[bratticus]

Muni Bond Sales Drying Up as States Face $42 Billion Shortfall

By Jeremy R. Cooke and Michael McDonald

Dec. 31 (Bloomberg) -- The worst year for municipal bond investors since 1999 may further reduce demand for tax-exempt debt just as state governments face the biggest budget deficits in at least a quarter-century.

State and local borrowers sold $385 billion of long-term bonds through yesterday, down 9 percent from 2007, according to data compiled by Thomson Reuters. Next year, sales will drop more than 6 percent to about $364 billion, the least since 2004, based on an average of estimates from London-based Barclays Plc, Merrill Lynch & Co. and Loop Capital Markets LLC.

The combination of the worst financial crisis since World War II and the collapse of the $330 billion auction-rate debt market will leave 41 states and the District of Columbia with shortfalls just as financing sources diminish. Merrill Lynch’s Municipal Master Index, which tracks 14,000 bonds, fell 4.6 percent this year, the first decline since a 6.34 percent drop in 1999. The biggest underwriters are merging or leaving the business.

“It’s been an absolutely horrible year,” said Robert MacIntosh, a money manager at Eaton Vance Management in Boston, who oversees $17 billion in tax-exempt bonds. He said he’s never seen such turmoil in the $2.67 trillion municipal debt market during more than 25 years in the business.

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Way more juicy stuff in this article.

[bratticus]

Default fears weigh on U.S. muni bond market

By Joan Gralla - Analysis
Reuters
Fri Dec 5, 2008

NEW YORK (Reuters) - U.S. states and local governments are heading into dangerous territory as a strained municipal market forces them to delay deals while fund managers worry that a lasting recession may lead to defaults.

The prospect that cities, hospitals and transportation systems may be unable to pay bondholders frightens investors drawn to the $2.7 trillion market by default rates of less than 1 percent.

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Getting Ready For Bailing Out The States And Cities

Douglas A. McIntyre
24/7WallSt
January 02, 2009

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States can't print money for their obligations like the US government can. That gets to the heart of the matter. The federal system can either take on critical programs for schools, infrastructure, and social assistance or it can loan states and municipalities money which they are unlikely to be able to pay back for years. That is very different from banks or car companies. A state in receivership is a state which may be unable to educate its population or support the jobless and the homeless.

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[Snowrunner]

The irony of this is that as the US government takes on these obligations it will increasingly look like the enemy it was created to destroy--communism.

There was no Communism in the 18th century, if that would have really been the reason for the Government (read, the country) to exist it should have disbanded in 1991.

You're confusing marketing with reality

[bratticus]

This is like one of the smallest feedback loops in the system:

people aren't buying municipal bonds because the states look insolvent -> <- the states are losing money because people aren't buying municipal bonds

[shortonoil]

This is like one of the smallest feedback loops in the system:

The NYC POA had a bond auction a couple of weeks ago, not one bidder showed up. When these localities have to roll their bond debt over, because they never planned on actually paying it off, the fireworks will really begin. The Auction Rate Bond market is dead, and so are most local governments.

[bratticus]

Oklahoma index shows state trade growth, but strength is likely to falter
... Oklahoma is one of only two states reporting business conditions in December above neutral, according to the latest Mid-America Business Index released Friday by Creighton University in Omaha, Neb. ...The second state with neutral growth was North Dakota, which saw its index slip to 53.9 from 55.7 in November.

=== Florida

South Florida tourist season opens with empty hotel beds
... Revenues from a countywide hotel tax are down 1 percent since September, and room revenues took their biggest dive in at least five years: down 10 percent.

Solving Florida's budget problems could cause pain
... The budget totals $66.3 billion, $7.4-billion less than was spent two years ago.

Almost one in 10 Floridians are on food stamps
... In the last two years, the number of Floridians on food stamps has increased more than 40 percent to 1.7 million.

Shoplifters of the World Unite
... retail theft cases in Naples[, Florida] are up more than 37% this December, compared with the same time last year.

Fla. prison population tops 100,000 for 1st time
... Florida's prison population has topped 100,000 for the first time, making it only the third state in the nation to break into six digits after California and Texas.

At overcrowded Florida prisons, some inmates may just camp out
... Faced with a budget deficit of $2.3 billion, Florida is saving money by buying giant tents to house prisoners at nine of its 137 facilities.

=== California

California panel halts $3.8 bln infrastructure loans
... California State Treasurer Bill Lockyer said a panel was forced on Wednesday to halt $3.8 billion in loans for infrastructure projects because the state needs the money to pay for vital public services.

State crisis halts 2,000 public works projects
... In addition to roads, schools and housing projects, parks, veterans homes, fire stations, courts, prisons and environmental cleanups will be affected.

Schwarzenegger steps up release of budget plan
... California is now on track to run out of money as early as February.

State controller suffered mild heart attack
... As controller, Chiang oversees California's cash flow, which is in danger of running short in coming weeks.

Inmates in Calif. prison drinking contaminated water
... State has no plan, funding to reduce high arsenic level

=== Texas

Areas eager for FEMA loans
... Galveston City Manager Steve LeBlanc has projected a $3.6 million budget shortfall for this fiscal year, a sum that could increase by $5.5 million because of property appraisals expected to drop by 30 percent. Last week, police and firefighters' unions agreed to accept a 3 percent pay cut.

