QUOTE OF THE DAY
Bloomberg: Chicago Pension Evokes Illinois Before Python Slain: Muni Credit
Squeezy the Pension Python has slithered north to Chicago.
The cartoon snake, which Illinois Governor Pat Quinn used to symbolize retiree costs that are strangling the state’s finances and undermining its credit rating, is now smothering Chicago. The third-most-populous U.S. city had its general-obligation grade cut by Moody’s Investors Service last week to three levels above junk. Excluding bankrupt Detroit and Stockton, California, that’s the lowest among the 90 biggest U.S. cities, data compiled by Bloomberg show.
The downgrade raises bond costs for Chicago, which is borrowing about $880 million this week through a sale of general obligations, said Peter Hayes at BlackRock Inc. and John Miller at Nuveen Asset Management. The city can ill afford the extra expense as it faces $590 million in additional pension payments next year, threatening a tax increase and cuts in everything from police to garbage collection.
“Chicago suffers from the delays of pension reform from the state,” said Miller, who oversees $90 billion of munis as Nuveen’s co-head of fixed income in Chicago. “They could be and should be a way better credit than this — the problem has been clearly identified. It’s really a matter of politics.”
Crain’s Chicago: What downgrade? Chicago sells $900 million in bonds
Despite a recent downgrade in its credit rating, the city of Chicago saw surging demand yesterday for a big sale of bonds.
Originally planning to sell $405 million, the city ended up selling $884 million in bonds of various maturities. Bond sales are a balance based on interest rates and demand for the debt. As interest rates began coming in lower than expected, city officials raisedthe amount of bonds they expected to sell. Even so, demand still outstripped that higher goal by about $100 million, city officials said.
Chicago Tribune: Chicago subpoenas insurance records from ride-share firms
The three major for-profit ride-share companies operating virtually unregulated in Chicago face a Friday deadline to respond to a subpoena calling on them to turn over copies of their insurance policies, officials said.
The subpoenas were sent to Uber X, Lyft and Sidecar this month by the city clerk on behalf of the Chicago City Council.
Insurance experts and taxicab companies have sounded alarms that ride-share customers aren’t protected by ride-share drivers or companies for any medical or other expenses resulting from an accident involving a ride-share vehicle.
NBC: Interest on Illinois’ Unpaid Bills Reached $318M
Interest payments on Illinois’ late bills cost the state $318 million last year — enough to cover the annual budget of the Illinois State Police.
According to a report by the Springfield bureau of Lee Enterprises newspapers, the state auditor’s overview of Illinois’ finances shows interest payments from fiscal year 2013 were more than double what was paid in the previous year.
In 2012, the interest amounted to $136 million. It was $91 million in 2011.
There have been dozens of ObamaCare delays or major revisions via administrative fiat, including four so far this year, but there’s one in particular that the Health and Human Services Department prefers to keep hidden: the individual mandate waivers that we exposed Wednesday.
HHS Secretary Kathleen Sebelius also happened to testify Wednesday in front of the HouseWays and Means Committee, and Tennessee Republican Diane Black asked about “ObamaCare’s Secret Mandate Exemption” (March 12). Ms. Sebelius said she hadn’t read the editorial but did call Ms. Black’s gloss “not accurate”—before going on to confirm that it was, in fact, accurate.
“The hardship exemption was part of the law from the outset,” the Secretary said. “There was a specific rationale there, and it starts with the notion that if you can’t afford coverage you are not obligated to buy coverage.” That’s true: But in December last year HHS ruled that ObamaCare itself was a hardship; people whose coverage was cancelled and believe the new plans are unaffordable were thus relieved of the requirement to buy insurance or else pay a penalty for the law’s first year. Our scoop was that HHS last week quietly extended this dispensation until 2016.
Real Time Economics: Fed Won’t Raise Rates Until Mid-2015, Economists Say
Most economists surveyed by The Wall Street Journal think the Federal Reserve won’t raise interest rates before June 2015 despite a falling unemployment rate and improving economy.
The Fed has said it will keep short-term interest rates near zero, where they have been anchored since December 2008, “well past the time” the jobless rate falls below 6.5%. It ticked up to 6.7% in February, according to the Labor Department, but economists in the survey estimated it will hit the 6.5% threshold this June.
A plurality of economists, 27%, said the Fed’s first rate increase will come in June 2015, but 30% expect the Fed will raise rates sometime before then. “Short-term policy stays accommodative around the world,” said Mesirow Financial chief economist Diane Swonk.
Mashable: Zuckerberg: The U.S. Government Is a Threat to Internet Security
Mark Zuckerberg has had it up to here with the United States government.
The Facebook CEO took to his public profile page Thursday to express his frustrations about the way the U.S. government has handled Internet security in recent months.
It’s a sensitive issue for Facebook, a company under continuous scrutiny regarding privacy issues that most recently came under fire last summer when reports surfaced that Internet companies sent user information to the NSA. Zuckerberg denied the reports at the time and said that the claims were harming Facebook’s reputation among its users.
CARTOON OF THE DAY
