ORANGE COUNTY IN BANKRUPTCY : Irreverent Foreign Press Takes Aim at Home of the ‘California Dream’
“Of all places, opulent and enterprising Orange County--the garden sprawl to the south of Los Angeles where the California Dream has been delivered in abundance to 2.3 million residents--is the last to expect talk of a municipality defaulting on its debt.”
So muses London’s Economist in the first paragraph of a lengthy explanatory piece in its forthcoming issue.
The British news weekly, almost as well known for its irreverence as for its knowledgeable reporting, could not resist the temptation of heading its story “Citron presse”-- French for lemonade and a play on the name of former Orange County Treasurer Robert L. Citron, architect of the county’s discredited investment strategy.
The Economist was arch. But overall, foreign and domestic reaction to Orange County’s investment debacle was muted Thursday--constrained not only by the story’s complexity, but also perhaps by a sense that the region’s financial folly is as singular as its geographic virtues.
In its Thursday edition, Britain’s authoritative Financial Times focused on the bankruptcy’s potential impact on Wall Street.
“In time, the outraged taxpayers of Orange County will want their revenge,” wrote the FT’s Tony Jackson. “It may extend not merely to the officials who lost $1.5 billion of their money, but also to the Wall Street firms which profited by helping them.”
Orange County’s wealth and conservative politics provided a jumping-off point for most of the coverage in the British press.
The conservative Times of London headlined its front page story: “Investment fund crash bankrupts home of the rich.” The left-leaning Guardian’s headline was “Derivatives crash busts U.S. county.”
The Independent ran its story under the heading, “Scandal rocks Nixon heartland.”
Under the headline, “Also in Money Paradise You Can Go Bankrupt,” Germany’s popular Bild tabloid wrote: “Orange County is one of the richest areas of the globe. Wide, fruitful landscapes, soft hills. The farmers drive air-conditioned 400 PS tractors over their farmland and at night they switch to 600-Benz limousines.
“Plantations to the horizon. In between hundreds of high-tech . . . enterprises, there is Disneyland, California--millions of visitors every year.
“Now the Orangeland is finished. Mr. Citron (which in German also means lemon) has bargained everything away.
“Hundreds of cities and companies in the U.S. are in a similar situation. The stock exchange shakes: Who is next?
“Yesterday it was published: Even the U.S. capital Washington is nearly bankrupt. The garbage collectors don’t work, and fire brigades don’t work anymore.
“Rich America? Poor country!”
In France, coverage was sparse, though the left-leaning Parisian daily, Liberation, also homed in on the unregulated and speculative nature of Orange County’s investments.
“This misadventure launches anew the question of control of sophisticated financial products,” the paper wrote. “The discomfiture of Orange County helped make a little clearer the insistent problems tied to the famous secondary markets. . . . The player in the secondary markets can really find himself totally naked.”
In Canada, readers of the Globe and Mail, the national newspaper, were informed Thursday on the financial page that “Orange County, home of Disneyland, bedrock Republicans and some of the richest people in North America, was reeling yesterday in the aftermath of an unprecedented filing for bankruptcy protection.”
Mexico, consumed with a dramatic presidential transition of power and a crisis in its southernmost state of Chiapas, gave Orange County’s financial situation little more than a few-second mention on the evening news and a single brief in the morning newspapers.
Domestic reaction to Orange County’s dilemma generally was confined to municipal officials eager to point out that “it can’t happen here” and professional money managers equally eager to downplay the crisis’ impact on the broader financial markets.
“The (bond) buyers and traders that I talk with are saying this is an isolated situation,” said Kenneth Woods, president of Asset Preservation Advisors Inc. of Atlanta, who manages $100 million in fixed-income investments.
Phillip Allen, director of financial and administrative services for Broward County, Fla., saw the bankruptcy as a warning to fellow financial officials. “All public officers should be looking at their own houses,” he said. “I am not surprised about another jurisdiction being burned with derivatives. It was bound to happen.”
“We know exactly the hole they dug for themselves,” said Calvin Smith, a financial specialist for Multnomah County in Portland, Ore. “They were fat and happy for years. But nothing goes one way forever.”
This story was reported by Times staff writers Mark Fineman in Mexico City, Scott Kraft in Paris, Marjorie Miller in Bonn, Craig Turner in Toronto and William Tuohy in London, with researchers John Beckham in Chicago, Doug Conner in Seattle, Lianne Hart in Houston, Cecilia Rasmussen in Los Angeles, Ann Rovin in Denver, Edith Stanley in Atlanta and Anna M. Virtue in Miami.
