Fire in The Disco
MBIA & Ambac lost their AAA credit ratings. The biggest hospital in Sarasota, Florida, is paying the price.
David Verinder, CFO of the Sarasota Memorial Health Care System, received daily e-mail messages last month informing him that
interest costs on an $83 million bond issue were rising to 1.45%, to 1.75%, to 3.25%, to 5.9%, and finally to 9% by June 24, a more than fivefold increase.
Just as the auction-rate breakdown caused borrowers to make plans to replace or change terms on at least $87 billion of the securities,
schools and towns now are rushing to find banks to agree to act as buyers of last resort for floating-rate bonds.
The Nattering One muses... with the exception of fuel taxes; city, county, state and federal coffers are suffering.
Dwindling consumer spending has cut sales tax; declining values and reappraisal has cut property taxes and a slowing economy has cut income taxes.
Making life difficult, deficit spending politicians like the Guvenator would normally refinance with new bonds, but rates are on the rise as risk premiums rise.
Yes, there is a "fire in the disco" and not everyone can get out the exit doors at the same time.
Interesting Codicil: This makes government dupliticious in the conspiracy to keep gasoline & food and especially housing prices artificially high.
Should housing prices fall further and or stagflation normalize, their debt service costs "interest" will increase...
and the budget deficits will become even more staggering, leaving BK as the only "way out of the disco".
Hattip To Bloomberg.
David Verinder, CFO of the Sarasota Memorial Health Care System, received daily e-mail messages last month informing him that
interest costs on an $83 million bond issue were rising to 1.45%, to 1.75%, to 3.25%, to 5.9%, and finally to 9% by June 24, a more than fivefold increase.
Just as the auction-rate breakdown caused borrowers to make plans to replace or change terms on at least $87 billion of the securities,
schools and towns now are rushing to find banks to agree to act as buyers of last resort for floating-rate bonds.
The Nattering One muses... with the exception of fuel taxes; city, county, state and federal coffers are suffering.
Dwindling consumer spending has cut sales tax; declining values and reappraisal has cut property taxes and a slowing economy has cut income taxes.
Making life difficult, deficit spending politicians like the Guvenator would normally refinance with new bonds, but rates are on the rise as risk premiums rise.
Yes, there is a "fire in the disco" and not everyone can get out the exit doors at the same time.
Interesting Codicil: This makes government dupliticious in the conspiracy to keep gasoline & food and especially housing prices artificially high.
Should housing prices fall further and or stagflation normalize, their debt service costs "interest" will increase...
and the budget deficits will become even more staggering, leaving BK as the only "way out of the disco".
Hattip To Bloomberg.
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