It costs more to insure California's municipal debt than Kazakhstan's bonds

[The Big Ragu]

http://online.wSportsJournalists.com/article/SB10001424052748704586504574654673186751100.html

It's true, according to CMA DataVision in London, which tracks bond insurance data.

Or as he writes in the piece, "Borat, one. The Terminator, zero."

On the bright side, he points out all the reasons why California's debt is really more stable than Kazakhstan's.

I never thought anyone would be having to allay that kind of fear. It's pretty funny, actually.

 

[poindexter]

Kazakhstan had a better year...

 

[qtlaw]

Kazakhstan has oil.

 

[Michael_ Gee]

I thought it was potassium.

 

[Smallpotatoes]

I thought it was potassium.

And all the other countries have inferior potassium.

 

[terrier]

Kazakhstan has better prostitutes.

 

[slappy4428]

Kazakhstan has better prostitutes.

Proveably and demonstrably so?

 

[Football_Bat]

Kazakhstan has oil.

So does California.

 

[Baron Scicluna]

Kazakhstan has oil.

So does California.

Yeah, but Kazakhstan doesn't have Donald Sterling.

 

[TigerVols]

You know what else Kazakhstan doesn't have?

It doesn't have to deal with getting just 78 cents back for every dollar it sends to Washington.

Now, if California actually received about as much FROM the Federal Government as some stalwart Republican states do, then maybe the state's bonds would be better off.

 

[mustangj17]

It is apples and oranges because I'm sure the underwriting in Kazakhstan is nothing like the underwriting in California.

 

[The Big Ragu]

It is apples and oranges because I'm sure the underwriting in Kazakhstan is nothing like the underwriting in California.

Care to explain that? Actuaries use a variety of metrics to try put a probability on default. Then they set their insurance rates accordingly. The same exact agencies insuring Cali muni debt are insuring Kazakhstan's national debt. What makes you think the underwriting criteria would be different, and how exactly is it apples and oranges?

 

[mustangj17]

It is apples and oranges because I'm sure the underwriting in Kazakhstan is nothing like the underwriting in California.

Care to explain that? Actuaries use a variety of metrics to try put a probability on default. Then they set their insurance rates accordingly. The same exact agencies insuring Cali muni debt are insuring Kazakhstan's national debt. What makes you think the underwriting criteria would be different, and how exactly is it apples and oranges?

Because they are different countries I would assume they have different regulations. All insurance in the U.S. is regulated.

But maybe I'm wrong.

In any event, if California's risk was more stable, that company would be stupid to have less expensive premiums for the debt of K-stan. Since all the insurance company is doing is "buying a risk" they put themselves at harm by not getting the true value of the risk.

So the underwriters are either really bad at their jobs, or California's risk is truly worse than K-stan's.