Posted on 04/23/2009 10:52:56 AM PDT by george76
When Warren Buffett speaks, it’s usually worth paying attention. This time, the Oracle of Omaha is voicing concerns about the ability of some battered local and state governments to pay off their debts. The idea of cities and states facing insolvency is alarming for sure, and Buffett isn’t alone.
Moody’s recently assigned a “negative outlook” to the creditworthiness of all the nation’s local governments. The agency has rarely made such a sweeping generalization but said the magnitude of this recession warranted the move. The comments are the latest to have shaken the once-staid world of municipal bond investing.
Traditionally, muni bonds offered lower yields — usually about 20% less — than Treasury bonds, since their income isn’t taxed. But the group was crushed last year...
(Excerpt) Read more at smartmoney.com ...
Then the Univ. of NC system is going to owe me a building!
Canal bonds.
Yes, they can! Everything is posssible in the "Era of Big Government", "Era of Big Brother Obama". Yes, we can!
If it’s the freshman dorm, you won’t want it.
This discussion is prompted by a recent fedgov proposal to establish an insurance program, to provide default insurance for muni bonds at rates lower than the current market.
Question: if you were a city governed by a bunch of nitwits - take Denton, Texas for example - and you found you could get insurance that allowed you to default on your bond obligations with no penalty, would you bother to pay back the bonds?
Ergo the concern.
Yes, can and have. Police, fire and other municipal and state employees will be paid before bondholders.
Warren Buffet has some sort of racket involved in this.
I think...
He has part of Moody’s. And, he has an insurance company that insures Muni bonds.
I’m not sure ....but... the racket works that if you don’t buy the insurance, Moody’s will downgrade you.
...............
I know Buffet who supports the estate Death Tax has an insurance company that sells policies to cover the tax. If there were no Tax, then there would be zero business for his company.
Just so you know.
yes.
Irving’s pro-ACORN mayor Herbert Gears was begging the feds to buy our bonds
David Buckner was on Glenn Beck about a week ago and fainted on the set but was discussing how municipal bonds are in danger for the first time ever.
Ah, I didn’t know that.
So, just like Warren fighting the repeal of the estate Death Tax, he has a dog in this fight. If FedGov backs muni’s, what do they need to pay Warren for?
Wait a minute. What if all these years Warren was pulling an AIG and if a bunch of Muni’s go down, that Buffet could not cover them?
That the premiums that hundreds, thousands of Muni’s that have paid Mr. Democrat’s insurance company were worthless.
That FedGov, Obama, would have to BAIOUT WARREN BUFFET?
I love it. What a circus.
Wednesday, 9 Jan 2008
Warren Buffett’s Muni Bond Insurer “Tip-Toes” Into Market With $10M NYC Bond
Warren Buffett’s brand-new municipal bond insurer, Berkshire Hathaway Assurance Corporation, has sold its first coverage, backing a $10 million bond issued by New York City yesterday.
Ajit Jain, who runs Berkshire’s insurance businesses, tells the New York Times, “We’re tip-toeing into the market, doing very small deals. We want to see if we can get the pricing that we find acceptable to us. Once we find this is real, we’ll put in a lot more capital.”
http://www.cnbc.com/id/22573146/site/14081545
CA wants the Fed to guarantee their new bonds.
With tax revenues falling fast, many cities, counties and states are going to be in a world of hurt. Plus they are going to have to replace the losses in the pension plans..double whammy.
Remember Orange Co, CA in the 90’s?
Would You Buy a Bridge From Warren Buffett?
by Jesse Eisinger | See Archive
The famed investor is getting into municipal-bond insurance. Too bad the industry is a racket
The problem isn’t with the muni bonds themselves but with the insurance companies that guarantee them. These bond insurers—such companies as MBIA and Ambac—are supposed to ensure that the bonds are safe. Trouble is, the insurers themselves are in crisis. This makes it clear that the entire business of muni-bond insurance is a giant taxpayer rip-off.
http://www.portfolio.com/views/columns/wall-street/2008/02/12/Buffett-Into-Municipal-Bonds-Market
AKA another transfer of Gov’t money to the insiders of State and Local Finance. The lower rates simply represent another subsidy and further intrusion into the Markets by those who think they have a blank check - And, unfortunately, they do!
So basically the State Government of California, it itself won’t back the bonds, it wants Podunk, Idaho to pay via FedGov?
Yeah. Right.
A year or two of more of this and the average American is going to have a more ripped up arse than Bwarny Fwanks boy friend.
Sub Prime default insurance anyone?
(You know, because government is so good at pricing things.)
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