Tuesday, November 27, 2012

San Berdoodoo II

Bloomberg - San Bernardino, the second-largest U.S. city to seek bankruptcy protection, will put off paying $13 million to California’s retirement system and $3.4 million for pension bonds issued in 2005, in a provisional spending plan.

For those of you who don't speak out the sides of your mouth; that last bit is called a municipal bond default.  

Recall the previous San Berdoodoo post.  In it I explained that the 2005 bond was used to pay arrears to CalPERS.  CalPERS needed/expected 8% compounded returns so they couldn't just make payments.  It was cheaper to issue a bond at a lower rate.  Funny thing, CalPERS has managed nothing close to the returns the San Bernardino bondholders WERE getting.  Everybody loses.  

San Bernardino is by no means alone in this boat.  With the cash flow scheme called Redevelopment Agencies winding down there are going to be a lot of California cities caught swimming naked.  


Rob Dawg said...



Rob Dawg said...

If you ever wondered where CR gets his schedule for the week post:


Rob Dawg said...

Like I said yesterday:
Consensus is for flat to slightly down month-over-month and up 2.6% to 3.0% year over year. Seeing as C-S is a rolling three month datum and significantly delayed there is little chance of a surprise. I'd even say the high end is more likely.

C-S came in at 3.0%. That is if you ignore bulk sales. Ask buyers in Sacramento if they can ignore bulk sales.

Cinco-X said...

I liked the "business/a-liberal-obama-vs-a-moderate-obama-in-the-fiscal-debate", but I'm not so sure there's truly moderate Obama...perhaps a pragmatic Obama