vania-janet/multiturn-rag-retrieval-data huggingface dataset:
You have not answered the question of total market and total amount that works out poorly for municipalities. You keep listing examples where it went badly, and have not compared that to the total size and those that went well. Without that ratio one cannot make a reasonable, informed decision. The total municipal bond market has about $3.7 trillion in it. You (and the article) list problems totaling in the tens of billions of dollars. Let's round up to 100 billion. That is still less than 3% of them going bad, which is a pretty good default rate. If 97% of such projects were a success (and I'm not claiming they are) then they should continue.  &gt;Not included are the hundreds of smaller venues such as arenas and ice hockey facilities that almost never produce the sorts of economic benefits promised  Yes, you keep listing only one side; I asked for the other sides data which you still have not provided.  If I only list those auto airbag incidents that result in kids dying, you'd conclude that airbags are bad and must be removed. However, by avoiding honest data you'd be making a mistake. All I ask for in this case is the honest dat, not stories only about when municipal bonds fail. The statistics seem to me to be that the vast amount of them are not included in these stories of problems.  &gt;why does the public have to foot the bill?  Because they often choose to, and cities certainly complain pretty loudly when a big name team moves away, so apparently cities like having sport teams.
The reason there should really be no bad feelings for the bond-holders is that they knew full well that these were defaulted bonds, but bought them because they saw a loophole they could use to try and force Argentina's hand.   It was basically a setup to enable them to try and blackmail the government into 'undefaylting' on those bonds.   I recon what will happen in the end is that the other creditors, the ones who had accepted the haircut, will end up buying those bonds at close to full price, just to ensure they are paid at least part of their money back. Because around 95% of bond holders agreed to the haircut, the diluted costs would be small.   What is infuriating is the precedent these guys are setting. In the end, all bond will have class-action clauses in which a majority agreeing to a restructure will apply to all bond holders.
They're exchange traded debt, basically, not funds. E.g. from the NYSE: An exchange-traded note (ETN) is a senior unsecured debt obligation designed to track the total return of an underlying market index or other benchmark, minus investor fees. Whereas an ETF, in some way or another, is an equity product - which doesn't mean that they can only expose you to equity, but that they themselves are a company that you buy shares in.  FCOR for example is a bond ETF, basically a company whose sole purpose is to own a basket of bonds.  Contrast that to DTYS, a bear Treasury ETN, which is described as  The ETNs are unsecured debt obligations of the issuer, Barclays Bank PLC, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Also from Barclays site: Because the iPath ETNs are debt securities, they do not have any voting rights. FCOR on the other hand is some sort of company owned/managed by a Fidelity trust, though my EDGAR skills are rusty. AGREEMENT made this 18th day of   September, 2014, by and between Fidelity Merrimack Street Trust, a Massachusetts business trust which may issue one or more series of shares of beneficial interest (hereinafter called the Trust), on behalf of Fidelity Corporate   Bond ETF (hereinafter called the Fund), and Fidelity Investments Money Management, Inc., a New Hampshire corporation (hereinafter called the Adviser) as set forth in its entirety below.
You only pay tax on the capital gain of the bond, not the principal, unless the source of the money for the principal was gain from another investment, if that makes sense.   In other words, if you bought the bond with income earned from your job, that money was already taxed as income, so it isn't subject to taxation again when you redeem the bond.  On the other hand, if you cashed out of one investment and used those proceeds to buy a bond, then the entire amount might be taxable.
whenever these securities are bought by the govt, they are retired.  Treasury sells bonds to the private sector market, if the central bank buys them back from the private sector market, then they are retired.  Treasury no longer are beholden to them.    When central bank buys toxic mortgages bonds, they bought only  enough to ensure stability and trust again in the banking system.     The homeowners mortgages should be forgiven since the US govt bought them, but, since we don't know who owns what due to mixing of the MBS and grading them triple A etc.., and the MERS program is such a mess, then it's up to the individual homeowners to fight in the courts that they should be absolved of the mortgage.  For the homeowners that don't have money to pay lawyers, then they gets foreclosed upon.
The issuer pays (negative money in this case) to the holder.  The person you sold your borrowed bond to gets this (negative) amount.  The person who you lent you the bond is eligible for that (negative) payment, they were the original holder of the bond.  When you return the bond you thus have to compensate the original holder.  Now turn around the cash flows and you're there. The new holder pays the issuer, the original holder pays you.
There is another reason why an investor might buy negative yielding bonds: if the investor expects that bond yields will go even further negative, then they are also expecting the price of the bond to go up. They can resell the bond later at a profit. As an example, they may expect an increase in central bank bond purchases to drive yields lower and prices higher.
