Moderating the infrastructure debate

April 4, 2013

New York’s mayor Michael Bloomberg has a reputation as a data junkie who uses statistics to manage the city more efficiently. I think I found his doppelganger in Michigan’s governor Rick Snyder. Fitch recently bumped Michigan’s rating to AA from AA-, where it had been since 2007. Bloomberg and Snyder may be national models for the effective use of data at the local, state and federal levels.

A bad track record for privatizing infrastructure

April 4, 2013

The poster boy for privatizing U.S. public infrastructure has been Virginia’s governor Bob McDonnell. I wrote last June about McDonnell:

Who’s the master of Puerto Rico? Governor Garcia-Padilla or the credit rating agencies?

April 3, 2013

via Jorge Banilla. Press closed captions for an English translation.

My Twitter thread was abuzz today with tweets about the comments made by Puerto Rico Governor, Alejandro García Padilla about the credit rating agencies (all of whom give PR the lowest investment grade rating of BBB- or Baa3):

Time for Stockton to wrestle with CalPERS

April 2, 2013

Another tax-giveaway goes to a local developer

March 28, 2013

I write about cities and states doing all kinds of unsound things with their money, but I am shocked as I watch my own very small community get bamboozled by a local developer. Here is the story from our exceptional local paper The Observer:

Do dealers have a chokehold on CDS markets?

March 28, 2013

European competition regulators are examining the coordinated activities of the big dealer banks in the credit derivatives space – a pretty dark part of financial markets. Supposedly, the dealer banks are thwarting competition for these products by using groups like Markit and ISDA (a trade association) to block access for other venues to conduct trading in credit default swaps. Markit’s board of directors includes employees of Bank of America, BNP Paribas, Commerzbank AG, Goldman Sachs, HSBC, JP Morgan and Morgan Stanley, and it has been under investigation by the U.S. Department of Justice since 2009. Bloomberg reports:

This is why Stockton is broke

March 27, 2013

Stockton, California is in federal bankruptcy court trying to make the case that it is insolvent and should be taken into the protection of the court to sort out its debts and obligations. Meanwhile, bond holders and bond insurers say it hasn’t tried hard enough to meet the requirements of Chapter 9 bankruptcy. They say the city overpays its employees and has not negotiated with CalPERS, the statewide pension system for public employees. Over 75 percent of Stockton’s general fund expenses go to pay police and fire salaries and pensions, much higher than in most communities.

As Sacramento drowns, it finds money for a new stadium

March 25, 2013

I keep reading stories about cities doing convoluted tax deals and giving away hundreds of millions of dollars to keep sports teams from moving away. This strikes me as odd – communities giving away precious resources to millionaire sports team owners while they can’t balance their budgets. Sacramento might win the award for fiscal battiness this year. Here is a description of the state’s current effort to raise money for a sports stadium from the Sacramento Bee:

Two massive pension reform struggles

March 23, 2013

After similar challenges fought in 42 other states, Muniland’s two weakest credits – Illinois and Puerto Rico – are fighting difficult battles over pension reform. The pension struggles will have enormous effects on their creditworthiness.

Credit raters unveil default data

March 22, 2013

It’s the season for credit rating default data. Credit rating agencies issue this data about bonds that defaulted, along with the ratings those bonds had been given. Investors can use this data to see how much default risk they assume when they purchase bonds rated AAA or A or B. It’s a quantitative risk road map for bonds.