Fox 2 plans re-do of 2005 Free Press canoe trek

Up the Rouge! Written by Joel Thurtell, Photographs by Patricia Beck. Wayne State University Press, 2009.

By Joel Thurtell

A reporter and a photographer paddling the Rouge River over five days in the first week of June, renting their canoe from a Milford livery and refusing help from establishment environmental and river friends groups. Their aim — an independent look at a little-noticed, much-maligned piece of wilderness in a highly urban setting.

Sounds like what Yogi Berra called “déjà vu all over again.”

Eight years ago, the Detroit Free Press sent a reporter and a photographer on that mission. I was the reporter. Patricia Beck was the photographer. Over five days — 60 hours — Pat and I bullied a canoe over or around 72 logjams, one dam and what was left of three other dams.

Joel Thurtell

Free Press readers got a two-day series of articles and photos that showed the reality of a river that 95 percent of the time was too laden with E. coli to be safe for human contact. The series won the Water Environment Federation’s 2006 Harry E. Schlenz Medal for achievement in public education. In 2009, Wayne State University Press published a book written by me with Pat’s photos: Up the Rouge! Paddling Detroit’s Hidden River. Up the Rouge! was a 2010 Michigan Notable Book choice of the Library of Michigan.

Now Fox 2 reporter Charlie LeDuff has arranged to rent a canoe from Milford-based Heavner Canoe  & Kayak Rental for five days starting Monday, June 3. 2013.

I’m surprised it’s taken this long for TV to figure out there is a great urban adventure story in the heart of Metro Detroit. But it takes more than a canoe to make this trip. It also takes time, and a willingness to make the sometimes strenuous effort needed to overcome obstacles in the form of logjams, a strong oppositional river current and the rise and fall of a river so “flashy” that its depth can change by 10 feet within 24 hours. Along the way, the Fox 2 team will treat television viewers to sights most people would never see otherwise. As it wends through some 127 miles of Detroit and suburbs, the Rouge and its tributaries are shielded from view by a tree canopy and often hidden by steep, slippery banks.

Sometime Monday morning, staff from Heavner Canoe are scheduled to deliver two canoes — an 18-footer and a 17-footer — to LeDuff and a cameraman. The plan is for the Fox 2 canoeists to put one of the canoes into the main branch of the Rouge River at Nine Mile and Beech in Southfield. They will have to decide whether they want the longer canoe for its greater capacity to store equipment, or the shorter vessel for its ability to maneuver over or around obstacles.

The pair will paddle downstream, heading for Zug Island where the Rouge meets the Detroit River. They will be followed by Fox 2 people on shore whose job, presumably, will be to photograph the duo from land and to lend a hand if the adventurers get into trouble. They may be surprised to discover that some parts of the Rouge can be problematic to access from land.

Pat and I did not have extra help. Heavner staff delivered a canoe to us at the start of the day and picked it up when we were finished. For those hours when we were paddling, we were on our own. No need to go into further details — read Up the Rouge! for that.

I first heard about this project late in April, when Charlie LeDuff called with a proposal that I take part in a kayak trip he was planning on the Rouge River. He’d heard that I canoed the Rouge a few years ago and had written a book about it. Was I interested in collaborating? It might help sell a few books, he said.

Well, I always want to sell books, and I like to encourage use of the Rouge. So I agreed to meet him on May 6. But I urged him to plan his trip for a later time when stream flows historically are lower. With its logjams, the Rouge is a dangerous place to canoe at any time, but more so at times of high water. In fact, even now I hope Charlie monitors the river level following the torrential rains of the last few days. If water is high, he might want to delay his trip in the interest of safety. Pat and I picked the first full week of June because, according to USGS stream flow charts, the river would have enough water to float our canoe but would not be swollen with spring runoff. If we waited till July, parts of the river might be too shallow.

Sounds like Charlie acted on my advice.

I suggested Charlie re-think his idea of using a kayak. We needed the open canoe for Pat to have easy access to her photographic equipment. Just as important, you can move in a canoe, and often that was necessary when we were obliged to haul the canoe over logjams. I can’t picture getting in and out of a kayak dozens of times at logjams.

Charlie has ordered a canoe from Heavner. Sounds like he listened to my advice on that point, too.

Apparently, he wasn’t sold on our idea of paddling upstream. Canoeists like to paddle downstream, getting help from the current. We did just the opposite, by design. The title of our book, Up the Rouge!, is based on our decision to paddle upstream, starting at the river’s mouth. It was Pat’s idea: Early explorers and settlers began at the mouth of the stream and worked their way upstream. As latter-day explorers of the Rouge, why not go up the Rouge? Turned out there was an advantage we had not considered: If you paddle downstream, you encounter ugly messes of debris and foam before arriving at a logjam. If you come to a jam from downstream, your approach to the jam is clean. It’s easier to see the challenge; it’s easier to maneuver the canoe’s bow against the jam and from that point begin the job of disembarking, lifting the canoe and working it over the mess.

