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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Why Rhode Island Isn't Defaulting On Its Moral Obligations |
Seeking Alpha - May 2, 2013 - By Felx Salmon
Josh Barro had a strong column Wednesday on the confusion and hypocrisy in Rhode Island; he gets equally strong support for his position from Ted Nesi.
The argument here is pretty simple. The state of Rhode Island has various obligations; among those obligations are pension obligations, general obligation bonds, and moral obligation bonds. The legislature and governor of the state are happy defaulting on their pension obligations, which are contractually obliged to rise in line with the cost of living: by freezing the pensions instead, some retirees will see their incomes slashed by a third.
Yet at the same time Rhode Island is determined to pay out the holders of moral obligation bonds in full.
Rhode Island’s pensioners would seem to be more deserving than the moral obligation bondholders, who sought out those bonds precisely because they carried an excess yield. The market priced in the fact that the bonds were more likely to default than general obligation bonds — and yet, when push came to shove, the state is standing behind those bonds, even as it cuts a billion dollars from promised future pension payments.
I think the argument here is a solid one, but there’s a gentle whiff of the faux-naive about it, as well. So without taking Lincoln Chafee’s side of the argument, let me try to explain what he might say, were he in a position to be honest about things.
The key here is the legislature voters. Why would any state ever issue non-legally-binding moral obligation bonds rather than legally binding general obligation bonds, given that the moral obligation bonds cost more to service? The answer is simple: general obligation bonds can’t be issued without the legislature’s voters’ approval, and getting that approval is a pain. So the executive doesn’t bother, and issues moral obligation bonds instead.
For the complete article.
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| Stuff to look at |
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Income Security Recommendation January 2013 Issue.
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