Our Common Good

It is the third consecutive month that high-level bankers have been found guilty of manipulating the U.S. municipal bond market.

This time it is three former UBS executives who today were convicted of corrupting bidding processes and defrauding cities across the country, according to a Department of Justice press release.

The defendants, Peter Ghavami, Gary Heinz, and Michael Welty, were charged in 2010 but denied any wrongdoing, Reuters reported.

A federal jury in New York City found all three guilty of conspiring to commit wire fraud. Ghavami and Heinz were also convicted of substantive wire fraud.

"Ghavami, Heinz and Welty deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities to refinance outstanding debt," according to the release.

The DOJ, which has been leading such investigations under pressure from Obama’s Financial Fraud Enforcement Task Force (FFETF), was also successful in the conviction of former JPMorgan Chase & Co banker Alexander Wright on the same charges, Reuters reported.

Bet a Romney administration would not be going after bankers…..

climateadaptation:

One of my favorite blogs is The Big Picture, run by Barry Ritholtz. It’s primarily an economics blog for wonks.
A recent post introduces the difficulties of evaluating long-term municipal infrastructure finance (eg, capital improvement projects) in the context of cancelled infrastructure projects. Exciting, eh?
I don’t agree with every thing in the piece, but over all it’s an excellent introduction to a serious issue that cities around the country face: long-term budgetary shortfalls. Cities are, for the most part, taking in less taxes than they spend on services. As a result, politicians are forced to cut spending on things like services to the elderly, education, employee benefits, and, as here, beneficial drinking water projects (note: true, sometimes they cut on ideological reasons, but despite the headlines this type of action is rare).
Anyway, the above section of drinking water pipe has been leaking for decades. The red outline shows the leak location, and the dotted line shows a proposed fix - build a bypass pipe.
The leak is so big that people’s homes have had to be evacuated. There are expanding sink holes and people are suing for damages. So much water is leaking that it could fill 650,000 swimming pools, or provide 3million Bangladeshis with water per year. The leaks were to cost NYC $60million to fix - a drop in the bucket for NY.
The project got cancelled for budget cutting reasons. And now the leak continues indefinitely and fingers are pointing to who’s at fault (Grr! Bloomberg! Grr! Obama! etc. Grr! Financial vampires!).
Meanwhile, the leak continues, homes are threatened, and drinking water for NYC may be in trouble.

climateadaptation:

One of my favorite blogs is The Big Picture, run by Barry Ritholtz. It’s primarily an economics blog for wonks.

A recent post introduces the difficulties of evaluating long-term municipal infrastructure finance (eg, capital improvement projects) in the context of cancelled infrastructure projects. Exciting, eh?

I don’t agree with every thing in the piece, but over all it’s an excellent introduction to a serious issue that cities around the country face: long-term budgetary shortfalls. Cities are, for the most part, taking in less taxes than they spend on services. As a result, politicians are forced to cut spending on things like services to the elderly, education, employee benefits, and, as here, beneficial drinking water projects (note: true, sometimes they cut on ideological reasons, but despite the headlines this type of action is rare).

Anyway, the above section of drinking water pipe has been leaking for decades. The red outline shows the leak location, and the dotted line shows a proposed fix - build a bypass pipe.

The leak is so big that people’s homes have had to be evacuated. There are expanding sink holes and people are suing for damages. So much water is leaking that it could fill 650,000 swimming pools, or provide 3million Bangladeshis with water per year. The leaks were to cost NYC $60million to fix - a drop in the bucket for NY.

The project got cancelled for budget cutting reasons. And now the leak continues indefinitely and fingers are pointing to who’s at fault (Grr! Bloomberg! Grr! Obama! etc. Grr! Financial vampires!).

Meanwhile, the leak continues, homes are threatened, and drinking water for NYC may be in trouble.

What is to be done? To find an answer, listen to the markets. They are saying: borrow and spend, please. Yet those who profess faith in the magic of the markets are most determined to ignore the cry …

Contrary to conventional wisdom, fiscal policy is not exhausted. This is what Christine Lagarde, new managing director of the International Monetary Fund, argued at the Jackson Hole monetary conference last month. The need is to combine borrowing of  cheap funds now with credible curbs on spending in the longer term. The need is no less for surplus countries with the ability to expand demand to do so.

It is becoming ever clearer that the developed world is making Japan’s mistake of premature retrenchment during a balance-sheet depression, but on a more dangerous – far more global – scale. Conventional wisdom is that fiscal retrenchment will lead to resurgent investment and growth. An alternative wisdom is that suffering is good. The former is foolish. The latter is immoral.

cognitivedissonance:

The idiots who decided to extort the debt ceiling for their ideological demands, because they’re incapable of making their non-arguments persuasively enough in the usual court of public opinion, are not getting nearly enough shit for their psychotic, economically illiterate actions. Now the United States has the credit rating agency Moody’s on its ass and is placing the government’s debt rating under review — not over the manageability or size of the debt, but thanks this completely artificial statutory number

Here’s the sentence that should really grind our gears: “Moody’s considers the probability of a default on interest payments to be low but no longer to be de minimis.” This ridiculous refusal to pass a clean hike — or better yet, repeal — of the debt ceiling has suddenly created, out of the blue, the brand new concern that U.S. Treasuries aren’t guaranteed assets. Even if a ceiling hike eventually takes place. Some precedent you’ve set, morons.

This is exactly how I feel about this - I’ve lost all patience with ideologues taking the US economy hostage because they want to further screw the poor and give the wealthy more tax cuts.

How are tax loopholes, subsidies, etc. NOT government handouts?