Boom! The first implosion in the municipal bond markets...

competentone · 09-30-2008, 09:50 PM

http://biz.yahoo.com/ap/080930/al_alabama_county_bankruptcy.html?.v=1

Alabama county to miss $83 million payment on bond debt; officials say bankruptcy vote looms.

Selected quotes from the article:

Quote:

Jefferson County is struggling to pay off $3.2 billion in bond debt linked to years of court-ordered improvements on its sewer system. A bankruptcy of that size would be nearly twice as big as the previous record, set in 1994 when Orange County, Calif., had $1.7 billion in debt.

Quote:

Jefferson County has about 658,000 residents and includes Alabama's most populous city, Birmingham.

The Bank of New York Mellon and two bond insurers, Financial Guaranty Insurance Co. and Syncora Guarantee Inc., have filed suit asking a federal judge to appoint a receiver who could use sewer rate hikes and unspecified "other measures" to pay the debt.

In response, the county filed a claim seeking $100 million from the companies on counts of contract breach, negligence and fraud.

Financial Guaranty and Syncora Guarantee insured $2.8 billion of the county's $3.2 billion debt. The bank joined in the lawsuit because it is the trustee for the insurers.

competentone · 09-30-2008, 09:58 PM

Quote:

Jefferson County has about 658,000 residents and includes Alabama's most populous city, Birmingham.

Quote:

Jefferson County is struggling to pay off $3.2 billion in bond debt ...

Do the math: That's $4863.22 for every man, woman and child in Jefferson County.

For a family of four, that's nearly $20,000.

It sounds like the citizens of Jefferson County won't be in any position to "help" the Wall Street bankers with their credit problems!

Jim727 · 09-30-2008, 10:03 PM

Nobody learns. Borrow today - pay tomorrow. Maybe.

We constantly have bond measures on our ballots here, and I usually vote no. Paygo or no-go.

HardDrive · 09-30-2008, 10:20 PM

Quote:

Originally Posted by competentone

Do the math: That's $4863.22 for every man, woman and child in Jefferson County.

For a family of four, that's nearly $20,000.

Yeah, you would think that the money guys in NYC would have sat down with a calculator and tapped that one out. I guess they were too busy spending their bonuses to get too wrapped up in....oh what is that called again?.....due diligence?

Porsche-O-Phile · Porsche-O-Phile's Garage

Yep. I'm guessing Kalifornia probably has 5 or 6 years tops before this entire state collapses under the weight of its own debt.

I typically vote against any/all bond or spending measures, but the government still finds a way to run deficits every year.

As a point of note: accounting for the state budget does not account for pension obligations. If it did, CA would be bankrupt TODAY.

NICKG · 10-01-2008, 04:49 AM

nj is in really bad shape debt wise..i shudder to think what it will be in the coming years...

911teo · 10-01-2008, 05:09 AM

Quote:

Originally Posted by competentone

Do the math: That's $4863.22 for every man, woman and child in Jefferson County.

For a family of four, that's nearly $20,000.

It sounds like the citizens of Jefferson County won't be in any position to "help" the Wall Street bankers with their credit problems!

Well what if they passed the bail out bill and confidence returned? Maybe this would not have happened....

You'll see... by the end it will cost everybody so much more than the $2,600 proposed in the $700bn plan....

tabs · 10-01-2008, 08:44 AM

POP..The CA Teacher Union Pension Fund is not tied to the CA General Account. They have resisted for years letting the Legislature spend their funds. I am not so sure about CALPERS though?

CA ha a budget of 124B USD....they suffered a shorfall of 15B USD....even though revenues have increased by 24B a year over the last 5 years....That means they have increased state spending by 39B USD a year over the last 5 years.....HELLO!

This bailout of Wall Street is only going to stabilize the system and not solve the problems of have a bloated govt bureaucrracy. This bailout only gives us about a 3 or maybe 4 year respite form the next crisis...and that will be a US govt crisis, and who the fk is going to bail out the US govt?????NOBODY that is who!

tabs · 10-01-2008, 08:46 AM

IMPLOSION in 2012...

Jim Richards · 10-01-2008, 08:54 AM

your spoons will keep you safe

lendaddy · 10-01-2008, 09:03 AM

Take note that saving "pensions" is part of the bailout bill. Don't think for a second that this isn't all about saving government pensions that they know are doomed. I'm surprised it hasn't gotten more play.

berettafan · 10-01-2008, 09:44 AM

Thank you for posting this. I chair our towns utility commission and it is indeed very timely. We have been told by our county that we are to build a new sewer plant that exceeds reasonable capacity needs AND treatment requirements.

