This short Reuters piece summarizes the status of the municipal bond insurance market, which froze up during the financial crisis and shrunk dramatically in its wake. Municipal bond insurance became much less common as a credit enhancement than it had been pre-2008, when it was often purchased by issuers in hopes of better ratings, interest rates and market acceptance for new issues than they would have garnered in their “natural” state. The ecology of the original small community of muni bond insurance firms changed as well in the pivotal period of turmoil, with several exiting and a few new ones springing up in recent years (though not all independently; MAC was established and is owned by Assured Guaranty (http://assuredguaranty.com/investor-information/by-company/mac) or more exactly by some of its parts (http://assuredguaranty.com/about-us/corporate-structure)). As the Reuters article explains, 2013 data suggest the muni insurance industry may be showing signs of a rebound, or at least, a slowed decline.
US municipal bond insurance’s contraction slowed in 2013 (Reuters)
Here’s another interesting backgrounder on the shutdown, this time on the Antideficiency Act which governs how the shutdown takes place.
The Odd Story of the Law That Dictates How Government Shutdowns Work
A shutdown would end up costing more because of the price of restarting the government — and other strange facts about the late-1800s Antideficiency Act.
The federal government is approaching a shutdown, continuing a pattern of brinkmanship as every new deadline approaches – rather than disciplined and regularized budget process observance. Even should we make it past this turn of the fiscal year without a shutdown (unlikely) the symbolic raising of the debt limit deadline is just around the corner. We are currently operating in the “sequester” which I discussed in a previous semester. As you observe events unfolding in these unusual budgetary times, make an effort to get past ideological shortcuts and take an analytical perspective based on your learning in the MPA program.
Observing the executive and legislative branches’ behavior and gamesmanship in recent years makes the detailed budget processes covered in the textbook appear meaningless. Nevertheless, the players in this drama (and it is depressingly dramatic; boring routine in fiscal matters would be a refreshing relief, and would be better received by the markets) are quite aware of the institutional rules which they can manipulate to force confrontation; those rules are grounded in budgetary and fiscal legislation.
Quartz.com (an Atlantic Monthly property, also publishes Government Executive) addresses “Who will notice a US government shutdown” – the metaphor of ice freezing through the economy over time as a shutdown persists is particularly apt. The New York Times bemoans the fact that the shutdown 17 years ago appears to have left little impression on the Congress of today – “Last shutdown a lesson lost on Capitol Hill” The Wall Street Journal summarizes recent events leading up to the shutdown.
The intergovernmental impact of a shutdown is substantial. Governors respectfully request that Congressional leadership not slam on the brakes, in a letter at the National Governors Association; note the emphasis on the value of predictability. The nations’ mayors oppose a shutdown as well. The National Conference of State Legislatures provides a location for updates on the impact of the shutdown.
Largest municipal bankruptcy yet announced today:
NYTimes: Detroit Goes Bankrupt, the Largest City to Do So in U.S.
"The decision by the city, the cradle of America’s automobile industry and once the nation’s fourth-most populous, also marks the largest municipal bankruptcy filing in American history in terms of debt."
An intriguing intergovernmental problem: when the Feds come down on you for NOT spending their money…
NYTimes: California Failed to Spend Millions on Water Projects, E.P.A. Says
The state failed to spend $455 million of federal money meant to improve water infrastructure in the state, the Environmental Protection Agency said Friday.
Note how the IRS tries to focus limited audit resources on returns with characteristics likely to predict cheating using mathematical modeling. I like the quote about its success from the IRS publication – elegant bureaucratic understatement.
AP Exclusive: Likely tax cheats flock South, West