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| User Info | Municipal Debt: The Next Theft in forum [Ticker] | |||
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Genesis Posts: 71435 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/962-Mu....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-04-16 09:37:55
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Mattryan00 Posts: 11 Incept: 2008-09-06
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Whoa...was that a 'Matilda' reference!?
2009-04-16 09:51:01
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Aynrandfan Posts: 1718 Incept: 2007-09-02 
Hannah, Montana
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Interest rates are extremely low right now by almost any historic measure one might care to look at. Anybody looking to borrow money right now would be well advised to get a fixed, long-term, low interest loan RIGHT NOW and to sit on it for as long as you'd like -- and that certainly includes any municipality. The idea that anybody negotiating debt on behalf of a large city decided to gamble around with swaps NOW when interest rates are THIS low is pretty nuts. There was simply no reason to do this; Houston did NOT need to have this problem. ---------- Mliu wrote.....I told my wife... that the depression is comming so I don't want to go to work anymore....
2009-04-16 09:55:06
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2banana Posts: 168 Incept: 2008-02-25
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AND municipal governments are raising taxes and fees (in a deep recession) to pay for their way over generous and grossly underfunded pensions. Eventually something will have to give.
2009-04-16 09:59:57
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Docberg Posts: 37 Incept: 2009-02-20
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When I was a city administrator, my nightmares chiefly consisted of not being able to roll over our existing bonds, and being forced to sell more bonds for infrastructure improvements while the employment base in my area was being annihilated by "creative destruction." There are still plenty of people in public management who are motivated by high ideals of community service and take their fiduciary duties seriously. And, due to unfunded mandates, circumstances beyond their control, and boneheaded mistakes by their predecessors, these people are going to have to be supremely creative to get their municipalities through the upcoming crashes.
2009-04-16 10:12:19
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Snowman Posts: 1040 Incept: 2009-03-09 
avoiding yellow snow
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The muni problem has been floating around for a while, see ref from last fall http://www.businessweek.com/bwdaily/dnfl.... Dexia (Belgium bank) is a major culprit in all this: http://www.bloomberg.com/apps/news?pid=2.... Needless to say, Dexia FSA went bust last fall, they are now owned by the Belgian tax payers, while FSA was sold off. The usual suspects sold this ****: http://www.bloomberg.com/apps/news?pid=n.... I'm not an attorney, but I would think the municipalities have a very strong case that they were fleeced. These instruments work fine in highly volatile short term rate markets, when the inverted yield curve is significant. Go back to 2006-2007: the yield curve was only slightly inverted in early 2007, flat actually, and then presented itself back to positive which is where we are now. there is no way these bonds fit the yield curve profile. Not a chance. They were lied to.
2009-04-16 10:17:52
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1011101 Posts: 936 Incept: 2007-10-05
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i'm sure my town is involved in this nonsense too. How do i find out exactly what swaps my town has?
2009-04-16 10:18:27
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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mr. digital 1011101, call your town treasurer and ask what their funding sources are and the bond calendar.
2009-04-16 10:23:42
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R2judge Posts: 302 Incept: 2008-04-13
Burbank CA
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The $479 billion market for the securities, whose rates are typically reset by banks every day or week, is turning into a quagmire for local officials who embraced a financing strategy they didn’t fully understand. ---------------------------- Just how could they have fully understood it? There are no track records on new scams.
2009-04-16 10:32:41
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Trades50 Posts: 1145 Incept: 2007-10-30
IL
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"employment base in my area was being annihilated" And the CONgress and Senate keeps pushing through immigration and visas. More people for less jobs drives down wages and tax revenues. It's a game of musical chairs for workers and a bump up for short-term corporate profits. CONgress is creating this feedback loop of lower and lower tax revenues while trying to maintain spending and public pensions. This won't end nicely. ---------- Labor for the Globalist: World Class means Third World Class.
2009-04-16 10:47:38
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Yourapostasy Posts: 21 Incept: 2008-10-06
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Aynrandfan: Anybody looking to borrow money right now would be well advised to get a fixed, long-term, low interest loan RIGHT NOW and to sit on it for as long as you'd like -- That only works if the asset is fairly valued, and we typically only see that at the beginning of a credit cycle. At the end of the cycle like we are in now, with still-inflated asset values, and with more deflation then hyperinflation on the horizon, the danger is even a generational low interest rate won't help if income volatility risks the ability to service the debt on an overvalued or even fairly-valued asset. I'm considering purchasing a house for the first time in my life now, but only because it will let me lock in a PITI psf cost of $0.75 per month for my business, which would take up about a third of the live-work space. This compares to $2-20 psf / month for comparable commercial space where I live. But this was only possible because the asking price on the property is about 34% off the tax roll appraisal, and 52% off the last refinance before it went into foreclosure. It's in good condition, the only reason someone hasn't picked it up yet is because it is all concrete (flippers won't touch an expensive demo like this) and ugly as sin (normal homeowners won't touch for aesthetic reasons). Luckily, my SO doesn't care about aesthetics as long as we don't break 3:1 total DTI with PITI. Still planning on leaving the country in a few years when the youngest child is at the age the SO and I agree is sufficiently old enough for us to make the jump, because all I see are very high tax rates in the future (our strategy is to develop our international client list now, and depend upon worldwide income freed of US corporate taxes to keep abreast of our competitors, who we assume are doing the same), so we'll just leave the non-critical business equipment in the house. If it becomes so Mad Max bad that we cannot operate the business equipment in the more conservative and wealthier part of town we are in now, then of course we'll lose the house, but we're not going to want to be anywhere near the country under those circumstances and losing title is going to be the least of my worries at that time. Several of the high-tech components of the DOW would all have to fail to make it that unviable for my business. Even Argentina or the Soviet Union didn't get that bad. Yes, borrowing costs are great, but standard underwriting concerns still prevail, and with income becoming more uncertain, adequate ratios will come under increasing pressures.
