SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
A little hypey

Monday, Mar 10, 2014

* AP headline

Study: Fiscal ’scarlet letter’ costs state extra $80M

* From the story

The study, conducted by DePaul University professor Martin Luby, a visiting researcher at the U of I institute, and Tima Moldogaziev of the University of South Carolina, set out to determine whether interest rates were even higher than other states’ rates in similar situations. They used a “’scarlet letter’ metaphor to note the hypothesized incremental risk premium demanded by investors on bonds that carry the name ‘Illinois.’” […]

“That’s above what the state should have been paying based on our worst-in-the-nation credit rating,” Luby said. “That’s one expensive reputation.”

OK, but we’re talking two-tenths of one percent, or about $16 million a year on average.

Yes, that money could’ve been better spent elsewhere, but it’s not a hugely gigantic pile of cash in the state’s overall budget.

- Posted by Rich Miller        


23 Comments
  1. - Empty Chair - Monday, Mar 10, 14 @ 2:39 pm:

    I’m sure JBT would disagree. That $80 million could have paid some vendors who are cash strapped because of the backlog.


  2. - funny guy - Monday, Mar 10, 14 @ 2:42 pm:

    Couldn’t agree more– cut out corruption and sweetheart deals sqq priceless!


  3. - Budget Watcher - Monday, Mar 10, 14 @ 2:52 pm:

    Sure it’s relatively small in the overall state budget, but $16M certainly could have paid for a few more anti-violence grants or other legislative minority caucus grants.


  4. - Bobby Hill - Monday, Mar 10, 14 @ 2:57 pm:

    - “OK, but we’re talking two-tenths of one percent, or about $16 million a year on average….but it’s not a hugely gigantic pile of cash in the state’s overall budget.”

    I guess I am wired differently, I just don’t think like that.


  5. - John A Logan - Monday, Mar 10, 14 @ 2:59 pm:

    Yeah……16 Million is chump change. No need to be concerned.


  6. - Norseman - Monday, Mar 10, 14 @ 3:07 pm:

    That’s an accounting error in Healthcare and Family Services.


  7. - Walker - Monday, Mar 10, 14 @ 3:14 pm:

    Read carefully.

    ===interest rates were even higher than other states’ in similar situations.===

    What they’re saying is that the rating agencies are overstating Illinois’ risk.

    Being unreasonably cautious, probably due to their previous errors.


  8. - Walker - Monday, Mar 10, 14 @ 3:17 pm:

    Their “red letter” (think “A”) is sardonically expressing an unfair, unwarranted, image-based rating.


  9. - DrVoodoo - Monday, Mar 10, 14 @ 3:24 pm:

    ===Illinois paid a “risk premium” based solely on buyers’ perception of its credit stability. The credit rating has worsened since then.===

    I’m not confident that the risk premium was out of line given that the rating has worsened. Sounds like they were building the potential for a worsening rating into the price, which was not a control point for the study.


  10. - just asking - Monday, Mar 10, 14 @ 3:26 pm:

    don’t all these not hugely gigantic piles kind of add up? I’m with Bobby H. as long as any waste is too small to worry about the institutional spiral keeps on rollin.


  11. - What is to be done? - Monday, Mar 10, 14 @ 3:40 pm:

    Puerto Rico to Sell $3 Billion GOs on Tuesday

    $3′Large’will be the largest muni deal ever. The new bonds will have a coupon that pushes 10% - and they will be priced in the hole to give the big-buck buyers a quick boost (retail investors will not see a dime of these bonds). These are tax free, so the fat cats will have a real yield pushing 16%! Thank you Uncle Sam!

    The underwriters stand to make a quick $40+ million in fees. Come Tuesday night, the Champagne will be flowing.(I think the deal will be a blowout success the whole $3B was all spoken for as of Friday)

    The best part of the deal(for the Street)is that the new bonds will be Senior to most of PRs other $70B of bonds. Thats because PR got rolled over a barrel and was forced to allow these bonds to be subject to NYS law meaning that the new bond holders can grab collateral, and force the other creditors to the back of the bus when the SHTF.

