Letter
to the editor
Foggy
information
While
I am not a financial expert, I do try to
pay attention to what people who are financial
experts say. Not everyone in the know thinks
borrowing money is a bad idea for California.
Two months ago I heard an expert recommend
precisely the same course of action based
upon the low interest rates. The expert
explained that by borrowing now at the lowest
interest rate that California will benefit
from future increases in the interest rate.
The fact that the interest rate cannot stay
low long means that it will cost less to
borrow the money today than in the future.
Borrowing money at 1 percent is more economical
than borrowing through bonds from the public
which would require at least four to five
times in interest paid.
The
government regularly borrows to operate.
All bonds are borrowing. This type of borrowing
is questioned procedurally by the people
with a vote, because the people repay the
bond. If the state government were to borrow
without a vote, using a debt instrument
to a lending institution instead of through
public bonds, it is possible that the people
might not be directly liable for repayment
in the event of default. This could be a
great advantage to the people in the event
that the state went bankrupt in the future.
This
rate would be lower than the average consumer
interest-rate, and if loaned to qualified
recipients to minimize bad debt, the government
could actually make some profit on borrowing
that money while simultaneously helping
businesses grow and create jobs. That, in
turn, would likely deliver additional tax
revenue to the state.
While
I am not convinced either way yet as to
what is the best course of action for California,
I think as editors of a college paper you
owe the subject more investigation and consideration
before you take any positions on the governor's
proposals. You don't have to leave the campus
to try interviewing some economic or political
science experts to get some facts before
you jump to what seem to be premature and
unsubstantiated conclusions. Our students
deserve to have facts and information presented
for their consideration, not merely your
unfounded personal opinion forced down their
throat.
--
Ed Ober
Political science major
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