I’m curious about why Charlie chose Nine Mile and Beech as a starting point. After five days of canoeing the Rouge, Pat and I took the craft out of the river about 9 p.m. Friday, May 10, 2005 just below the bridge over Nine Mile Rd. near Beech in Southfield. That is the point at which Charlie plans to put into the river. But Nine and Beech was never part of our design. We were aiming for Telegraph and Civic Center Drive in Southfield. But we were given five days for the project, and by the time we reached Nine Mile and Beech on Day Five, our time was up.

If Charlie read Up the Rouge!, he would know that for the last half mile or so downstream from Nine Mile the river was too shallow for the canoe. We got out and pulled it.

Here’s a thought, Charlie: If you launch the canoe at the bend alongside Southfield’s Beech Woods Golf Course, you can avoid a possible dense logjam at Hole Four.

Charlie may have forgotten something else I told him: After our 2005 trip, I purchased from Heavner Canoe the 13-foot aluminum canoe Pat and I used for four of the five days of our trip. The 13-footer is lighter and more easily lifted over or around logjams than the heavier 18-footer we used on Day One. Nowadays, Heavner doesn’t have 13-footers. Their shortest canoe is a 17-footer. I told Charlie we could use my 13-footer. He wouldn’t have had to rent a canoe — mine would be free!

The last I heard from Charlie was on May 3. He called to say he was too busy to see me and canceled our May 6 meeting. But he still wanted me to help plan his Rouge canoe trip and be on camera for parts of it. I suggested he call me after I returned from a speaking engagement in California. I urged him to think about going in June. He said he would call me May 15.

I suggested that meantime he might want to read Up the Rouge! for its detailed instructions on how to organize a Rouge River canoe expedition.

Hmmm. It’s June 1. No call from Charlie.

Guess Charlie doesn’t need me.

And yet….

Tell you what, Charlie — Here’s some more free advice. You want to go on a five-day Rouge River canoe trip, right? Well, bosses being what they are, you might not get all five days, given your downstream plan starting from Nine and Beech. This is a tactical error, Charlie. You have limited the distance you can travel to 27 miles maximum to the river’s mouth. What if the high water and fast current propel you to the river’s mouth before your five days are up? Are your editors going to let you paddle around Zug Island for a day or two looking at freighters and barges and blast furnaces? Or are they going to tell you, “Enough of this fun; go cover the murder du jour”?

If you want to get the max out of those five days, reverse your plan, Charlie. Why aim for Southfield? Aim for Beverly Hills! Better yet, Birmingham!

Start your trek at Zug Island, Charlie, and paddle your canoe Up the Rouge!

 

 

 

 

 

 

 

 

 

 

 

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Bait and switch for press ‘freedom’

By Joel Thurtell

Would some wise person in the media please explain to me how the government’s surveillance of The Associated Press’s phones translates into a new push for a so-called federal “shield” to insulate mainstream journalists from subpoenas?

Somehow, news of a government inquiry into leaks to The AP has morphed into an urgent need to extend non-existent First Amendment privileges to select reporters.

Who would benefit from this confusion?

Oh, I guess the same people who would have benefited if the US Supreme Court had bought their argument in the 1930s that the National Labor Relations Act guaranteeing union rights did not apply to newspapers because, so newspapers claimed, “freedom of the press” meant freedom from unions.

Or it might have been the same people who argued, again in the same time frame, that the First Amendment exempted newspapers from paying federal taxes.

At various times, newspapers have argued they should be exempt from child labor laws that would have regulated paper carriers, pure food and drug laws they perceived as a threat to advertisers, the Sherman anti-trust law that banned newspaper monopolies, and a post office law that required sworn statements — that is, the truth — about circulation.[1]

“It’s all about me” is the real core value underlying newspapers’ seemingly high-minded call for protection from subpoenas.

Newspapers and now, by extension, news media, would like the right to collect information from whomsoever they in their exalted wisdom deem a fit source without having to reveal to lowly mortals where their sacrosanct data came from. As with child labor, unions, taxes, food and drug laws, the news media would like to be subjected to a separate standard of quality which is no standard at all.

Is the source credible? Let us decide on our own, cry the media. We have the First Amendment, therefore, butt out.

Did we verify our source’s information by testing it against information from other sources?

Hey, we don’t have to do that. We are the media. Trust us — we have our standards.

What are our standards? None of your goddam business. First Amendment.

From a practical standpoint in news gathering, such a privilege relieves journalists of responsibility for making sure what they print is accurate. Oh yes, there still are libel laws, but when it comes to defamation, again thanks to press litigation, the government faces tougher standards of proof than regular folk.

