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The End Of The MUB Bounce? Republicans To Block Renewal Of Build America Bonds

Tyler Durden's picture




 

The final nail in the zombified Build America Bond program may be finally approaching, in which case the dead cat bounce in the MUB may be about to end. After late last week Gerald Connolly,
D-Va, proposed an extension to the BAB program through 2012, resulting in yet another risk bounce in the one asset class that has seen a major walloping in early January, not to mention record outflows (and a corresponding inflow into US equities), it seems that the GOP is not very excited about the prospect of further state subsidies. From the WSJ: "Key Republicans signaled they would block renewal of the Build America
Bonds program as the Obama administration prepared to reinstate the
bonds in the 2012 budget plan due Monday. Build America Bonds were originally introduced as part of the $787 stimulus program in 2009 but expired at the end of last year. They allowed states and localities to sell taxable bonds and receive a federal subsidy payment from the Internal Revenue Service equal to 35% of the interest costs on their bonds. But Sen. Orrin Hatch (R., Utah), the ranking Republican on the Senate Finance Committee, said late Friday that BABs were "simply a disguised state bailout." "These bonds rightly expired at the end of 2010 and it is my hope the Obama administration does not try to resurrect such a nonsensical provision in their upcoming budget," he said." Yet that is precisely what the president intends on doing, while somehow pretending that the budget will actually cut $1.1 trillion from the deficit over the next decade. Just how crazy is it to request that at some point America has a president and economic advisors who actually understand at least the most basis mathematical concepts, the key of which is that spending does not equal saving...

From the WSJ:

The Obama administration will propose reintroducing BABs, according to three people outside the administration who were briefed on the matter. They expected the administration to propose a two-year extension at a 28% subsidy rate for the bonds.

A Treasury spokeswoman declined to comment.

Even a 28% subsidy rate wouldn't garner GOP support, according to a Republican Senate aide. The aide said the rate wasn't revenue neutral, meaning it would cost the federal government more in subsidy payments than the government loses in revenue from traditional tax-exempt municipal bonds.

Democrats see these bonds as an effective tool for job creation and funding infrastructure projects. Some were already trying to reinstate them ahead of the budget proposal last week.

On Thursday Rep. Gerald Connolly (D., Va.) introduced a bill that would extend the bonds at subsidy rates of 32% in 2011 and 31% in 2012.

That bill has been referred to the House Ways and Means Committee, which handles tax legislation, but it is unlikely to advance. Ways and Means Chairman Dave Camp (R., Mich.) said last year Build America Bonds were "a highly subsidized spending program." A spokeswoman for Mr. Camp declined to comment Friday.

So while Bill Gross is playing golf at Pebble Beach, he may consider making some reverse inquiries to Larry Meyer and find out just how bad the bill will be if for the first time in history, the Pimco head does not end up getting what he wants. Oh well, time for El-Erian to pen another politically correct yet modestly critical op-ed, promptly followed by another monthly letter by Gross decrying just how bad of a ponzi scam the US financial system is, lead by that satan among satans Bernanke, when those axed alongside the Fed do not get what they want every now and then...

 

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Sun, 02/13/2011 - 18:39 | 958271 slaughterer
slaughterer's picture

No BABs, bitchez

Sun, 02/13/2011 - 21:02 | 958522 ZerOhead
ZerOhead's picture

 "...in which case the dead cat bounce in..."

 

Funny... you never hear me talking trash like... "in which case the dead Tyler bounce..."

(Of course you are a higher value target on the Goldman top ten 'hit list'! :)

Sun, 02/13/2011 - 18:45 | 958275 snowball777
snowball777's picture

Orrin Hoover.

Do we really need to help Bernanke establish the need for QE3 that much?

Sun, 02/13/2011 - 20:35 | 958470 Ned Zeppelin
Ned Zeppelin's picture

I agree.  BAB may be pricey, but it may be the only thing propping up some of these states. You are right to see it that way - as things go south, the rationale for QE3 grows. Of course, they'd do it anyway! 

Sun, 02/13/2011 - 18:43 | 958276 EscapeKey
EscapeKey's picture

Build America Bonds were originally introduced as part of the $787 stimulus program in 2009 but expired at the end of last year.

I wonder how much of the allocated capital was used for its implied purpose ("build America").

Sun, 02/13/2011 - 18:56 | 958294 Pool Shark
Pool Shark's picture

Like it or not, state bailouts have to happen (from the perspective of the federal government). If California, Illinois, New Jersey, and New York collapse; so too will federal revenue and their ability to borrow at reasonable rates (bye, bye bond market...)

