The laws regarding debt restructuring are complex, and the status of bondholders in such cases is much higher in the “capital structure;” in many cases, more akin to secured creditors at an operating company level than a typical senior unsecured corporate bond at a holding company level…
The U.S. court system is highly unlikely to allow a state to impose permanent losses on investors in GO debt…
Bond security is very strong for most debt issuances, and is provided for in state constitutions, statutes, covenants with bondholders, and local ordinances. U.S. state and local government bonds are usually secured by a general obligation of the issuer. For local governments, this is generally accompanied by an unlimited property tax pledge and such taxes are senior to the property’s mortgage obligation. Other commonly issued municipal bonds are secured by a first lien on sales or income taxes.
So we have a case of Mark Thoma's Public Sector Unions able to dictate our future pension obligations behind closed doors ten years ago. Hurray for Mark Thoma. Now we have Felix Salmon celebrating the fact that courts are bound to send squads of Sheriffs to take possession of our homes. Hurray. We have Chris Romer subsidizing the federal government with 28% of our income taxes. Hurray.
It seems to me we have a good cause for secession, nullification. At least, Romer, Thoma, and Salmon (Baker, Krugman, etc) engaged in a serious case of fraud in their economic analysis for ten years. More importantly, the state government is on the edge of a Due Process requirement with the Dills Act. Find me the place where Fresno voters were allowed transparency and rights in this process. It seems to me we have a voter rights issue or an anti-trust issue. Start the lawsuits. California should start by firing the entire economic department of Berkeley.
No comments:
Post a Comment