It’s all about journalists — some journalists, that is — being somehow better qualified as citizens than the rest of us and therefore endowed with a special right not to respond to court demands for evidence.

I say “some” journalists, because the proposed federal shield law would exclude all but credentialed journalists. In other words, bloggers like me would go to jail for refusing to give up sources, but reporters from media outlets deemed acceptable by this nefarious bill would have a “get-out-of-jail-free card.”

What makes a reporter from The New York Times or, say, my hometown Plymouth Observer, better than me?

Why do those “credentialed” reporters get to thumb their noses at federal judges when, other facts being the same, I would be sent to the slammer?

In my view, we all should be sent to the slammer for showing contempt of a federal court’s need for names or information.

I’m not in a bargaining position here. I’m not willing to shut up if the word “blogger” is added to the proposed legislation.

I just don’t see what makes a “credentialed” journalist somehow superior in moral or personal quality to ordinary citizens who are required to give evidence in civil and criminal cases.

And please don’t try to feed me that “chilling effect” garbage.

Show me evidence that the number of sources — leakers, whistle blowers — has somehow diminished as a result of government prosecutions. There is no “chilling effect” – for better or for worse, leakers with their own lofty or sordid motives will always be there for reporters.

In future columns, I’ll discuss why so-called “press freedoms” are derived from the “freedom of speech” part of the First Amendment, while the “free press” clause is an empty bag. And I’ll report on a singular case where the Obama administration has seen fit not to prosecute government officials who illegally leaked federal grand jury information to a reporter. Yes — I’ll be writing about the Ashenfelter-Convertino case again.

But first, will someone please help me understand how government surveillance of some AP phones equates to a sudden strident call for exempting mainline reporters from giving evidence that all other mortals are required to provide?

 



[1] Theodore L. Glasser, “Objectivity and News Bias,” in Elliot D. Cohen, Ed., Philosophical Issues in Journalism, Oxford University Press, Oxford, New York, 1992, p. 178. Branzburg v. Hayes (No. 70-85) and No. 70-94, 358 Mass. 604, 266 N.E. 2d 297, affirmed; No. 70-57, 434 F. 2d 1081, reversed., 1972, http://www.law.cornell.edu/supct/html/historics/USSC_CR_0408_0665_ZS.html, pp. 8-9.

 

 

 

 

 

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We need a federal ban on CABs

By Joel Thurtell

According to California Treasurer Bill Lockyer, those school board members at San Diego’s Poway Unified School District who authorized bonds with a 10-to-1 ratio of debt to principal ought to be recalled.

“Stupid,” was Lockyer’s description of Poway’s 2011 Capital Appreciation Bond issue borrowing $105 million with a billion-dollar balloon payback.

Lockyer was keynote speaker at the second annual conference of the California League of Bond Oversight Committees Friday, May 10, in Sacramento.e

I was gratified that Lockyer mentioned recall. Guess who one year ago was calling for a recall of the Poway board — yours truly, the ever-restrained proprietor of joelontheroad.

As I digest what I heard from various CaLBOC speakers, I realize that reform of CABs should not be done piece meal. Yes, Michigan banned CVABs, period. But it’s evident that the Michigan model is not likely to be adopted elsewhere. It is too tough on the people who make their living screwing taxpayers with these monstrous debt-generators.

I’m calling for something else now: a federal ban on CABs.

California’s solution is a bill in the state Assembly that would ban CABs with a debt:principal ratio more than 4:1.

That is no ban at all.

I pointed out in my speech to CaLBOC that most of the CABs that enraged people 20 years ago when I wrote about Michigan CABs would easily pass the proposed California test. Yet those CABs had interest piling up at two, three, four and nearly six times principal.

That kind of payback may be great for investors, and certainly is terrific for the underwriters who sell the schools on issuing them. But they are terrible for the taxpayers who believe school officials’ lies that there will be no new taxes with CABs.

My conclusion: that we need a federal ban on CABs.

More soon…

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‘Michigan blogger’ to talk CABs to California

By Joel Thurtell

At 2:15 PM on Friday, May 10, I’ll be in Sacramento telling members of the California League of Bond Oversight Committees how I learned about Capital Appreciation Bonds in Michigan 21 years ago. I’ll talk about how bad CABs were for Michigan schools, and how our Detroit Free Press reports on prompted the Michigan Legislature to ban CABs.

I’ll also explain the chain of events that led me to write about California’s CAB problem.

 

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Ashenfelter-Convertino: Essential reading

By Joel Thurtell

A federal judge has ordered the Detroit Free Press to reveal the names of US Justice Department officials who illegally disclosed secret grand jury information about a former assistant US attorney, Richard Convertino.

Convertino has sued the Justice Department. He’s trying to learn which US Justice Department officials illegally leaked negative information about him for a January 17, 2004 Free Press story.

