The Federal Reserve bank assures us that inflation is under control.  This sign at University and 54th tells a different story.
  • The Federal Reserve bank assures us that inflation is under control. This sign at University and 54th tells a different story.
  • Image by Chris Woo

Is it drunk outside? Or is it just me? San Diegans are asking a similar question: political and civic leadership appears perpetually besotted. Is this a local phenomenon, or is it happening elsewhere? You’ll be relieved to know that political/economic dipsomania is worldwide. The risk is that we’ll stumble back into the 2007–2009 delirium tremens.

For example, in San Diego, the mayor says that the deficit for the fiscal year beginning July 1 will be $56.7 million. But a group launched by the mayor, the Citizen’s Fiscal Sustainability Task Force, says it will be $130 million. That same group once suggested that the City consider bankruptcy. So did the San Diego County Grand Jury and the local League of Women Voters.

“San Diego’s finances are in worse shape than ever before,” says Norma Damashek, former president of the League of Women Voters, but the mayor and other civic leaders are pushing for a downtown football stadium in which the billionaire owners of the Chargers would put less than $200 million (when you consider naming rights and other scams) while the City would have to put in a minimum of $600 million. And according to that task force, the City needs to take care of deferred maintenance, or upkeep of the City’s rotting infrastructure, which has been ignored while the politicians were plunking money into sports stadiums, subsidized shopping centers, and condos, ad nauseam. The cost of that deferred maintenance: $600 million.

But Los Angeles is just as broke as San Diego. Los Angeles, too, wants to build a downtown football stadium — one that may lure the Chargers from here if it ever gets constructed. Anschutz Entertainment Group claims that the stadium will be privately financed. Balderdash. According to the LA Weekly, author D.J. Waldie, who writes about Los Angeles and Southern California, says that to make the stadium work, L.A. will have to pay off $445 million in existing convention center bonds at $48 million a year and, in addition, pay off $350 million in new convention center bonds at $29 million a year. Then the city, or somebody, will have to come up with $117 million for a parking structure. Bottom line: this stadium that will purportedly be financed with private funds will cost Los Angeles $86 million a year for the first ten years, says Waldie.

That brings us to convention centers. San Diego wants to build an addition to its center. It could cost $700 million, perhaps more. The City doesn’t know how to pay for it. Mayor Jerry Sanders says a surcharge on hotel rooms might be a start. It’s not clear that the hotel industry will fall into line, says Heywood Sanders, professor of public administration at the University of Texas at San Antonio and America’s leading expert on convention centers. (San Diego businesses typically want the public to finance their profit centers.)

Boston officials trumpet the success of the Boston Convention and Exhibition Center. They want to expand it. But they refuse to face the fact that much of the hall’s business has come at the expense of another Boston center, the John B. Hynes Veterans Memorial Convention Center. In the past five years, the number of visitor hotel nights to the two halls is up only 9 percent, says the Boston Globe. One hall is cannibalizing the other, points out Heywood Sanders.

Then there is Seattle. Taxpayers financed Safeco Field, where the Mariners play baseball. Later this year, those taxes will be ending. So politicians want to continue the taxes to expand the Washington State Convention and Trade Center. The pols started beating the drums in 2009, following a large drop-off in out-of-state visitors generated by the convention center. “In 2009 they had fewer out-of-state visitors than they had in 1997,” says Heywood Sanders. “In 2010, they had 85,456 out-of-state visitors; they were doing less than half the business they had done in 2007, but they still want an expansion.”

Says Heywood Sanders, “The impact of the recession has been absolutely enormous. Centers around the country have seen business drop by 20, 25, and 30 percent. In San Diego, the cost will be enormous, but it is not at all clear it will generate any substantial increase in business. These things are literally crapshoots. You can think you have a great center and a great destination, but everybody else believes the same thing. Yet cities up and down the West Coast are thinking of [expanding centers]. This isn’t driven by anything remotely like rational decision-making.”

San Diego’s long-delayed audit may be completed by August, nine months late. The City blames the delay on data-entry errors under a new computer system. What’s pathetic is that the bond-rating agencies seem to accept San Diego’s lame excuse. “Software-implementation delays are not unusual in other cities,” says Standard & Poor’s. “We don’t want to signal a problem if this is just a system-related problem,” says Fitch. Moody’s says the delay sounds “technical in nature.” These are the same outfits that gave AAA ratings to mortgage derivatives that were stuffed with doggy home loans.

Those egregious misjudgments almost drove the world into the abyss. And they serve as reminders that it’s not just state and local governments that make decisions while drunk as billy goats. Consider America’s reaction to world calamities. The Muslim Brotherhood gains clout in Egypt. There is violence in Syria and Libya. The Saudi sheiks are waving their sabers at Bahrain. So oil prices soar and gas prices in San Diego remain around $4. Meanwhile, the Japan tragedy, combined with food-supply shortfalls in China, will send food prices even higher.

