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[24 Feb 2011 | No Comment | ]

Illinois credit ratings are the equal of corporate junk bonds, yet Illinois had to pay significantly higher interest rates to lure investors to buy the crap. According to the Wall Street Journal: Illinois officials were forced to promise a yield…

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[29 Dec 2010 | No Comment | ]

The cost of insuring Illinois’s bonds against default rose to the highest level in five months as the state headed for the new year without a plan to finance a $3.7 billion pension-fund…

(If you like this story, come vote it up on WindyCitizen.com)

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[10 Dec 2010 | No Comment | ]

Washington is still playing political games with the December 31, 2010 expiration of the Bush tax cuts. On Saturday, Democrats forced a vote to extend the tax cuts for most, but allow them to rise on incomes over $250,000. The vote failed. But don’t let this legislative gamesmanship alter your outlook. We aren’t.

As we wrote in August, Congress and the President are going to agree to extend all the income tax cuts enacted in 2001 for all earners, including the ones with the highest incomes. …

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[5 Nov 2010 | No Comment | ]

Back in 1992, the Democrats’ mantra was “It’s the Economy, Stupid.” The economy was recovering from the 1990-91 recession, but job growth was slow and the unemployment rate held stubbornly in the mid-7% range. Despite real GDP growth of 4.3% in 1992, Republicans could not overcome negative feelings about the economy and lost the election to Bill Clinton.

We bring this up because we were struck by how unanimous the Republican attack on Friday’s third quarter report on GDP growth. Republicans are using the same playbook that worked …

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[26 Oct 2010 | No Comment | ]

A prominent investment story in last Friday’s Wall Street Journal said that so far in 2010 Bridgewater Associates, a Connecticut-based hedge fund run by Ray Dalio, had racked up a 38% return.

But that’s not what got our attention. What got our attention was the “hook” – the central idea that made the story worth the WSJ’s time: that Bridgewater was a “Big Bear” and achieved its large return with a “wager that the U.S. economy would be in worse shape than many expected.”
Being bearish is cool these days. …

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[8 Oct 2010 | No Comment | ]

In case you missed it, Medill Reports that the Metropolitan Pier and Exposition Authority(McPier) is taking taxpayer money to invest in enterprise which benefits McPier
The $1.1 billion bond offering will include $921 million to pay off existing debt as well as $200 million for hotel expansion plans. The new money will help build a new 450-room tower onto the 800-room Hyatt Regency McCormick Place hotel, which is owned by McCormick Place authority and run by Hyatt management.
Retiring old bonds sounds sensible enough, but what in the name of Hades is …

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[7 Oct 2010 | 7 Comments | ]

“In the year 1000, the average infant could expect to live about 24 years. A third died in the first year of life. Hunger and epidemic disease ravaged the survivors. By 1820, life expectation had risen to 36 years in the west, with only marginal improvement elsewhere. After 1820, world development became much more dynamic. By 2003, income per head had risen nearly ten-fold, population six-fold. Per capita income rose by 1.2 per cent a year: 24 times as fast as in 1000-1820. …

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[5 Oct 2010 | No Comment | ]

Illinois capital-markets director John Sinsheimer and Citigroup Inc. bankers took a globe-girdling trip from the U.K. to China in June to persuade investors that the state’s $900 million of Build America Bonds were a bargain.

The seven-country visit worked. The state sold one-fifth of the federally subsidized securities abroad the next month, tapping investors who are the fastest-growing source of borrowed cash for U.S. municipalities. Illinois, with the lowest credit rating of any state from Moody’s Investors Service, dangled yields higher than Mexico, which defaulted on debt in 1982, and Portugal, …

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[3 Sep 2010 | 3 Comments | ]

You remember credit default swaps, right, the financial “instrument” that pricked the housing and economic bubble?
Illinois is “enjoying” the same kind of debt bubble that led the nation into its current financial mess. I call it a debt bubble because if all the borrowing that the state does to keep it afloat ever becomes no longer possible, if Illinois defaults on the bonds it has sold to millions of investors, Illinois is finished. Kaput.

It might surprise you that under girding Illinois’ massive debt are credit default swaps (CDS), the same …

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[24 Aug 2010 | No Comment | ]

The following are facts, based on the government’s own figures.

Obama’s stimulus, passed in his first month in office, will cost more than the entire Iraq War — more than $100 billion (15%) more.
Just the first two years of Obama’s stimulus cost more than the entire cost of the Iraq War under President Bush, or six years of that war.
Iraq War spending accounted for just 3.2% of all federal spending while it lasted.
Iraq War spending was not even one quarter of what we spent on Medicare in the same time frame.
Iraq …