Four documents are basic to understanding the case involving a star Free Press reporter, David Ashenfelter, and the former federal prosecutor, Richard Convertino. The documents are:

I. Professional Integrity section of Detroit Free Press-Newspaper Guild labor agreement

II. “3. Attribution, unnamed sources” and “4. Confidentiality” in December 13, 1984 “Free Press Ethics Guidelines.”

III. “Confidentiality” clause of March 3, 2001 “Detroit Free Press Ethics Policy” in place January 2004.

IV. “3. WE PROTECT THE INTEGRITY OF THE FREE PRESS,” February 25, 2004 “Detroit Free Press Ethics Policy.”

I. No person employed by the Free Press shall, for any reason, prepare for publication material which is inaccurate, misleading or false.

ARTICLE XI, Section 1 – “Professional Integrity,” from Agreement between Detroit Free Press, Inc. for Detroit Free Press and Newspaper Guild of Detroit.

II. The December 13, 1984 “Free Press Ethics Guidelines” sent to “Free Press newsroom” from then Free Press Executive Editor Dave Lawrence preceded the March 7, 2001 guidelines. Here are excerpts related to confidential sources:

3. Attribution, unnamed sources:

Our readers usually are best served when we can identify news sources by name. We should work hard to identify the source(s) although there will be instances when the pursuit of truth will best be served by not naming a source. Sources will be named unless the reason not to do so is an overriding consideration. Except in a justifiable instance, we will not allow an unnamed source to use us to attack an individual or an organization. We will work hard to corroborate information from any unnamed sources. A decision to use unnamed sources will be made with teh advice and consent of a supervising editor.

4. Confidentiality:

Since the U.S. Supreme Court has ruled that the First Amendment does not extend to journalists the absolute right to protect the confidentiality of news sources, reporters on their own cannot guarantee sources confidentiality in a published story. If a demand is made after publication for the source’s identification, a court may compel us to reveal teh source. In circumstances where the demand for absolute confidentiality is made as a condition for obtaining the story, that situation needs to be discussed with a supervising editor before a commitment is made. Trust works both ways — the editor must be able to trust the reporter, and vice versa.

III. Text of the “Confidential Sources” section of the March 7, 2001 Detroit Free Press Ethical Guidelines in force on January 17, 2001 when the Free Press published a story based on illegally-leaked information from the US Justice Department. The Free Press policy of December 13, 1983 that preceded the 2001 policy as well as the February 25, 2004 policy follow the 2001 policy that was in effect in January 2004:

CONFIDENTIALITY Because the U.S. Supreme Court has ruled that the First Amendment does not extend to journalists the absolute right to protect the confidentiality of news sources, reporters on their own cannot guarantee sources confidentiality. If a demand for absolute confidentiality is made as a condition for obtaining the story, that situation needs to be discussed with a department head or higher editor before a commitment is made.

More recently, the Supreme court has ruled that the First Amendment does not bar a breach of contract suit for damages when a newspaper breaks a promise of confidentiality. That breach can arise from disclosing a source’s name, inadvertently or otherwise, from too detailed a description of the source or from an inadequately disguised photograph.

These legal concerns suggest that unnecessary promises of confidentiality be avoided, and the need for the promise be weighed against its value.

In making such a promise, take care to avoid ambiguity. Keep the promise specific; a pledge to not use a source’s name is preferable to agreeing to make the source unidentifiable.

Also, take reasonable steps to insure a promise is kept: Make sure the commitment is known by supervisors and by photo editors and others who might inadvertently disclose an identity.

If a promise goes beyond the source’s name, consider reading the description back to the source to insure the source is comfortable with it.

If there appears to be a need to break a promise, seek advice from legal counsel.

Further on in the same document, the subject of confidential sources was addressed again:

SOURCES They should be named. We don’t use unnamed sources unless absolutely necessary to tell the story.

– When we’re forced to use unnamed sources, we must strive for multiple sourcing. When we can’t name a source, we must be as specific as possible about identifying the person, to attempt to preserve the credibility of the story.

– Avoid using the word “source” if possible; “person” is preferable.

– We must strive to explain each time to readers why we’re not naming a source. (The explanation doesn’t have to accompany the first reference to the source, but should be high enough to give the reader appropriate knowledge.)

– In finding people to quote in a story, whenever possible and appropriate strive for a diversity of sources — people of more than one race, age group, gender and geographic locations.

IV. On February 25, 2004, Free Press managers replaced the 2001 ethics guidelines with a 10-point set of rules for news reporting entitled “Detroit Free Press Ethics Policy.” The new policy was implemented five weeks after the January 17, 2004 Convertino story. Here are portions of the new policy dealing with confidential sources:

3. WE PROTECT THE INTEGRITY OF THE FREE PRESS

We name our sources. The use of unidentified sources in published material requires the approval of a managing editor or the highest-ranking editor available.

