Oy, the schadenfreude! Orange County, California is near insolvency – again! Forced to declare bankruptcy in 1994, after years of borrowing in Reagan/Bush-era interest rates, this laboratory of Republican theology [their economic policy] has disclosed that it is holding nearly a billion dollars of its funds in SIVs that are about to be downgraded. Of course they did.
Orange County, home to those quintessential California surfside dream towns Newport Beach, Laguna Beach and San Juan Capistrano that ribbon its bucolic coastline, and the somewhat messier inland towns of Anaheim and Garden Grove, which are homes, respectively, to Disneyland (of prefab-happiness fame) and the Crystal Cathedral. The commercial hub of Orange County is Costa Mesa, home to South Coast Plaza, the shopping mall that requires a car to navigate, and the outsized, circular-collonade grounds of TBN, Christianity’s flagship freak-show.
But none of these properties has anything on residential OC, with its population of nearly 3 million, an unmatchable percentage of whom live in vast gated communities of outsized, sterile and sprawling homes (usually without much land). Although in area, it is the smallest county in California outside the Bay Area, fully 30% consists of “master planned communities.” You can drive for miles without seeing anything but beige stucco walls, insulating residents from anything as unseemly as pedestrians (not that there are any).
What has long fascinated me about the place that those of us in Los Angeles have always called “behind the Orange Curtain” is how very conservative it really is. Because, oddly, in neighboring Los Angeles County, the opposite is true: the district that includes its most famously affluent communities, including Malibu, Santa Monica, Brentwood, Bel Air, Beverly Hills and West Hollywood has been represented by Henry Waxman for 31 years! Meanwhile, Orange County has provided the United States Congress with such stalwart Republicans as Bob Dornan (long since unseated by lone Democrat Loretta Sanchez), Dana Rohrebacher, and Gary Miller, whose voting records have been reliably regressive.
SIVs (mortgage-backed Securities Investment Vehicles) are incredibly risky, which, like junk bond derivatives in the 1980s, are really flimsy, pyramid-scheme paper (in)securities that pay large interest precisely because they are so risky – and should never be risks taken by those entrusted with the public’s funds. Quoted in the Orange County Register, Riverside County Treasurer-Tax Collector Paul McDonnell, who heads the statewide county treasurers' association, said he did not know of any other counties that have money in structured investment vehicles. They aren’t.
McDonnell further stated, "It requires a degree of sophistication that we didn't feel we had in-house." Kudos to him for his rhetorical diplomacy. What he’s really saying is that they are irresponsible investments, and no one in his or any other county treasurer’s office, nor in the State treasurer’s office was able to justify putting the public’s money into such a flimsy investment.
At the same time, I can’t help but see this as the logical consequence of a sub-society that believes so totally in the right wing economic theories that have brought us to this point. Let this laboratory of Republican ideology be a warning. I doubt they will. Perhaps the third time will be the charm.
But don’t let them call it conservative. There is nothing conservative about this crackpot ponzi scheme of an economy, and most of Orange County has voted in support of the radical right wing theories of less government service and less taxation. Now they’ll, no doubt, be very much interested in a government bailout from both California and the Federal Government. And they’ll get it. And they won’t have learned a thing.
