Some government bonds are no longer good investments

Article Abstract:

California has used certificates of participation (COPs) for over 50 years to pay off municipal debts. However, recent events showed the risks involved in such a venture. Investors filed a case against the Richmond Unified School District because they stand to lose their investments. In addition, the state has condemned the use of tax certificates to pay for the school's operations costs and debts. The case has made the public wary of California COPs and triggered proposals that the state government exert more control over school budgets and adopt a law that would allow the use of the more reliable general obligation bonds.

Management, Cases, National debt, Government securities, Public debts, Certificates of participation (Securities), Participation certificates (Securities), School bonds

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Recession drives local developer bonds to the brink

Article Abstract:

Land-backed municipal bonds, known as Mello-Roos bonds, could be vulnerable to defaults because of the current recession in the US. This becomes more apparent as the values in California real estate market dive. Both Wall Street and Main Street have expressed such fears, since defaults could affect the credit ratings of bond issuers, burn bondholders and may leave some local governments holding the bag for bond payments. The case of Colorado, where over $500 million worth of bonds similar in structure to California's, defaulted in the latter part of the 1980s, is cited.

Analysis, Prices and rates, Public finance, Municipal bonds

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"Buying America" isn't so easy

Article Abstract:

'Buy America' and 'Buy California' bills are piling up in the California legislature. Legislators are encouraging businessmen to conduct their business with intra-state companies to lessen out-of-state contracts. The proposed bills provide an advantage for California firms in competitive bidding, give priority to California laborers in public works and stipulate the use of US-made materials. However, critics point out that the proposed bills will not solve the economic problems of Calfornia and will only be detrimental to the state's economic development.

Evaluation, State government, Bills, Legislative, Legislative bills

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