 

 

 

 

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Convertino case: Judge orders Free Press to name sources

By Joel Thurtell

Former assistant US attorney Rick Convertino’s lawsuit against the US Justice Department is still alive, despite a federal judge’s decision to let a Detroit Free Press reporter, now retired, off the hook as a witness in the ex-prosecutor’s federal whistle blower lawsuit.

Convertino is suing the Justice Department and Justice officials under the federal Privacy Act for disclosing to the Free Press secret grand jury information that he says destroyed his career.

Because US District Judge Robert Cleland allowed then Free Press reporter David Ashenfelter to invoke the Constitution’s Fifth Amendment protection against incriminating himself by naming names, Ashenfelter is a dead end as far as discovering who the sources were. Cleland on January 15, 2013 ordered the Free Press to turn over to Convertino Ashenfelter’s notes, including e-mails and electronic files, and to make further effort to find other current and former Free Press staffers who may know who Ashenfelter’s sources were.

On June 22, 2012, a Washington, D.C. appeals court panel ruled that Convertino is entitled to pursue discovery in his Privacy Act lawsuit against the Department of Justice.

US District Judge Robert Cleland on January 15, 2013 ordered the Free Press to produce documents related to the Free Press sources and to provide a company witness to testify about Ashenfelter’s sources.

As a consequence of the judge’s order, the newspaper offered free legal services to four current and six former staffers who, the newspaper contends, may know who the reporter’s unnamed sources were.

In a January 28, 2013 e-mail memo, Free Press publisher Paul Anger asked the current and former Free Press editors if they knew the source or sources for then Free Press reporter David Ashenfelter’s January 17, 2004 Free Press story, “Terror Case Prosecutor is Probed on Conduct: Outcome of Investigation Could Give The Defendants a New Trial.”

The “terror case prosecutor” in the paper’s headline was Convertino, who had earlier filed a whistle blower lawsuit against the government. The civil suit was put on hold after the US Justice Department charged Convertino with obstruction of justice. A jury took four hours to acquit Convertino on October 31, 2007, whereupon he revived his civil lawsuit against the government.

The Obama Justice Department is prosecuting other government leakers aggressively. For example, a CIA leaker has been sentenced to prison. Lewis “Scooter” Libby was convicted in the Valery Plame leak case. For some reason, Obama’s minions aren’t breathing down the necks of Ashenfelter’s leakers.

In a December 8, 2008 column, I quoted from the Free Press policy on confidential sources in effect in January, 2004: “If a demand for absolute confidentiality is made as a condition for obtaining the story, that situation needs to be discussed with a department head or higher editor before a commitment is made.”

In that column, gave this advice to Richard Convertino:

Dave Ashenfelter wasn’t the only one at the Free Press who knew the names of his federal sources. Why don’t you subpoena the people who edited his story?

I had some advice for Dave Ashenfelter, too:

It’s not too late, Dave — get a second legal opinion.

If Dave had sought other advice, he might not have had to invoke the Fifth Amendment to avoid incriminating himself.

A key question now is whether any of the 10 present and former Free Press staffers Anger queried was “a department head or higher editor” when the Free Press published Ashenfelter’s story.

The January 28 memo from Paul Anger is titled  “Court Order to Reveal Source(s).” It states:

As you may know, the plaintiff in Convertino v. United States Department of Justice, et. al, a civil case pending in federal court in the District of Columbia, is suing the Justice Department because he claims it violated the Privacy Act when it allegedly disclosed information about him to the Free Press. As part of his litigation, Convertino needs to find the person who gave secret grand jury information to the Free Press. The Free Press is not party to the litigation.

As part of the litigation, Convertino subpoenaed the Free Press, demanding information concerning the identity of a confidential source(s) for a January 17, 2004 article in the Free Press headlined “Terror Case Prosecutor is Probed on Conduct: Outcome of Investigation Could Give The Defendants a New Trial. The article is attached.”

“We opposed the subpoena but were recently ordered by Judge Robert H. Cleland to designate a corporate representative who can testify with regard to whether there is a current or former employee who knows the source’s identity.”

“In July 2006, you received a memorandum from the Gannett Law Department asking whether you knew the identity of the person(s) who provided, commented on, or confirmed the information attributed to ‘Just Department officials” in the article. You were instructed to contact a Gannett Law Department representative if you had such knowledge. You did not respond and the newspaper consequently concluded that you had no knowledge of the source’s identity.”

“In light of Judge Cleland’s recent order, I am responsible once again to inquire whether you have that information, i.e. whether you know that names of sources of information about Mr. Convertino in the article that appeared in the January 17, 2004 edition of the Free Press, and what information each such source provided to the newspaper.

If you have such information, especially considering the lengthy history of this litigation and the personal interests at stake, you may want to consult with a personal attorney who can advise you in this matter. In that respect, the Free Press has engaged Lee Levine, Esq. to be available personally to advise you (or any current or former employees) who wishes personal legal advice in this matter. Mr. Levine is copied on this message.

