Alfred Woody's Kewl Blog [ 椼森 ]

Saturday, June 19, 2010

Standard & Poor's downgrades Miami bond rating by two notches

Shaky municipal finances prompted Standard & Poor to slash the rating by two notches, meaning interest rates to build parking facilities at Marlins Ballpark will rise

A key agency has downgraded cash-strapped Miami's bond credit rating, a shift that will leave the public footing a higher bill for big-ticket projects, including parking garages for the new Marlins ballpark.

Standard & Poor's Ratings Services dropped two of the city's critical bond credit ratings by two notches, making it more expensive for Miami to borrow money at a time the city is scrambling to keep its budget afloat.

``That will have a significant impact on the cost of projects,'' said Tom Tew, a Miami securities attorney who has represented the city in the past. ``This is just another straw on the camel's back.''

Standard & Poor's lowered the rating for general obligation bonds -- usually backed by property taxes -- from A+ to A-, and the rating for bonds backed by other revenues from A to BBB+. The rating agency cited the city's climbing employee pension costs and unwillingness to raise taxes as reasons for its negative credit outlook.

``They have skepticism of the ability of the city to reduce expenses,'' City Manager Carlos Migoya said Thursday.

``I feel very confident that we'll be able to do that,'' he added -- possibly through employee union negotiations or layoffs.

The most immediate fallout: Funding for the city to build surface parking lots and four garages at the Marlins' new home in Little Havana.

Miami plans to float $104 million in bonds next month to finance the garages. Because of the lower bond rating, it will cost the city $15 million more to pay off those bonds over the next 30 years, the city manager estimated.

Migoya said that is about $15 million less than the garages would have cost over three decades if the city were building during boom times with higher construction prices.

The bonds will be paid off with money from a variety of sources, including a convention development tax generated by hotel sales and the average $10 the Marlins will pay the city to buy almost all of the parking spaces.

The manager said the credit downgrade should not delay construction. Work began this month after the city borrowed $3 million from a capital fund and received a $20 million bridge loan. The Marlins hope to begin play at the new ballpark on Opening Day in April 2012.

The rating downgrade is the latest dark financial cloud over the city.

Two months ago, another agency, Moody's Investors Service, shifted the city's credit outlook from a stable to a negative position, an indication that Miami's bond rating was poised to take a hit.

Miami leaders have had to raid the city's reserves to plug budget holes, including using $54 million from the rainy-day fund earlier this year to balance the 2009 budget.

The U.S. Securities and Exchange Commission continues to scrutinize whether the city hid its financial troubles from investors over the past three years, a review with potentially far-reaching budget implications.

Last week, city leaders discussed a controversial doomsday scenario: laying off more than 1,100 employees to fill a $100 million budget hole. Commissioners have sounded wary of raising taxes to cover the shortfall.

Against this backdrop, credit agencies are under pressure across the country to redo municipal bond ratings as home sales and property taxes -- local governments' main source of revenue -- tumble in the slumping economy.

Standard & Poor's noted Miami's historical difficulty with cutting expenses, and said cutbacks probably would not be enough without structural changes to labor contracts.

``The city's financial flexibility has been greatly reduced by growing fixed costs and limited tax-raising flexibility and willingness,'' the agency's report said, adding that the absence of ``considerable expenditure reductions could lead to further credit deterioration.''

Officials Worried About The Gulf Cleanup Materials Sent To Their Landfills

They have good reason to worry. Even though BP claims otherwise, we just don't know for sure and you shouldn't just dump it anywhere (although I suspect they will, anyway):

About 35,000 bags — or 250 tons — of oily trash have been carted away from this beach, said Lt. Patrick Hanley of the Coast Guard, who is stationed at Port Fourchon. And as of Monday, more than 175,000 gallons of liquid waste — a combination of oil and water — had been sent to landfills, as had 11,276 cubic yards of solid waste, said Petty Officer Gail Dale, also of the Coast Guard, who works with at the command center in Houma.

Michael Condon, BP’s environmental unit leader, said that tests have shown that the material is not hazardous, and can safely be stored in landfills around the region that accept oil industry debris. The checklist and procedures involved, Mr. Condon said, are part of a process “we do very well and have done for a long time.”

But some local officials, environmental lawyers and residents who live near landfill sites are not convinced.

“There’s no way that isn’t toxic,” said Gladstone Jones III, a New Orleans lawyer who has spent much of his career trying to get compensation for plaintiffs he says have been harmed by exposure to toxic waste.

