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Follow The Jefferson County Chapter 9 Negotiations Live
Earlier, we noted a release that the probability of what can soon be the largest US municipal bankruptcy in history, that of Jefferson County, Alabama, is 80%. On this painfully slow day (and in the aftermath of four 400+ DJIA point swings anything would be a snooze), those who wish to follow the hearing in real time can do so here courtesy of Birmingham News. While we have described the nuances in the past, the bottom line revolves around whether the proposed debtor plan which sees a 66 cents on the dollar recovery to the creditor committee led by JPM. If indeed there is only 20% chance of default avoidance, this will likely be the catalyst event that unleashes many other comparable muni Chapter 9 filings, which would now have a case study that not only it can be done, but how it should be done.
More about the latest news in the situation in the Birmingham News
h/t Cate Long
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This one's for the Meredith.
http://en.wikipedia.org/wiki/Meredith_Whitney
this things been going on long before mw knew what a muni bond was
This will be a "sell the news" event either way.
I agree. Asia is on holiday Monday, we get the sell jump this time. RUT is struggling, and there sure is a lot of short side volume today to be so quiet. Shhh.
Jefferson County Sez:
The Bernank Sez:
You just made work much more bearable. Lolz
Yo dog, give dat bitch one-a dem bailouts. Bitchez luv bailouts 'n shit.
its dem wascally white boys that are doing this to us. let's burn and pillage and take what is ours as a downpayment on dem reparations we is owed.
..
the chair recognizes the other chairs...
uh-oh...activity...
> ... painfully slow day
Thank you weekly opex for the regular dose of valium.
watching today's market is like watching paint dry...hope the action picks up into the close
edit: a stillness like death (thanks kierkegaard)
2:30 pm. The 'bots are back in town!
It was pretty bad today - Tyler was Twittering stuff like, oh look, someone bought a T-bill. ZZZ. Oh look, someone bought two ES contracts. ZZZ...
Is Wesley Mouch chairing the meeting?
10-1 they're all overweight.
Sewer Creditors
.66 cents on the dollar is still .33 cents too much !
I agree that we'll see a strong trend. And that this will provide something of a real template.
Now why, that being the case, do I think hundreds of muni's will nonetheless pay outrageous fees in every case for what is, if not now, then fairly soon, boilerplate work?
We should keep an eye on that, me thinks.
errrr...nobody is there....hello? Ohh the brunette stenographer is hot!
ALABAMA will lead the charge - time to stop tearing "Vote for Wallace" bumper stickers off of cars!
"Once you've had steak and fine wine, it's hard to return to ham and eggs."
That's what my Father says. He is UberFrugal and prepared for what he predicted would be an eventual "correction" ...although the pessimists call it a "deep recession." My boss cut salaries 10% (and later another 10%) and cut moderately back on benefits but we all agreed it was better then shuting down and firing everyone. This is how the private sector works. Unfortunately, there are several unions that don't want to yield so Chapt 9 is forced on them ...it is the "Great Persuader."
He also warned me again and again, "free money distorts the market and creates an Uber Bubble" referring to Zero down NINJA mortgages.
GL! to everyone. I am heading off to eat my ham and egg sandwich.
Oh come on ... don't be such a buzz kill! WE'RE IN THE MIDDLE OF A RECOVERY.
From the somber atmosphere, looks like a done deal.
this is america!!! they will be bailed out!!!! ZERO pct chance of bankruptcy!!!
Ok so they are off doing a backroom deal away from the cameras...typical govt.. Taxpayer to be screwed...again and again....
Everyone has seen the interview by Max Keiser with Matt Taibbi on Jefferson County's mess? He lays out a compelling case of fraud and bribery against Jefferson County by JPM and the corrupt political figures there. I know shocking, right.
sit there you drones and stand and salute when the other drones walk in. lol
For the love of god, and this one please be the bankruptsy that brings the house down.
The whole sorded mess just keeps on going?
Frankly at least if there were riots in the streets the right people would be hanging
its 1:30 CT.. has someone filed Ch. 9 yet?
Looks like Wall St. has gotten a room full of high-class hookers for the good-ole boys - all that I see is empty seats...
they are behind closed doors....bribing the officials and will come out with a grand deal that in the end will screw the people....banksters and politicians will make bank. Watch...magic deal before the day is done....corrupt as anything. Or humanity will shock me and do the right thing, default and kill all the bad deals in place, save the taxpayer. I hope for the shock, but expect the corrupt deal.
