Municipal Bonds: The Rating Game
Wednesday, March 5th, 2008Local cities and states have finally woken up to the way in which they are systematically fleeced by the rating agencies. Bill Lockye, the Californian Treasurer, is leading a campaign to change the way in which their bonds are rated.
Often they are rated poorly which then requires a nice fat insurance payment on top. This simply transfers more taxpayer funds to the financial sector.
Ok so it’s just another racket but what I like about this is the awakening from local financial institutions and the realisation that they can do things a bit differently.
What is to stop local governments from issuing their own bonds to their own people for local projects? Take that a step further and what’s to stop them from issuing their own local currency.
The current crisis is helping many people to see through some of the smoke and mirror charges imposed in the course of financial transactions and the system is becoming more transparent as “special purpose” structures and entities are revealed to be nothing more than methods to add on commissions and fees as many times as possible.