Similar action is being undertaken in Europe following the example of Cyprus. As WND recently pointed out, finance ministers of the 27-member European Union in June had approved forcing bondholders, shareholders and large depositors with more than 100,000 euros in their accounts to make the financial sacrifice before turning to the government for help with taxpayer funds.  Do they get compensation later if the bank recovers?
One of the reasons is also general distrust to the government. Another one is that there exist special interest group which profits from the complicated scheme, keep adding special cases, and has stronger financial situation that the opponents of such complex scheme. People do not trust government, or companies, to act in their best interests. So they (we) waste huge amount of time and/or money to comply with byzantine income laws. In 2004 Democratic presidential primary, presidential candidate Wes Clark (who beyond being 4-star general has also master degree in economics from Oxford, and taught economics in West point) proposed similar scheme: for people with income under 50K, employer would do all the (simple) paperwork, if desired, and get return.  In the noise of the campaign, idea how to simplify taxes for half of the population was lost.  Funny how the only candidate in recent history who was both professor of economics (not MBA, which is about business and profits) and distinguished military hero, could not get any traction in Democratic party.
Members instead opted to reduce services such as park maintenance in the community about 20 miles east of San Francisco. “We’re not willing to hurt the public first,"" Priebe said. ""We’re not going to lay off half of our employees and have the quality of life of all of our citizens really be impacted.” Moraga’s declaration hasn’t affected its standing on Wall Street. Its $7.7 million in outstanding debt is rated AA+, second highest by S&amp;P Global Ratings. One of its bonds due April 2029 was valued on July 5 at 0.85 percentage point more than benchmark debt, little changed from the 0.82 percentage point seen on the day of the fiscal emergency declaration. That spread stood at 1.16 percentage point at 2016 year-end, according to data compiled by Bloomberg. The squeeze on Moraga stems in part from two infrastructure failures: the damage to a bridge in April and a sinkhole that became such a civic event that residents threw it a sarcastic birthday celebration. Though officials are hoping for state and federal reimbursements, the cost to fix both depleted its savings, leaving the city vulnerable to another emergency. The general fund, boosted modestly with this year’s anticipated $46,217 surplus, has about $1.6 million in reserves. The fiscal emergency declaration allows Moraga to put any revenue-raising measure on the ballot when it wants instead of waiting for a regularly scheduled election. Options being mulled include proposing a flat fee on property or a utility tax, Priebe said. The town will poll residents by phone to see what’s preferable. Moraga should look to cut personnel expenses first, said Seth Freeman, an unsuccessful council candidate and the only resident to speak about the issue at the board meeting. He criticized the council’s decision to award raises to employees two weeks before issuing the emergency declaration. ""I’m concerned that the simple solution would be to raise taxes than to address some of the issues under the control of the town manager,"" Freeman said in an interview. ""The compensation for a small town is unaffordable.” Priebe said the town’s costs are low compared to others in the county and that it must remain competitive.
"In a sentence, stocks are a share of equity in the company, while bonds are a share of credit to the company. When you buy one share of stock, you own a (typically infinitesimal) percentage of the company. You are usually entitled to a share of the profits of that company, and/or to participate in the business decisions of that company. A particular type of stock may or may not pay dividends, which is the primary way companies share profits with their stockholders (the other way is simply by increasing the company's share value by being successful and thus desirable to investors). A stock also may or may not allow you to vote on company business; you may hear about companies buying 20% or 30% ""interests"" in other companies; they own that percentage of the company, and their vote on company matters is given that same weight in the total voting pool. Typically, a company offers two levels of stocks: ""Common"" stock usually has voting rights attached, and may pay dividends. ""Preferred"" stock usually gives up the voting rights, but pays a higher dividend percentage (maybe double or triple that of common stock) and may have payment guarantees (if a promised dividend is missed in one quarter and then paid in the next, the preferred stockholders get their dividend for the past and present quarters before the common shareholders see a penny). Governments and non-profits are typically prohibited from selling their equity; if a government sold stock it would basically be taxing everyone and then paying back stockholders, while non-profit organizations have no profits to pay out as dividends. Bonds, on the other hand, are a slice of the company's debt load. Think of bonds as kind of like a corporate credit card. When a company needs a lot of cash, it will sell bonds. A single bond may be worth $10, $100, or $1000, depending on the investor market being targeted. This is the amount the company will pay the bondholder at the end of the term of the bond.