    In my estimation, the $3B deal will buy PR at least 24 months before the next credit crunch hits. I have little expectation that PR is going to turn things around in that period of time, so the crunch will happen. But that’s so far away that PR, and its financial woes, will fall off the headlines. As that happens, the new bonds are going to rip up in value a 10% pop in these bonds is a distinct possibility. That would mean that come Tuesday, those who get to play in this sand box stand to rake in an �extra� $300m.

    By Christmas, the new PR bonds will have been sold at big premiums over par to yield-hungry retail investors�(more Champagne). And the poor retail guys will be wondering what they bought sometime before 2017.

    So Hurray for Wall Street and the moneymen. The fact that $3b can be raised for a troubled credit (that does not have a rosy future) is a measure of power. WS can do what the IMF cant provided it gets paid well for the effort.


  12. - Walker - Monday, Mar 10, 14 @ 3:41 pm:

    @DrVoodoo:

    You might be right; but wouldn’t ==”building the potential for a worsening rating into the price”== undercut the value of rating agencies as well? What are they there for, if not to competently predict future risk at a given point in time?


  13. - Formerly Known As... - Monday, Mar 10, 14 @ 3:48 pm:

    While this is not the end of the world, it does remind me of an iconic Illinoisan.

    To semi-quote Everett Dirksen: “A million here, a million there, and pretty soon, you’re talking about real money.”

    $16 million here, $30 million there…


  14. - DrVoodoo - Monday, Mar 10, 14 @ 3:53 pm:

    @Walker:

    I agree with that assessment, but rating agencies definitely signal changes before making changes, and they don’t necessarily make changes in real time. Investors will make their own assessments beyond the ratings agencies, as they should. There are even discrepancies in ratings between the agencies at any given time.

    Of course, the ratings agencies credibility during that 2005-2010 period has been pretty substantially questioned post-financial crisis, and with good reason, so there is that.


  15. - Walker - Monday, Mar 10, 14 @ 3:55 pm:

    @DrVoodoo: Upon reflection:

    You’re right, I was wrong.

    Not an uncommon position for me.


  16. - $54.5 Million - Monday, Mar 10, 14 @ 4:06 pm:

    We Really need to pay our Bills! But if we wonder why we are in such bad shape. Its not the Pensions!!! It the gross mismanagement of tax payers money. How can a Governor use $54.5 million on an anti-violence campaign. This would have paid over 2/3 of the bills we owe. Then we cannot figure out where that some of the $54.4 million went. It looks like squeaky clean Pat may have been caught with his hand in the cookie Jar. Nobody cares, its public funds. Billions given to financial institutions, they don’t have to pay back. The Automobile bailout, not being paid back. Taxpayer fund just disappear and nothing is done. Until public officials are being held responsible for their actions, it will not stop. If there is no consequences public officials just keep giving out the cash. If they violate the public trust and misuse our money, somebody has to pay


  17. - VanillaMan - Monday, Mar 10, 14 @ 7:09 pm:

    That couldn’t even buy Pat Quinn votes on the South Side.


  18. - concern1 - Tuesday, Mar 11, 14 @ 4:29 am:

    $16 million is not a “huge pile of cash” ok send it my way then….this state has piles and piles of little piles of $16 million each…can this state get any more corrupt…ridiculous!!!!!!


  19. - Skirmisher - Tuesday, Mar 11, 14 @ 8:46 am:

    Rich- If you are of the opinion that $16 million flushed down the drain to no purpose is no big deal in the great scheme of wasteful state spending, then perhaps you have been consorting too long with Illinois politicos. Their mentality may be rubbing off on you.


  20. - Stuff happens - Tuesday, Mar 11, 14 @ 9:18 am:

    === OK, but we’re talking two-tenths of one percent, or about $16 million a year on average.
    ===
    === Yes, that money could’ve been better spent elsewhere, but it’s not a hugely gigantic pile of cash in the state’s overall budget.

    I keep telling the Illinois Department of Revenue that when it’s time to pay taxes, but they won’t listen. “It’s just a few thousand, and in the grand scheme of things it’s really not going to make a difference. Let me slide on it.”

    But then they tell me that they have to pay for bad credit ratings because they thought they could keep writing checks as long as there were checks in the checkbook.


  21. - olok1973 - Tuesday, Mar 11, 14 @ 9:30 am:

    “A million here, a million there”? You know the rest of the story. Are you on the Pat Quinn PR crisis team Rich?


