It is also bullshit, I did read your last link and it was difficult to read, the guy goes on and on before he gets to the point. His points are two fold.

1. Cities have assets with real value and hide that value in ways that even a corporation or individual can’t and would go to jail for. (This I knew already)

2. Corporations profit off the back of cities and states and counties etc. as private vendors for services to citizens some the government runs as a non profit and some as a for profit. (This I also already knew)

You have been suckered in by an old tired big government liberal lie here, simply that “Cities are worth more on paper then they claim”, it is a lie but it is true at the same time.

Let me explain, say a company depreciates a building more then they should, it should have actually appreciated. Now creditors want money, the building can be sold and the creditors repaid in spite of the numbers saying it won’t work on a balance sheet. Is that likely, yes, does it happen, yes and does it matter in the big scheme of things when one company dies and others pick their bones, nope.

Let us try this with Government assets and see if it will work FOR THE PEOPLE making the above claim.

The city has a shit ton of cop cars, they are worth more then it says on their balance sheet. The accounting has depreciated the fleet down to 1 million dollars but the fleet is worth 2.5 million and the government tit suckers say, see you have 1.5 million you said you didn’t have, use it to pay benefits. Yet the city doesn’t have 1.5 million more dollars, they don’t even have the original million they have cars for their cops. Said cars eat gas and need parts and maintenance they are not even really as asset but in total a liability (they cost money).

To make the cars into 2.5 million and pay off creditors or pay pensions (ironically much of it to retired cops) you have to sell the cars. If you are Spirko Inc, fine you are screwed and go out of business but if you are the City of Spirko, your cops now have NO CARS. So would the people making this argument be okay with selling all the cop cars and telling them to go buy a bike at their own expense? Would you? How safe would the streets be of a mid to large size city with no cop cars.

Let’s try this again! Say now that we look at the City Hall buildings and the Tax Office buildings. City says they have depreciated down to 5 million but their true market rate is say 15 million, so what do they do, sell City Hall and the Tax Office, great now how does the city function as a city?

Give me a major asset that these cities have that can be sold without removing major aspects of city services, I mean one that is pretty universal. Sure some may own an art museum we can sell that and be done with it and only a few artists will cry as some billionaire buys up the collection but that is a rounding error in the grand scheme of things.

Anyone saying this stuff should simply ask how these assets can actually be monetized so that said revenue can pay pensions, salaries and creditors. The answer is they can only be monetized if the cities are basically de chartered and privatized. Likely if that was done all debts could be paid in full, sure, I’ll give you that but the city is now gone and likely 50 or more large companies now own the assets. Citizens will now have to pick and choose services ala carte, there also should be no city taxes, you now have a private city where more then one company can compete for any service.

Public utilities likely would continue run by a county government (assuming they were not broke) or the state could oversee basic services (those that belong in public hands like electricity, gas, water, phone, cable, etc) but if you want security you would have to buy it, a neighborhood could form a group, everyone chips in and they get their own private cop 24/7 or go without it.

Now as a libertarian, I am pretty much okay with this model assuming some basic law enforcement and basic services remain but I don’t think most making this argument of asset value would be.

Basically the point is the cities are broke on paper and changing accounting will change that. This is the same argument made about the banks and FAS 157. Change the accounting and they are financially healthy. Just like that, this is nothing but a ponzi scheme. Sure if you did as these groups say it MIGHT improve the ability of the city to borrow more for a time, it won’t however do anything to provide them the ability to service an even large debt.

People that point out this concept know just enough about money to understand basic accounting but not enough to understand basic economics.

Um no, I am not going to leave 275 feet of cord on the ground for 4-5 months a year.