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Political Event Risk Warning:

Pensions and Gilets Jaunes

Sometimes meanings and distinctions can be lost in translation so it is important to not only check the facts, but also the context. Nowhere is this more true than in the understanding by Americans about the French "gilet jaunes".  No, it is not about farmers.  Although farm tractors have been used for demonstrations (or "une manifestation" or "une manif").  The protests are first and foremost about being French. The Constitution of the First Republic enshrined this right as"the most sacred of rights and the most indispensable of duties."  La rue (the street) has become synonymous with popular protests in France. A synonym for "to protest march" is batte le pave (pound the pavement).

France is still gripped by the longest running  mass demonstrations by the "yellow vests" since WWII. The protest is against the government's plans for pension reform.  FYI, those yellow vests are required to be stored in every car so they are ubiquitous and common place in France — the perfect uniform for popular protestors against any plans to reform public pensions.

As a foreign observer of a protest, I was surprised by a sign: MAKE OUR RETRAITES (pensions) GREAT AGAIN.  Who says politics don't travel.

SRG Political Event Risk

Unfunded pension liabilities have risen to the forefront of investment grade credit analysis over the past five years. The Government Accounting Standards Board (GASB) has done a lot of work to reform the way states and local governments report  the size of the unfunded pension liability.



NYC HDC Launches Housing Impact Bonds

The New York City Housing Development Corporation (HDC) announced the inaugural issuance of $375 million of Housing Impact Bonds, a new category of Sustainable Development Bonds. The 2020 Series Bonds will finance the preservation and rehabilitation of 2,625 NYCHA homes across 37 tenant-occupied public housing buildings and two non-residential community centers throughout Brooklyn.

Jefferies-led the $375mm taxable and tax-exempt NYC HDC Housing Impact deal which saw strong subscription levels.The taxable portion was bumped 2bps from preliminary pricing in various parts of the curve.

The New York City Housing Development Corporation (HDC) is the nation's largest municipal Housing Finance Agency and is charged with helping to finance the creation or preservation of affordable housing under Mayor Bill de Blasio's Housing New York plan. HDC also serves as a key financing partner in the rehabilitation of the City's public housing stock under the NYCHA Permanent Affordability Commitment Together (PACT) initiative. Since 2003, HDC has financed more than 184,000 housing units using over $24.2 billion in bonds and other debt obligations, and provided in excess of $3.095 billion in subsidy from corporate reserves and other available funds held by the corporation. HDC ranks among the nation's top issuers of mortgage revenue bonds for affordable multi-family housing on Thomson Reuter's annual list of multi-family bond issuers. In each of the last five consecutive years, HDC's annual bond issuance has surpassed $1.6 billion



Cybersecurity for Poets #1

The Three Little Pigs Build Networks

  — by Hans Holmer

The Times Progress but Pigs Don't

By way of introduction, last time we heard from the three little pigs they had set themselves up in the building trade. One had built a straw house, the second a house of sticks and the wise little pig had built one of bricks. When the big bad wolf arrived he naturally made short work of the straw and stick houses. The builders of those houses fled into the brick house and when the wolf tried to climb down the chimney he was deterred by a pot of boiling water.

Well, times have developed and those three little pigs have decided that they need some computer networks. Pigs need computer networks as much as they need houses or cooking pots in fireplaces.

The First Little Pig

The first little pig never really considered the environment that his network would be in, just as he knew about wolves but the house was only intended to protect him from the weather. The network was built to be cheap and fast to deploy and the little pig had long played with computers so it was not hard to set up a router and a bunch of computers for all the pig colleagues that needed a place to store their files and receive pig mails. The network was quickly on line and little trotters typed the traditional piglet typeface called Sans Cutlet.

The Second Little Pig

The second little pig knew that his network was likely to get bigger with time and set out to plan for that, so he hired a contractor pig to design and build the network.






5 Years  Ago

10 Years Ago

15 Years Ago

20 Years Ago

Fitch Ratings has downgraded Russia's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'BBB-' from 'BBB'. The issuer ratings on Russia's senior unsecured foreign and local currency bonds have also been downgraded to 'BBB-' from 'BBB'. The Outlooks on the long-term IDRs are negative. The Country Ceiling has been lowered to 'BBB-'from 'BBB'. The Short-term foreign currency IDR has been affirmed at 'F3'.

The economic outlook has deteriorated significantly since mid-2014 following sharp falls in the oil price and the ruble, coupled with a steep rise in interest rates. Western sanctions first imposed in March 2014 continue to weigh on the economy by blocking Russian banks' and corporates' access to external capital markets. Having grown by just 0.6% in 2014, Fitch now expects the economy to contract by 4% in 2015.


One in every 365 housing units received a foreclosure filing in December 2009.

RealtyTrac, one of the leading online marketplaces for foreclosure properties, recently released its Year-End 2009 Foreclosure Market Report, which shows a total of 3,957,643 foreclosure filings—default notices, scheduled foreclosure auctions and bank repossessions—were reported on 2,824,674 U.S. properties in 2009, a 21% increase in total properties from 2008 and a 120% increase in total properties from 2007. The report also shows that 2.21% of all U.S. housing units (one in 45) received at least one foreclosure filing during the year, up from 1.84% in 2008, 1.03% in 2007 and 0.58% in 2006.

The company reported there were, 349,519 foreclosure filings on U.S. properties in December, a 14% jump from the previous month and a 15% increase from December 2008.


Credit improvements were the big story in 2004. While the overall trend will continue in 2005, there may be some major problems.Tops on the list of potential credit problems is the non-rated municipal bond market.

During 2004, the size of the municipal bond market went from $1.2 trillion to $2.6 trillion in par value outstanding.  The jump in the volume was due to improvements in the reporting of CUSIP information.  Paradoxically, while the par value increased, the number of CUSIPS remained at slightly more than 1.3 million, but the number of municipal offerings outstanding dropped to 148,000. The new data makes sense if the number of CUSIPs were somehow confused with the number of issues in the past. Slightly more than 400,000 CUSIPs are non-rated.


Muniland was stunned when Linda Ruthhardt, Commissioner of Insurance of the Commonwealth of Massachusetts, was appointed the temporary receiver for Harvard Pilgrim Health Care. Her decision to force the HMO into receivership was facilitated by the Massachusetts State Legislature's enactment of a law that provides emergency protections to covered lives of troubled HMOs. Governor Paul Celluci signed the bill into law on November 24. The legislation included emergency provisions that gave it immediate effect.

The decision by the Insurance Commissioner to force the HMO into receivership is understandable since the management reported an unanticipated $60 million hit to expenses. What's more, the bad news followed an unanticipated $100 million hit.



February 10, 2020, Vol. XXVIII, Issue 2  Municipal Edition









The Global Economic Doctor


Scott B. MacDonald, Ph.D.

January 9, 2020


Outlook 2020 Series, No. 2


Will Food Prices Be a Spoiler for the Global Dinner Party?

Summary: One of the most famous sketches by the British comedy group Monty Python involves a man who is being questioned incessantly by an annoying person and finally says that he did not “expect a kind of Spanish Inquisition.” Upon that statement a group of men dressed in 15th century Spanish Catholic robes storm into the house and proclaim, “Nobody expects the Spanish Inquisition!”  The same could be said for a shock to global food prices, nobody expects food price inflation! However, one of the potential risk factors for 2020 could be stealth inflation in food prices, caused by a combination of factors, including the spread of African Swine Fever (ASF), swarms of locusts, droughts and massive fires. This raises major questions for economic policymakers as well as investors throughout the world’s largest economies and countries; how prepared are they if food prices spike? The answer is probably that they are not.

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