Detroit is remaking itself from the ground up

March 20, 2013

You have seen the headlines from Detroit; how Michigan Governor Rick Snyder appointed an emergency manager, Kevin Orr, to take over the functional management of the city, how the water and sewer system is moving to a regional rather than municipal system and how 6,700 abandoned homes have been demolished. Big things are happening in the Motor City.

The two schools of thought on pensions

March 20, 2013

Public pension funds are essentially big piles of assets that are managed to provide the best investment returns at the lowest risk. The assets are what public employees have to retire on. If they are well managed and employees and governments make their required contributions, the assets grow as they earn investment returns (accounting for over 60 percent of the annual increase in pension assets). The most important part of the pension fund equation is how well the fund managers do earning investment returns.

Distress in muniland

March 19, 2013

The Bond Buyer is holding its 2nd Annual Symposium on Distressed Municipalities in Providence, Rhode Island on March 18-19. Though I am not there, some conference attendees have done a great job of tweeting the highlights. Here is a selection as the conference continues into its second day:

Healthcare “Survivor”: Muni bondholders wait to see who makes the cut

March 15, 2013

This is a guest post from Joseph Rosenblum, the Director of Municipal Credit Research at AllianceBernstein.

Puerto Rico slides toward insolvency

March 15, 2013

Federal policies may pose the biggest threat to states

March 13, 2013

One of the best muniland research teams, Blackrock, is out with its State of the States and Local Governments report. If you have time to read the 12-page report, you will get a very balanced roadmap of the challenges that municipal governments are facing.

Sequester is skewed against the poorest citizens

March 13, 2013

A well known political maxim is that politicians remain in office when they bring home benefits for their constituents. Nothing proves this point more than how the sequester process protects the senior citizen entitlement programs – Medicare and Social Security – while cutting federal spending for the most economically disadvantaged Americans. One of the nation’s most prominent sell-side analysts, Natalie Cohen of Wells Fargo, thinks the effects of these cuts have big consequences, and  eventually could even be socially destabilizing. From Cohen’s recent report:

Illinois, the sovereign entity, gets a slap on the wrist

March 12, 2013

Numerous public pension plans across America are in horrendous shape. The employee plan of the Commonwealth of Puerto Rico, funded at an alleged 7 percent of assets, is functionally broke. Other public plans, like that of Charleston, West Virginia, have 24 percent of the assets needed to meet future promises to retirees.

Muniland’s changing landscape

March 9, 2013

Want to take a 30,000-foot flyover of municipal market trading? The Municipal Securities Rulemaking Board has published its 2012 Fact Book. Let’s have a look at some of the highlights.

Rough seas ahead for higher education

March 8, 2013

While student borrowing for college has expanded to record levels and 12 percent of student loans are delinquent, enrollment in U.S. public and private universities declined in 2012. The number of full-time students stood at 11.5 million last year, a 0.7 percent decline from 2011. Meanwhile, state and federal governments have been reducing funding to public universities. Schools themselves have increased their borrowing for capital improvements to compete for the best students. There are rough seas ahead for education; lower the sail and batten the hatches.