Going into long term debt to pay short-term operating expenses is fiscally unsound. Going into debt for 20 years for 3 months operating expenses is beyond the absurd. Nonetheless, that is exactly what Arizona did.
Arizona, which sold state prisons and offices to raise cash six months ago, plans to borrow $300 million by marketing its Supreme Court building and about a dozen more properties through leaseback bonds starting today.
Investors will hold ownership of the court building in Phoenix, the fifth-largest U.S. city, and the Arizona Schools for the Deaf and the Blind in Tucson for as much as 20 years, with the securities maturing serially from 2012 through 2029, according to offering documents. Lease payments will back the debt, known as certificates of participation.
Arizona, whose foreclosure rate last year was ranked second-highest after Nevada by RealtyTrac Inc., will use the sale to pay for three months of school aid. The state raised $709 million for education payments when it sold and then leased back nine properties to investors in January.
“From an investor point of view, this is great,” state Treasurer Dean Martin, 35, said in an interview. “The state has to have buildings to operate and we’re the largest employer in Arizona.”
Wrong Point of View
Who gives a rat’s ass if "This is great From an investor point of view"?
Here’s what Arizona taxpayers need to decide: "Is this great from ataxpayer point of view?"
Obviously it is not. Just as with other states, this is more kicking the can down the road action in a bury your head in the sand mentality.
Arizona politicians need to accept reality: This economy is going to be weak for a decade thanks in part to refusal of politicians to address fiscal issues, union salaries, and union pensions now.
The problem is not lack of revenue, the problem is state spending gone rampant, with political hacks lacking the discipline to do anything about it. I do not care how favorable the interest rate or other terms are, going into debt for 20 years to get 3 months operating expenses is simply insane.
The wave of social unrest is spreading. A new round of protests has hit Spain with a public sector strike set for June 8. In Slovenia, students are protesting new rules that limit their work hours and pay.
"Luka Gubo" an economist from Slovenia writes:
First I must say that I love your blog. Great job!
I just wanted you to know that Slovenian students are protesting too.
The main reason for organizing protests is changes in law regarding student jobs. Current tax law makes average workers uncompetitive because businesses pay about 15% income tax for students and more then 35% income tax for average worker (average net income is 930€).
Bear in mind that the average time for a student to complete his higher education here is 6 years and that more then 20% of "students" do not to school at all. Instead, they just enjoy student benefits like lower income taxes, food stamps, etc.
I think that everyone would agree a new law is needed in Slovenia. However, the new will limit the maximum hours worked by students to one third of full work time, and put a limit on maximum hourly wage at 8€ per hour.
That one *ing great free-market solution, wouldn’t you agree?
Here is the Slovenian parliament building after 2 hours:
Public sector union ADEDY and private sector union GSEE called the strikes against the government’s austerity measures, in particular the pension reforms announced last week. The reforms include raising the retirement age, which varies in different professions.
It is the first major strike since May 5, when violent protests against the austerity measures resulted in the deaths of three people in the capital, Athens.
Spanish government workers were set to protest at 6 p.m. (noon ET) outside the Ministry of the Treasury in Madrid and outside the central government offices in their respective towns. Spanish government workers were set to protest at 6
Thousands of protesters bused down by labor unions and social service advocates rallied at the Capitol today in an attempt to pressure state lawmakers into raising the income tax to avoid more budget cuts.
A spokesman for Illinois Secretary of State Jesse White estimated the rally crowd at 15,000, with more than 12,000 marching around the building. That would appear to make it the largest Capitol protest since the Equal Rights Amendment crowds a quarter-century ago.
Bus after bus pulled up on streets surrounding the Capitol complex and dumped sign-waving protesters clad in purple, green, red and blue shirts that represented a show of strength from a variety of public employee unions and dozens of groups that formed what they named the “Responsible Budget Coalition.”
"Raise my taxes! Raise my taxes! Raise my taxes!" they chanted, lined up shoulder to shoulder for a few hundred yards stretching a street in front of the Capitol.
Springfield Pro-Tax Rally
Save our Schools is a farce. Save our Salaries is what the protest is all about.
While the stock market marches on oblivious to the real world, things are rapidly approaching crisis mode in Illinois, and for that matter nearly everywhere you look. Please consider School bills are due, but state won’t pay.
