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Miami Herald: How a $91M loan on Marlins Park will cost Miami-Dade $1.2B

Discussion in 'Sports and News' started by 3_Octave_Fart, Jan 25, 2013.

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  1. The Big Ragu

    The Big Ragu Moderator Staff Member

    People on here buy that $1.2 billion number without any thought. It's just not right.

    It is going to end up being a really expensive ballpark -- maybe more than Yankee Stadium cost in public money. But that $1.2 billion number is just not right.

    $1.2 billion in 2048 isn't worth $1.2 billion today -- even if inflation is zero. The real cost in present-day terms has to be measured by how much you'd have to set aside right now to pay off the balloon payments in the future. So for example, you could put that money in long-term treasury bills right now and get between 1.5 percent and 2 percent. If you did that, you could pay off $1.2 billion in 2048 with somewhere around $650 million of today's money.

    That is as simplistic as the $1.2 billion number, because some of that money will have to be paid off before 2048. I couldn't follow the balloon payment schedule from that story. But there will also be better ways over the next 30 years to grow money from today than by investing in treasuries. Let's say you earned 4 percent annualized over the next 30 years and paid off that loan in lump sum then. ... It would end up costing $450 million.

    There is actually no way to tell how much the loan will end up costing in present value terms. Depending on how the city handles it finances it will be VERY expensive. But it won't quite be $1.2 billion.

    Not that that disregards the "Our public debt shouldn't be getting piled on with this kind of stupidity" posts. It's ridiculous.
     
    The Big Ragu, Jan 27, 2013
    #25
  2. SoCalScribe

    SoCalScribe Member

    The problem is, most governments are focused on the next election, so the chances of any money being saved and invested with an eye toward this type of bond are basically zero. And this bond will be a huge issue in elections in 2040 or whenever, sweeping people into and out of office, all because of a bad decision made 30 years earlier. It will be wholly irrelevant to the politics of the day, but I guarantee people will use it as something to run "against" and so forth.
     
    SoCalScribe, Jan 27, 2013
    #26
  3. SoCalScribe

    SoCalScribe Member

    A good example of this is the Chicago parking meters. Instantly decried as a hideous move, rates going up every year and, hey, only most of the century remaining on a deal to balance a budget for a year that has already passed.
     
    SoCalScribe, Jan 27, 2013
    #27
  4. The Big Ragu

    The Big Ragu Moderator Staff Member

    I know. And no argument. ... If this even sits there like a brick until 2030, or whenever their balloon payments ratchet up. Any any way you slice it, it is going to come at a lot of public cost. Nobody takes a loan under those kinds of terms. ... unless they really can't afford to take the loan.

    But that kind of story still misleads people. It wants to shock with the $1.2 billion number, so it looks at nominal costs, and that misleads, because the true cost won't be borne for decades. People should intuitively understand this, but I got the sense from some of the responses that people see $1.2 billion, and don't consider it the way they consider most other things in their lives.

    This is a more exaggerated version of looking at the total of $600k in payments over 30 years you still owe on your home that is worth $300k and just considering the nominal costs of all the payments added up. ... not considering the present value of that money.
     
    The Big Ragu, Jan 27, 2013
    #28
  5. Baron Scicluna

    Baron Scicluna Well-Known Member

    She's not against free trade, she's for fair trade.

    http://www.ontheissues.org/international/Amy_Klobuchar_Free_Trade.htm

    In other words, she's against shipping jobs overseas just so workers can get paid 8 cents an hour and beaten if they take 3 minutes for a shit break.
     
    Baron Scicluna, Jan 27, 2013
    #29
  6. Starman

    Starman Well-Known Member

    Well that means she knows nothing about economic reality, because THAT'S THE WAY THINGS HAVE TO BE in the glorious Free Market.
     
    Starman, Jan 28, 2013
    #30
  7. Baron Scicluna

    Baron Scicluna Well-Known Member

    I did read it.

    She wants a level playing field. Not the US getting dicked over for the sake of a few million in Swiss bank deposits. Sounds good to me.
     
    Baron Scicluna, Jan 28, 2013
    #31
  8. cranberry

    cranberry Well-Known Member

    Things like this don't need to happen:

    http://abcnews.go.com/Blotter/factory-fire-kills-garment-workers/story?id=18327767

    Just like this didn't need to happen 100 years ago:

    http://www.wnyc.org/articles/wnyc-news/2011/mar/21/100-years-later-remembering-triangle-shirtwaist-factory-fire/

    Perhaps we can learn from history?
     
    cranberry, Jan 28, 2013
    #32
  9. GeorgeFHayek

    GeorgeFHayek Member

    LOL ... your grasp of economics never ceases to amaze me. Tell me what it is that you like about, say, the U.S. sugar program.
     
    GeorgeFHayek, Jan 28, 2013
    #33
  10. crusoes

    crusoes Active Member

    Why start now?
     
    crusoes, Jan 28, 2013
    #34
  11. cranberry

    cranberry Well-Known Member

    The fire in Bangladesh should serve as an International wake-up call. The Triangle Waist Co. fire served as a catalyst for labor reform here.

    http://www.dol.gov/oasam/programs/history/mono-regsafepart07.htm
     
    cranberry, Jan 28, 2013
    #35
  12. Baron Scicluna

    Baron Scicluna Well-Known Member

    The market isn't flooded with cheap foreign sugar, meaning American sugar farmers don't go out of business, and are able to create American jobs. Yes, prices are higher. But that's because American workers are doing the work.

    Found it rather interesting that certain groups are against the U.S. sugar program. Such as the Coalition for Sugar Reform, who count as their friends the Americans for Tax Reform, aka, Grover Norquist's group.

    http://sugarreform.org/about/members/
     
    Baron Scicluna, Jan 28, 2013
    #36
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