In fact, waste from oil exploration and production falls into a regulatory no man’s land, neither exactly benign nor toxic on its face. The compounds in oil most dangerous to human health — like benzene, a carcinogen — are volatile and tend to dissipate when crude oil reaches the ocean surface, or soon thereafter. But some toxicologists say it is impossible to know whether the toxic chemicals are entirely gone.

The FCC’s Grand Plan to Control Your Internet, TV, and Phone?

This Thursday, the FCC opens up comments on its proposal regulate the Internet. While no one is quite sure all that it will contain, Scott Cleland (a long-time telecom policy expert and insider) has pieced together recent FCC filings from Google to outline how Net Neutrality regulations could be part of a grand plan to control how virtually all media enters your home. Here's a brief summary:

Under the guise of “Net Neutrality” and “consumer protection” the FCC would begin regulating Internet access for the first time under a completely new regulatory scheme (even though they lack the authority to create it). Meanwhile, the FCC would push regulations – cloaked in the heart-warming language of competition and innovation – mandating that your cable box (known as a set-top box) become a “broadband gateway device” controlling access to your Internet, TV, and phone. The FCC has already started looking at set-top box regulations in their National Broadband Plan.

The FCC would then begin setting rates for the total cost of all three services. Chairman Genachowski said he does not intend to set prices for Internet access. However, the legal maneuvering is so tenuous and the desire from left-wing groups so strong that a mere promise to “forbear” from rate setting is certainly no guarantee. On top of this, it would open the door for the FCC to begin monitoring or censoring content on the Internet (in addition to your TV), something Free Press and other progressives, as well as the White House regulatory czar advocate. The Songwriters Guild of America has a great op-ed on why government censorship is entirely possible if the Internet becomes regulated.

This plan outlines a dark hypothetical world that would effectively destroy any future competition for services and turn our nation’s networks into “dumb pipes” under government centralized control. Everyone will buy an Internet/TV/Phone connectivity box that the government approves. Everyone will pay rates for service that the government sets. And everything passing through your Internet, TV, or phone would become subject to the FCC’s consistent regulatory whim.

Worst of all, this extreme case of political favoritism for Google’s business model (which is developing set-top boxes and carrying all content to users for "free") is not out of the realm of possibility. Both Google and the socialist organization Free Press have long pushed for such regulations and both are arguably the closest groups to FCC Chairman Julius Genachowski. They are also strong supporters of President Obama who are calling for their payoff. The former head of Google’s policy shop is now Chief Technology Officer at the White House and Free Press’s former press director is the FCC’s spokesperson.

There are a lot of hurdles for the FCC should they choose this horrendously anti-free market route to take over the nation’s Internet networks and control the flow of media. Already facing severe bipartisan opposition from Congress and the court, the FCC would certainly invite another legal challenge. But if it works, Internet, phone, and TV service will simply become Google Chrome, Android/Google-Voice, and Google TV.

The number given is based on estimates of the size of Iran’s long range missile arsenal, and the fact that the best of Iran’s missiles has a maximum range which would allow them, if fired from Iran’s western border, to reach the southeastern tip of Europe.

This would hypothetically allow Iran to really put a hurting on a nation like Croatia or Macedonia, though why on earth this is even a topic of discussion is unclear, as Iran has no conceivable reason for doing so.

Still, this sort of idle speculation is more than enough for the administration to sell the enormously expensive missile defense and its dubious utility, even in the midst of a budget crisis.

Absent from all of this, of course, is that the US hasn’t put its missile defense in southeastern Europe, but well outside of Iran’s missile range, along the Russian border.

Which of course is the other reason for wild speculation about the Iranian “threat.” Russia isn’t too keen on the US putting so many missiles along their frontier, and the Obama Administration is struggling to convince people, beyond all reason, that the missiles have something to do with Iran, not Russia.

BREAKING: Banks In Oaxaca, Mexico No Longer Accept American Dollars 6/17/10

Banks In Oaxaca, Mexico No Longer Accept American Dollars

SoCal Martial Law Alerts
June 17, 2010

FRESNO, California -- SoCal Martial Law Alerts (SCMLA) interviewed Lee, an American who discovered while on a recent (Christian) mission trip to Oaxaca, Mexico, that Mexican banks will no longer exchange American dollars for Mexican pesos.

Lee said that, when he first arrived in Oaxaca two weeks ago, the banks would still exchange American dollars for Mexican pesos, but then when he accompanied a friend to a Mexican bank approximately one week ago, that's when he discovered the policy change regarding dollar-to-peso currency exchanges.