“The newspaper will pay for legal services rendered to you by Mr. Levine.

“If you do not know the name of the confidential source for the January 17 article or the information he or she provided, please confirm that fact in a reply email.

“If you do know that information, please send me a reply e-mail stating ‘yes.’ If you do that, we will follow up with you for more detail.

“Finally, because of a Court-imposed deadline, please respond to this message or contact Mr. Levine no later than 5 pm on January 28, 2013.”

JOTR note: the time on the Anger memo was 3 PM — two hours before the deadline. As a result, the deadline was extended to January 31.

On February 15, Paul Anger was deposed by Convertino’s attorney. Learn what the top manager of the Detroit Free Press said about use of confidential sources at the Free Press in a forthcoming JOTR column.

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Texas may ban CABs

By Joel Thurtell

In spite of all the uproar about high-interest Capital Appreciation Bonds and 1000-percent interest rates in California schools, the California Legislature has not outlawed these taxpayer ripoffs and may only limit their use.

In Texas, meanwhile, a bill has been introduced into the Legislature to ban CABs outright.

It seems that in Texas, as in California, schools are borrowing at 1000-percent interest rates.

According to The Associated Press, “A bill to eliminate the option has cleared a state Senate committee, and if passed by the Legislature, will allow Texas to join Michigan as the only two states to bar school districts from using the bonds.”

Michigan banned CABs in 1994, following publication by the Detroit Free Press of my April 5, 1993 investigation of Michigan schools; use of CABs.

The story of California’s CAB scam was broken on this blog starting on April 27, 2012.

I’ll be speaking about how I uncovered the Michigan CAB scandal at the annual conference May 10 of the California League of Bond Oversight Committees in Sacramento.

 

 

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My first CAB stories

Twenty years ago today, on April 5, 1993, the Detroit Free Press published my investigation into a financial abuse known as Capital Appreication Bonds.  A year later, the Michigan Education Association awarded the Free Press and me its School Bell Award for alerting the public to the dangers of Capital Appreciation Bonds. But the most important achievement of those 1993 CAB stories happened in the Michigan Legislature. In 1994, lawmakers banned CABs in Michigan.  On the twentieth anniversary of my first CAB stories, here are some thoughts on CABs, news, and public finance.

By Joel Thurtell

If you’d uttered the words “capital appreciation bonds” a year ago, most people would have thought you were babbling nonsense.

CABs are a form of municipal bond so (perhaps intentionally) obscure that when I was researching them in the early 1990s, the industry textbook* didn’t mention them.

California requires that all governments issuing municipal bonds have a citizens watchdog Bond Oversight Committee to monitor borrowing. In April of 2012, a member of a California school district’s Bond Oversight Committee noticed an odd-sounding term in the fine print of bonds her schools were issuing. She googled “capital appreciation bonds” and “ban.”

By early 2013, googling for CABs brings up dozens of published mentions of Capital Appreciation Bonds.

CABs are on the radar now. The New York Times, Los Angeles Times, Bloomberg, National Public Radio, and many, many smaller news outlets mostly in California have written about CABs.

What was that lone hit the googling Bond Oversight Committee member found in April of 2012? “Muni ripoffs — same old same old,” was published on joelontheroad January 9, 2009. That one blog story contained all eight articles about CABs that I wrote for the April 5, 1993 Detroit Free Press.

I wrote an introduction explaining that acting on my Free Press stories, the Michigan Legislature in 1994 banned CABs. The bond committee member was dreaming of a ban for California and found there was indeed a ban, 19 years old, but in distant Michigan.

Acting on our recommendation and findings, the Michigan Legislature in 1994 also mandated competitive bidding for muni bond deals, thus eliminating an additional and unnecessary profit center for bond promoters.

Last April, the California Bond Oversight Committee member told me that California school districts were issuing CABs with enormous rates of interest that could push those districts into default decades in the future. At that time, the only people aware of the situation and who had a desire to stop CABs were this alert committee member in California and me, the guy known by some Californians as “the Michigan blogger.”

I’m very proud of what we at the Detroit Free Press accomplished with our CAB stories. One thing did not happen here. There was no general media cry of outrage. Unlike California, where local news organizations have produced their own localized CAB stories, no other Michigan newspapers ran stories examining CABs in 1993. It didn’t matter. Legislators were outraged, and they permanently stopped CABs in Michigan.

With that CAB-killing history in mind, I thought it might be possible to ban them in California. One element was missing: I’m retired, and no longer enjoy the power of a large-circulation daily newspaper to blast angry pages through the countryside.

