Category: Municipal bonds

Twenty years into the muck hole: Part 2, Bad luck, it’s got to land on somebody

22 January, 2014 (09:00) | Alabama, Bonds, Cities, Infrastructure, Jefferson County, Municipal bankruptcy, Municipal bonds, Orange County California, Proposition 13, Sewer systems, US News |

  [Continued from yesterday’s Part 1.] By:David A. Smith Categories: Alabama, bonds, cities, infrastructure, Jefferson County, municipal bankruptcy, municipal bonds, Orange County California, Proposition 13, sewer, US news As we saw yesterday, Jefferson County’s bankruptcy was 18 years in the making, and 2 years in the doing, and the road to ruin and then redemption […]

Twenty years into the muck hole: Part 1, I want to talk some sense to him

21 January, 2014 (09:00) | Alabama, Bonds, Cities, Infrastructure, Jefferson County, Municipal bankruptcy, Municipal bonds, Orange County California, Proposition 13, Sewer systems, US News |

By:David A. Smith   While writing my magnum opus of Jefferson County’s pilgrim’s progress   through bankruptcy to reorganization and exit, I of course became totally absorbed in reading old newspaper articles, and came upon one, from Bloomberg (November 10, 2011) the day right after the filing, that is an unexpected gem for both its jumbled history of […]

Whose risk is it, anyway? Part 4, If the funding ratio falls below 80%

16 January, 2014 (09:00) | Actuaries, Bankruptcy, Bonds, Detroit, Investment, Kevyn Orr, Municipal bankruptcy, Municipal bonds, Pension funds, Public choice theory, Risk, Speculation, US News |

By:David A. Smith   [Continued from yesterday’s Part 3 and the preceding Part 1  and Part 2.]   In the three days up to this point, we’ve discovered that the City of Detroit, not its employee-retiree pension funds, owns the risk of fund underperformance, meaning we have a classic case of moral hazard combined with principal-agent risk.  […]

Whose risk is it, anyway? Part 3, Unrealistically high projected rates of return

15 January, 2014 (09:00) | Actuaries, Bankruptcy, Bonds, Detroit, Investment, Kevyn Orr, Municipal bankruptcy, Municipal bonds, Public choice theory, Risk, Speculation, US News |

By:David A. Smith   [Continued from yesterday’s Part 2 and the preceding Part 1.]   In yesterday’s post on the net unfunded liabilities of Detroit’s two principal public-employee unions (the non-uniformed GRS and the uniformed FRP), we had reached the point of knowing that Detroit was on the hook for any shortfalls, even as the pension funds […]

Whose risk is it, anyway? Part 2, Negative twelve percent return

14 January, 2014 (09:00) | Actuaries, Bankruptcy, Bonds, Detroit, Investment, Kevyn Orr, Municipal bankruptcy, Municipal bonds, Pension funds, Public choice theory, Risk, Speculation, US News |

By:David A. Smith   [Continued from yesterday’s Part 1.]   Yesterday’s post, the first of four parts in this multi-parter, finally started our blog process of explaining the arcana of pension fund investment management and its implications for failing cities and municipal bankruptcies.   Principal sources used in this post Pension and Investments (April 15, […]