The attitude is I see prevalent is one of total ignorance of the concept of payback. No cost benefit analysis, no cost per resident, no 'what's the minimum and why are we spending xxx more to be 'green''.

Z-man · Z-man's Garage

Quote:

Originally Posted by NICKG

nj is in really bad shape debt wise..i shudder to think what it will be in the coming years...

Yeah, but we've got the mob. And they'll take care of anything...

-Z-man.

Rick Lee · Rick Lee's Garage

I vote no on all bond issues, always. Fairfax County has a few every single election and they're often in the nine figure range. It's just insane. Spend more now and then use the need for more taxes as an excuse for more development so you can then say you need more infrastructure and of course more bonds. It always reminds me of that drug PSA from the 80's.

Why do I do coke? So I can stay away longer, so I can worker harder, so I can earn more money......so I can do more coke.

craigster59 · craigster59's Garage

Quote:

Originally Posted by tabs

IMPLOSION in 2012...

Ooh, the end of the Mayan calendar

NICKG · 10-01-2008, 10:04 AM

Quote:

Originally Posted by Z-man

Yeah, but we've got the mob. And they'll take care of anything...

-Z-man.

yea..but even they feel the crunch..I was checking concrete prices and wow have they gone up..so instead of shoes, they are only getting concrete flip flops

competentone · 10-01-2008, 04:07 PM

Quote:

Originally Posted by 911teo

Well what if they passed the bail out bill and confidence returned? Maybe this would not have happened....

Yea, right. If we "just pretend" that debt ratios aren't a problem, then everything will be fine, right?

Let the government "hide" some of the worst debt on the financial companies' balance sheets, and the party can continue. Everyone can get back to their behavior of "spend, spend, spend with no regard for ever paying the bill" and then the economy will be just fine?

Are these your arguments?

The government bailout won't eliminate any of the bad debt -- the government has NO "magic wand."

All the bailout does is shift responsibility for some people's debt to everyone in this economy. Things are going to be rough with or without the bailout, but without the bailout, those most responsible for this mess will suffer the most.

Those living responsibly, will be a lot better off without the bailout -- they may have a rough time as the economy tanks, but they won't have to endure the "double burden" of dealing with the slow down and bailing out the deadbeats, thieves and incompetent fools who got us into this mess!

Math · 10-02-2008, 06:38 AM

Quote:

Originally Posted by competentone

The government bailout won't eliminate any of the bad debt -- the government has NO "magic wand."

blowing up a bunch of buildings like in fightclub would do that, right?

911teo · 10-02-2008, 06:52 AM

Quote:

Originally Posted by competentone

Yea, right. If we "just pretend" that debt ratios aren't a problem, then everything will be fine, right?

Let the government "hide" some of the worst debt on the financial companies' balance sheets, and the party can continue. Everyone can get back to their behavior of "spend, spend, spend with no regard for ever paying the bill" and then the economy will be just fine?

Are these your arguments?

The government bailout won't eliminate any of the bad debt -- the government has NO "magic wand."

All the bailout does is shift responsibility for some people's debt to everyone in this economy. Things are going to be rough with or without the bailout, but without the bailout, those most responsible for this mess will suffer the most.

Those living responsibly, will be a lot better off without the bailout -- they may have a rough time as the economy tanks, but they won't have to endure the "double burden" of dealing with the slow down and bailing out the deadbeats, thieves and incompetent fools who got us into this mess!

How many times do I have to say it? The bail out does not solve any problems but MIGHT give us more time to work out a solution.

It's clear you want to see people suffer. I do not subscribe to this point of view.

I call myself out of this fruitless debate.

competentone · 10-02-2008, 08:16 AM

Quote:

Originally Posted by 911teo

.

It's clear you want to see people suffer. I do not subscribe to this point of view.

Wrong, wrong, wrong!

I do not want to see people suffer -- especially innocent people.

Sadly, the massive irresponsibility, corruption and incompetence has created a situation in our economy were there is going to be suffering -- that is a fact we are going to have to face.

I want those who are most innocent to suffer the least -- and those who are most guilty for creating the mess to bear the brunt of the suffering.

We do not help the innocent by bailing out the precise financial institutions most responsible for creating the mess!

We do not help those who have been living within their means, by bailing out those who have been supporting a lifestyle they cannot afford using the easy credit given to them by the irresponsible and corrupt Wall Street and Federal Reserve bankers.