But I have my blog. In 2008, I learned — well, a lot of us Michiganders learned — what this blog can do when I wrote about my encounter with the shotgun-totin’ goon. This hireling of billionaire Ambassador Bridge owner Manuel “Matty” Moroun had kicked me out of a public park. Until then, Moroun was virtually invisible to Detroit media. My angry report — and numerous JOTR follows — about the high-handed Matty Moroun put his name on the lips of Michiganders.

I wanted to inform Californians about the CAB scandal and mobilize public opinion against not only these pestilential bonds. I wanted to pillory the elected school board members and school administrators who were approving these financial holocausts.

I wanted to blast CABs the same way I opened the gate to covering Matty Moroun.

So what is this blog, joelontheroad? JOTR does not have an office. Who needs an office? I did Matty from my computer. It doesn’t matter where I am sitting.

So the Bond Oversight Committee member and I collaborated.

My first California CAB story ran on April 27, 2012: “Muni bomb ticks in California.”

I wrote:

There’s a school bond scandal brewing as California schools load taxpayers with horrendous debt for the next generation of taxpayers.

The blight is called CABs — short for Capital Appreciation Bonds.

I gave a short historical overview:

It hit Michigan in 1988. Within four years of the first CAB issue, Michigan public school debt had doubled to reach more than $4 billion. That was just principal. The interest on the CABs amounted to 200 percent — 300 percent — even 575 percent of principal, depending on the terms of the individual bond issue.

I described the difficulties of understanding CABs, spawned in “this fascinating but arcane world with its private argot strewn with obscure words like ‘zeroes’ basis apsis points’ describing fairly simple things in language you need a special dictionary to comprehend. It’s an industry with specialized documents that seem encrypted so that people like you and I will have trouble understanding them.”

My biggest concern, though, as I began publishing articles about CABs, was that the subject would be treated by California media in the same way it was treated in Michigan when we published CAB stories in 1993: with a huge yawn, followed by continued slumber.

Because most journalists are lay people not indoctrinated into these clubby ways, and because municipal bonds are not well known as the powerful economic motors they are, journalists don’t look closely at this business that accounts for trillions of spending with virtually no accountability and the lightest of pseudo-regulation.

In Michigan, there was a cartel of businesses that controlled school bond issuing, with — in the early 1990s — two bond underwriters sharing nearly all the business; two law firms were also cut into the deals, as was an Ann Arbor financial advising firm. I learned of lavish trips to New York ostensibly paid for by the supposedly independent financial adviser, who introduced school officials to bond rating officials in Manhattan, although those meetings produced nothing of benefit to the schools; the cost of the trips, together with Broadway plays, was eventually billed by the “independent” adviser right back to the schools. School officials were being bribed and their taxpayers — already on the hook for huge unnecessary interest costs — were made to pay for their officials’ personal spending sprees.

Another word: bribes. Payola was going on in Michigan, and I recommend that Californians ask whether school officials received money or gifts worth money from bond hucksters.

I hear that California may limit CABs, but is unlikely to outlaw them, as Michigan did. That is too bad. Californians deserve no less than a total ban on these monstrous drains on community resources.

I said it on April 28m 2012, and I’ll say it again today:

“Michigan killed CABs; California can do it too!”

* Fundamentals of Municipal Bonds, Public Securities Association, Fourth Edition, New York, 1990.

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Two-empire paradigm: Homeric conquest tales distort history

An idea and an outline for further investigation:

By Joel Thurtell

joelthurtell(at)gmail.com

It’s hard to shake off the feeling that historians of Latin America have bedeviled themselves for centuries with a self-perpetuated myth that makes it impossible for them to accurately conceive of and recount what happened in America following its discovery on October 8, 1492 by Christopher Columbus.

It’s not Columbus’ fault that the narrative has been told minus a third and very important actor. What I call the Two-empire Paradigm has muscled out any discussion by other than specialists of the role of the third empire whose name the generalists dare not speak.

The existence of another empire, one that was independent, vibrant, highly organized politically and with a centralized religion and state successfully pursuing war against the supposedly omnipotent Aztecs at the time Hernán Cortés arrived in México is an inconvenient fact ignored by most writers.

The traditional formula has it that a few years after Columbus discovered the New World, an adventurer and fortune-hunter — Cortés — found a dazzling society of natives ruling over their neighbors in what is now central México. In fact, the republic of México derives its name from the Mexica, whose empire, so the myth has it, was all-powerful in Central México at the time of Cortés’ arrival.

Empire One: the Aztecs.

A few years after Cortés conquered the Aztecs, another adventurer-fortune-hunter, Francisco Pizzaro, found the Incas in Peru, conquered them and allowed Spaniards to take over another advanced civilization.

Empire Two: the Incas.

There was a third empire in the New World at the time Cortés was conquering the Aztecs. It was independent from and at war with the Aztecs in 1519 when Cortés disembarked on the east coast of what we now call México.

