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I thought it was a good article until the last sentence: Until voters can agree on what government services they want and will pay for, it is possible that bon

I thought it was a good article until the last sentence: Until voters can agree on what government services they want and will pay for, it is possible that bondholders will bank the profits while taxpayers, employees and citizens share the losses. I don't understand the need to take a shot at the bondholders here. This isn't a case where investment bankers took advantage of overmatched finance people. The cities and states offered bonds for sale. The bonds were purchased by average people in return for an agreed to interest payment.

TomOfTTB 16y ago
Let me say up front that I agree with you on demonizing people who purchased these bonds. But let me play devil's advocate. For years politicians have been talking about "Predatory Home Loans" where banks supposedly took advantage of people by selling them on loans they could never afford. By law the terms of these loans were spelled out to these buyers. These buyers were told what their payments would be and how much interest they'd pay. Yet the lending practices are still considered predatory because the lender should have known the borrower didn't have the ability to pay the loan. Now, for example, look at the State of California. California's GDP to Debt ratio is nearly 20% and their monthly bills total to more than their monthly income. If the state were an individual it would easily have poor credit. Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. So while I agree with you I can see how someone could reasonably direct the rage they had at predatory banks towards bond holders
- protomyth 16y ago
  Some of the (smaller) banks actually didn't want to lend. They were sued by some organization for being too strict in their lending requirements.
- anigbrowl 16y ago
  Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. Why do you say that? Every time I see a bond measure on the ballot, there's an estimate of the fiscal impact from the Legislative Analyst's Office in the voter information pamphlet, showing the relative costs of principal and interest payments, and the annual cost of paying off the bond. I suppose a lot of people don't bother to read that and just vote based on TV ads or signs instead, but it's not as if the information is hidden from them. For that matter, private interests can and do put bond measures onto the ballot as well. In 2008 there was one proposing the state issue about $2 billion in bonds to build children's hospital facilities, which passed. All the major campaign donors were hospitals, but I'm sure that's just a coincidence.
warfangle 16y ago
It was fairly good, but it completely mischaracterized what's going on in WI. Walker approved $140m in corporate tax breaks - just before announcing a $138m deficit. If he hadn't given corporate tax breaks, the government would have been in the black. I haven't researched, but I'm willing to bet the Koch family company benefited.
- deleted 16y ago
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- TomOfTTB 16y ago
  I don't expect research but at least do a search on Wisconsin Budget Deficit. That's what I did and I came up with this (http://www.jsonline.com/news/statepolitics/109275069.html http://www.jsonline.com/news/statepolitics/109275069.html)... Democratic Gov. Jim Doyle's administration on Friday told Republican Governor-elect Scott Walker that he would have to cope with a $2.2 billion deficit in the state's upcoming two-year budget, but this brighter-than-expected forecast contained more than $1 billion in hidden pain. To arrive at the favorable estimate, the Doyle administration's estimate assumed that Walker and lawmakers would make spending cuts that have yet to actually happen - two more years of state employee furloughs, no pay raises, a virtual hiring freeze and belt tightening in state health programs. Without that $1.1 billion in savings, the state's projected shortfall rises to $3.3 billion - a significant increase over previous estimates that put the gap at between $2.7 billion and $3.1 billion. Even liberal blogger Ezra Klein backed off the claim you're making (http://voices.washingtonpost.com/ezra-klein/2011/02/wisconsins_fiscal_condition.html http://voices.washingtonpost.com/ezra-klein/2011/02/wisconsi...)... As I wrote in the update to my original post on Wisconsin, my initial understanding of the way Gov. Scott Walker's tax cuts had changed his state's budget picture was wrong: They didn't add to this year's deficit, but to the 2011-13 deficit. That doesn't make them any more fiscally responsible, but it does mean they're not behind the deterioration in Wisconsin's 2011 budget projections. They're behind part of the deterioration in their 2011-2013 budget projections.

TomOfTTB 16y ago

Let me say up front that I agree with you on demonizing people who purchased these bonds. But let me play devil's advocate. For years politicians have been talking about "Predatory Home Loans" where banks supposedly took advantage of people by selling them on loans they could never afford. By law the terms of these loans were spelled out to these buyers. These buyers were told what their payments would be and how much interest they'd pay. Yet the lending practices are still considered predatory because the lender should have known the borrower didn't have the ability to pay the loan. Now, for example, look at the State of California. California's GDP to Debt ratio is nearly 20% and their monthly bills total to more than their monthly income. If the state were an individual it would easily have poor credit. Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. So while I agree with you I can see how someone could reasonably direct the rage they had at predatory banks towards bond holders

protomyth 16y ago
Some of the (smaller) banks actually didn't want to lend. They were sued by some organization for being too strict in their lending requirements.
anigbrowl 16y ago
Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. Why do you say that? Every time I see a bond measure on the ballot, there's an estimate of the fiscal impact from the Legislative Analyst's Office in the voter information pamphlet, showing the relative costs of principal and interest payments, and the annual cost of paying off the bond. I suppose a lot of people don't bother to read that and just vote based on TV ads or signs instead, but it's not as if the information is hidden from them. For that matter, private interests can and do put bond measures onto the ballot as well. In 2008 there was one proposing the state issue about $2 billion in bonds to build children's hospital facilities, which passed. All the major campaign donors were hospitals, but I'm sure that's just a coincidence.

warfangle 16y ago

It was fairly good, but it completely mischaracterized what's going on in WI. Walker approved $140m in corporate tax breaks - just before announcing a $138m deficit. If he hadn't given corporate tax breaks, the government would have been in the black. I haven't researched, but I'm willing to bet the Koch family company benefited.

deleted 16y ago
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deleted 16y ago
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TomOfTTB 16y ago
I don't expect research but at least do a search on Wisconsin Budget Deficit. That's what I did and I came up with this (http://www.jsonline.com/news/statepolitics/109275069.html http://www.jsonline.com/news/statepolitics/109275069.html)... Democratic Gov. Jim Doyle's administration on Friday told Republican Governor-elect Scott Walker that he would have to cope with a $2.2 billion deficit in the state's upcoming two-year budget, but this brighter-than-expected forecast contained more than $1 billion in hidden pain. To arrive at the favorable estimate, the Doyle administration's estimate assumed that Walker and lawmakers would make spending cuts that have yet to actually happen - two more years of state employee furloughs, no pay raises, a virtual hiring freeze and belt tightening in state health programs. Without that $1.1 billion in savings, the state's projected shortfall rises to $3.3 billion - a significant increase over previous estimates that put the gap at between $2.7 billion and $3.1 billion. Even liberal blogger Ezra Klein backed off the claim you're making (http://voices.washingtonpost.com/ezra-klein/2011/02/wisconsins_fiscal_condition.html http://voices.washingtonpost.com/ezra-klein/2011/02/wisconsi...)... As I wrote in the update to my original post on Wisconsin, my initial understanding of the way Gov. Scott Walker's tax cuts had changed his state's budget picture was wrong: They didn't add to this year's deficit, but to the 2011-13 deficit. That doesn't make them any more fiscally responsible, but it does mean they're not behind the deterioration in Wisconsin's 2011 budget projections. They're behind part of the deterioration in their 2011-2013 budget projections.