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Thread: Wisconsin governor gives Democrats ultimatum

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by Hatuey View Post

    Mostly Socialists, and Communist backed. Wow, big achievement. Put on display the childish temper tantrum that is today's liberal.


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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by buck View Post
    I have heard both WI democrats and republicans agree that this is the drop dead date. This is not an artificial deadline set by Walker. I believe it is due to the time necessary to refinance the debt and passing the bill too late will not generate the savings necessary.
    The political rhetoric is wrong. The so-called drop dead date was first touted as last Friday. Now it is today. No one has shown covenants or other terms that preclude restructuring at a later date. Indeed, even the political rhetoric is very inconsistent on the expected benefits of refinancing. Some have argued that refinancing would actually cost the state $42 million. The governor has argued that it would save the state $165 million. Neither side has actually provided the underlying assumptions for their estimates. Barring provisions that would preclude refinancing at a later date--provisions that would be extremely rare for public debt--the risks associated with later date would be interest rate and credit risks. The former being that rates could rise from current levels. The latter being that the state's financial outlook could deteriorate further leading to a greater risk premium.

    Given the current benign interest rate picture, interest rates are not likely to be much higher than they are at present a month down the road. Moreover, if the governor offers a credible budget, the state's fiscal outlook could be somewhat better than it presently is. The budget's underlying assumptions and projections and its likelihood of being adopted will tell the story as to its credibility. The bottom line is that there is no drop dead date, though waiting until the summer might begin to see interest rates drifting higher as inflation and inflation expectations become somewhat larger factors than they are at present. Indeed, the shifting of that date already shattered the political narrative that had been advanced.

    IMO, perhaps the best strategy to lock in the largest possible savings from a debt refinancing would involve adopting a credible budget within the next month or two, one that addresses the state's fiscal imbalances beyond two years e.g., the restructuring of health/pensions is started and assumptions/projections are realistic, and puts the state on a path toward sustained budget surpluses (to contribute partially to addressing long-term imbalances). To achieve that, there will need to be political tradeoffs. Without such accommodation, one would see layoffs, but the budget picture would not be appreciably improved. Markets would also price in the possibility of a significant political backlash/future electoral changes and the "victory" would likely prove pyrrhic with the elevated credit risk premia reducing or, in a worst case, wiping out possible refinancing savings.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by donsutherland1 View Post
    The political rhetoric is wrong. The so-called drop dead date was first touted as last Friday. Now it is today. No one has shown covenants or other terms that preclude restructuring at a later date. Indeed, even the political rhetoric is very inconsistent on the expected benefits of refinancing. Some have argued that refinancing would actually cost the state $42 million. The governor has argued that it would save the state $165 million. Neither side has actually provided the underlying assumptions for their estimates. Barring provisions that would preclude refinancing at a later date--provisions that would be extremely rare for public debt--the risks associated with later date would be interest rate and credit risks. The former being that rates could rise from current levels. The latter being that the state's financial outlook could deteriorate further leading to a greater risk premium.

    Given the current benign interest rate picture, interest rates are not likely to be much higher than they are at present a month down the road. Moreover, if the governor offers a credible budget, the state's fiscal outlook could be somewhat better than it presently is. The budget's underlying assumptions and projections and its likelihood of being adopted will tell the story as to its credibility. The bottom line is that there is no drop dead date, though waiting until the summer might begin to see interest rates drifting higher as inflation and inflation expectations become somewhat larger factors than they are at present. Indeed, the shifting of that date already shattered the political narrative that had been advanced.

    IMO, perhaps the best strategy to lock in the largest possible savings from a debt refinancing would involve adopting a credible budget within the next month or two, one that addresses the state's fiscal imbalances beyond two years e.g., the restructuring of health/pensions is started and assumptions/projections are realistic, and puts the state on a path toward sustained budget surpluses (to contribute partially to addressing long-term imbalances). To achieve that, there will need to be political tradeoffs. Without such accommodation, one would see layoffs, but the budget picture would not be appreciably improved. Markets would also price in the possibility of a significant political backlash/future electoral changes and the "victory" would likely prove pyrrhic with the elevated credit risk premia reducing or, in a worst case, wiping out possible refinancing savings.

    So IOW, just reshuffle the deck? Kick the can down the road AGAIN? people are tired of this. Tell me why Public Sectors get to unionize in the first place?


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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by j-mac View Post
    So IOW, just reshuffle the deck? Kick the can down the road AGAIN? people are tired of this. Tell me why Public Sectors get to unionize in the first place?


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    What can? Who is kicking it? Down what road?

    Because it is their right under the law.
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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by haymarket View Post
    Because it is their right under the law.
    With any luck, in Wisconsin, that law will change.
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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by haymarket View Post
    What can? Who is kicking it? Down what road?

    Because it is their right under the law.

    Define "right" and tell me where it appears in either the state or nations constitutions.


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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by j-mac View Post
    So IOW, just reshuffle the deck? Kick the can down the road AGAIN? people are tired of this. Tell me why Public Sectors get to unionize in the first place?


    j-mac
    That's what refinancing is. Whether its a home mortgage, corporate debt, or public sector debt. Refinancing is used to take advantage of lower interest rates.

    Refinancing, of course, is not a solution for Wisconsin's debt problem and I am not arguing that refinancing solves everything. My point is that there is nothing special about today when it comes to the opportunity to refinance. Indeed, if refinancing were the only strategy being considered, it would be little more than a cheap political gimmick. The savings that can be realized from refinancing are miniscule compared to the state's long-term imbalances.

    A credible budget that begins to tackle the structural imbalances (particularly health/pension-related costs) will be required. A two-year budget that does not touch either program is also a punt on the long-term fiscal issue, even if it creates transient balanced budgets.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by donsutherland1 View Post
    The political rhetoric is wrong. The so-called drop dead date was first touted as last Friday. Now it is today. No one has shown covenants or other terms that preclude restructuring at a later date. Indeed, even the political rhetoric is very inconsistent on the expected benefits of refinancing. Some have argued that refinancing would actually cost the state $42 million. The governor has argued that it would save the state $165 million. Neither side has actually provided the underlying assumptions for their estimates. Barring provisions that would preclude refinancing at a later date--provisions that would be extremely rare for public debt--the risks associated with later date would be interest rate and credit risks. The former being that rates could rise from current levels. The latter being that the state's financial outlook could deteriorate further leading to a greater risk premium.
    Take it up with the Non-partisan Legislative Fiscal Bureau (think CBO) in WI who indicated that it must be completed by March 16th to meet deadlines and it will take 2 -3 weeks to authorize (putting the deadline to right about now.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by j-mac View Post
    Define "right" and tell me where it appears in either the state or nations constitutions.


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    In many of the 842 threads on this topic the same questions has come up again and again and has been answered again and again.

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    Re: Wisconsin governor gives Democrats ultimatum

    Quote Originally Posted by j-mac View Post
    Define "right" and tell me where it appears in either the state or nations constitutions.


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    go to 5 United States Code and read chapter 71
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