But the Federal Reserve, America’s central bank, watches so-called core inflation, which does not include fuel or food prices. So it just keeps pumping liquidity into the financial system, assuring us there will be no inflation, although anybody who either eats or uses fuel (and who doesn’t?) knows better. The Fed has stated it wants to pump up the stock market to jump-start the recovery. But 80 percent of financial wealth (stocks and bonds) is controlled by the richest 10 percent. The Fed says as long as unemployment stays high and plant utilization stays low, all this liquidity won’t cause inflation. It appears that the Fed loves high unemployment and is blind to soaring food and fuel prices. And you think only San Diego officials are blotto?

Actually, there is a measurement that closely reflects the cost of living. It’s called the chained consumer price index for people in urban areas. It takes into account changing consumer habits — say, if pork is cheaper than beef, folks switch to pork. And this cost-of-living index, unlike inflation measures, is now at a record high. But don’t tell Ben Bernanke, head of the Fed. He’s working on his second martini and plotting more ways to make the upper 10 percent even richer.

Just remember: crapulence follows intemperance.

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Comments

clockerbob April 7, 2011 @ 8:28 a.m.

Manny are not familiar with pre-bankruptcy euphoric spending.

In 1995 I lived in Cardiff with a group of retired Teamsters all former members of the racetrack parking lot crew.

Before filing for bankruptcy they borrowed everything they could-spent everything they could.

Any cash was kept in the house. Bank account at less then ‘0’. Max credit cards and more came in mail. Same day loans against $2,500 monthly pension’s check-

used white Plymouth Valiant down payment on credit card.

Jake spent weekends with

younger women in Reno and San Fran.

Then all debts were cleared before a bankruptcy judge.

Even got to keep car.

Same policy is being followed by bankrupt city of San Diego (new stadium, new library,

new park, new fire station, new convention

center, homeless consultant and staff at $464,750 a year to provide “technical assistance”, 3.5% raise for postal workers)

All debts will be erased by
bankruptcy judges’ ruling that city sales tax will be increased 2% without a public vote to cover debt.

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Don Bauder April 7, 2011 @ 7:19 p.m.

Mayor Jerry Sanders wants to appease the plutocrats that line his pockets while at the same time stalling out bankruptcy until he is out of office. Yes, the similarities with the Mafia are remarkable. Best, Don Bauder

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tomjohnston April 7, 2011 @ 9:42 a.m.

Actually, as much as I have enjoyed, some of Waldie's writings over the years, your version is not exactly accurate. Waldie is not the one who came up with either the figures or the questions asked. The actually came from City Councilman Bill Rosendahl. They were in what seems to be a now pretty widely circulated document that was initially sent to the Deputy Mayor and the other city council members. You should be able to find it or references to it somewhere on Citywatch, which is one of the places I read about it probably a month ago. I've also read that it is $260 million in bonds, not $445 million, but I could be incorrect. I don't know if any stadium will be built in LA, but I would say the odds are that there's a better chance that happens than the chances of the Chargers staying in San Diego.

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Don Bauder April 7, 2011 @ 7:22 p.m.

The first casualty of war is truth. The same is true of the construction of government-subsidized sports stadiums. I have covered several of these dea;s: the first rule is: don't believe the owners or the politicians in the owners' pockets. Best, Don Bauder

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sd_engineer April 7, 2011 @ 5:36 p.m.

As a long time Rams fan who watched the team move to St. Louis, I can tell Charger fans that there is life after the NFL. Tell the Chargers to go take a hike and go strip-mine their fans someplace else, preferably North Dakota (no disrespect to North Dakotan's, but I would really love to watch the Chargers play when it's 50 below zero outside).

With all of our new found time we can do more important stuff like pay attention to what our Rep's are doing in Congress while the Robber Barons on Wall Street are robbing us blind.

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tomjohnston April 7, 2011 @ 7:22 p.m.

We were season ticket holders for a long time while the Rams were in Anaheim. But not one single time did we bother to attend a raiders game while they were in LA even though we had to drive from the north side of LA down to Anaheim. There is indeed life in the NFL after a team, or two, leaves. And if the Chargers do eventually relocate up here to LA, at least there's one thing that won't change; you'll still iss some of the games because they're blacked out.

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Don Bauder April 7, 2011 @ 7:27 p.m.

What? You didn't turn out to support Raiders' owner Al Davis, the master extortionist? Now he wants to leave Oakland unless he gets what he wants from the broke city. Best, Don Bauder

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tomjohnston April 7, 2011 @ 9:34 p.m.

I could care less about Al Davis. My personal feelings have long been that if anyone is stupid enough to do business with him, whether it be a muni, a business or even an individual, and they gets screwed, then it's there own fault. There is absolutely no one who shouldn't know what kind of person he is and if they go ahead and do it anyway, well let's just say they shouldn't be suprised when they found out the got bent over.

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SurfPuppy619 April 7, 2011 @ 9:58 p.m.

The original majority owner of the Raiders was Wayne Valley and he said Davis was the worst mistake of character he ever made in his life.