The feds are in a box; either keep the ponzi rolling or risk the collapse of the entire federal government.

Are we witnessing the collapse of Exter's Pyramid?

Sun, 02/13/2011 - 19:12 | 958321 Fred Hayek
Fred Hayek's picture

None of them should get any help until AFTER they've made a lot of very tough choices.  A lot of them.

Sun, 02/13/2011 - 19:30 | 958347 Pool Shark
Pool Shark's picture

Agreed.

But we know those 'tough choices' will never be made...

Sun, 02/13/2011 - 19:52 | 958382 Bastiat
Bastiat's picture

Look at all the tough choices Wall St had to make to get bailed out . . .

Mon, 02/14/2011 - 04:24 | 959101 jeff montanye
jeff montanye's picture

and that's why it (tbtf) was/is so pernicious: it absolutely undercuts the moral (and ultimately all) authority of government.  with mogadishu as an instructive alternative, it is folly of the worst kind for these sad "elites" to so mismanage that with which they were entrusted. 

Sun, 02/13/2011 - 20:28 | 958456 Fred Hayek
Fred Hayek's picture

New Jersey might make some.  Living in Massachusetts, I will predict with confidence that we'll make none.  Charlie Baker ran for governor on the promise that he would do just that.  Pathetic seat warmer Deval Patrick beat him easily (with the help of a 3rd candidate being in the race for reasons that escape anyone sane). 

New York?!  Little Andy claims to have just discovered that NY's budgets are a joke.  What an epiphany for the state's former AG! 

Cali?!  Hahahahaha!

Illinois?!?!  You're killing me!

Sun, 02/13/2011 - 20:34 | 958467 sethstorm
sethstorm's picture

New Jersey might make some.

The only cuts made will be in the name of political vengeance, not real cuts that need to be done.

Sun, 02/13/2011 - 20:15 | 958424 topcallingtroll
topcallingtroll's picture

No state bailouts don't have to happen.  California, Illinois, New Jersey, and New York can cut services and raise taxes.  Anybody thinking that the republicans are going to bail out the states is seriously deluded.

Sun, 02/13/2011 - 20:49 | 958495 snowball777
snowball777's picture

Anybody thinking that the republicans are going to raise taxes in CA is deluded too.

Sun, 02/13/2011 - 21:06 | 958532 WestVillageIdiot
WestVillageIdiot's picture

"No state bailouts don't have to happen. California, Illinois, New Jersey, and New York can cut services and raise taxes."

Why do services need to be cut? Technically, they don't. The states could cut labor costs across the board and not have to cut services.

I do agree there are a lot of really non-essential services that should be cut but those are pet projects and least likely to be cut. You know they will cut police and fire, hoping to scare people. The unions will fight pay cuts so less employees will asked to do more.

We are back to big government and public unions screwing these states. Something tells me they aren't done. It is hard to imagine Democrat Cuomo really taking on the unions in this union choked state. Taxes will get raised and services will get cut, like you think.

Sun, 02/13/2011 - 21:58 | 958631 midtowng
midtowng's picture

If the states such as California and Illinois fired every single public union worker, it still wouldn't balance their budgets. Although I'm sure you expect the public employees to work for free.

You are going to see cuts in police and fire, not because of some fictional Big Union boogyman, but becuase that is where most higher-paid public workers are.

The public pension numbers are so bad, not because the public pensions are "golden" but because they've been underfunded for decades.

Mon, 02/14/2011 - 10:47 | 959437 RKDS
RKDS's picture

Looks like someone who didn't understand the problem junked you...why am I not surprised?  Out in PA, I've read that labor costs are about 3% of the budget.  Meanwhile, education, welfare, and prisons are closer to 2/3.  That's what we've got to trim down, if not because of how much they consume, then for the horrendous math skills of fools who ceaselessly cry about the relatively miniscule burden of public employees.

Sun, 02/13/2011 - 22:15 | 958657 Fred Hayek
Fred Hayek's picture

You mention "non-essential services". 

We've had a long siege of a winter here in Massachusetts.  One of the standing jokes is that when a big snow storm is on the way, the governor will announce that all "non-essential" government personnel should stay home.  The automatic rejoinder from us private sector workers is that, of the hacks, "Who doesn't that cover?"