Say the words out loud to get a feel for the size of it: Forty-five million, two hundred and six thousand, six hundred and fifty-four dollars, and sixty-one cents. That’s how much the state is behind in payments to your local schools.
When the quarterly payments came due at the end of the year, the state again missed its categorical and grant payments to all 871 Illinois school districts.
This money is supposed to fund projects like school buses, special education, reading programs and early childhood development. But the money’s not coming, instead getting added bill by bill to an already $4.5 billion IOU the state has for services from schools to homeless shelters.
But the same state that’s no longer paying for these programs legally requires them.
Unlike the usual budget bellyaching when political pressure can make money appear, this time is different, said state Rep. Linda Chapa LaVia, D-Aurora. There is no money. "This is not a false alarm. This is not someone pulling a fire drill. This is a fire," Chapa LaVia said.
The West Aurora School District plans to lay off teachers for the second year running. Last year, the district planned to lay off 120 teachers, but ended up only giving 55 the ax. The district didn’t have a change of heart — laying off all 120 would have pushed class sizes past the maximum in the teachers union contract.
There’s a fee the district can pay if they want to go past that limit by laying off more teachers. They’re considering it. "It’s cheaper to pay a premium than to pay a teacher," West Aurora Chief Financial Officer Christi Tyler said.
It’s not that the state is denying it owes this money. The Illinois State Board of Education, like many state agencies, is dutifully sending its vouchers to the comptroller’s office, where … nothing happens.
What usually is a bureaucratic delay where the comptroller gets the voucher and then cuts the check within
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
Price is still in a trading range, so the battle of supply (Bears) and demand (Bulls) is not over, but as you can see (right hand side of chart) the waves up (blue dots) are attracting more volume than the waves down (red dots). This is strength and demand overcoming supply. After a strong down move supply does dry up, all those that have sold, are very close to being done! Soon the bulls will have a chance to push prices higher. Look like accumulation, and once accumulation is completed prices can be expected to be marked up. However to be sure that demand has control wait for prices to break over resistance, but do keep this stock on your watch list.
That was quick! Last November Snapchat was valued at $2 billion in the private VC market; by Q1 that had risen to $7 billion; and yesterday it soared to $10 billion. Gaining $8 billion in market value in just nine months is quite a feat under any circumstance - but that’s especially notable if you’re are a company with no profits, no revenues and no business model.
And, yes, that’s not to mention the “product” either. Apparently, Snapchat’s 100 million teenage and college users mostly swap pics of their private parts which vanish after 15 seconds - or so they think. In that respect, Snapchat’s business challenge may not be lack of “demand”, but whether its exhibitionist “customers&rd...
Buffalo Wild Wings Inc. (Ticker: BWLD) shares are in positive territory in early-afternoon trading on Thursday, reversing earlier losses to stand up 0.50% on the session at $148.50 as of 12:15 pm ET. Options volume on the restaurant chain is running approximately three times the daily average level due to heavy put activity in the October expiry contracts. It looks like one or more traders are buying the Oct 140/145 put spread at a net premium of roughly $1.45 per contract. As of the time of this writing, the spread has traded approximately 3,000 times against very little open interest at either striking price. The put spread may be a hedge to protect a long stock position against a roughly 6% pullback in the price of the underlying through October expiration, or an outright bearish play anticipating a dip in BWLD shares in the next couple of months. The spread makes money at expiration if shares in BWLD decline 3.3% from the current price of $148.50 to breach the breakeven point...
Gradient Senior Analyst Nicholas Yee reports on six companies that are using a variety of techniques to shift pretax profits to lower-tax areas. Featured in this USA Today, article, the companies include CELG, ALTR, VMW, NVDA, LRCX, and SNPS.
Mt Gox may be long gone in the annals of bankruptcy, but its founder refuses to go gentle into that insolvent night. And, as CoinDesk reports, the disgraced former CEO of the one-time premier bitcoin trading platform has decided to give it a second try by launching new web hosting service called Forever.net and is registered under both Karpeles’ name and that of Tibanne, the parent company of Mt Gox.
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Well PSW Subscribers....I am still here, barely. From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.
First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices. Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment. Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer. For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...
I just wanted to be sure you saw this. There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.
If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.
Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.
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