Right on schedule the muni bond and COP market is beginning to crack. From Financial Week we read;
The muni market’s problems, like those plaguing much of Wall Street these days, stem largely from the popping of the housing bubble. That’s threatening two major sources of government revenue—property tax collections and real estate transfer taxes—that are used to pay bondholders. Compounding matters, investor confidence has been seriously undermined by worries over the health of a handful of companies that guarantee munis, and which face crippling losses related to subprime mortgages.
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The upshot of all this is that muni deals that would have flown off the shelves earlier this year are now gathering dust. Officials in municipalities across the country are wondering just how much they will have to pay to raise the cash they need as uncertainty drives up interest rates.
Gee, what's another name for investor revenue dependent upon the health of the real estate market?
11 comments:
First, let me say MURST.
Taxes?
Anyway, I posted this at HP, and it needs to be told. OT? A little.
Add insult to injury:
Well my postage stamp penthouse was taxed at $214.00 per sq. foot per year for 2005 and 2006.
Injury:
So, I just got notice that my 2007 taxes are going up to $252.33 per sq. foot whilst the value of my home has gone steadily down for the last year and a half.
Insult:
Governor Charlie Crist promised that Florida Property taxes would "drop like a rock." when he ran for and won the election to the office last year.
Lots of bad news overnight, and probably more bad news today. It's going to be a busy day at CR . . . all the financial institutions know that everyone's eyes will be on the Fed, so it's the perfect time to take out the trash.
Officials in municipalities across the country are wondering just how much they will have to pay to raise the cash they need as uncertainty drives up interest rates.
Needful Things.
Thanks Edgar. I was wondering when somebody would pick up on the language of need as opposed to want. Great link. I liked that movie too.
I didn't know Leslie Nielsen was running for office.
"The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process."
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL
You want a municipal bond crisis? I'll give you a municipal bond crisis:
http://graphics8.nytimes.com/images/2005/07/02/nyregion/02brink_184.jpg/
FMW,
I hope you mean per 100 sq feet. $252 per sq foot? that would be $200k for 800 sq feet. am i missing something??
@ Arron,
am i missing something?? No, I am an idiot.
You are right. I am so angry I lost my math mad skillz.
Look at those people- little bellies on every one of 'em! There's still a lot of visible fat to cut!
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