listen to these two promoters and your children will be in debt….

 

this is a first for us.  the “hey abbott award” this week goes to a daughter-father team, alexandra lebenthal and her daddy jim.

 

child and dad run a new york city based financial company called lebenthal & company.  the dad was left the business by his father and he is obviously leaving it to his daughter.  a real family caravan.

 

in an article about the company, it is pointed out that alexandra was able to endorse a check when she was six.  her own daughter heads an imaginary company.

 

just think.  on a cold winter’s eve the entire family gathers around the burning fireplace and play with piles of money.

 

they run commercials on the radio that seem to be on the air every two minutes.  not since a hustle called “crazy eddie’ which was advertising the sale of appliances has there been such a flood of radio selling.

 

for this offense to our ears, this couple are entitled to the award.

 

however, they get the “hey abbott award” because of the message they are sending out.  they want people to buy municipal bonds through their financial company.

 

municipal bonds, if you didn’t know it, are like promissory notes that are issued by cities that can’t manage within their financial resources and then go into debt by borrowing money.

 

it is a nasty business on three counts.  first of all, the municipality should operate within their financial abilities.  borrowing money which is going to have to be paid back by the next generation is bad.

 

a second dodgy part of this deal is that once a municipality starts this borrowing process they can just continue to do it over and over again because they are paying interest on the bonds which attracts investors.  this puts the municipality in more debt.

 

and finally, the municipal bonds are tax free which means the buyers get a free ride.  it is one of the few areas in finance where you can make money and not share some of it with the tax man.

 

alexandra and jim lebenthal encourage municipalities to borrow money and encourage clients to lend the money.  this is like telling children to smoke and adults to overeat.  not a very healthy message to be sending out.

 

in another time,  daddy and daughter would be selling snake oil from the back of a covered wagon.