Governments “don’t have to pay off their debt like a household does,” said Louise Sheiner, policy director for the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. “They can just keep rolling it over. They’re never going to go out of business and have to pay all at once.”
State and local liabilities can also be likened to the federal government’s deficit and debt, Sheiner said in an interview with MarketWatch. Most economists think that as long as those numbers stay constant as a share of the economy, it’s not problematic.
In his 2022 budget address, Milwaukee Mayor Tom Barrett wrote of his city’s predicament, “We are facing an unsustainable demand driven primarily by the pensions for public safety employees. We must begin preparing now, setting aside money to blunt the impact of the massive payments coming due in just two years.”
For many local governments, making a big deposit all at once and being able to budget for more manageable payments in the future, for both debt service and annual pension payments, can feel like a relief.
But there are many reasons it’s a bad idea, and one that many municipal-finance observers find problematic.
State pension systems dropped the rate of return they assume for their investment portfolios again, continuing a two-decade long trend that public-finance experts say is necessary, even as it presents some challenges for the entities that participate in such plans.
A study by Oxford University found the number of people who receive blood clots after getting vaccinated with a coronavirus vaccine are about the same for those who get Pfizer PFE, 2.43% and Moderna MRNA, 6.67% vaccines as they are for the AstraZeneca AZN, -0.16% vaccine that was produced with the university’s help. According to the study, 4 in 1 million people experience cerebral venous thrombosis after getting the Pfizer or Moderna vaccine, versus 5 in 1 million people for the AstraZeneca vaccine. The risk of getting CVT is much higher for those who get COVID-19 — 39 in a million patients — than it is for those who get vaccinated. AstraZeneca’s vaccine use has been halted or limited in many countries on blood clot concerns.
Embattled financial startup Greensill Capital plans to file for insolvency in the U.K. this week, as it simultaneously moved toward a deal to sell its operating business to Apollo Global Management APO, -1.69%, according to people familiar with the matter.
The deal with Apollo, which could be struck by the end of the week, would be part of a Greensill insolvency, similar to the U.S. bankruptcy process, the people said.
The Wall Street Journal previously reported the two sides were in talks for a deal that would pay Greensill around $100 million. Through the acquisition Apollo would take over Greensill’s core operations and inherit clients that generate around $7 billion in assets, according to the people familiar with the matter.
The House Budget Committee approved on Monday a $1.92 trillion bill to carry out President Joe Biden’s coronavirus relief plan, the first step toward likely House passage by the end of the week.
The vote was 19-16. Texas Democrat Rep. Lloyd Doggett voted with Republicans in opposition to the bill but a spokeswoman for him later said he had cast his vote in error and supported the legislation.
Aid to state, local and tribal governments: This would provide money for states and local governments, as well as tribal governments, to offset tax-collection losses and increased spending resulting from the coronavirus pandemic. Price tag: $350 billion.
Multiemployer pension plan aid: The Pension Benefit Guaranty Program would be able to give grants to underfunded pension plans guaranteed by the PBGC. The PBGC revolving fund to help pay full benefits when pensions fall short is set to be exhausted in 2027 under current law. Price tag: $81.5 billion.
Treasury Secretary Janet Yellen convened a meeting with the nation’s top regulators Thursday, who are continuing to review whether recent volatility in popular, so-called meme stocks, and brokers’ responses to it, “are consistent with investor protection and fair and efficient markets,” according to a Treasury Department statement.
Yellen met with the heads of the Securities and Exchange Commission, Federal Reserve Board, Federal Reserve Bank of New York and Commodity Futures Trading Commission to discuss the functioning of financial markets and practices of both investors and brokers in recent weeks.
“The regulators believe the core infrastructure was resilient during high volatility and heavy trading volume, and agree on the importance of the SEC releasing a timely study of the events,” according to the statement. “Secretary Yellen believes it is imperative to uphold the integrity of these markets and ensure investor protection.”
“I get that people think it’s funny when bad things happen to Wall Street types, but this GameStop GME, -44.29% thing is not a joke,” I tweeted. “These are stock traders conspiring to manipulate the markets in open view of us all and using the ‘nah, its for the lulz, and the other side sucks’ as an excuse.”
You may think it’s funny to value GameStop like it’s 2007 again and hurt some hedge funds in the process, but you might not think the next target is funny, nor the next, nor the next. You won’t laugh when you read the eventual feature about a teenager misplaying GameStop options on his dad’s account and costing them the house, or a first-time investor putting their savings into GameStop just before it all fell apart.