Farewell. The Flying Pig Has Left The Building.

Steve Hynd, August 16, 2012

After four years on the Typepad site, eight years total blogging, Newshoggers is closing it's doors today. We've been coasting the last year or so, with many of us moving on to bigger projects (Hey, Eric!) or simply running out of blogging enthusiasm, and it's time to give the old flying pig a rest.

We've done okay over those eight years, although never being quite PC enough to gain wider acceptance from the partisan "party right or wrong" crowds. We like to think we moved political conversations a little, on the ever-present wish to rush to war with Iran, on the need for a real Left that isn't licking corporatist Dem boots every cycle, on America's foreign misadventures in Afghanistan and Iraq. We like to think we made a small difference while writing under that flying pig banner. We did pretty good for a bunch with no ties to big-party apparatuses or think tanks.

Those eight years of blogging will still exist. Because we're ending this typepad account, we've been archiving the typepad blog here. And the original blogger archive is still here. There will still be new content from the old 'hoggers crew too. Ron writes for The Moderate Voice, I post at The Agonist and Eric Martin's lucid foreign policy thoughts can be read at Democracy Arsenal.

I'd like to thank all our regular commenters, readers and the other bloggers who regularly linked to our posts over the years to agree or disagree. You all made writing for 'hoggers an amazingly fun and stimulating experience.

Thank you very much.

Note: This is an archive copy of Newshoggers. Most of the pictures are gone but the words are all here. There may be some occasional new content, John may do some posts and Ron will cross post some of his contributions to The Moderate Voice so check back.


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Tuesday, February 16, 2010

A worthless guarantee in Harrisburg

By Dave Anderson:


Hypothetically, if I was to make a  notarized pledge that through the goodness of my heart, that I would act as the bond guaranteer to the Rivers Casino bond with all my personal assets, that guarantee would be worthless.  I don't have several tens of millions of dollars in immediate cash or liquid capital nor do I have access to several hundred million dollars in cheap credit.  Any default on the bonds would swamp the limited assets that I control, so investors who own the bonds would look at my guarantee and either laugh or completely discount it and then laugh.  I don't have the ability to make good on the obligation.


That is an absurd scenario, but it is only slightly less absurd than the guarantee issued by Harrisburg.  Harrisburg is considering defaulting on $300,000,000 in bonds because there is no viable way for the city to both pay off the debt and function.  Reuters has the details:


Harrisburg, Pennsylvania, moved a step closer to defaulting on a bond payment when its city council passed a 2010 budget that does not include $68 million in debt repayments on an incinerator...

The $2.072 million payment is the latest installment on a $300 million bond owed on the construction of the incinerator. An additional $637,000 is due on April 1.

City Controller Dan Miller said last year's payments on the incinerator were made from a debt service reserve fund that is now depleted.

Debt payments on the incinerator total $68 million in 2010, or more than the city's general fund budget of about $60 million, Miller said.



Harrisburg was guaranteeing debt that is five times its annual budget with a balloon payment that is greater than the annual budget. Pittsburgh is in Act 47 municipal quasi-bankruptcy because the total acknowledge debt is about 1.75 times the city budget and the total debt is roughly 4 times the annual budget.  My biggest question on the Harrisburg deal is why did any investor think that the guarantee was worth anything if there was any probability that the guarantee would actually be invoked. 


The city government in Harrisburg is acting responsibly for their stakeholders, the voters/citizens of the city, as they face an impossible situation as I described last year:



 Local governments will be making a decision of taking a hit on their credit by defaulting or crippling their community with an escalating cycle of tax rate increases to produce flat or declining revenues and horrendous services.  Sooner or later, pulling out of the credit market for five years will be very attractive. 


Tripling or quadrupling local taxes in order to pay off a bad deal is the only option for non-default. That is a ridiculous thing for any political entity to consider, and that is why the original guarantee was ludicrous.  We need to get the ludicrous and the ridicoulous out of the system so that it has a chance to work again.  Part of this process will be municipal governments looking at their debt obligations and their capacity to pay with an eye on renegoatiating or walking away from the absurd. 



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