Judgment Day was coming — just like it was for the Delaware River Port Authority, the Pennsylvania school system, the cities of Detroit, Chicago, Oakland and Los Angeles, the states of Connecticut and Mississippi, the city of Milan and nearly 500 other municipalities in Italy, the country of Greece, and God knows who else.
All of these places are now reeling under the weight of similarly elaborate and ill-advised swaps — and if what happened in Jefferson County is any guide, hoo boy.
Because when the shit hit the fan in Birmingham, it really hit the fan.
For Jefferson County, the deal blew up in early 2008, when a dizzying array of penalties and other fine-print poison worked into the swap contracts started to kick in.
The trouble began with the housing crash, which took down the insurance companies that had underwritten the county's bonds.
That rendered the county's insurance worthless, triggering clauses in its swap contracts that required it to pay off more than $800 million of its debt in only four years, rather than 40.
That, in turn, scared off private lenders, who were no longer interested in bidding on the county's bonds.
The banks were forced to make up the difference — a service for which they charged enormous penalties.
It was as if the county had missed a payment on its credit card and woke up the next morning to find its annual percentage rate jacked up to a million percent.
Between 2008 and 2009, the annual payment on Jefferson County's debt jumped from $53 million to a whopping $636 million.
And here's the kicker.
Last year, when Jefferson County, staggered by the weight of its penalties, was unable to make its swap payments to JP Morgan, the bank canceled the deal.
That triggered one-time "termination fees" of — yes, you read this right — $647 million.
That was money the county would owe no matter what happened with the rest of its debt, even if bondholders decided to forgive and forget every dime the county had borrowed.
It was like the herpes simplex of loans — debt that does not go away, ever, for as long as you live.
On a sewer project that was originally supposed to cost $250 million, the county now owed a total of $1.28 billion just in interest and fees on the debt.
Imagine paying $250,000 a year on a car you purchased for $50,000, and that's roughly where Jefferson County stood at the end of last year.
Last November, the SEC charged JP Morgan with fraud and canceled the $647 million in termination fees.
The bank agreed to pay a $25 million fine and fork over $50 million to assist displaced workers in Jefferson County.
So far, the county has managed to avoid bankruptcy, but the sewer fiasco had downgraded its credit rating, triggering payments on other outstanding loans and pushing Birmingham toward the status of an African debtor state.
For the next generation, the county will be in a constant fight to collect enough taxes just to pay off its debt, which now totals $4,800 per resident.
Traducción automática; hacer clic aquí.
Gracias al amigo Ayj, que me hizo llegar el link de Rolling Stone, tenemos datos frescos de
Ahora bien, ¿Se puede hacer un paralelismo con “Regreso” de
Si existe, o existio, “Just tell us how much”; es una tarea obligatoria de los legisladores opositores.
Pero, hay que tomar en cuenta dos datos externos, donde el papel de
1/ El “modelo” argentino de resolver la deuda, el Argentinator financiero, es un precedente que se esta demostrando viable; por el solo hecho de que AUN estamos aquí.
Ya sabemos que para los anglosajones, utilitarios de alma, el precedente importa.
No será lo soñado por
2/ “La incertidumbre de
Es una de las frases de los Wallstreet Boy’s en el 1º G20; y como reconoció
En poco tiempo, cuando los INDEK de las calificadoras de riesgo se blanqueen, no seria de extrañar que nos mejoren la calificación.
Permitiendo así, jugosas “comisiones” sobre los prestamos voluntarios.
Sumando 1 (lo útil) y 2 (lo placentero); se “comprende" el “gesto” de
Pero todavía falta lo mejor;
3/ La reivindicación del Patacón bonaerense por los subnacionales del 1ª Mundo; deuda muchísimo mas barata, por el simple hecho de que no genera “comisiones” bancarias y de brokers; y además porque al permitir pagar impuestos a valor nominal, se termina por ahorrase los intereses, sean fijos o variables.
¿Un delirio?, jejejejeje, la necesidad financiera tiene cara de hereje; sino pregúntele a GWB, Paulson, Bernanke y cia; y SU salvataje del Sistema Financiero Global.
El “Moral Hazard” fue el primer lastre que tiraron por la borda.
No se pierdan los próximos capítulos de este atrapante folletín.
PD, para quienes no sepan de que trata el “caso Milán”, un link de BusinessWeek, hacer clic aquí.
March 17 (Bloomberg) -- Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan.
Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today.
The banks allegedly misled the city over swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of bonds sold in 2005.