Davis only cares about the almighty buck, he would sell his mother if he coudl make a buck off of it.

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tomjohnston April 7, 2011 @ 10:35 p.m.

surfpuppy619, unless I'm mistaken, haven't you written that you're from someplace in the Bay area? Here's some raiders trivia for you. What was the original name of the raiders when Oakland was given the AFL franchise and where did they play their home games in the 1st season. Now be honest and answer without looking them up. I lived in the Bay area for about 6 yrs way back when and I have met very few people who know the answers.

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SurfPuppy619 April 9, 2011 @ 10:33 a.m.

I grew up in Oakland, and was a die hard Raider fan until they moved to LA, then that was it. No more.

Al Davis-without looking anything up- was brought in by Valley to eb coach and I know of no other name but the Raiders, where did they stsart playing?? Don't know that one.

I know I will never again be a Raider fan, even when Davis dies. The carpet bagging LA move left a very bad taste in my mouth that has never gone away.

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tomjohnston April 9, 2011 @ 11:49 a.m.

A friend from my college days told me this a long time ago. when Oakland was awarded the franchise,It's pretty common knowledge that the city wasn't even trying to get a pro football team. Barron Hilton supposedly threw a fit and threatened drop out of the league if there wasn't another west coast team. Since the 49ers were already in the bay area, they gave the team to Oakland; that's how Wayne Valley got involved with the other 7 original owners, they had a contest in the paper and the winning names was The Oakland Señors. Somebody got smart and came up with the Raisers a few weeks later. At first I didn't believe him but his dad was a die hard from the beginning and he still had some old newspaper articles about the team. As of a couple of yrs ago it's also on wikipedia, so obviously that makes it official. LOL The 2nd part I actually knew.Berkeley wouldn't let them play there so for the beginning of their first season, they shared Kesar with the 49ers and played the last couple of games at the Stick, where they also played the following year. When I was a kid, probably late 50's early 60's, my dad took my brother and I with him to San Fran a few times, so we saw some 49ers games at Kesar. I think he's probbly the one who told me about the Raiders playing there.

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Don Bauder April 8, 2011 @ 7:31 a.m.

As I recall, Davis was an assistant coach of the Chargers in the early days. Davis was also a business partner of Allen Glick, the casino owner whose La Jolla home was lighted all night for security reasons.. Best, Don Bauder

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tomjohnston April 8, 2011 @ 9:02 a.m.

Davis was an offensive coach with the Chargers the year they played here in the Coliseum and their first year in San Diego. My dad and grandfather were bigtime Ram's fans, so my late brother and I got to go to many Rams games when we were kids, but I don't remember that we ever went to a Chargers game when they were here.

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Don Bauder April 8, 2011 @ 7:28 a.m.

You are right about Al Davis, but he keeps wooing cities and their ignorant/corrupt politicians. Best, Don Bauder

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sd_engineer April 8, 2011 @ 2:22 p.m.

Master extortionist indeed - The Raiders rip-off of the City of Irwindale is now legendary, but unfortunately it has provided the model for the rest of the NFL to follow.

The really weird thing about the NFL now is it's become so prohibitively expensive that only Wall Streeters and rich CEOs can afford to attend the big games. Every year before the Superbowl, the local airports overflow with Gulfstream biz jets.

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Don Bauder April 8, 2011 @ 8:41 p.m.

Al Davis of the Raiders was an offensive coach, and he is an even more offensive owner. Best, Don Bauder

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tomjohnston April 8, 2011 @ 8:53 p.m.

That's probably true for everyone except Raiders fans. To them he is the owner of the team that has 3 Superbowl wins, which the last time I checked was 3 more than the Chargers have. My guess is that most Chargers fans would gladly trade 3 Superbowl wins in return for dealing with someone like Al Davis as an owner. And speaking strictly as an outsider, there doesn't appear to be much difference between Al Davis and Alex Spanos.

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Don Bauder April 7, 2011 @ 7:25 p.m.

Yes, watch our national representatives who are in robber barons' pockets, but also watch our local politicians with sticky fingers. Best, Don Bauder

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Don Bauder April 8, 2011 @ 7:34 a.m.

I wonder if the public actually knew about what goes on in pro sports -- the owners' and players' mob ties, the point shaving and sometimes game-throwing -- whether the demand would weaken. Best, Don Bauder

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jojoba April 14, 2011 @ 12:05 p.m.

DonJohnston:

Waldie's numbers are correct. They can be found in the city's budget online at www.lacity.org. Los Angeles owes $445 million on the bonds that were used to expand the Convention Center years ago. They are being paid off at the rate of $48 million per year. There are quite a few years to run on that.

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Don Bauder April 14, 2011 @ 4 p.m.

And LA's convention center, like others elsewhere in the U.S., is underperforming. Best, Don Bauder

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Don Bauder April 15, 2011 @ 6:42 a.m.

Did you go into your neighborhood Staples to buy a basketball or a hockey stick? Best, Don Bauder

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