STOCK MARKET WATCH -- Tuesday, 26 June 2012

[Demeter]

58. With No Vote, Taxpayers Stuck With Tab on Bonds MUNICIPAL HIGHWAY ROBBERY!

http://www.nytimes.com/2012/06/26/business/surprised-taxpayers-are-paying-for-bonds-they-did-not-vote-on.html?_r=1

Surprised local taxpayers from Stockton, Calif., to Scranton, Pa., are finding themselves obligated for parking garages, hockey arenas and other enterprises that can no longer pay their debts.

Officials have signed them up unknowingly to backstop the bonds of independent authorities, the special bodies of government that run projects like toll roads and power plants.

The practice, meant to save governments money, has been gaining popularity without attracting much notice, and is creating problems for a small but growing number of cities.

Data from Thomson Reuters suggests that local taxpayers are backing so-called enterprise debt at five times the rate they did 10 years ago. The resulting municipal bonds are sometimes called “double barreled,” because they are backed by both the future revenue of a project and some sort of taxpayer backstop. The exact wording and mechanics can vary. ..bond guarantees have been time bombs, causing problems too severe to be solved in a workout. Stockton may be headed for Chapter 9 bankruptcy this week after pledging taxpayer money to backstop authorities’ debts for a hockey arena and other showcase buildings. Scranton, a faded former coal center, touched off a full-blown debt crisis this month, losing access to the capital markets when its City Council refused to honor a taxpayer guarantee for a parking authority’s bonds....

READ IT AND WEEP FOR THE SUCKERS--SOME POLITICOS HAVE TO GO TO JAIL!