I hate it when I'm right....
You were right. Accept the deal but act like they don't want to.
do you think someone told them we were watching?
where everyone go?
Someone realized it was too ironic to have 4 county employees chatting around on the clock for hours on end waiting for a hearing about filing BK to start. They are now in a back room, still chatting, still on the clock.
They're waiting for the markets to close for the day.
+1
They will announce their decision promptly at 4:01 EST.
Can we read the tea leaf of a 4:01 announcement and guess what the decision is?
Nice chairs, etc. All gov't buildings should be quonset huts with folding chairs and folding tables simply because you know who is paying for them. I could sure put that money to better use, no need to get Imperial Roman...
For sure FIAT. Surely those tables and chairs could be sold off to meet the demands of creditors to keep the Ponzi going over the weekend.
Well we're movin on up, to the east side. To a dee-lux apartment in the skkyyyy
actually, I think this is the better song: http://www.youtube.com/watch?v=T5DnqW3F57E
They should remake it, only with the Bernanke and Geithner as the leads.
STFU and just say "Chapter 9, baby - suck it up".
searching twitter for #jeffco.. and the "deal" is 2.3B remaining in debt at 7.8%.. The old rate was 6.1%.. Don't know the old principal.
HAHAHAHA... Is this a good deal??? WTF??? Just file 9, and get it over with.
I'm about to get a boner - it's sounding like the council is going to give JPM the unanimous finger.
boehner*
What's awesome is that all this is over a sewer.. ironic.
The meeting is on. It doesn't look good.
$2.9b is the total amount to be borrowed. A 7.8% increase is immediate followed by a 7.8 increase in 6 months and a 7.8% increase 12 months later. 25% in 18 months. These increases are estimates contingent to the State agreements to their conditions.
The debate is focusing on all the unknowns, or contingencies, of which there are many.
For example, the proposal will require the State to legislate:
A reduced interest rate for repayment based on the State paying the difference.
Auth to fund a 1/4 billion dollar reserve should JeffCo fall behind
Auth to cover any losses that exceed the reserve should the reserve fail.
36% of the state is on food stamps and they are going to force this deal on all the taxpayers of the state? Incredible....are the people of Alabama even paying attention? Do they realize how bad they are being screwed? America is toast if this is any indication.
I doubt that even the entire state of Alabama will be able to absorb over $3 Billion in debt. I think it's going to be a mistake to get the state to basically sign onto the deal because this may be the debt debacle that broke the camel's back. Then the state itself would be facing certain Chapter 9 vice only Jefferson County.
What is amazing is that so far ALL of the council members have a solid handle on this shakedown of a deal. They may give local gov't a good name (ignoring for the moment that they got themselves into this mess to begin with)
default bitchez!
i find it hard to believe Sandra Little Brown is going to vote for this
WSJ is reporting that "Alabama County Expected to Avoid Bankruptcy."
http://online.wsj.com/article/SB1000142405311190400610457650455413837030...
Guess we'll find out here shortly whether their reporting is accurate or pure BS to calm people until the actual decision comes out.
Fuck the WSJ - Proposal Rejected - Unanimous.
listening to these guys and girls just seems to confirm they don’t really know, or maybe don’t really care what kind of obligations they got into, are trying to get out of, or are going to get into going forward. The mismatch of fee-hungry investment bankers and local talent is striking. What they can see is enormous pressure being brought to bear by the governor and others behind the scenes not to default, the pressure being measured by reduction almost 1/3 of the nearly $3 billion their original good ol’ boy dealmaking got them into, and that seems to be good enough. The ratepayers will pay, and if not them, then the rest of Alabama. God help us.
Meanwhile, some of Lynyrd Skynyrd must be rolling over: http://www.youtube.com/watch?v=ye5BuYf8q4o
Edit: In light of new info below ("Proposal just rejected”), if true, my bad. Good for them.
Re-edit: So they’ve decided again not to decide, albeit not accepting the supposedly final, final creditor proposal, but to take over the dealmaking w/ JPM et al. themselves, and coordinate with the Governor and legislature for another month-plus to wring out another 120-140 million and block 2 or 3 rate increases cumulating 18-25% in a year and 3% annually after that. I don’t know what the status of the currently scheduled payments is, but it’s beginning to sound like they’re well into flushing for free, although judging from reader comments at Birmingham News site, it also sounds like a lot of what was supposed to be built wasn’t, or wasn’t built well, so folks might want to be careful.
http://blog.al.com/spotnews/2011/08/jefferson_county_commission_de_8.html
I got the distinct sense listening to the council deliberate that there is some extremely shady shit going on at the state level. And their distrust of the governer's office came through in their remarks.