http://www.citymayors.com/finance/bonds.html      &gt; There were approximately $3.7 trillion outstanding in municipal bonds by 2011 according to a quarterly U.S. Federal Reserve Flow of Funds release in December 2011. This amount included a $840 billion dollar amount missed from prior calculations of outstanding debt issued since 2004.(Kaske, Michelle. “Fed Agrees With Citi on $3.7 Trillion Estimate”. Bloomberg. December 8, 2011.)      Still waiting on your magic numbers.       What he did was cite a number that represents the entire muni bond market. A number that can be sourced from valid places. The muni bond market IS worth that much in total.  At least from the sources we have thus far. You've yet to actually do much of anything but bitch that his numbers (and apparently the MSRB and Fed's numbers) are wrong while good ol crotchpoozie knows the real score.
This depends on the jurisdiction, but such companies are typically subject to regulations (and audits) that require them to keep the customers' accumulated premiums very strictly separated from the company's own assets, liabilities and expenses. Additionally, they are typically only allowed to invest the capital in very safe things like government bonds. So, unless something truly catastrophic happens (like the US government defaulting on its bonds) or people in the company break the regulations (which would invovle all kinds of serious crimes and require complicity or complete failure of the auditors), your premiums and the contractual obligation to you would still be there, and would be absorbed by a different insurance company that takes over the defunct company's business.  Realistically, what all this means is that insurance companies never go bankrupt; if they do badly, they are typically bought up by a competitor long before things get that bad.
It was the sole creditor we're trying to avoid here is what I meant to say, not the broker him/herself.  The reason a firm might extend their debt would be to extend their credit into monetary value, in the scenario I just discussed, and it would more often be the more well known firms that would be the most likely to provide a Bond-Money Supply--Think IBM Bonds, Google Bonds, Cheese Board Collective Bonds, Tesla Motor Bonds, GE Bonds, etc.  All these firms would find a way to apply their bond funds in a way that would expand their output and henceforth make repaying the bonds much more likely, just like a normal firm would today.  The only difference is that in the mean time, that bond becomes a monetary commodity which people can trade for goods and services until it is repaid. Once repaid/neutralized, people can see that the bond is worth using and the demand for that bond as money will increase, just like how the demand for money will increase and that prompts a normal central bank to print more money.  Which means, the firm is safe to take on stable debt again which people can reuse again.  The major difference here is that we have a money supply that you can choose to participate in or not, and it is up to the consumers of that currency how the money supply flows, as opposed to a central authority.  It does matter who's first in line to get the new money in any economy, and with multiple policies competing, power is less concentrated:  http://www.youtube.com/watch?v=hx16a72j__8
They get into so much debt, and their tax-revenue shrinks as their economy worsens. That drives up the interest rate they must pay when they issue new bonds (ie add debt). So the value of a currency comes from tax revenue (interest payments). If a government misses an interest payment, or doesn't fully pay it, the market considers this a ""credit event"" and investors sell their bonds and freak out. Selling bonds has the effect of driving interest rates even higher, so it's a vicious cycle. If the government defaults, there's massive deflation because all debt denominated in that currency suddenly skyrockets due to the higher interest rates. This creates a chain of cascading defaults - one person defaults, which leads another person, and another, and so on. Everyone was in debt to everyone else, somewhere along the chain. In order to counteract this deflation (which ultimately leads to the kind of depression you saw in 1930's US), governments will print print print, expanding the credit supply via the banks. So this is what you see happening today - banks are constantly being bailed out all over the Western world, governments are cutting programs to be able to meet their interest payments, and central banks are expanding credit supplies and bailing out their buddies. Real money has ZERO counterparty risk. What is counterparty risk? It's just the risk that the guy who owes you something won't honor his debt. Gold and silver and salt and oil aren't IOU's. So they can be real money."
This article is 100% incorrect. The governments main concern is to PREVENT depositors and tax payers from losing funds in the case of bank default.  How?  By having debt holders being forced to converted into equity to create a capital buffer to keep a bank solvent which will help protect depositors and prevent tax payers from having to bail the banks out.  Please ask me more questions on this as I have done a lot of work on this topic as of late.
Grade 'Eh' Bacon answers it well, the issue is risk. To explain further, when a bank issues a loan, that loan comes with certain legal rights. If the bank decided to partner with a construction company, many of those rights to collect would be gone. Debt is treated differently than equity in the legal system. Banks are good at debt, investors are good at equity.  We also oversimplify it by asking why banks don't prefer equity to debt. Some investment banks also like to deal in equity, so it's probably an inaccurate assumption that you start with.
