Muni sweeps: Fiscal kabuki
Fiscal kabuki is frightening. From the Washington Post’s Ezra Klein:
“If the president doesn’t get serious about the need to address our fiscal nightmare, yeah, there’s a chance it could not happen,” John Boehner told Politico.
“It,” in this case, isn’t a golf game, or a bipartisan potluck. It’s a vote on the debt ceiling before the Treasury runs out of room to cover our debts.
Properly understood, what Boehner actually said is “if the president doesn’t get serious about the need to do what the Republican Party wants on fiscal policy” — note that allowing the Bush tax cuts to elapse would cut the deficit substantially, but wouldn’t calm Boehner — “yeah, there’s a chance I am prepared to trigger a fiscal nightmare.”
Awake yet?
More fiscal bad dreams.
From Reuters:
States are short $1.26 trillion in paying for public employee pensions and other retirement benefits, a gap that grew 26 percent in one year and will take many more years to wipe out, according to a report released on Tuesday.
A total of 31 states had pensions that were underfunded in fiscal 2009, the latest year for which data is available, up from 22 states a year earlier, the Pew Center on the States reported.
Muni sweeps: Show me the money!
I forget that the last recession was in the mid 2000′s.
We had a short, intense credit boomlet in between that and the crash of 2008.
The hangover from the housing and financial bubble has been tremendous.
Deficits, caused by the financial crisis, are still a serious problem in muniland.
Remember that states must balance their budgets annually.
Here is a spreadsheet with the shortfall numbers for fiscal year 2012 from the Center on Budget and Policy Priorities.
Muni sweeps: Increasing the muni investor pool
It’s a glorious spring day in America and everything continues to bounce along. A little progress here and some fall back there. Oh and that unpleasant negative ratings watch on United States debt from Standard & Poor’s. Yeah that is not good. Welcome to a new week in muniland.
Increasing the muni investor pool:
Marketwatch has an article which frames the proposed Wyden and Coates federal legislation for muni tax-exemption as having the effect of shrinking the investor pool.
I think this is a good frame to think about tax changes within. Whether they broaden the pool of investors for municipal debt or narrow it.
Build America bonds helped the muni market because they attracted new investors.
One of the big shortcomings of the current tax treatment of muni bonds is there is no advantage to holding them in tax free retirement accounts. Which means less affluent investors cannot take advantage of their tax exemptions.
Muni sweeps: Strutting her stuff
She may not be the prettiest girl but at least she’s out there
The home of the famous Mummer’s parade struts its stuff for the bond markets.
The city of Philadelphia was named tops for transparency in a University of Illinois at Chicago survey of cities providing investors with financial information online.
Every municipality, like every person, has problems. Hiding them doesn’t instill confidence in investors. I’m glad to see Philly and other cities letting it all hang out. From the the Philadelphia Inquirer:
Philadelphia won praise for providing not only archived and current financial information about the city’s finances, but also links to documents related to future bond issues and its policies on debt management and the uses of swaps, which are financial derivatives.
No Senator Wyden your bill will not pass
Muni sweeps
It’s Friday and America keeps chugging along.
We have no Federal budget, we are possibly shutting down the federal government and our national credit card is nearly maxed out.
And over here in muniland the road is still bumpy. Here is the sweep.
Municipal bond mutual funds continue to experience outflows, general obligation bonds interest rates tick up a little from slack demand and several Senators dust off an old, unpopular idea for taxation of muni bonds.
Transportation for America: The Fix We’re In For: The State of Our Bridges
“Despite billions of dollars in federal, state and local funds directed toward the maintenance of existing bridges, 69,223 bridges — 11.5 percent of total highway bridges in the U.S. — are classified as “structurally deficient,” requiring significant maintenance, rehabilitation or replacement.”
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Resident Muniland expert
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Sometimes I think we’re doing the old “I’m going bankrupt soon, so I’ll just run out and buy as much as I can now in hopes of keeping some of it.”. Unfortunately the banksters figured that one out a few years ago and changed the bankruptcy laws. I think the world economy has figured it out too.