West Texas poverty rate rising
... "Most of the figures we used were from 2005 and 2006 when, by most accounts, the Texas economy was booming," said Frances Deviney, director of the Center's Texas KIDS COUNT and author of the study. "With the current economic crisis, I can just imagine what we are going to see two or three years from now when we analyze the 2008 and 2009 data."

2008 Brazoria County year in review
... “They are <b>incompetent</b>,” Cameron said of the EDC board. “They’re halfway through a $6 million project and they still don’t have the plans.

Texas tries to cut losses in Accenture settlement
... thousands of Texas children lost their health insurance in a call-center labyrinth, uncounted others seeking food stamps were confounded by a computerized application system and other Texans lost their social safety net in a morass of malfunctioning software, bad planning and confusing directions.

Texas prison officials cancel test to jam cellphone signals
... Prison officials said they determined after consulting with the state attorney general that the test by Florida-based vendor CellAntenna would violate federal law against jamming radio transmissions.

Texas jail closes after recliners found in cells
... A jail in northern Texas has been closed and its nearly 60 inmates transferred as authorities investigate what they call dangerous conditions for jailers and those behind bars — including cells that locked from the inside or contained recliners.

[patience]

Indiana has a problem with unemployment funds.
Eying Federal help

Somewhere I read that the $2 billion we had in January 2008, is down to $93 million, with 50,000 NEW claims/month. A neighbor has waited 10 weeks after filing, and still hasn't received his first check. This could be due to the state contracting out claims to 2 separate companies, one for administration, and one for claims service. The governor is reported to have said that the state is solvent, and has money in other funds, but that the original appropriation is about used up. Some of us wonder if this was a damage control statement, or anti-panic propaganda.

In any case, the manufacturing sector is in bad shape here, and getting worse, adding to the miseries to come.
12,800 jobs lost That was in November alone. Better be finding some money for unemployment, huh?

[DaleFromCalgary]

Come to Alberta, eh? In 2009, the budget surplus is expected to be only a billion or so.

From http://en.wikipedia.org/wiki/Alberta

"Albertans are the lowest-taxed people in Canada, and Alberta is the only province in Canada without a provincial sales tax"

[bratticus]

[flash width=425 height=344]http://www.youtube.com/v/CqOJZaK5Kb4[/flash]

As a recession in the U.S. continues to hinder all facets of the economy, many states now say that their unemployment budgets have reached drastically low levels. Kelly Wallace reports from New York.

[bratticus]

Come to Alberta, eh? In 2009, the budget surplus is expected to be only a billion or so.

From http://en.wikipedia.org/wiki/Alberta

"Albertans are the lowest-taxed people in Canada, and Alberta is the only province in Canada without a provincial sales tax"

Get crucial--Alberta's oilsands are history.

Once-booming oilsands face uncertain future

EDMONTON
The Canadian Press
Dec 26, 2008

Thousands of workers from as far away as the Philippines are watching their jobs in Alberta evaporate as the richest oil boom in the province’s history deflates.

Sinking oil prices have forced skittish investors to hedge their bets on half a dozen multibillion-dollar oilsands projects, leaving one of the key engines of Canada’s economy teetering on an uncertain future.

Ben Stacey, a pipefitter from Newfoundland, was making as much as $70 an hour in the oilsands when he was blindsided by sudden layoffs.

“You can make $70,000 up there in three months,” Stacey, 54, told The Canadian Press from his home back in Grand Bank. “If the price of oil keeps on dropping, you’re going to see a lot of Newfoundlanders on unemployment here and a lot of people selling their trucks.”

The scramble to mine tar-like bitumen and refine it into synthetic crude stopped abruptly after oil prices, which had soared to US$147 in the summer, tumbled below US$40.

“The economy in our town generally depends on what happens in Alberta because of the work shortage in Newfoundland,” Stacey said. “So as Alberta goes, that’s the way we go here in the small towns.”

The province that has been the envy of the rest of the country for years is not doing so well these days. After 15 consecutive massive surpluses, Finance Minister Iris Evans admits Alberta could be heading for a deficit in 2009-10. That’s still relative, however, since the province has billions in the bank that have been saved in case of just such a shortfall.

The steady stream of workers that had been pouring into northern Alberta reversed this fall as nearly every major project was delayed, cancelled or scaled back.

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“The gold rush is over,” said a recruiter, who asked not to be identified, for a large multinational firm. “Up until four or five months ago, there were shortages in pretty much every trade,” he said. “The higher-paying jobs seemed to dry up all at once this fall, as did the need to bring in people from other provinces and other countries.”

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A recent forecast by the Canadian Federation of Independent Business suggests expectations among small businesses in Alberta are approaching a record low.Something else is different in 2008. The oilsands have been facing a dreadful image problem. International media have talked about how developers are “raping” a swatch of land the size of Florida. And environmentalists in both North America and Europe have taken aim.

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[flash width=425 height=344]http://www.youtube.com/v/F54rqDh2mWA[/flash]

[Serial_Worrier]

But but they told me it was all going to be ok as long as I kept buying cheap foreign goods!

[bratticus]

But but they told me it was all going to be ok as long as I kept buying cheap foreign goods!

It was. Why did you stop?

[Serial_Worrier]

But but they told me it was all going to be ok as long as I kept buying cheap foreign goods!

It was. Why did you stop?

Because I tapped out on my credit cards and am living at homeless shelter? Body lice is a real problem right now.