Randomly Noted

The finances of many state and local governments are just a mess. Huge budget gaps, hard decisions about what programs to cut, threats of higher taxes and municipal layoffs. You would think investors wouldn’t want to touch municipals  with a ten-foot clipped coupon.

But as Newswires reporter Stan Rosenberg reported today, pent up demand and an appetite for still decent yielding maturities led to the strong sales today of $4 billion in new securities. Another reason – investors who missed out on the 14% gains in munis last year – the best in the fixed-income world – did’t want to miss another chance. The pros are forecasting new issuance could reach $450 billion this year. But buyers should be very selective. Yes, very few municipal issuers have ever defaulted. But municipalities will feel the brunt of the financial crisis much later than other sectors. And there is more pain to be felt on that front.

If you are looking for more reasons to be discouraged about the timing and pace of a jobs recovery in the U.S., take a look at a speech given last week by Eric S. Rosengren, president of the Federal Reserve Bank of Boston.

Referring to labor-market dynamics, Rosengren makes the Catch-22-like notation that research shows workers who have been out of work for long periods have a tougher time getting back into the work force.

“It may be that their skills atrophy, or just that their sector of the economy is particularly hard hit,” Rosengren said in his prepared remarks. “And potential employers may worry about the underlying reasons for the long unemployment spell.”

Guess what: nearly 40% of the unemployed have been out of work for 27 weeks or more, the Boston Fed president said, a much higher percentage than in previous recessions.

Other factors cited by Rosengren fall into the category of the things employers can do before bringing new people through the door.

About 6% of the work force is working part time because of the slow economy. They would be made full time, presumably, before new hires are made. Overtime would likely be used more extenseively before new hires are made. And employers will continue to push for more productivity gains – they already have been significant – before making new hires.

All this becomes more relevant, he said, because businesses generally lack the robust confidence about significant growth ahead that spurs hiring.

“Any significant hiring will likely have to wait while current labor resources are more fully utilized,” Rosengren concluded.

“Marlins reiterate payroll compliance,” reads the headline on MLB.com. That doesn’t sound like a compelling story, but oh, it is. The Major League Baseball Players Association - that is, the ballplayers’ union – blew the whistle on the penurious Florida Marlins for not spending enough on their payroll. The invaluable bizofbaseball.com puts the story in proper perspective: “Precedent-Setting Deal With Marlins Over Revenue-Sharing Has Broad Implications.”

Continue reading…