Bloomberg is covering the muni bond market seizure. Here is someone who is shocked, stunned and surprised by the recent turn of events:``The problem with most auction bonds isn't the bonds' credit quality or default risk,'' said Joseph Fichera, chief executive at Saber Partners, a New York-based financial adviser to local governments. ``The problem is that there isn't enough demand for the bonds because some issuers gave monopolies on the distribution to a few banks.''
Truth is that the bonds are selling just with repricing to reflect the buyers perception of risk. For instance:
a $100 million Port Authority of New York & New Jersey bond reset at 20 percent, up from 4.3 percent a week earlier. The rise in the port authority's rate increased interest costs on the securities by $305,278 this week alone.
This is what happens when credit contracts. Everyone pays. And lets face it there just isn't as much faith in our government when it comes to financial credibility anymore.
7 comments:
``The problem is that there isn't enough demand for the bonds because some issuers gave monopolies on the distribution to a few banks.''
lol.
The problem is that there are too many people begging to borrow money. These bonds suddenly found out the premium over treasuries they must pay is going to the recession norm. Welcome to the end of easy credit.
Got popcorn?
Neil
The young lady has long, albeit crossed, fingers. I like that in a woman.
I'd gander at one of her best points,
but the goose executed a cover-up first.
The LA Times cover story on the state budget BS makes me think the state is doomed to a horrible recession with this type of leadership. We are so f@cked.
http://www.latimes.com/news/la-me-cuts16feb16,0,4790701.story
What happened is that the world is choking on all the junk bonds shoveled out by the banking monopolists. They don't trust the banks, because they have already lost a $hitload of money. We need Buffett and Ross to step up, insure muni bonds, and then broker the bonds. Let the maggots die.
The Usual Suspects.
I see some hard times coming up.
I finally figured out this bond sieze up is why utilities are being butchered in the stock market.
Muni's aren't the only entity trying to float debt. The local utility has massive debt it's trying to float as well. The buyers are demanding more money for that debt risk.
The market has only siezed up because the debt seller's aren't willing to suck it up and price that debt at a rate the debt BUYER'S are willing to pay.
Sort of like the housing market but huger.
SIDE NOTE OFF TOPIC:
Mr. Dawg, I think Pizzeria Uno has gone teets up here in Vegas. I wanted to go there on Valentine's Day. But no white or yellow pages listing and the only phone number I found on the net had been disconnected. I'll do a physical drive by next week.
I took my date to Joe's Crab Shack instead. She was happy but I thought it sucked.
I just don't like Joe's.
Front pages story in the Sunday New York Times with the usual scary graphs (warning: G. Morgenson is not the most solid of writers).
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