It is common knowledge that the newspaper industry is going down the toilet, which is unfortunate for all of us because newspapers provide 90-something percent of the original reporting relied upon by other media. Most of what we read online or see on TV isn't "reporting" per se but re-reporting from major newspapers. We want them to continue to do the hard work but we don't want to pay for it.
This will have more consequences that we realize since smaller papers are usually the first to go, either going under or being purchased by larger media companies and filled with homogeneous wire service content. That means there is essentially no one paying any attention to what local governments are up to, and boy oh boy do local governments get up to some stupid crap. The Chicago Tribune just uncovered a fun little game the Chicago Public Schools played with its bond issues. Due to the district's financial problems, "plain old municipal bonds weren't good enough anymore, and banks were standing by with attractive new options. So…the chief administrative officer at CPS and other officials pushed forward with an extraordinary gamble. From 2003 through 2007, the district issued $1 billion worth of auction-rate securities, nearly all of it paired with complex derivative contracts called interest-rate swaps, in a bid to lower borrowing costs." Shockingly that didn't work, and instead of lowering costs it ended up costing over $100 million dollars more than traditional bonds would have.
In a vacuum this example is not that big of a deal outside of Chicago. What should be keeping us awake at night is the prospect of thousands of Bright Ideas of this variety lurking out there and waiting to blow up in our faces. There is nothing more terrifying than going to a city council meeting or becoming familiar with your local government on some level. You may find some shining examples of public servants here and there; overall, however, the people who have decision-making power at the local level in this country are not terribly bright. And for the most part we have absolutely no idea what they are doing. If they make decisions that affect us directly – putting up red light cameras, for example – we freak out. Not much of what they do is that visible, though.
Given the budget nightmares that city/county governments and school boards have confronted since 2008, we might reasonably shudder to think of how many shortsighted, risky, delusional, or otherwise harebrained schemes they signed off on in the last few years. With most of us (myself included) paying next to no attention to what is going on at the local level, it is highly likely that we'll be seeing plenty more of these little surprises. These are the governmental equivalent of taking payday loans – cash in hand today with the exorbitant costs punted into the future.
I can't wait to see all the disasters on which the clock is currently ticking without our knowledge.