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’Meredith Whitney and the muni fifth dimension
Bloomberg has tracked down Meredith Whitney, bought her scrambled eggs, and demanded an explanation.
In an article out on Tuesday, Whitney is asked about her prediction that “You could see 50 sizable defaults,
A pause in the muni madness
Another day, another report of municipal bond outflows from mutual funds. From Reuters on Wednesday:
The mass exodus of cash from municipal bonds accelerated to a record outflow of an estimated $5.7 billion in the week ended Jan.
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,
Muni mayhem, charted
Recent action in the municipal bond market … from The Bond Buyer:
And some historical context from Deutsche Bank:
Ouch.
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:
Municipal nut, meet your sledgehammer
What’s good enough for GM is apparently good enough for California and Illinois.
That’s the argument made by University of Pennsylvania law professor David Skeel in an op-ed in Tuesday’s WSJ:
Governors across the country are making similar promises [to balance budgets],
Muni-ETFs at the Vanguard
Sign-of-the-times news from the municipal bond world on Thursday (report from Reuters):
Vanguard Group canceled plans to open a line of tax-exempt bond exchange-traded funds as municipal bond prices tumbled and index tracking concerns hit competitors’ ETFs.
Changing China’s biggest bank account?
To tell the story of China’s biggest bank account it helps, perhaps, to start with a story about certain, smaller, Chinese bank deposits. So. Meet Zhang Meifang.
Ms Zhang is, or rather was, an official at the Jiangsu Province Finance Bureau.
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:
Ill(inois) behaviour in the municipal markets [updated]
Sing along with us:
From a wilderness of prairies, Illinois, Illinois,
Straight thy way and never varies, Illinois, Illinois,
Till upon the inland sea,
Stands thy great commerical tree, turning all the world to thee,
A two-tiered municipal bond market?
Never mind two-tiered government bond markets in Europe — what about two-tiering in US municipal debt?
That’s the implication from the WSJ on Monday morning and from CBS’ 60 Minutes report on state finances on Sunday evening.
Good luck, Mr Gross
Pimco’s Bill Gross last week poured $4.4m of his own money into the municipal bond market in the States — which would be, you know, that thing that’s been tanking ever since the Build America Bond programme looked set to expire.
Europe’s America bonds
Think the Build America Bonds story is just about the US?
Think again.
One of the very reasons the subsidised bond scheme was created as part of the $787bn 2009 American Recovery and Investment Act,
BABs expiration: still on schedule
Monday night’s compromise on extending the Bush tax cuts and unemployment insurance also kept alive policies that were introduced in the 2009 stimulus package — but one was conspicuously left out.
From Bloomberg Businessweek:
Slightly less deficient deficit commission [updated]
Despite narrowly losing to Jean-Claude Trichet in today’s global debt-ridden excitement stakes, the National Commission on Fiscal Responsibility and Reform continues to stumble towards a final vote on Friday.
Dispatches from Euroland
Forget central government debt, what about local?
Out today — a note by Morgan Stanley’s European economics team, led by Daniele Antonucci, discussing ‘non-central government liabilities and budgets.’
Here’s what they say:
Orange County tells Harrisburg bankruptcy not so bad
On Wednesday, the mayor of Harrisburg — the capital of Pennsylvania, for those not au fait with US municipal geography — appeared on CNBC to discuss the gaping hole in the city’s finances.
The NY Times has detailed how Harrisburg torched its budget:
Bond insurer blow-up fallout, Las Vegas Monorail edition
Some excellent reporting from Bloomberg on the side effects of Ambac’s part-seizure by its regulator – and for once, for the story has nothing to do with credit default swaps.
Here’s Bloomberg:
March 29 (Bloomberg) — Holders of bonds sold by the Las Vegas Monorail Co.
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:
I.O. Economic Girlie Men
A rather flippant title perhaps for a post highlighting the impending bankruptcy of the government of California (the economy over which said state presides being the eighth largest in the world). But then again,
CDS wrap: The week in perspective
This CDS report was written by Markit’s Gavan Nolan
The US municipal bond market is not renowned for its headline-catching abilities. Debt backed by the revenues of US states is viewed generally as a safe,
Another reminder that munis are not bulletproof
The Markit MCDX index – an indicator of the perceived risk of investing in the municipal bond market – on Wednesday traded wider than a similar index of US investment grade bonds.
This is the first time that buying protection on US municipal debt via the MCDX index,
UBS quits the US muni business
UBS is getting smaller by the minute.
The Swiss bank, not content with selling off its subprime mortgage portfolio, slashing a few thousand jobs and repeatedly losing a ton of money, has decided to exit the US municipal bond business.