Myths Encinitas

At the recent state of the city speech, April 18, Mayor Stocks said the city was doing great financially.  In a practically fact-free presentation one of the only slivers of a fact was a Standards & Poor rating.  The thing is, this isn't the kind of gold plated legitimacy Stocks presumes we all should acknowledge. Do we not remember 2008 bubble-bursting trail of culprits who led the economy into meltdown?

Last summer a leading economist wrote of the S&P downgrade for the U.S., which Stocks eludes to in his myth making.

"On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really? 

Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade. 

More than that, everything I’ve heard about S&P’s demands suggests that it’s talking nonsense about the US fiscal situation. ... In short, S&P is just making stuff up — and after the mortgage debacle, they really don’t have that right. 

So this is an outrage — not because America is A-OK, but because these people are in no position to pass judgment."

This simple assumption that conventional wisdom, long standing financial traditions still hold true, or were ever really true, is a part of the myth busting going on all across the world.  In a time of financial crisis it is irresponsible for those who wield political power to provide myths when real challenges are upon us all to explore all of our economic narratives.  Stocks states, "We are allegedly at the end of a recession." Says you.

And about this comparison to our neighboring cities doesn't really hold up well in light of the Union Tribune article in Sunday's paper which shows Encinitas at the very bottom of the list of available reserves, at 4%. Here is a sampling from the documentation below.

                    GF Expenses        % of Expenses in Reserve
Carlsbad           $95,968 K                85%
Poway                32,856 K                93%
San Marcos        62,210 K                57%
Solana Beach     16,355 K                29%
Vista                  79,780 K                27%

Encinitas            47,397 K                 4%

Note: Reserves exclude amounts restricted to specific uses by federal, state or local law or legally-binding agreements.

Lisa Shaffer, candidate for city council, comments on this article,

"If Encinitas is in such great financial shape, as reported by Mayor Stocks, why are our general fund reserves so low? I guess I'll ask when I meet with Mr. Stocks tomorrow."

We anxiously await her findings from the meeting with Jerome Stocks. She's very good at sharing with the public. Oh yes, she also has an MBA.

Update 5/6/12: UT Watchdog comments on reserves after Stocks makes noise. Ironically for this editor, the reporter used the S&P methodology (based on liquidity) to come up with the above numbers.  As this post states, the S&P is the only thing we were told to pay attention to in assessing our city's strength. You can't make this stuff up.