittee of the House of Representatives suggesting, in deed if not word, that the first job of local government is to pay bond traders and mega-banks instead of cops, firemen, and school teachers.

Update: Charlie Gasparino needs to stick to leaks from CEOs, he does not know a damn thing about politics.

Update II: Response from McHenry’s office to this post, along with my reply:


Sure wish you would have reached out to me before writing your blog post today. Congressman McHenry is holding this hearing on the looming state and municipal debt crisis tomorrow because he believes that fiscal imprudence has been rampant in the states and municipalities. He believes that over-spending, not under-taxing, has been the driver of the debt crisis. The hearing will examine the causes and severity of the debt crisis and take in to consideration ways to provide states the tools they need to dig themselves out from their debt.

The hearing has academic scholars who have written in depth on state fiscal issues, particularly on unfunded or underfunded liabilities in pension funds. That issue is an extremely troubling one that Congressman McHenry is interested in hearing more about.

The one thing that is known for sure going in to these hearings is that there will be no bailouts and no additional stimulus money available.

Hope this helps clear up where the Congressman stands a little. If I can ever be of assistance or answer any questions for you please let me know.


Ryan Minto
Rep. Patrick McHenry (NC-10)

Thanks for the input, Ryan. Did the NYT misquote the Congressman:

…But the subcommittee’s chairman, Representative Patrick T. McHenry, Republican of North Carolina, said that would not dissuade him from investigating her record.

“This isn’t a gotcha thing, but she’s going to be part of the hearing, whether or not she participates,” he said. “If she doesn’t want to come forward in a venue like this, that makes a statement.”…

If not, I spent 13 years in DC, I know a subcommittee lynch mob when I see one. Whitney is a not a fruitful subject for investigation, nor is the bankruptcy canard. (Although I would like to see Eileen Norcross’ testimony which is not posted yet.)

Get Chris Whalen up there (his new book is required reading) to explain what happened and how to fix it. The banks and bond traders helped drive the over-spending. Call Brian Moynihan to testify to get to the root of the looming crisis.


Jeff A. Taylor

I think it was an accurate quote, but how it is perceived is important. “This isn’t a gotcha thing” was him explaining to the reporter that this isn’t an investigation of Meredith Whitney. I think what he was trying to explain was that she did make a splash with her 60 Minutes segment and because it ties so closely to what we are looking at it could be brought up. We are very excited about having Ms. Norcross. We’ve been reading her work for some time now. I’d be glad to send you her testimony if you would like.

Ryan Minto

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Tax Hike, For the Children: Part XIV

The property tax hike express is now screaming down the track after months of steady rolling.

The tax-hike poll commissioned by defenders of the status quo is the pen-ultimate act of the outside campaign. The final act will be packing county commission and city council budget meetings demanding a tax hike. The inside campaign continues with Mecklenburg County government obscuring the impact of the reval on homeowners’ tax bills while Jennifer Roberts whips votes for a tax hike.

Still unknown is the extent to which local tea party activists are prepared to counter the tax hike push. My sense is much energy is being sucked up by a rather pointless tilt for the head of the local GOP wing. We shall see, however.

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