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’Michael Lewis and Meredith Whitney in muniland
Following his not-so Grand Tour of Europe, the esteemed vagabond financial scribe Michael Lewis has returned home to report on California for Vanity Fair:
In our opinion, it’s not as perceptive as his articles on Greece or Ireland but it’s still worth an Instapaper click.
Was demographics destiny after all?
Interesting USDA chart, pointed out by Big Picture Agriculture:
It’s from this data set. We’re interested in it, anyway. There’s an argument out there that falling Mexican emigration to the United States (caused in this theory by a crackdown on illegal immigrants) was a “missing”
LA Conduit-fidential [updated]
The Los Angeles Times and the Bond Buyer have done some interesting reporting in the last three weeks, shedding light on a dark corner of the municipal markets: conduit bonds.
What are conduit bonds? Not for the first time,
Comparing Greek apples to Californian oranges
Comparisons between the peripheral European sovereign bonds and US municipal bonds were ten to the nickel until their fortunes diverged in the last couple of months.
Noting that Greece and California “have been occasionally compared in the business media”,
Further further reading
For the commute home, where there is often such a thing as too much information, like the government warning on your favourite bottle of scotch,
- US IPO filings reach 2007 levels.
- When there’s no such thing as too much information.
Space, time and public pension black holes
Mad, bad, and dangerous to know — the response from states to the idea of Congress pre-emptively legislating for their bankruptcy.
In Monday’s Wall Street Journal, EJ McMahon of the Manhattan Institute adds to the criticism,
Bankrupt ideas for states
Is this how it starts?
The New York Times has splashed on whispers of backroom (mainly Republican) Congressional musings on ways for states to declare bankruptcy — an option not currently open to states under federal law.
Vallejo’s exit plan: cuts, more cuts and haircuts
Those who believe municipal or state bankruptcy is a clean and simple option may want to take a peek at the city of Vallejo’s proposal to exit court control of its finances. Details from Bloomberg on Wednesday:
Californian cuts, bonds and votes
California is biding its time in the 2011 municipal bond market.
The LA Times’ Money & Company blog on Monday reported that the state is postponing general obligation bond sales due in the spring until fall 2011:
Betfair goes west
We have asked the question before and we will ask it again; what price Betfair, when it lists on the London stock exchange later this month?
Well, if these slides from Numis Securities’ pre-float marketing presentation is anything to go by £1.5bn looks to be the ball park figure.
Fiscal anxiety crosses the pond
Here is an arresting graphic (click to enlarge):
The Bloomberg chart above shows the 5-year CDS for California, Illinois and New York, bond insurer Dexia added for context.
This chart is being circulated in the wake of a piece in Tuesday’s FT which focused on increased investor concern about rising local government debt in the US:
Dimon: We’ve hedged Greece. But California…
The attention of the world’s media has shifted in recent months toward Greece — small European country, population 11m, ‘difficult’ economic situation — and away from California.
Remember California? The US state,
Hamps across America
There’s a key word missing in the below press release on the US Treasury’s Hamp programme:
WASHINGTON – Today, the Obama Administration released the next monthly report for the Making Home Affordable (MHA) loan modification program.
California acts against State Street
California has launched a $200m legal action against State Street, accusing the institutional money manager of committing “unconscionable fraud” against Calpers and Calstrs, the largest US pension funds.
Strong demand for California bond issue
Strong demand for California’s latest debt sale has pushed down anticipated yields in a further sign of reviving credit markets. The state on Monday begins the sale of $8.8bn in short-term notes, less than three weeks after it stopped issuing IOUs to pay its bills amid a budget crisis.
California reaches budget deal
California lawmakers, their state broke and its credit rating shot, finally sealed the deal with the governor Monday night on a plan to close a $26 billion budget gap, the NY Times reported. The plan distributes pain through nearly every aspect of government services,
Arnie goes all Terminator on California budget-crisis
Da da duh da doo… da da duh da doo…
“The stakes have never been higher”
Da da duh da doo… da da duh da doo…
“Californians are worried about their childrens’ future”
Da da duh da doo…
Further reading
Elsewhere on Wednesday,
- An EU commissioner’s pipeline dreams.
- Could France’s special bond be its unravelling?
- Gasparino tells CNBC to stop protecting Goldman Sachs.
- On the matter of some rapidly disappearing central bank liquidity swaps.
California’s credit rating cut (again)
California had its credit rating cut for the second time in as many weeks over lawmakers’ failure to close a $26 billion deficit that left the most-populous U.S. state issuing IOUs to creditors, Bloomberg reports.
Fitch cuts California’s bond rating close to junk
Fitch slashed its rating on California’s general obligations bonds to triple B – two notches above junk – on Monday, after the state was forced to issue IOUs for certain payments while it frantically tries to agree a budget,
Wall Street gears up to trade California IOUs
Wall Street is gearing up to trade the registered warrants – de facto IOUs – issued by cash-strapped California, which last week declared a fiscal emergency amid a legislative stalemate over how to close a $24bn budget gap.
Arnie’s IOUs will pay 3.75 per cent
Bloomberg reports:
July 2 (Bloomberg) — California will pay an interest rate of 3.75 percent on IOUs it will begin using today to pay its bills, a panel decided, as Governor Arnold Schwarzenegger and lawmakers remain deadlocked over how to fix a $26 billion budget deficit.
BofA to accept Cali IOUs
News this week that California would begin issuing IOUs helped crystallise the enormity of the fiscal crisis confronting the state.
That the IOUs are now feeding into banks should serve as a reminder of just how intertwined the fortunes of the state and the financial sector really are.
California declares fiscal emergency
California, which is teetering on the brink of fiscal collapse, has printed the first batch of about 30,000 IOUs to be issued to people awaiting income tax rebates on Thursday unless Arnold Schwarzenegger,
Arnold Schwarzenegger declares “fiscal emergency” in California
California’s governer declared a state of “fiscal emergency” after lawmakers failed to agree on a budget plan by the deadline on Wednesday, Reuters reported.
From Reuters:
California’s lawmakers failed to agree on a balanced budget by the start of its new fiscal year on Wednesday,
California’s eighth largest city ponders bankruptcy
SFGate reports:
behind closed doors the Oakland City Council has discussed filing for bankruptcy protection in the midst of a $100 million budget deficit.
“We have asked the (bankruptcy) question because we wanted to know the impact,”
Muni investors still backing California bonds
The LA Times’ Money & Co blog noted on Thursday that holders of bonds issued by fiscally-challenged California are betting that “debt repayment will be a priority at the expense of other spending.”
Tom Petruno makes his case thus:
State by state stimulus
From an FRBSF article, showing funds received vs projected 2010 state budget gaps.
Some states, like New York, appear to be making profits while others, like California and Connecticut, look to be in much tighter spots (H/T Econbrowser).