Thursday, March 25, 2010

Build America Bonds: great for Wall Street, bad for Mississippi?



The Wall Street Journal had a few things to say yesterday in an editorial about the Build America Bonds program (Hinds County and other Mississippi governments are using the program.):

"Obama Administration and Congress are moving to subsidize even more federal and municipal borrowing through a program called Build America Bonds. These are a new type of state and local municipal bond, authorized by the 2009 fiscal stimulus bill as a temporary way to help open credit markets that were frozen. They no doubt did some good in the crisis, but naturally the politicians can't leave well enough alone and now want to make it permanent.

Unlike traditional munis, these new bonds aren't tax-exempt but rather carry a direct federal subsidy of one-third of their interest payments. Thus on a bond with a 7% interest rate, the issuing city government pays roughly 4.5% of the interest, and the feds pay 2.5%. These bonds also expand the pool of muni bond purchasers to nontaxable entities, such as pension funds, foundations and foreign investors. Conventional munis are mostly purchased by individuals in high-tax brackets. Treasury is proposing to reduce the federal subsidy to 28% of the interest but make it permanent
..... (Got that? the federal government is trying to insert itself and take over part of the muni bond market. Wonder how long it will be before the federal government starts placing "conditions" on the subsidy.).

Meanwhile, Wall Street firms have pocketed more than $1 billion in fees in less than a year from selling the bonds. Average underwriting fees are $8.20 per $1,000, according to a March 10 Journal story, compared with traditional tax-exempt fees of between $5 and $6 per $1,000. Goldman Sachs, a major Build America Bonds underwriter with some $10 billion in sales, has taken out advertisements urging Congress to make the program bigger and permanent. This is one banker bonus the politicians don't seem to mind.

We aren't surprised that everyone with government connections is happy when Washington pays cities and states to borrow more money. But no one mentions the downside: Build America Bonds will add hundreds of billions of dollars of new liabilities to the balance sheets of cities, states and Uncle Sam.....
" Column

Meanwhile, Florida decided to forgo the bonds for now because its not sure if the Feds could take part of the money raised from the bonds for moneys owed it for other programs. Suppose the state had a dispute with the federal government over Medicaid funding and it was argued the state owed $20 million. There is a serious question as to whether the federal government could seize that $20 million from the bond proceeds even though it was for a different program:

"Florida, a frequent issuer of federally subsidized Build America Bonds, is temporarily suspending its use of the highly successful program, state Finance Director Ben Watkins said Thursday.

Mr. Watkins told a Florida municipal bond conference, and then Dow Jones in a telephone interview, that he is "uncomfortable" with an Internal Revenue Service "offset" rule that he believes would let the federal government subtract from the bond subsidy any monies the state may owe it for other programs, such as Medicaid or Medicare.

Mr. Watkins said he has been asking for clarification of the rule for weeks and hasn't received any response other than being "shuffled around."

Given his uncertainty, he said, he decided to cancel a combined sale next week of $265 taxable new-money Build America Bonds and $160 million of tax-exempt refunding bonds
..." Article

Hope Hinds County and the rest of Mississippi don't get addicted to this stuff.

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS
.