Berkshire Hathaway Inc. terminated a large wager on the municipal-bond market five years early, The Wall Street Journal quoted a person familiar with the transaction as saying.
In a quarterly regulatory disclosure filed this month, the Warren Buffett-owned company terminated credit-default swaps insuring $8.25 billion of municipal debt.
The Journal said the early termination is deepening questions among some investors about the risks of buying debt issued by cities, states, and [...]
Stocks may have hit their peak recently and could be in for a rough ride in 2013, says Marc Faber, author of the Gloom Boom & Doom Report, although there could be a false rally in the late summer or early fall.
The Standard & Poor’s 500 stock index is trading around 1,405, down from a 52-week high of around 1,422, though fewer and fewer businesses are bringing in [...]
Via The Federal Reserve Bank of New York,
In our recent post on the state and local sector, we argued that structural problems in state and local budgets were exacerbated by the recession and would likely restrain the sector’s growth for years to come. The last couple of years have witnessed threatened or actual defaults in a diversity of places, ranging from Jefferson County, Alabama, to Harrisburg, Pennsylvania, toStockton, California. But do these events point to a [...]
By Joan Gralla
July 2 (Reuters) – U.S. states and localities have run up
more than $2 trillion of unfunded pension liabilities, Moody’s
Investors Service said on Monday, citing data on plans offered
by 8,500 local governments and over 14,000 individual entities.
The Wall Street credit agency said that according to its
estimate, the total liabilities for fiscal 2010 were more than
three times the amount reported by local governments.
“Pension liabilities are widely acknowledged to be
understated,” Moody’s Managing Director [...]
A “tidal wave” of defaults in the municipal bond market is still building and will eventually hit the United States, says Wall Street analyst Meredith Whitney.
Many U.S. cities, towns, and municipalities are insolvent but are treading along similar to how Greece did for years before officially defaulting.
In late 2010, Whitney told ’60 Minutes’ that municipal defaults could run up into the hundreds of billions of dollars, although that hasn’t [...]
Jefferson County, Alabama, declared the largest municipal bankruptcy in U.S. history, capping a more than three-year saga that turned it into one of the biggest casualties of Wall Street’s credit crisis.
The move yesterday by Alabama’s most-populous county came after state lawmakers failed to back a September agreement with creditors led by JPMorgan Chase & Co. (JPM) that would have reduced its sewer-system debt of more than $3 billion. Governor [...]
The company said on July 21 that a U.S. downgrade based on a failure to come up with a “realistic and credible” plan to reduce the budget deficit would be the “least disruptive” scenario for municipal ratings. That’s because it would mean Congress avoided making significant cuts to the funding of municipal credits not directly linked to the federal government, S&P said.
Top-rated state and [...]
1) ECB Said to Buy Bonds of Italy, Spain to Cap Gain in Yields
“The European Central Bank bought Italian and Spanish government bonds amid concern their rising bond yields may force the two countries to seek bailouts, according to six people with knowledge of the transactions.
The ECB isn’t buying Irish or Portuguese bonds, said one of the people, who asked not to be identified because the [...]
1)Â China should steer clear of US debt, expert warns
“China, the largest US creditor, should stop buying US Treasuries because the “cost” of lending to a nation that may face a default on its debt is too high, said former Chinese central bank adviser Yu Yongding.
The US may reach its congressionally-mandated debt limit of $14.3 trillion in a few months, which could lead to a default, Yu [...]
by Kathryn Blair
If congressional hearings can be seen as a lagging indicator, investors may be right to be worried about the muni bond market: A House panel is holding a hearing this morning titled “State and Municipal Debt: The Coming Crisis?”
“State and Municipal Debt: The Coming Crisis?” is the provocative topic of a congressional hearing Wednesday, which among other things will consider whether states should be allowed [...]
Meridith Whitney made her little speech on January 12, 2 weeks after that equity inflows went down from previous weeks from 6.5 billion to 4.9 billion, corporate bonds went from 1.4 billion to 3.6 billion. Can we safely say they went into equities?
week ending 1/12 muni out flow was 2.4 billion
week ending 1/19 muni out flow was 5.8 billion
taxable bonds in flow was 1.4 billion 1/12 [...]
1) Warning From S&P on Munis
“Downgrades of bonds issued by state and local governments could increase this year, according to a report to be issued Monday by credit-rating agency Standard & Poor’s.
The $2.9 trillion municipal-bond market has been thrown into tumult in recent months, in part because of growing fears that some state and local governments will default on their debt. Investors have pulled out [...]
From New York Times:
Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.
Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states [...]
Frederick J. Sheehan is the author of “ The Coming Collapse of the Municipal Bond Market“(Aucontrarian.com, 2009)
On January 7, 2011, Kelly Evans of the Wall Street Journal interviewed former Federal Reserve Chairman Alan Greenspan. He rooted for the stock market.
Greenspanâ€™s circular logic was unenlightening: “Stocks are cheap if earnings are to continue higher.” Taken as a whole, this does not mean much, akin to prophesizing: “The Red Sox will [...]
Munis — bonds sold by states, cities, counties and other localities to finance government operations — are in trouble because the Ponzi scheme of Big Government is coming unglued. The markets are merely reflecting this reality, as they always do.
The $3 trillion muni market was once regarded as the safest of all investments because the bonds are backed by government taxes. Now it’s showing all [...]
LINK BELOW explicitly demonstrates what A DISGRACE Michigan Governor Jennifer Granholm and her years of “happy talk” (like Obama) are and have been . . .
Leaders of this city met for more than seven hours on a Saturday not long ago, searching for something to cut from a budget that has already been cut, over and over.
This time they slashed money for boarding up abandoned [...]
Having already been roiled by the expiration of the “Build America Bonds” (BAB) program, unrest in the municipal bond market got a very public hearing Sunday evening, thanks to a segment on CBS’s “60 Minutes”.
Entitled, State Budgets: The Day of Reckoning, the segment warned of a “looming crisis” at the state and local level. Budget shortfalls and subsequent muni bond defaults “could derail the [...]
From the latest Greed and Fear
The news of an estimated â‚¬80-90bn bailout for Ireland this week raises the issue of when a bailout will turn into a default or debt restructuring.
GREED & fear has been aghast ever since the financial crisis first hit at the grotesque extent to which senior bank bond holders have been let off the hook.
Greeceâ€™s goal to reduce its fiscal deficit [...]
I listened to the Financial Sense Webcast for this weekend. They are long term gold bulls due to their believe the fiat currencies are in trouble. However, they said this correction, if it continues, could go to $1,170 and if that breaks, $1,050 before it would head up again.
The problem with the gold forecasting is that it has little to do with gold and everything to do with faith in [...]