2009-04-16 11:08:56
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Phirang Posts: 8824 Incept: 2008-10-25
bar khoba's revenge
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Imagine the housing bust when rates go UP... all I have to say. ---------- The Treasury can issue debt on your behalf because the State can and will stomp the wealth out of you and your family.
2009-04-16 11:10:06
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Iliketrends Posts: 1919 Incept: 2007-11-26
Teyshas
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The US canibalizing itself financially. And we worry about bid Laden et al........................ Rot from within and fall apart like a crock potted roast. ---------- “The danger to America is not Barack Obama but a citizenry capable of entrusting a man like him with the presidency. It will be easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate willing to have such a man for their president
2009-04-16 13:03:28
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Dirtysouth Posts: 2766 Incept: 2007-09-20
Love Truth Honour ॐ Banned
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Gee.. I wonder if this has anything to do with the push for state sovereignty.. bahhhhh ---------- Forest First...Trees Second Feb 9 ~ Mar 11 ~ Apr 09 ~ May 09 ~ Jun 07 ~ Jul 07 ~ Jul 22 ~ Aug 06 ~ Sep 04 ~ Oct 04 ~ Nov 02 ~ Dec 02 ~ Dec 31
2009-04-16 13:17:08
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Photopro Posts: 372 Incept: 2008-03-18
Republic of Texas - got .308?
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Dirtysouth- Exactly what I was thinking. The states are being conned into this then the Fed will be there to bail them out. Gotcha! So much for state sovereignty. ---------- It is very dangerous to be right when the government is wrong. — Voltaire http://www.RxSaveMoney.com
2009-04-16 14:18:47
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Expy Posts: 8131 Incept: 2007-09-05
STOP the DEMONIZATION LIBS and MSM!!!!
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"mr. digital 1011101, call your town treasurer and ask what their funding sources are and the bond calendar. " Snow, that is a REALLY interesting comment. If you know more of this, it would be usful to get into the realm of all Americans. Can you imagne ordinary folks becoming informed as to this and calling their local and state treasurers? Could Karl expound on this and Pika get it some exposure? This needs to go more mainstream. ---------- "IT'S THE INCOME/CASHFLOW SILLY"! {c expy  } Where will incomes, wages, and profits/revenues come from to recover the economy after the spiral down? Certainly not the "New Service Economy". W/out massive new debt creation, [unlikely], and useful productivity, the public and business are probably screwed by a
2009-04-16 14:24:24
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Varg Posts: 299 Incept: 2007-12-01 Vestfold
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Houston, you've got a problem.
---------- http://www.brasschecktv.com/page/439.html
2009-04-16 17:09:21
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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It's the bad old case of bond originators stuffing crap to the issuers when they knew it was an easy sell to the investors. Instead of proper banking to match issuer financial needs with investor demand. So instead of bond sales people selling worthless mortgage crap to investors, their originators sell worthless lending products to the issuers (but the investor is still protected provided the muni can cough up the margin call). Another reason banking is so exciting: you can screw any hole you want.
2009-04-16 17:36:03
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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btw, Nobel Laureate Stigliz once again doesn't give up telling the viewers what the story really is. He and Krugman make a great couple. Keep pounding the table! http://www.bloomberg.com/avp/avp.htm?N=a....
2009-04-16 17:56:06
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Xennady Posts: 2815 Incept: 2008-03-18
Too damn near Detroit
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Lately on XM I've been hearing ads pitching municipal bonds. While this has been a nice addition to the continuous viagra and get-rich-quick-scheme commercials I don't think it's a harbinger of good times for the municipal bond market.
2009-04-16 18:25:38
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Raingod Posts: 1067 Incept: 2008-08-29
Tastes Like Chicken
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So, because the auction-rate securities market blew up on them a year and a half ago, they've gone to a new level of bull****? Auction-rate sounded eminently fair to me. ---------- I have even intermittenter access than I did over the summer. No idea when I can check in.
2009-04-20 02:20:57
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