Gina Raimonda's Moral Compass Is Broken

Gina Riamondo’s moral compass is broken. That is the obvious
answer to the question of why she came out with a statement that Rhode Island
needs to honor its moral obligation to pay the bonds that are in default by the
38 studios collapse.

I am not saying definitively that we shouldn’t pay those bonds;
it is just the irony that the woman who championed breaking the largest moral
obligation in state history would come out in honoring this moral obligation.

The other moral obligation in question is last year’s pension reform, the same pension reform that made Gina Riamondo as a state powerhouse figure and the presumptive democratic nominee for governor in 2014.

Now please let us be perfectly clear. I not only think that the pension reform
that passed last year was absolutely necessary, but I think that it did not go
far enough. For the pensions promised by our crooked politicians to teachers
for years and years were and are still unsustainable. We cannot afford them as
they were written. We cannot afford them as they stand now.  But let us be honest, we had a moral obligation to pay them.  

We can’t pay them, but we should. They were promised by our representatives and they will not be paid. We broke our moral obligation. Those are the facts.

And Gina Riamondo’s claim that after the reform passed that pensions
will be fixed “forever” was a simple lie, unless you define forever as the
potential duration of her political career. For while the reform was a great
step forward and I supported it, it assumes a 7.50 % average annual return to sustain the new lesser pensions and that is not going to happen. The return hasn’t
averaged 7.5% over the last 10 years or the last 20 years and it isn’t going to
average 7.5% in the future. If it is please have the state know so I can put my
money there. 7.5 % is a big number that number is reserved for high risk investments that yield high risk returns, not the kind that states put pension money into. So in the end in say 20 or 30 years we will be back at the same place with pensions the state can’t afford. And we will have to break that moral
obligation. Again.

What is significant about that 7.5% rate of return for me is that that number is just about the same rate of return the 38 studio bond holders are scheduled to receive for their bonds. And that number is much higher than the interest the state pays for general obligation loans. Why did these loans pay more? Because moral obligations have higher risk.

Now remember I am a strong proponent of pension reform. But how can we possibly reconcile not paying thousands of teachers what they were promised because we don’t have enough money and causing real working people some
real hardship and then turn around and claim we do have enough money to pay a
few dozen wealthy investors who took the risk based on a higher rate of return.
They need their money back but we have to cut pensions? ?? I can’t sell that argument, can you? Can Ms. Riamondo? If we don’t have enough money then we don’t have enough money and we can’t pay either! What is good for the goose is good for the gander.

But of course I am pretty sure the state will honor the bonds, much as I might like
otherwise. Which will make the state the primary creditor in the Bankruptcy hearing in Delaware on Tuesday.

And I have a suggestion for the lawyers who represent the state.

But first, by way of full disclosure I have to say I worked one day doing voice over work for 38 studios for several characters in the game. I also represented about a dozen actors who also voiced several characters and before they ran out of money. I had 15 more actors that had been approved for work and was preparing another 25 to audition. All the actors were promised a lot more work which obviously never materialized. It was great work for RI actors, for whom paid work is few and far between, and the rate to actors here was much less than the union rate in LA.

From what I saw the game they were working on was top of the line, with a dream team of talent putting it together. I have no doubt that they needed to watch their money better and that costs were out of control, but it was going to be a great game. The value of the game as a work in progress has been placed between several to as much as 20+million dollars. And if the state pays the bonds that money is going to the state to off-set the cost of repaying the expenses.

What the state should do is insist that it direct who gets the rights to the game to whichever bidder is willing to finish the game in RI and keep the JOBS here. You remember the jobs right? Jobs, the reason we made the guarantee in the first place? What a waste it will be if we get stuck with the bill AND lose any chance of bringing the jobs here, when we can at least keep a few jobs for our trouble. If we are going to pay the bill get something for it at least!

If they finish the game here in Rhode Island the payroll taxes that will be generated would be an added value out of a big loss. If we have to
pay the bill, let’s at least keep some jobs.