  22. - Yellow Dog Democrat - Tuesday, Mar 11, 14 @ 9:45 am:

    I’d argue that the state’s bond rating is a lot less damaging to our economy and our budget than the incessant “Illinois is anti-business” from the business lobby.

    Of course, if the “scarlet letter” bond rating bothers folks, the simple solution is to not borrow money.


  23. - Demoralized - Tuesday, Mar 11, 14 @ 9:48 am:

    ==simple solution is to not borrow money==

    And how do you suggest we take care of capital needs, like building roads? You can’t just stop borrowing money.


Sorry, comments for this post are now closed.


* Reader comments closed for the weekend
* In which I agree with the governor
* Stuff you may not know about Illinois pensions
* It's just a bill
* Question of the day
* AG Madigan wants expansion of hate crime law
* Déjà vu all over again
* Rauner defends grand bargain parameters
* "We are proud to call him one of our own"
* Springfield holds its collective breath as strike talk mounts, budget impasse continues
* *** LIVE *** House session coverage
* SUBSCRIBERS ONLY - Supplement to today’s edition
* Yesterday's stories

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............
<


Loading


* AFSCME authorizes public-employee strike - Du Q.....
* Governor Talks Strike Costs - Alton Daily News..


* Pulling for success: Class helps build strength, confidence
* EXCHANGE: Water World exhibit opens at Sycamore museum
* Chicago police reports overnight raids ended with 81 arrests
* 2 more men charged in shooting death of toddler in Chicago
* University of Illinois veterans help Danville fire victims
* Second man charged in shooting death of 2-year-old
* Best tactic for some governors is to avoid mention of Trump
* Dems invite immigrants to Trump's first address to Congress
* Former Lake County coroner pleads not guilty to perjury
* Baby born premature dies after mother shot dead in Chicago

* Durbin wants open look at Russian involvement in election
* Trump puts moderate GOP governors in awkward spot
* Economic stakes high for Springfield in labor showdown
* AFSCME authorizes strike, but still wants to bargain with Rauner
* AFSCME members authorize leaders to call strike
* Madigan forms Illinois House panel to address school funding
* Ex-U.S. Rep. Jackson gets about $138,400 in annual benefits
* AFSCME members authorize leaders to call state employee strike
* AFSCME will announce results of strike-authorization vote Thursday
* Hastert victim again argues for remainder of hush money

* Pols emulate Trump's bombastic ways at their peril
* Tollway gets new help in O'Hare access fight
* Boeing to open Its first European plant—in the post-Brexit U.K. ​
* GOP Obamacare plan would cover fewer people; blowback grows
* GOP health plan would cover fewer Americans


* 2 killed in West Chicago wreck
* Burglars taking materials from West Side vacant buildings
* Georgia Nicols horoscopes for Feb. 25, 2017
* Dear Abby: Creepy boy follows around eighth-grade girl
* Editorial: Billionaire pols could use a little farm team training
* 2 in custody after shooting in Brighton Park
* The new-look Bulls roster passed their first test in overtime win
* Trump administration drops support of local transgendered student
* Can Schwarber go from legend of the fall to early riser for Cubs?
* Sneed: Trump’s excoriation of the press is out of bounds


* Report: Muhammad Ali's son was detained at Florida airport, asked 'Are you Muslim?'
* Major Republican donors' stake in far-right media outlet Breitbart is confirmed
* VP Mike Pence tells Jewish group world will know U.S. supports Israel
* Agency plans to award Mexico border wall contracts by April
* Witnesses: Bar gunman shouted 'get out of my country' before shooting 2 Indians at Kansas bar
* Old fashioned: Dwyane Wade and Jimmy Butler huge in overtime victory over Suns
* As election day approaches, here's a review of the Aurora mayoral race
* Shooting that killed toddler was retaliation against boy's uncle, 3rd man charged: prosecutors
* Challengers cite Ald. King's political advantages, say 4th Ward needs change
* Violence endures at Parkway Gardens, even with a deep-pocketed owner


