Budgeting details will drive you to drink — and you’ll need a cigarette with that

Posted: 08/29/2014 in Screwed

Hey, remember this?  Remember when the top lawyers in virtually every state climbed on the anti-tobacco band wagon and suited tobacco companies out of business?  I’ll bet you thought that turned out great for everyone, didn’t you?  Well, guess what — it didn’t turn out quite the way they planned it.

Of course the governmental lawyers didn’t sue the tobacco companies out of their deep love for the public good, they did it because there was money to be made.  Money by the truck load.  And money for the state meant good publicity for the politicians.  So how do you think that turned out?  Looks like some of those states may go bankrupt because of their greed lack of foresight.

The politicians knew that all those lawsuits were going to keep the bulk of the money tied up for generations, so they did the greedy prudent thing: they borrowed money from Wall Street and told Wall Street they’d pay it back with the tobacco industry payments.  Hidden in the contracts, however, were securities called capital appreciation  bonds.  They were supposed to repay about 36 billion dollars to Wall Street, only now they’re considered worthless.  So the states have to find the money elsewhere.  And to repay that $36 billion is going to take over $200 billion by the time all the dust settles.  (It’s complicated.)

And then there’s the “balloon payments” that are now coming due.  If you’re a grownup, you know what that’ll do to a budget.  If you’re not, then you shouldn’t be worrying about such things.  Let the adults handle tricky money stuff.  You’re not smart enough.  Not quite as experienced as the politicians are — now.


Be seeing you.

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