I really want to write about the growing problem of unfunded pension plans which threaten the financial stability of a number of our states and municipalities but to be honest I don't understand it. One idea that manages to gain traction day by day is the scheme to cover pension shortfalls by issuing debt...despite the fact that in most cases there is no way to pay back the debt except by issuing replacement debt somewhere down the road in the midst of unknowable market conditions or by raising taxes which, if politically possible right now would obviate the necessity to issue debt in the first place. Problem is I can't write about that either because that's another thing I don't understand. Then there's the apparent huge demand for this sort of thing from investors...which I don't understand at all. Oh yeah, I know that if the state of, say, Illinois or any municipality therein issues debt, the interest payments are tax free to residents of that state which is a very good deal indeed if you are of the opinion that you always collect more in interest than you lose in principal--a thought to which I have never subscribed. Recent experience of the bond holders of Detroit might make some think twice (they got back about 13% in bankruptcy), but nope, the bond gurus keep saying they can sell it.
Which brings me back thinking about how all that stuff back 10 years ago got sold and makes me wonder why no politician is interested in who was buying that stuff and why? I mean if there's someone who wants to buy debt of Chicago rated junk by one major rating house, why get mad at me if I create some and sell it to that fo...er...investor who can read Moody's as well as the next guy when Chi-town goes belly-up? I guess there's a reason but I don't understand it.
Which brings me to Greece which I don't want to write about but it's something that I think I understand.
Anyway, the Greeks just a couple of days ago said they were just this far away from a deal. The Euros waited a bit before saying not so fast, the Greeks then said they were making more progress, Jacob/Jack urged both sides to reach a deal and avert the catastrophe of a Grexit (no one was listening to him this time either) and today Chrissy popped up with the opinion that there probably wouldn't be a deal and that a default was "probable." JUST to top things off, the Rock Star announced that he "would be back"--from where was the obvious question coupled with the prayer that if the dumb bugger has really been away that he not return from wherever that was.
So this I understand. Everyone involved is mostly out of their mind which is certainly a valid excuse for things having gotten this far unlike the pension crisis which is overrun by the most cynical, greedy, race of self-centered humans on the planet at this time save for the management of FIFA who may, just may, pay a steep price in which case there is cause for hope. Now it is purely hope you understand, because I don't understand that either.
Showing posts with label Muni bonds. Show all posts
Showing posts with label Muni bonds. Show all posts
Thursday, May 28, 2015
Thursday, January 27, 2011
BACK TO WHAT'S GOING TO MATTER
Certainly nothing that was in The Speech Tuesday night. The Leader, for all the hopes of future years, is a committed Socialist/Leftist/Big Govvie Guy, call him whatever you wish, with the understanding that there is nothing wrong with being a proponent of any of those things except that for the most part events have proven they don't work very well--or at least in my opinion. So, what we can expect from here is a knock down, drag-out fight up to the election of 2012 between the right and the left with little being accomplished, the economy lumbering forward, unemployment remaining in the 9% range, housing stinko, and a general funk settling over the business climate which will overwhelm the momentary good feels brought about by the results of last year's election (make no mistake, it was the results that brough about the pop in confidence) with the knowledge that the only the The Leader cares about is getting reelected. He might just do it as no strong opposition has yet emerged. Then again, things could go south in a hurry which could change the game entirely. Might happen, too.
Inflation, despite the administration's claims and the view of the Fed is real. Oh, not in the official numbers but in the tape from the cash register folks get when their weekly shopping is over. Jimmy Rogers was on the horn the other day predicting $150-$200 oil. Rogers is not a dope. To supply ethonol to the level of 15% which will kill my 1993 Acura has already had an effect on food prices: we compete with China and India for most commodities now...hello; interest rates on the rise despite QE II and dare we mention the looming muni situation?
We dare. Today, Moody's announced that they would begin to consider the pension overhang on the states' credit ratings. For the usual suspects, that can't be good but the dummies at Moody's are about to get in wrong again. Rather than making their own assumptions in regard to the reinvestment rates from which shortfalls or surpluses are calculated, they intend to accept the states' evaluations at face value. Remember 2008? There was some question as I recall as to the valuation of certain assets held on the books of various financial institutions around the world. The institutions felt it was 100...others felt it was somewhat below that figure and that's when the problem started. In merely highlighting this issue, Moody's will spotlight it which is not particularly useful but then again, no one ever clainmed these guys were very smart. Right at the time when Illinois is planning to raise a few billion here and there to fund its pensions plans for the year. Ya gotta wonder. My father used to say, "Do it right or don't do it at all." Moody's never met my father.
Paul Ryan seems to be the point guy for the Loyal Opposition which is good because he's nobody's fool. I would, however, like to see him attack our dreadful fiscal shape with an all out assault upon the tax code rather than messing about the edges as he seems to be doing. Is there no support in his own party for this? I frankly don't understand because all of the logical arguments seem to be supportive of this goal. Is it because once one scratches off the red or the blue one winds up with the same politician underneath? Ya gotta wonder.
Finally, did anyone notice that the other night The Leader barely mentioned the views of the Bowles/Wyoming Win Nut Commission that he himself handpicked, and there was barely a mention of that fact in the mainstream media or anywhere else for that matter? They actually came up with a few good ideas and yet the Commission has been cast aside as though it never happened. Ya gotta wonder. I'm going to do just that.
Inflation, despite the administration's claims and the view of the Fed is real. Oh, not in the official numbers but in the tape from the cash register folks get when their weekly shopping is over. Jimmy Rogers was on the horn the other day predicting $150-$200 oil. Rogers is not a dope. To supply ethonol to the level of 15% which will kill my 1993 Acura has already had an effect on food prices: we compete with China and India for most commodities now...hello; interest rates on the rise despite QE II and dare we mention the looming muni situation?
We dare. Today, Moody's announced that they would begin to consider the pension overhang on the states' credit ratings. For the usual suspects, that can't be good but the dummies at Moody's are about to get in wrong again. Rather than making their own assumptions in regard to the reinvestment rates from which shortfalls or surpluses are calculated, they intend to accept the states' evaluations at face value. Remember 2008? There was some question as I recall as to the valuation of certain assets held on the books of various financial institutions around the world. The institutions felt it was 100...others felt it was somewhat below that figure and that's when the problem started. In merely highlighting this issue, Moody's will spotlight it which is not particularly useful but then again, no one ever clainmed these guys were very smart. Right at the time when Illinois is planning to raise a few billion here and there to fund its pensions plans for the year. Ya gotta wonder. My father used to say, "Do it right or don't do it at all." Moody's never met my father.
Paul Ryan seems to be the point guy for the Loyal Opposition which is good because he's nobody's fool. I would, however, like to see him attack our dreadful fiscal shape with an all out assault upon the tax code rather than messing about the edges as he seems to be doing. Is there no support in his own party for this? I frankly don't understand because all of the logical arguments seem to be supportive of this goal. Is it because once one scratches off the red or the blue one winds up with the same politician underneath? Ya gotta wonder.
Finally, did anyone notice that the other night The Leader barely mentioned the views of the Bowles/Wyoming Win Nut Commission that he himself handpicked, and there was barely a mention of that fact in the mainstream media or anywhere else for that matter? They actually came up with a few good ideas and yet the Commission has been cast aside as though it never happened. Ya gotta wonder. I'm going to do just that.
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