"Property taxes, where they exist, are generally levied by cities, counties and other local-level administrative bodies like MUDs, and are the primary source of revenue at these levels of government. These taxes pay the lion's share of the expenses for basic services provided by a city or county: There are federal dollars, other revenue sources (State lottery revenues often go toward public schools for instance), and ""usage fees"" (vehicle registration, utility bills, toll roads) at play as well, but a lot of that money covers larger-scale infrastructure development (freeways/interstates) and specialized ""earmarks"" (political backscratching involving this bridge or that dam in a Congresscritter's home district, a few national initiatives from the President's budget like first-responder technology upgrades for improved disaster/terrorism readiness). Property taxes are the main funding for the day-to-day government operations at the most visible level to the average resident. The theory behind using a property tax instead of some other form of taxation (like income) is that the value of the property and the quality of services provided to the resident(s) of that property are interrelated; the property is valuable in part because the infrastructure is well-maintained and nearby schools/hospitals are good, and by the same token, affluent residents expect high-quality services. Property taxes are also easier to levy, because most of the work can be done by the tax assessor; monitor recent sale prices, do drive-bys through neighborhoods, come up with a number and send the resident the bill. That's opposed to sales taxes which businesses operating in the jurisdiction have to calculate, collect and turn over, or income taxes which require residents to fill out paperwork to calculate how much they owe. The justification is eminent domain. It's very simple; when you buy land in the U.S. and a State thereof, you are still a citizen and/or resident of that State and the U.S., and subject to their laws. You're not creating your own country when you buy a house. As such, the government charges you for the facilities and services they provide in your area and your State, which are then your privilege to use.
Bond ETFs are traded like normal stock.  It just so happens to be that the underlying fund (for which you own shares) is invested in bonds.  Such funds will typically own many bonds and have them laddered so that they are constantly maturing.  Such funds may also trade bonds on the OTC market. Note that with bond ETFs you're able to lose money as well as gain depending on the situation with the bond market.  The issuer of the bond does not need to default in order for this to happen.  The value of a bond (and thus the value of the bond fund which holds the bonds) is, much like a stock, determined based on factors like supply/demand, interest rates, credit ratings, news, etc.
You report what you contributed (sum of monthly investments that you made) to the bond fund. Distributions are the earnings in the account that stay in the account and have no tax consequences (in particular, you don't report them as income on your tax returns) until you withdraw the money later.
It isn't as simple as just borrowing money. This is more of an economics question but there are reasons to borrow money (simple example being when the economy is growing too slowly) and reasons to increase taxes (basic example being when the economy is growing too fast). Check out monetary and fiscal policy on investopedia or youtube, this should give you a good understanding.   Now one more thing to consider is the 'risk' of governments defaulting on their loans. In a simple sense, the more debt a government has the more risk there is to default. This means people who lend the government money will want a higher interest rate, making it harder for the government to borrow money.
Why are they trying to demonize Seth Klarman. He's a value investor buying distressed assets, not some nefarious puppet master. Is having their bonds fail better for Puerto Rico or anyone? Seth Klarman didn't bankrupt Puerto Rico. You can't make someone take a loan, and a default is bad for all parties so why the finger pointing.
I never understand the mindset of infrastructure being paid for through private investment. On a municipal level it makes sense that development fees can help a city pay to replace a bridge that leads to the development or put in some new parks, but considering that infrastructure like rail lines and dams are the big concern, I don't really see private entities taking a big interest in them. It would've really helped Houston if private investment was funnelled into stormwater management while developing into a major suburban centre. Based on the evidence shown, those private investors didn't have major concerns for improving the city's infrastructure and just did what they had to in order to be allowed to put in their development.  Infrastructure belongs in the public sphere. Things like rail, highways, dams and coastal protection are in the public's best interest. What does a businessman have to gain by paying to electrify a rail line or put in new traffic signals at an intersection?
"In theory, the term of the bond does not affect the priority.  It does not matter whether a ""Junior Subordinated Debenture"" is due in one year or sixty, it is still lower priority than a ""Secured Note"".  On the other hand, if the ""Secured Note"" is secured by something that is not worth as much as the note, the excess is an unsecured debt. In practice, the term of the bond has two effects: Short term debt holders are more likely to get out just before the company goes broke.  Sometimes their efforts to get out are exactly what causes the company to go broke!  (""Commercial paper"" is even more fickle than banks.) All other things being equal, and depending on the terms of the loan, some bonds get priority over bonds of the same type that are issued later.  For example, your first mortgage usually takes precedence over your second mortgage."