» Rauner Has Plan To Keep Government Running In Case Of Strike
» Congressman Rush Declares His Offices As Sanctuaries
» Weekend Funerals For Young Victims Of Chicago Violence
» CPS Relents, Returns $15 Million to Poorest Chicago Schools
» Doctors Discuss Alternatives To Opioids For Pain
» State Week: Will AFSCME Strike?
» Illinois Lawmakers: NEIU Student Workers Can Only Keep Jobs If State Passes Budget
» Civil Rights Investigation Into Cicero Schools Not Its First
» Indivisible Illinois Activists Concerned About Bobby Rush's Absence From Congress
» Regional Farmers Concerned About Effects Of Immigration Directives


* Durbin wants open look at Russian involvement in election
* Charles Krauthammer: Trump and the ‘Madman Theory’
* Guest Column: Finding beauty in trash
* Trump puts moderate GOP governors in awkward spot
* Economic stakes high for Springfield in labor showdown
* AFSCME authorizes strike, but still wants to bargain with Rauner
* Thumbs Down: To attempt to reinstate Legislative Scholarship program
* Ralph Martire: More ambiguity than Illinois can afford
* George Will: America’s predictable pension crisis
* Eugene Robinson: Obamacare has staying power


* Needed — Big brothers: About 30 waiting for role models to inspire, help them grow
* Reader photo: Bolt from the blue
* History with some soul (food)
* Local dentists don't support 'dental therapists'
* Cdr. Margaret Rose Ruppert, NC USN (ret.)
* James 'Jim' Griffith
* Julia Farris
* Gerry Mercer
* Danny Shelton
* David MacLeod


* No. 21 Drake women win record 17th straight, clinch title
* Benn's goal breaks tie in 3rd, Stars beat Coyotes 5-2
* DeRozan has career-high 43, Raptors beat Celtics 107-97
* Foster, Fox call for unity at rally for immigration rights
* Two dead after head-on collision in West Chicago

* Hultgren to participate in veterans forum ...
* Hultgren criticizes immigration ban, Roska...
* Majority of IL Congressional Delegation Op...
* US Congressman tours new Aurora Specialty ...
* Rep. Hultgren stands up for ACA repeal - C...
* Protesters converge on U.S. Rep. Randy Hul...
* GOP congressman appears to distance himsel...
* US Representative Randy Hultgren visits ne...
* Hultgren to join veterans' forum at Geneva...
* DeKalb County activists seek parley with C...

* Durbin to Trump: Stop Tweeting and Provide......

* Ernst Leads Letter to EPA Expressing Suppo......

* “The Driver’s Side” – News From The Motorist’s Perspective
* Trump makes it just so difficult for anyone of sense to sympathize w/ him
* The women’s marches showed America at its best
* As Trump kicks out reporters, the Washington Post declares war on 'darkness'
* Take the Trump survey and rate the perfidious media
* Mayor Rahm and Alderman Lopez cut a deal on the property-tax rebate
* Brain Damage In Former Players Fuels Soccer 'Heading' Fears
* Bannon, The Best And The Brightest
* Cal City Candidates Called Upon
* Protect America rally adds speakers for Saturday at noon


* Governor Bruce Rauner Honors Carnegie Hero From Buffalo Grove
* Governor Addresses State Board of Education to Emphasize Importance of Strong Accountability Standards
* Stars and Legends to Perform at 2017 Illinois State Fair - First Round of Grandstand Headliners Announced for Springfield Fair
* Earthquake Education Kiosk Unveiled at University Mall in Carbondale - IEMA, Central U.S. Earthquake Consortium project will help southern Illinois residents reduce damage, injuries from earthquakes
* Governor Takes Bill Action

  
* Google talks RCS and the default messaging situation on Android
* Facebook’s mobile prodigy launches video charades game
* Sign-up page for Samsung Galaxy S8 updates leaks
* Giveaway: Win a Scosche MagicMount Power Bank (USB-C)!
* [TA Deals] Get the Complete Machine Learning Bundle for $39!
* SoFi confirms $500 million in new funding as it pushes beyond lending
* Samsung's Never-Ending Battle With Apple Over 'Slide to Unlock' May be Headed to Supreme Court

* Quintana eager to face USA, teammates in Classic
* Buehrle 'blown away' by having number retired
* Fulmer gets nod to start Cactus League opener
* Frazier rewarded for design work on Glove Day
* Starter for Saturday's spring opener TBD
* White Sox Tilson hopes to return next week
* Improving Anderson a key piece to Sox rebuild


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress




Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller