SunCal’s Perverse Socialism

Today’s Albuquerque Journal reports the latest development in the taxpayer handout to SunCal story.

From the Journal:

SunCal Companies defaulted on $184 million in loans– losing five properties in foreclosure. At least nine lawsuits are pending in those states.

Moody’s last month removed a bond rating on one SunCal company responsible for four developments in Southern California.

Coco offers her take on all of this at Duke City Fix.There is a breathtaking perversity to the whole scheme: The handing over of millions of dollars tax revenues to an out-of-state developer to support the construction of more rooftops just when the economy is tanking and state revenues are already projected on a downward curve. (Watch the latest Eye on New Mexico for a sobering economic forecast.)

Now chew on this observation from Pulitzer Prize winner David Cay Johnston’s new book, Free Lunch.

Subsidies add a layer of financial insulation to buffer the company from the inevitable unexpected developments in the market, from management errors to changes in consumer tastes.

By soliciting government subsidies, SunCal has merely shifted the risks of its development onto the residents of Bernalillo County and the state of New Mexico.

So let’s call this risky business for what it is — Corporate Socialism.


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