Europe’s privatization of public assets isn’t a model for the U.S.

By Cate Long
August 12, 2013

Chart: Policy Dialogues

Some think that when it comes to privatizing U.S. public assets, our nation is a laggard and we really should be following the path of Europe in selling infrastructure into private hands. Here is attorney Kent Rowey, who is a leading infrastructure privatization attorney (and whom I’ve sparred with previously):

Detroit’s emergency manager sure loves the media

By Cate Long
August 9, 2013

#Detroit EM Orr was one of Miami's "most eligible men" in 1990, thank you @MaryellenTighe for the best fact of the day! #muniland

The real history of public pensions in bankruptcy

By Cate Long
August 8, 2013

There appears to be a frenzy of comments lately that public retirees receive excessive pensions in the current economy and that they need to be reduced. Many in the media have taken a brief look at Detroit and decided that costly pensions were the cause of the city’s bankruptcy. Nothing could be farther from the truth. Detroit pays a relatively modest median pension of $19,000 a year to general government retirees and $30,000 to police and fire retirees. Detroit’s pension system was funded at 82 percent in 2011 (and at 99 percent for its police and fire retirement system). That is higher than the national median of 74 percent. But public benefits make easy targets for critics. Let’s take a tour of pensions in bankruptcy through the years.

The looming battle between Chicago and Illinois

By Cate Long
August 7, 2013

 

The bankruptcy filing of Detroit has thrust the fiscal health of America’s cities into the spotlight. This is a good thing, because a number of U.S. cities are facing similar problems: Declining populations, rising costs, heavy pension burdens and thin budgets.

The deafening roar has subsided

By Cate Long
August 6, 2013

The recent sell-off in fixed income markets, led by the decline in U.S. Treasuries, was big by historical standards. Here the Federal Reserve Bank of New York compares past Treasury bond sell-offs with the most recent one. The recent rout was much deeper and more sustained than most in history.

The return of the bond vigilantes?

By Cate Long
August 5, 2013

On Thursday, a small municipal bond deal for a Michigan county was postponed due to “lack of investor interest.” This is unusual, given the yield premium offered on the bonds. The Wall Street Journal has the story:

How much federal money already goes to Detroit?

By Cate Long
August 2, 2013

 

Members of the House of Representatives are trying to gather support from other members of Congress to hold hearings on a federal fund to help Detroit through its bankruptcy.

How ratings agencies will approach pension liabilities

By Cate Long
July 31, 2013

The New York Times recently ran a piece discussing how new pension valuation methods, put in place by the Government Accounting Standards Board, were far superior to the historical methods of valuing unfunded pension liabilities. They were even endorsed by some academic commentators. I have not heard of any state or local plan using these new methods to increase the funding of their pensions. Governments are not forced to use them, rather only to do the calculations and show the results on their balance sheets. Despite the revisions, governments will likely continue to use the averages of their historical rates of return on their pension investments to make decisions about the size of their annual contributions to their pension funds.

Developing a new heartbeat for muniland

By Cate Long
July 31, 2013

Trading bonds in muniland is a mess unless you have access to systems that provide information on current market levels for various types of bonds. It’s almost impossible to know, as a retail investor, if your bond purchase is close to a market level or if it is, in fact, marked up excessively. You are basically shooting in the dark and it’s probably best to just stay away from buying these bonds individually.

Puerto Rico issues bonds for energy

By Cate Long
July 30, 2013

Though it has not borrowed in the bond market this year, the Commonwealth of Puerto Rico appears to have started by taking two loans from unnamed banks. Unfortunately we don’t have much information about these transactions, so the amount and purpose are unclear (July 9, July 29). The Puerto Rico Electric Power Authority (PREPA) has filed a bond offering that is expected to come to market on August 5th. Janney Montgomery’s Alan Schankel wrote about the deal: