When it comes to comprehending the global economic crisis, Kenosha has a leg up on much of the rest of the world.
The Kenosha Unified School District is one of five in southeastern Wisconsin that have lost a lot of money by investing in something called synthetic collateralized debt obligations, the same absurd financial maneuver that has brought A.I.G. to the brink of collapse and made it a symbol for excess and corporate welfare.
Collateralized debt obligation investments are essentially bets on other people's debts -- mortgages, car loans, business loans, etc. If the debtors pay their bills, the investors get a kickback in exchange for agreeing to cover the debt should the debtors default.
In case you haven't heard, there has been a lot of defaulting these days. Kenosha's $37.5 million "investment" is now worth perhaps $950,000 or less. Altogether, the five Wisconsin school districts -- Kenosha, Whitefish Bay, Waukesha, West Allis and Kimberly -- borrowed $200 million via a network of German, Irish and Canadian lenders to make the investments, and have, by most accounts, lost almost all of it.
If you think the school districts lost all their money because they were rubes lost in the world of high finance, think again. A.I.G., the world's largest insurance company, lost hundreds of billions doing the very same thing.
Elected officials and corporate lobbyists have engineered a massive wealth shift in this country, through 30 years of policy changes in favor of Big Business, tax shifts away from corporations and the wealthy, mergers, acquisitions, deregulation and union busting. While economic growth over the last three decades has been substantial, wages have been flat.
In 1970, the average CEO salary at the top 100 U.S. companies was 45 times that of the average employee salary at the same company. By 2006, it was 1,723 times.
There was so much money flowing upward that wealthy corporations and individuals didn't know what to do with it. Thus financial instruments like synthetic collateralized debt obligations came into being.
While the federal government has stepped in with more than a trillion dollars of bailout money for A.I.G. and other corporate giants -- apparently with few strings attached -- the students and taxpayers in Kenosha, Whitefish Bay, Waukesha, West Allis and Kimberly are on their own.
The districts say the investments were misrepresented to them and are suing the consortium of companies that sold them, see School Lawsuit Facts. I, for one, hope their lawsuit is successful.
The Kenosha Education Association, the union that represents public school employees in Kenosha, has appealed to the federal government to allow the school districts to use the same Trouble Assets Relief Program funds that are benefiting AIG. That way the school district would be covered regardless of the outcome of the lawsuit.
Given that the union had to come up with this idea on its own, and that the feds have not exactly embraced it, people in Kenosha have a much richer understanding of the double standard that favors rich people and large corporations.
Dustin Beilke is a union organizer and freelance writer who lives in Madison.