KeNo's Housing and Economic Portal: Monday February 7 Housing and Economic stories

Sunday, February 6, 2011

Monday February 7 Housing and Economic stories

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TOP STORIES:

Illinois Plan for Pensions Questioned - (www.nytimes.com) Federal regulators are examining disclosures by Illinois about its unorthodox pension funding method, trying to determine whether the state misled bond investors about the risks. The Securities and Exchange Commission has said it has a special team devoted to investigating public pensions, and last year it brought its first case ever against a state, accusing New Jersey of securities fraud for claiming to have pension assets that did not really exist. If the commission decides at some point to bring a case against Illinois, it would send another warning. Some other states, including Arkansas, Ohio, Rhode Island and Texas, have used variations of Illinois’s method, which reduces their annual contributions to their pension funds. The effect is to save money at a time of tight budgets, but it can also weaken the pension funds.

Bondholders Left in the Dark - (online.wsj.com) Investors and regulators are growing increasingly concerned about the quality and timeliness of information that state and local governments are disclosing about their finances. The Securities and Exchange Commission is inquiring about public statements Illinois made about its pension funds amid the agency's increased scrutiny of the municipal-bond market, a representative for the governor said. Amid governments' financial woes, meanwhile, angry investors are finding themselves blindsided by bad news. Those concerns are reflected in a forthcoming study that shows that public issuers routinely file information about their financial health well beyond the date they promise to bondholders, if at all. This weak disclosure is raising anxiety in the $2.9 trillion market, where investors withdrew more than $20 billion from municipal bond funds in recent weeks. Federal regulators' power in this realm is limited because municipal borrowers are unregulated. But they are trying to crack down on the disclosure issue.

Default worry sees US muni bond sales dry up - (www.ft.com) Fundraising by US states, cities, hospitals and other public bodies has plunged as fears of defaults and bankruptcies have intensified this month. “It is likely to be the worst month in about a decade,” said Matt Fabian, managing director of Municipal Market Advisers, citing expectations for less than $11bn of issuance. That would be a monthly level not seen since 2000, according to Thomson Reuters whose current monthly tally is $8.6bn. In 2010, municipal issuers sold an average of $36bn a month. January is typically a month of low new issuance for the $3,000bn municipal bond market, but growing concern about the health of state and local economies in the US and record selling of muni bonds by retail investors have pushed borrowing costs higher. “The market has been in disarray and issuers have avoided it,” said George Friedlander, chief municipal strategist, at Citigroup.

GOP invokes 1700s doctrine in health care fight - (news.yahoo.com/s/ap) Republican lawmakers in nearly a dozen states are reaching into the dusty annals of American history to fight President Obama's health care overhaul. They are introducing measures that hinge on "nullification," Thomas Jefferson's late 18th-century doctrine that purported to give states the ultimate say in constitutional matters. GOP lawmakers introduced such a measure Wednesday in the Idaho House, and Alabama, Kansas, Maine, Missouri, Montana, Oregon, Nebraska, Texas and Wyoming are also talking about the idea. The efforts are completely unconstitutional in the eyes of most legal scholars because the U.S. Constitution deems federal laws "the supreme law of the land." The Idaho attorney general has weighed in as well, branding nullification unconstitutional. "There is no right to pick and choose which federal laws a state will follow," wrote Assistant Chief Deputy Attorney General Brian Kane.

Richard Russell: The Dollar Has Lost All Stability And Is Ready For A Crash - (www.businessinsider.com) Legendary newsletter writer Richard Russell has been calling for the collapse of the U.S. economy for awhile. Based on recent dollar movements he says that crash is going to come now (via King World News) First the dollar has lost all stability: Today there's no definition for the dollar. So how do we price the dollar? At one time, the dollar was priced in terms of the time-honored standards -- gold and silver. But today we must price the dollar against other fiat currencies. "A dollar is worth so much against the yuan, or so much against the pound sterling, or against the euro and so forth".