Cortés himself was quite familiar with these people. They were sufficiently advanced that they valued precious metals as ornaments denoting prestigious and power to their owners. Among their number were miners and metal-workers who produced the thing Spaniards like Cortés valued above all: gold and silver.

Empire Three: the Tarascans, now often referred to as Purépecha.

You won’t learn about the Tarascans by reading standard histories.

Yet it seems like it takes extra effort to ignore the Tarascans.

An act of will.

Why, exactly, this important society has been ignored is a question that I’ll try to answer later.

I plan to look at five issues:

1) Brief overview of the Tarascan civilization and its conquest by Spaniards 1521-1530.

2) Did the Tarascan civilization qualify as an empire on a par with the Aztecs and Incas?

3) Treatment of the Tarascans in a popular college textbook of colonial Latin American history; in a well-regarded anthropological survey; and in a best-selling book about world history.

4) What would happen to their interpretations if we tried to fit the Tarascan story into their broad narratives of the Two-empire Paradigm? Put another way, how does omitting from our narrative an entire civilization affect our understanding of Latin American and world history?

5) Why no room for a third empire? Origins of the Two-Empire Paradigm and why it thrives.

 

1)    My scriptures for this discussion of the nature of Tarascan culture on the eve of the Spanish Conquest and shortly thereafter come from three modern texts, all out-of-print scholarly works[1] evidently more conversant with Tarascan history and proto-history than any of the generalists whose work I’ll discuss in 3).

2)    What is an empire?[2]

3)    I’ll look at the Two Empire Paradigm in a popular college textbook, Peter Bakewell’s A History of Latin America to 1825; discuss its role in Eric Wolf’s Europe and the People Without History; and consider its use in Guns, Germs, and Steel: The Fates of Human Societies, by Jared Diamond.[3]

 

4)    Five of the seven letters in “history” spell “story.” Just as it was in the time of ancient Greek historians Herodotus and Thucydides, so today’s history is mostly about spinning tales. Efforts to mold the study of past events into scientific shape largely have failed. If you’re going to tell a story, you want it to be a GOOD story, one that conforms to Aristotle’s dictum for drama: It must have beginning, middle and end, and it must evoke fear and pity on the part of the beholder. If he were transported by time machine to the twenty-first century, Aristotle might posit another dictum: The tale should make for a powerful screenplay.

 

5)    A movie about the fall of the Tarascans would make for a very different kind of drama. The kind of battle scenes that excite the yarns about Cortés vs. Montezuma and Pizarro vs. Atahualpa did not occur in the western area of Michoacán. The conquest was not over in a  year or two, but endured eight years during which two empires shadowed one another. William Hickling Prescott knew a good story – rather, he knew two good stories. He wrote them in his 1840s classics, History of the Conquest of Mexico and History of the Conquest of Peru. He did not write a History of the Conquest of Michoacán. Why would he? The clash of arms and heroic struggles of the Homeric drama were missing from the story of how Spaniards conquered the third pre-Colombian empire. There was drama, but it was too subtle for the pen of Prescott or for the celluloid yarn-spinners in Hollywood. Like Hollywood, latter-day historians have been so mesmerized by what they believe occurred in Central Mexico that they have simply ignored the possibility that anything significant happened west of Tenochtitlán.



[1] Shirley Gorenstein and Helen Perlstein Pollard, The Tarascan Civilization: A Late Prehispanic Cultural System, Nashville, Tennessee, Vanderbilt University, Publications in Anthropology, No. 28, 1983. Helen Perlstein Pollard, Taríacuri’s Legacy: The Prehispanic Tarascan State, Norman and London, University of Oklahoma Press, 1993. J. Benedict Warren, The Conquest of Michoacán: The Spanish Domination of the Tarascan Kingdom in Western México, 1521-1530, Norman, University of Oklahoma Press, 1985.

[2] Michael W. Doyle, Empires, Ithaca and London, Cornell University Press, 1986. Edward N. Luttwak, The Grand Strategy of the Roman Empire From the First Century A.D. to the Third, Baltimore and London, The Johns Hopkins University Press, 1976.

[3] Peter Bakewell with Jacqueline Holler, A History of Latin America to 1825, Third Edition, Chichister, West Sussex, United Kingdom,John Wiley & Sons, Ltd., 2010; Eric Wolf, Europe and the People Without History, Los Angeles and London, University of California Press, Berkeley, 1997; Jared Diamond, Guns, Germs, and Steel: The Fates of Human Societies, New York and London, W.W. Norton & Company, 1999.

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Free Press to deliver NY Times

By Joel Thurtell

Note to newspaper publishers:

Can’t make money on your own news product?

Peddle somebody else’s.

A note in today’s (March 24, 2013) New York Times states: “Starting on Monday April 1st we will no longer be your paper carrier. PCF distribution has lost the delivery contract to the Detroit Free Press.”

 

 

 

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