It’s hot down in Alabama
It’s hot down in Alabama
It sounds like we have a deal in Jefferson County, Alabama. This has been a long festering problem where the county is unable to afford the debt payments on $3 billion of bonds for a sewer system built several years ago. Excellent local reporting by KDAF-TV and Birmingham News. It sounds as if Jefferson County wants creditors to reduce the debt owed by $1.3 billion.
Meanwhile the SEC has announced a July 29 field hearing in Alabama on the “State of the Municipal Securities Market”. Reuters reports here.
Detroit: Bike City?
Governors want some federal unity
The New York Times nails the elephant in the room with this headline: “One Thing Certain in Debt Debate: More Cuts for States”. As the federal government gets its budget under control there will be less flowing through to the states. Buckle up, everyone.
Hunger will increase
I laud U.S. Senator Bernie Sanders and his staff for preparing this report, “Senior Hunger: The Human Toll and Budget Consequences.” As we shrink government at all levels, there will be individuals who have relied on the social safety net who will be left behind. Learning about who these people are is the first step to ensuring that the suffering is not too great.
Bankers increase letters of credit to muniland
Letters of credit involve banks agreeing to backstop municipal debt issues in case weekly bond sales fail. This is different than the trend I commented on last week of Wall Street lending directly to muniland in lieu of governments issuing bonds. From Reuters:
The use of domestic bank letters of credit for U.S. municipal debt issues jumped nearly 319% in the second quarter of 2011 from the first quarter, according to Thomson Reuters data on Friday.
But the $2.65 billion of new muni debt in 57 deals backed by letters of credit in the first half of the year was down 32.4% in the same period in 2010, according to the data.
J.P. Morgan Chase (JPM.N) was the top letter of credit provider so far this year, covering $708 million of debt in 15 deals, followed by Wells Fargo Bank (WFC.N) and Bank of America (BAC.N).
@MillerTabek: “a rating agency suggested that the U.S. remove the debt ceiling – we suggest the only thing keeping the U.S. solvent is the debt ceiling”
@EpicureanDeal: “Don’t kid yourself. Meredith Whitney will claim her warning mobilized sleepy governments to avoid default. A mea culpa is beyond her.”
@munilass: “Moody’s rates 15 states, 440 local govts, 100 housing programs, 43 higher ed / nonprofits Aaa.”
@alebenthal: “Who saw Indiana’s surprise 1.18 bb surplus. Said as if Oprah said it SURR-Plus!”
@EpicureanDeal: “Hoo boy. RT @BondBuyergirl: FINRA nabs registered rep for “misrepresentative and unbalanced tweets” in quarterly disciplinary actions”
Reuters: U.S. lotteries and the state taxman
Wall Street Journal: Higher Taxes Yield to Budget Cuts in States
Bloomberg: Meredith Whitney Loses Credibility
Bond Buyer: Dodd-Frank Sparks Anxiety Issues
New York Daily News: Cuomo, New York State Public Employees Federation Reach 5-Year Labor Agreement
Ohio Budget Watch: Ink’s hardly dry and Kasich’s already busted the budget