Sun, 02/13/2011 - 21:36 | 958588 Saxxon
Saxxon's picture

If by 'bailouts' we mean the Fed helping the states to pay their GO bonds, then yes, the states will be bailed out, and each of them.  That's my mantra and I will invest accordingly.

California and the other comatose large states simply cannot be allowed to default.  The Fed will continue to tap the brakes to the front while shoveling coal to the rear to keep the fire burning; gold will be tamped down from time to time; numbers manipulated; the train will continue to roll down the track to its inevitable end which is not going to be deflation because no policitician will permit it . . . because they instantly lose power while doing the right thing.

This is a classic tragic farce where the outcome is obvious and yet each character plays his role to the bitter end.

Sun, 02/13/2011 - 18:58 | 958295 snowball777
snowball777's picture

That depends on your disposition to CA state infrastructure projects.

Can I offer you a high-speed rail? ($5.23B...~10% of the issuance)

 

 

  • $1.7 billion for the state's taxable general obligation bonds to fund stem cell research and stem cell related projects, various housing programs, and additional needs for High Speed Rail.
  • $5.2 billion from newly authorized Build America Bonds will provide funding to restart the balance of all state projects that had either been stopped and for those that have been proceeding with non-state funding. This includes projects for California State University, the University of California, California Community Colleges, Caltrans and the Department of Water Resources. In addition, this bond sale will fund grants that had been frozen, including school construction projects, environmental and park projects, grant programs to support clean air (engine retrofits and clean port projects, wastewater treatments projects, improvements to drinking water infrastructure, children's hospitals, public safety grants and local library grant projects. Finally, all outstanding bills not previously funded will be paid.

 

 

Sun, 02/13/2011 - 19:54 | 958388 Bastiat
Bastiat's picture

Actually low speed sewer would be a good use of money.

Sun, 02/13/2011 - 20:50 | 958496 snowball777
snowball777's picture

We already have a legislature, thanks.

Mon, 02/14/2011 - 04:34 | 959105 jeff montanye
jeff montanye's picture

one hopes all of your persuasion were eloquently and passionately opposed when the federal government began deficit spending in earnest in the early eighties and then kicked it into turbo after 2000.  because that's where the relative inflexibility to deficit spend now, in the famine times, came from.  opposed all the wars right?  excellent.  thanks for the vigilance. 

Mon, 02/14/2011 - 01:04 | 958909 Terminus C
Terminus C's picture

Monorail... MONOrail... MONORAIL...!

Mon, 02/14/2011 - 07:38 | 959203 Miles Kendig
Miles Kendig's picture

All of those projects are collateralized by the buildings, rails or whatever and have limited or no recourse to the tax base beyond the item being developed.  The same does not hold true for general obligation or GO bonds.  In most cases these are explicitly backed, constitutionally, by the capacity of the sovereign to collect the revenues to make these bonds good.  Hence a reason the BAB program did not go to support GO bonds, another being the separation of powers in the federal & state constitutions.  So a bunch of states will default and give bondholders physical delivery of their collateral in lieu of payment.  An even bigger nightmare than a commodities trader having to take physical delivery...

Sun, 02/13/2011 - 19:44 | 958367 gookempucky
gookempucky's picture

Heres a little help--make your own conclusions.

http://projects.propublica.org/recovery

this will even take you into the local counties

Sun, 02/13/2011 - 21:47 | 958603 TimmyM
TimmyM's picture

@Eskape Key

The IRS has an active program of significantly auditing the spending of bond proceeds. Issuers rushed to market for the subsidy and many are scrambling to spend it. If they don't spend it in 3 years they lose the subsidy. Bond attorneys thought it was enough of a risk that most of the official statements have extraordinary call provisions written into them that allow the issuer to call the bonds if they fail these IRS spending audits.

Sun, 02/13/2011 - 18:50 | 958287 Rule of 72
Rule of 72's picture

I wonder how much of the allocated capital was used for its implied purpose ("build America").

None.  They are more properly known as "State Government Union Pension Bonds."

It's staggering how many Ponzi schemes are in play.  That's the government's solution, to just make another one.  We may be lucky to kill off this one.  Just wait for the others, including SS and Medicare.

Bernie Madoff should've gotten a job as a White House advisor.

Sun, 02/13/2011 - 19:00 | 958301 Cleanclog
Cleanclog's picture

Right-ee-oh!  State and local municipalities are committing intergenerational theft by borrowing to cover costs of labor already provided via pensions, rather than paying for that (or setting it aside) at the time the labor was utilized.

Watch out for the VRBOs that won't be able to secure new LOCs when their current ones expire.

Mon, 02/14/2011 - 10:50 | 959451 RKDS
RKDS's picture

Looks like you got junked by another "I'll pay you on Tuesday for labor performed today" thief.

Sun, 02/13/2011 - 19:04 | 958309 robobbob
robobbob's picture

would people please make up their minds

Should the Feds continue to pass out $ we don't have to states who have refused to wake up to the deadly serious situation they are in, and thereby contribute to the destruction of the country,

or, do we cut them off, causing them to default quicker, requiring emergency support and a take over from the Feds, which will thereby contribute to the destruction of the country.

Which is it ZH?

Sun, 02/13/2011 - 19:13 | 958322 Trimmed Hedge
Trimmed Hedge's picture

I'll try behind door #3, please....

Sun, 02/13/2011 - 19:16 | 958329 Sean7k
Sean7k's picture

Agreed. These are two of many options- including default by the states and a budgeting and tax process that is balanced with savings for "rainey days". If states can't buy bonds, they will be on a cash basis- just like the rest of us. 

Sun, 02/13/2011 - 20:13 | 958418 topcallingtroll
topcallingtroll's picture

sounds good to me.

Sun, 02/13/2011 - 20:32 | 958462 bigargon
bigargon's picture

allow the states the ability to go bankrupt. we just can't go on piss out good money after bad. I some point the states and the federal government have to bit the bullet and cut,cut,cut.

Sun, 02/13/2011 - 21:08 | 958539 WestVillageIdiot
WestVillageIdiot's picture

"I'll try behind door #3, please...."

 

Isn't that the door that always shows the two goats eating grass, with a hot chick standing next to them?  Come to think of it, that might be the best we can hope for.  Bring on the goats.  We already have enough sheep in this country.

Sun, 02/13/2011 - 21:39 | 958595 snowball777
snowball777's picture

Goats are very efficient at clearing brush and you can shear sheep.

You, on the other hand...

Sun, 02/13/2011 - 19:25 | 958338 Zero Govt
Zero Govt's picture

i can't speak for everyone on ZH but personally if California and New York descended into the sewer (where they belong) and a couple of hundred Democrats and their crones were burnt alive at the stake i'd consider it a fair, just and equitable end to State largesse 

Sun, 02/13/2011 - 19:45 | 958375 lunaticfringe
lunaticfringe's picture

Some lefty musta junked ya.

Sun, 02/13/2011 - 20:11 | 958415 Zero Govt
Zero Govt's picture

Yes 1 got you too, must take offence at being called "lefties" (touchy tossers aren't they?) though I can see why 2 junked me with the "burnt alive at the stake" comment... just as well i didn't mention posting all 200 pairs of their burnt bollocks thru Barney Franks letterbox as warning of what he's got coming for destroying the US property sector then!

Sun, 02/13/2011 - 19:55 | 958392 Cleanclog
Cleanclog's picture

Cuz the Republicans have no fingerprints on this mess?

Both parties suck.  Self promulgation has gone over the top.

Sun, 02/13/2011 - 20:37 | 958472 Fred Hayek
Fred Hayek's picture

Oh, they both suck but there are degrees of even suck.  I mean, look at the states that have the most problems, Cali, Illinois, PA etc.  Heavily weighted toward the blue in their state reps and state senators even if they have some governors of both parties.  Then look at the states that have the least trouble.  Mostly bright red mountain and plains states.  State workers and their lovely gold plated pensions are definitely in the blue column as well.

Sure, both parties deserve blame.  The repubs only talk a decent game and seldom act on it.  But the dems don't even talk a decent game.  Blanket equivalence doesn't tell the real story.

 

Sun, 02/13/2011 - 21:12 | 958542 WestVillageIdiot
WestVillageIdiot's picture

That is a good rant.  Both parties suck but blaming the Repubs for an equal share in the pension and public union mess is very dishonest.  Now if we want to discuss the MIC we can probably place more blame on the Repubs.  Fair is fair and dishonesty is still dishonest.  They might be equal in their overall suck quotient but they have different areas where their suckiness really excels. 

Mon, 02/14/2011 - 07:23 | 959198 Miles Kendig
Miles Kendig's picture

Oh really?  So, there are degrees of acceptability in gang rape these days?

Sun, 02/13/2011 - 20:02 | 958401 EscapeKey
EscapeKey's picture

A few select quotes from Carroll Quigley's "Tragedy & Hope". I can't recommend this book highly enough.

"When the business interests, led by William C. Whitney, pushed through the first installment of civil service reform in 1883, they expected that they would be able to control both political parties... and allow the electorate to believe that they were exercising their own free choice", page 73.

"This (political) struggle... had always been viewed as a struggle between Republicans and Democrats at the ballot box in November. Wall Street, long ago, however, had seen that the real struggle was in the nominating conventions the preceding summer.", pg 1246.

"the National parties and their presidential candidates, with the Eastern Establishment assiduously fostering the process behind the scenes, moved closer together and nearly met in the centre with almost identical candidates and platforms, although the process was concealed, as much as possible, by the revival of obsolescent and meaningless war cries and slogans.", page 1247.

Sun, 02/13/2011 - 22:02 | 958635 midtowng
midtowng's picture

I'm guessing that you aren't aware that California and New York pay more federal taxes than they get back. Unlike most southern states.

Sun, 02/13/2011 - 22:20 | 958667 Fred Hayek
Fred Hayek's picture

That's kind of a phony statistic because of social security.  On the east coast, I bet a lot of states have officially negative net situations and that Florida has a wildly positive one for that reason. 

One might guess that in Cali, because of the still ridiculously high real estate pricing, a lot of retirees sell and leave and go to perhaps AZ or somewhere else to buy a cheaper condo than they'd find in CA.

The context of the situation is more complex than simply CA and NY paying more taxes than they get back.

 

Sun, 02/13/2011 - 22:47 | 958701 Larry Darrell
Larry Darrell's picture

That's why people love statistics, because you can make them say whatever suits your fancy.

Now I ask you:  what do those states produce?

Sure, New York pays a lot in taxes.  But that's because the financial district takes money from all over the country and redistributes it as it sees fit.  What does New York PRODUCE?  And I mean, what USEFUL PRODUCTS come from the state at large?

The way I see it, all the money they pay in taxes is, by and large, money taken from the rest of the country.

Mon, 02/14/2011 - 07:20 | 959194 Miles Kendig
Miles Kendig's picture

Another person who believes the entire state of New York can be found on Manhattan Island.

Sun, 02/13/2011 - 19:25 | 958341 caconhma
caconhma's picture

We cut them off, causing them to default quicker, and to face the reality.

States cannot spend well above their means forever.

They must, for a beginning,

  • Cut sate employment by 10-20% across the board
  • Convert their pension systems into 401K-accounts and raise the retirement age to match the SS one
  • Cut compensation @ salaries below equivalent benefits & pays in a private sector
  • Stop all support programs for illegals
  • Stop all discretionary "feel good" programs
  • Stop flooding failed educational system with money
  • Stop endless subsidies for lazy and dishonest 
Sun, 02/13/2011 - 21:14 | 958546 WestVillageIdiot
WestVillageIdiot's picture

Why won't you think of the children?  You must hate children if you question government programs.

That is my "liberal" impersonation.  I hope I did it well. 

Sun, 02/13/2011 - 20:11 | 958417 topcallingtroll
topcallingtroll's picture

What emergency support?  The republicans have been considering how to let states go bankrupt.  No takeover from the feds.  A clean, simple default.

Sun, 02/13/2011 - 20:30 | 958458 snowball777
snowball777's picture

50 Icelands comin' right up!

Sun, 02/13/2011 - 21:15 | 958547 WestVillageIdiot
WestVillageIdiot's picture

49

I think North Dakota is doing okay.

Sun, 02/13/2011 - 21:33 | 958582 snowball777
snowball777's picture

Puerto Povrecito, Papi!

Mon, 02/14/2011 - 07:14 | 959185 Miles Kendig
Miles Kendig's picture

A clean, simple default.

ROFLMAO.  Since when do the feds have the authority to amend state constitutions?  Sounds like some socialist, central planning mumbo jumbo.  That's why its the "deficits don't matter" republicans proposing it, with a wink and a nod for those other socialists, the democrats.  Another reason Bernanke and his print at all costs destruction of America, and indeed the world has been steadfastly supported by both parties leadership.

Besides, the fed have been taking over.  All the unemployment being payed out is just a loan from the feds, like hundreds of other shred cost programs.  Are you proposing the states default on the debts to the federal government as well, or just to their citizens and businesses while placating the feds?  Sounding more and more like Ireland or Greece and the EU/ECB/IMF to me than responsible self government.

No muss default.  hahahahahahahahahahaha  How totally clueless.

Sun, 02/13/2011 - 19:12 | 958324 Sean7k
Sean7k's picture

A thorough reading of government financing of public works, the development of cartels and sanctioned monopolies and other corporate incentives during the first great depression are identical in purpose to the ones being used in the second great depression- wealth transfer and the consolidation of markets for selected industry insiders. 

Same game, next generation players. 

Sun, 02/13/2011 - 19:17 | 958332 Rotwang
Rotwang's picture

Intergenerational transfer of debt obligations is the name of the game.

Unfortunately it ends when the wee ones no longer step up to the plate, or their slave-ground has been 'off-shored' so there isn't even a place to pitch.

Debt secured through the power of taxation (police-power), attempted past the point of the inherent carrying capacity will default, regardless of backstop.

Sun, 02/13/2011 - 19:30 | 958349 Everybodys All ...
Everybodys All American's picture

Let each state raise their taxes to pay for these commitments. Sir asshole himself Jamie Diamond said that a simple 1% increse in taxes in  California will pay for their deficit. Do it then and stop asking everyone else to pay for it.

Sun, 02/13/2011 - 19:54 | 958390 snowball777
snowball777's picture

That'd be a 1% increase on corporate tax rates, not personal income taxes...and said corporations continue to arbitrage between states, threatening capital flight if they don't get a pass (as if they could somehow find the same talent in NV that they enjoy in CA).

I'd love to see CA call their bluff, but we're gerrymandered beyond recognition and the Pugs in this state would never let that happen.

 

Sun, 02/13/2011 - 20:41 | 958476 Fred Hayek
Fred Hayek's picture

I'm sure Legs Dimon would also like to see all the ridiculous "Double Dutch" and other loopholes closed where companies like Google <wink> send their profits to Holland and Ireland and elsewhere and end up paying much less tax than the guy who owns 4 dry cleaning stores in the suburbs.

Sun, 02/13/2011 - 19:37 | 958355 prophet
prophet's picture

Something tells me a stabilization will come via the short term market.  It was the first thing to disappear during the credit freeze and still needs to be addressed.  The post below  explains a bit about it.

The immediate, under-the-radar problem for the municipal -bond market is that borrowers relied on banks to backstop their credits and lower short-term funding costs when the credit crisis shut the door on auction-rate preferred financing.

Call it a legacy issue.

While most municipal borrowings are long term in nature, issuers still have short-term obligations that need to be rolled over. And while most of the states' ratings remained intact during the crisis, investors demanded higher interest on the money they were loaning to even the strongest borrowers. To keep borrowing costs from soaring, municipal borrowers sought big bank letters of credit (LC) as backstop guarantees on the shorter- than- they- wanted variable-rate- demand obligations that they turned to.

According to Bank of America Merrill Lynch (NYSE: BAC), $109 billion worth of different kinds of credit backstops and guarantees will be expiring in 2011. Thomson Reuters estimates that $53 billion of those guarantees are bank letters of credit.

Of course, banks charge a fee for their letters of credit. But while they will likely increase the cost of their backstops significantly, no amount of fee income may be enough if they fear being left holding the bag on obligations that face potential default.

 

 

Found at:  http://moneymorning.com/2011/02/11/deadbeat-states-make-no-mistake-muni-bond-defaults-are-headed-our-way/

 

Sun, 02/13/2011 - 20:14 | 958421 Bastiat
Bastiat's picture

Good point.  But don't forget the vast amounts of municipal debt that was issued floating rate (short) and swapped to fixed!!  This is the derivatives bomb buried in the municipal finance landscape!!!

Sun, 02/13/2011 - 20:26 | 958448 topcallingtroll
topcallingtroll's picture

I thought it was the other way around, but whatever it was you can be sure goldman is on the right end of it and the states and municipalities are on the wrong end.

Sun, 02/13/2011 - 19:45 | 958372 prophet
prophet's picture

BAB needs to end as previously discussed.  It does not help the municipalities and is a way to begin a wealth redistribution program by ending the tax break, taxing the rich more, spending more at the federal level, and leaving the states to figure out how to raise funding out of a shrinking base that is being pillaged at the federal level.  

Sun, 02/13/2011 - 20:05 | 958407 perchprism
perchprism's picture

 

"..the key of which is that spending does not equal saving..."

 

But I have here my grocery receipt from Food Lion saying that today I saved $8.71.

Sun, 02/13/2011 - 20:23 | 958435 Zero Govt
Zero Govt's picture

you 'saved' $8.71 from what Food Lion would have charged you... it's relative.. relative to over-charging you... see they're playing 'Good Cop, Bad Cop' ...i wouldn't go there again it's a head fuk! ...you just want to shop for beer and beans not play mind games ah?

Sun, 02/13/2011 - 20:25 | 958444 topcallingtroll
topcallingtroll's picture

Under standard clinton/obama definitions that is now a real savings.  I am sure the republicans think that way too.

Mon, 02/14/2011 - 07:00 | 959183 Miles Kendig
Miles Kendig's picture

Naww.  The republicans (in WDC mostly, but some other places as well, sad to say) believe deficits don't matter.  Or that was their reasoning when they last held all three branches of government.

Sun, 02/13/2011 - 21:20 | 958554 WestVillageIdiot
WestVillageIdiot's picture

"But I have here my grocery receipt from Food Lion saying that today I saved $8.71."

That is awesome.  But you should have spent even more.  Just think  about the truly awesome Valentine's gift you could have gotten the little woman, if only you had maxed out your credit card.  She could have had that diamond studded vibrator she's had her eye on.  I spend so much at Rite Aid that I was able to get my wife the vibrator and the matching red ball mask.  She is going to be so happy. 

Sun, 02/13/2011 - 21:37 | 958590 snowball777
snowball777's picture

Especially if she thinks they're for you.

Mon, 02/14/2011 - 01:46 | 958951 StychoKiller
StychoKiller's picture

Well, whatever floats your little man-in-a-boat! :>D

Mon, 02/14/2011 - 06:56 | 959181 Miles Kendig
Miles Kendig's picture

Proving their contention that consumers such as yourself pay attention to such nonsense

Sun, 02/13/2011 - 20:29 | 958441 topcallingtroll
topcallingtroll's picture

I am really surprised that anyone expected BABs to be re-started.  The republicans have made it clear they would rather set up a mechanism for state bankruptcy.  There will be no bailout.  I am sure that failure to restart BAB's was priced into the market.  There can't be anyone out there who has listened to the republicans who could be surprised by this.  There will be no state bailout either.  Bernanke has made it clear.  If there is a QE3 it will not be municipal bonds.  He said in his question and answer session before congress that he is not allowed to bail out the states and even if he were allowed to he would not do it. QE3 will not be a state/municipal bailout.  Bernanke may be ready to quit after qe2 and let a little deflation scare help prices and the market adjust a little.

The states that like to spend money can raise taxes and cut services or they can float higher interest bonds.  This is going to be very fun for me to watch the blue states squirm a bit.  I am looking forward to all these under productive and overpaid bureaucrats to be fired and their pensions cut.  Strange how they always close the washington monument, or fire the police and firefighters.  No one ever says "hey maybe we should defer office furniture purchases, or end free cell phones, or fire a few more administrative assistants."

Sun, 02/13/2011 - 20:29 | 958454 snowball777
snowball777's picture

Sure, his honesty about such things is known far and wide.

He's not monetizing debt don't-cha know.

Sun, 02/13/2011 - 20:44 | 958485 Fred Hayek
Fred Hayek's picture

Exactly.  He's not monetizing debt and we're indulging in quantitative easing in order to lower interest rates.  And now that those interest rates have gone up, that *proves* that it worked!

Ben Bernanke, destroying your economic future for over a 25th of a century!

Sun, 02/13/2011 - 21:23 | 958561 WestVillageIdiot
WestVillageIdiot's picture

"No one ever says "hey maybe we should defer office furniture purchases, or end free cell phones, or fire a few more administrative assistants."

 

You hate filled person.  How dare you question the ability of local governments to hand out free cell phones.  What would those people do without those free cell phones.  How can they drive their Escalades and talk on the phone without that government assistance?

Sun, 02/13/2011 - 20:27 | 958450 buzzsaw99
buzzsaw99's picture

Build America Bonds Bitchez!

Sun, 02/13/2011 - 21:06 | 958534 Hedgetard55
Hedgetard55's picture

Financial Armageddon will come before the end of our first Down Low President's term.

Sun, 02/13/2011 - 21:21 | 958555 apberusdisvet
apberusdisvet's picture

Ca, Il, Ny are the poster children for the radical progressive full bore entitlement societies. The problem with this Utopian dream is that the Marxist-in-charge is now able to put the final touches on the Cloward-Piven strategy and produce the Revolution that Trumka, Stern and  the rest of the uber-lefties so ferverently desire.

Sun, 02/13/2011 - 21:26 | 958568 WestVillageIdiot
WestVillageIdiot's picture

I marvel at the fact that the rest of the country allows this state, especially the Wormy Apple, to syphon off so much of the wealth of the nation.  The fact that anybody in a flyover state thinks that the bailouts have benefited their state in proportion to the benefit of Manhattan just floors me.  Isn't it funny how Manhattan real estate prices have dropped so little?  I wonder why that is.  Even Jersey and Long Island have fallen much more, ditto for Greenwich, CT.  The center of the inter-generational thievery is located where Broad Street and Water Street come together. 

Sun, 02/13/2011 - 22:01 | 958634 props2009
props2009's picture

Axel Weber makes his final annoucement. I am standing down for ECB

http://dawnwires.com/investment-news/weber-makes-a-public-annoucement-he-will-stand-by-for-ecb-chief/

Sun, 02/13/2011 - 22:03 | 958641 plocequ1
plocequ1's picture

Here, Build this.

Sun, 02/13/2011 - 22:10 | 958650 snowball777
snowball777's picture

Okay...what scale is that model?

Sun, 02/13/2011 - 22:51 | 958693 Bobbyrib
Bobbyrib's picture

http://www.taxfoundation.org/research/show/266.html

Damn the blue states at the top of this list. Enjoy your subsidies you big government hating hypocrites.

Nevada and Texas are the only red states I see on the list getting back less than they put in regarding federal tax dollars. If you look at the bottom of the list you will notice the states whose finances are in trouble and I don't think it is any coincidence.

 

Mon, 02/14/2011 - 00:08 | 958822 robobbob
robobbob's picture

footnotes indicate that they include SSI payments. reduces usefullness of meaningful comparisons, unless no one moves after retiring, especially from big tax blues to low tax reds.

meaningless statistics without in depth collection criteria.

 

 

 

Mon, 02/14/2011 - 07:47 | 959196 Bobbyrib
Bobbyrib's picture

If that were the case, I wonder why the state of Florida is not getting back more money than they put in. I always hear people in the northeast speak of going to Mississippi to retire...yeah fucking right! Try again.

You did notice when the Republicans won back the House and they discussed getting rid of pork spending some of them rejected the idea? Southern representatives are princes of pork. If you live in a red state other than Texas, or Nevada enjoy the subsidies. 

It's a shame the data wasn't profuced for the 2010 census yet:

http://factfinder.census.gov/servlet/GCTTable?_bm=y&-geo_id=&-ds_name=DEC_2000_SF1_U&-_lang=en&-mt_name=DEC_2000_SF1_U_GCTP5_US19&-format=US-19&-CONTEXT=gct

Here's 2000, enjoy.

 

 

 

Mon, 02/14/2011 - 19:31 | 961707 Bobbyrib
Bobbyrib's picture

Junked=Truth...sometimes it hurts.

Mon, 02/14/2011 - 00:11 | 958825 Ham Wallet
Ham Wallet's picture

You should check the demographics of those "big government hating" red states

Mon, 02/14/2011 - 08:58 | 959261 Bobbyrib
Bobbyrib's picture

Even if it were true that would only explain part of your argument.

Mon, 02/14/2011 - 07:23 | 959199 Bobbyrib
Bobbyrib's picture

That's actually the map, I was looking for. I found it in the past, but couldn't bring it up. Thank you.

Mon, 02/14/2011 - 01:52 | 958963 StychoKiller
StychoKiller's picture

You provide a good argument for denying ALL Federal Govt Subsidies to the states.  It thus seems only fair that the States stop collecting taxes for the Federal Govt as well!  Bottom line:  The Govt, at ALL levels is too large!

Mon, 02/14/2011 - 07:21 | 959197 Bobbyrib
Bobbyrib's picture

Being in the state that receives the lowest amount of tax dollars for what I pay in, I agree.

Mon, 02/14/2011 - 02:15 | 958988 dumpster
dumpster's picture

hatch never let a good tap dance get in the eay of political theater,,  on the money jets into 2008 underbush  ,, he voted to print then when the heat was getting hotter ,, gee wizz  hatch mutured ,, i made a mistake ,, like a 2 trillion dollar one ,, as he excuses him self \and  goes in to forced retirement with a couple three four million in accounts not spent on elections ,, and his fancy 160,000 retirement ..

 

maybe he needs to be billed for the  two trillion divided by the number of senators ,,

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