Word: default
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Ford's concern for New York's investors betrays a certain duplicity. While he seems to regard New York as a corporate entity, he fails to recognize that because the federal government, through the Federal Reserve Bank, has time and again subsidized major corporations nearing default, he owes aid to the city. Lockheed is a classic example of federal subsidies keeping a corporation afloat, although Ford now likes to think of that bail-out as "I don't know, it might have been a mistake." When Con Ed skipped its regular stock dividend in 1974, banks' loans to electric utilities...
...city's situation is grave and while it's hard to say who or what exactly caused all its financial problems, even President Ford and the Federal Reserve Bank are--through backdoor guarantees to the private banks that might be affected--anticipating "ripple effects" from default. Vice-president Rockefeller links the entire nation's economic well-being to New York's fate...
President Ford calls these and other predictions about what will happen in the event that New York defaults "the blatant attempt in some quarters to frighten the American people and their representatives in Congress." Ford didn't exactly allay the fears of New Yorkers when they came within hours of default two weeks ago. By delaying executive action and then rejecting the idea of any federal aid--either by the executive, through Congress or through the Federal Reserve Bank--Ford has looked not to the nation's concerns but, while facing a tough battle with Ronald Reagan, to the political...
...York is more than just a corporation, and its long-term problems, as well as other cities', will not be solved by short-term stop-gap measures, although these might be sufficient to avoid default in early December. The federal government has the clear responsibility to come forward with a carefully, worked-out plan of federal subsidies for all cities--a plan that will include some form of autonomy for city budgeting (unlike the legislation for loan-guarantees presently before Congress calling for a three-man board with absolute power over New York's spending policies) and with some form...
...deciding why the Roman Empire fell. Washington politicians tend to the sin-and-decadence theory, New Yorkers to the barbarian hypothesis. Let the historians decide. In the meantime--between, that is, now and December 1--city, state and federal officials should get busy making sure that the coming default does not set off financial panic or throw the country back into another recession. Everyone in New York, from Chase Manhattan to rookie sanitation men must be prepared to make some sacrifices. But these sacrifices will have to be imposed from outside, as the necessary price for saving the city...