She has a point, they really are talking about taking the State down with them. Since the State will functionally be required to become a co-signer to the debt, the State is being asked to assume the $2.9b debt. So why not give the State a chance to vote down any one of the State's new requirements and extend this out to Sept 16th for the State legislators to vote? If any one of the 3 requirements fail to pass they can start all over.
They can then write up a new draft that imposes all the same requirements, but with the Federal Gov backing the State on any requirement they refuse to accept so we'll get 3 separate issues to be voted for passage by 4 legislative bodies and two veto powers. It should be 2020 by then and fiat inflation will make the whole matter moot.
This will continue to drag on until the bondholders call it quits, not the council.
BAM! Proposal was just rejected ... now the vote on whether to file bankruptcy or not.
Now these are REAL PATRIOTS !
what a joke..the Governor.. blah.. negotiate... transparency.. blah.
Can I ax ya what this will mean wiff my Social Security?
Delay bitchez!....again.......
This is nothing but kabuki theater. They are trying to act like they don't want to agree to the banks demands but it is preordained. Now that are all off to vacation. What a crock.
I think they are trying to use the leverage of bankruptcy to get an even better deal. It's going to be entertaining to watch the JPM city slickers roll into Alabamastan for a haircut right about scalp level by these unsophisticated country bumpkins!
They have set it up so that a small adjustment can be declared a victory. Someone took them in a back room and scared the bejeezus out of them. Something like "you don't want to be the largest bankruptcy in history, do you? You don't want to be the domino that's responsible for martial law in the streets and grandma having no heating oil, do you? Your bankruptcy will paralyze your city for years and will stigmatize your city forever. Your only choice is to keep paying"
They will agree to these terms, or something very close, keep screwing the people with debt repayments to bankers forever, and declare victory.
yep….too bad they don't have the balls (ovaries) to say fuckoff ...
When cheap credit is available, everyone goes full retard... but, when it comes time to pay, everyone becomes rather sophisticated. Curious.
Excellent point
insight of the year!
They were bluffing, they want to take another 30 days to negotiate. This is a joke.
I was hearing that the lowest sewer bill was well over $300 . There is no way that a middle-income home-owner or even a renter could absorb this if it was passed along by the landlord. This may also be a pitchfork and knives moment over paying an additional 10x the average sewer bill based on one of many fuck-you deals by JPM.
I propose yet another unfunded liability: CAP Crap Assistance Program
or combine the two
SNAPCRAP- Supplemental nutrition Assistance program and crap removal assistance program
It was really painful to watch the council deliberate over what to do because they're choosing between being bled dry or declaring bankruptcy. Either way they're screwed ... which is going to be extra difficult for some of the poorest people in the nation.
Many bankruptcy's will be coming up via the local and state govt..
The thing about this whole Jefferson County thing is that it is essentially the national problem being played out at the local level. Which is actually quite frightening if you think about it. Because if the problem were only at the national level, that would be one thing. But this reaches all the way down to the municipal level. These people on the Jefferson County council are doing precisely what our national legislators are doing. They're putting off making the tough decision. In the end, they will be forced to declare bankruptcy. The income is simply not there to pay for the debt obligations that the government has signed up for. To steal a phrase from Dylan Ratigan ... it's a mathematical fact. And the sooner they declare bankruptcy, the quicker and less painful it will be. But instead, these people just kick the can down the road as far as possible (a month in this case). First it was a week, then another week, now a month. It's sad because this is exactly what is happening at the national level.
IIRK this was a combination insider deal and totally non-necessary sewer boondoggle forced down their country bumpkin throats by some lofty-goals retard fed agency. Throw in the normal bribe the local fatcats this county got fleeced like a banana republic. Reminds me of E'gypt's natgas deal (what a deal).
2 obvious solutions by my way of thinking-
A- ask for a bill for payment in full then send it to the fed agency that forced this rip-off down their throats, then say it's no longer their concern.
B- stop paying the mortgage on the redundant and unwanted sewer. Let them come reposses the stupid sewer. They don't need it and nobody ever wanted it in the first place. Let the bloodsuckers have it back, why put the whole county in bk for something they don't need/want?