Where are muniland’s cross-over buyers?

By Cate Long
August 26, 2011

It’s an odd moment in muniland. There is an irregularity in the pricing of municipal bonds. Generally muni bonds have a lower yield than U.S. Treasuries because munis give investors a tax advantage. Investors use them to shield their investment income since coupon payments on municipal bonds from their state of residence are generally triple-tax-free — that is, they are not taxed at the local, state or federal level.

“We don’t have a deal”

By Cate Long
August 16, 2011

The Jefferson County Commission met last Friday to decide if they would accept a proposed settlement from creditors led by JP Morgan on their $3 billion of sewer debt. After many hours of meeting in executive session and in public, the Commission voted to reject the proposal, remove the court appointed receiver and directly negotiate with the creditors.

Chapter 9 struggle: Unions are buying power

By Cate Long
August 15, 2011

“The unions are buying power”

This is a great video of Stephanie Gomes discussing her experience as a member of the City Council in Vallejo, California, as they struggled through a municipal insolvency and bankruptcy. She talks about the power of the police and firefighter unions and their stranglehold on local politics. Gomes comes across as passionate citizen who was willing to confront some of the deep-seated problems in her community. She highlights the importance of local and national media attention on the “dirty laundry” of municipal finances like high salaries and generous pensions for union workers. Her experience is an important lesson for anyone interested in muniland.

Jon Stewart dives into raterville

By Cate Long
August 11, 2011

The Daily Show
Get More: Daily Show Full Episodes,Political Humor & Satire Blog

Jon Stewart’s Daily Show interview with Columbia law professor John Coffee is great. To have credit rating agencies discussed on a popular national comedy show is fantastic. The more the public knows about these powerful agencies, the better.

Munis gain as stocks sell off

By Cate Long
August 5, 2011

Munis gain as stocks sell off

In a risky world, we’re seeing a flight to quality that’s benefiting muniland. From the Los Angeles Times Blogs:

Watch Jefferson County Commission hearing live

By Cate Long
August 4, 2011

The Jefferson County Commission is meeting now to review a counter-proposals from creditors lead by JP Morgan and decide whether to accept it or file for Chapter 9 bankruptcy. Live feed via the Birmingham News.

Geeks for democracy

By Cate Long
July 28, 2011

Geeks for democracy

“How do you enable people to have a louder voice within their communities?” asks Conor White-Sullivan. He answered his own question by developing Localocracy, a platform that hosts community-focused discussion boards seeking participants who are registered to vote and who use their real names. Localocracy gives citizens an opportunity to generate discussions to influence each other, their government and journalists.

The state becomes the guarantor

By Cate Long
July 27, 2011

Jefferson County, Alabama is getting a lot of attention as it negotiates with the holders of $3 billion of sewer bonds. The county would like to pay $2 billion to settle the $3 billion of bonds outstanding and limit the rate increases county residents would have to pay. This arrangement would pay bondholders (led by JP Morgan) 66 cents on the dollar — not a great recovery but not outrageous either. Bondholders want the state to guarantee this new arrangement and stand ready to pay in the event of another default.

What would a debt-limit crisis cost the states?

By Cate Long
July 27, 2011

Thanks to Jordan Eizenga at the Center for American Progress, you can see some scenarios of the impact of the halt in payments to states if the debt ceiling is not raised. Jordan says:

Oh Illinois!

By Cate Long
July 25, 2011

 

Oh Illinois!

Illinois has massive problems: the state has more liabilities than assets, and the credit-default swap market says they are the number one state at risk for default (see chart above). The Bond Buyer ran an excellent story on how the liabilities of Illinois are rapidly increasing: