The Market Ticker
Commentary on The Capital Markets- Category [States]
2017-07-25 07:00 by Karl Denninger
in States , 414 references
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This sort of rank corruption should lead to trials, followed by hangings.

But it doesn't.

Tesla will soon hit the limit of the federal tax rebates, which are good for the first 200,000 EVs sold in the US per manufacturer beginning in December 2009 (IRS explanation). In the second quarter after the manufacturer hits the limit, the subsidy gets cut in half, from $7,500 to $3,750; two quarters later, it gets cut to $1,875. Two quarters later, it goes to zero.

Given Tesla’s ambitious US sales forecast for its Model 3, it will hit the 200,000 vehicle limit in 2018, after which the phase-out begins. A year later, the subsidies are gone. Losing a $7,500 subsidy on a $35,000 car is a huge deal. 

Tesla will sell near-zero cars without the subsidies.  They know this.  So does California, and guess where Tesla sells more cars than anywhere else?

What California is contemplating doing is subsidizing the difference in price between an EV and a car of "equivalent features" that is not an EV.  This could wind up costing $30,000 per vehicle, and not as a tax credit either -- as a direct rebate.

Where are they going to get that kind of money?  It's not said, but one place they're talking about is their infamous plan for carbon taxes.  That's right -- they're literally going to steal from the people of the state and effectively hand it to anyone who buys something from a company "they like."

This is rank corruption folks.  It's theft on a grand scale for the benefit of one company and its CEO, who does not run a corporation, he runs a tax farm that has as its only operating model theft from the public to remain open.

Let me remind you that Tesla has never made an actual profit.  That is, it has never managed to make more money selling things than it spends creating those things.  It's a cash bonfire, in short, and the more "things" it sells the more money it puts in the bonfire.

That's obviously something you can't keep doing forever, but Musk has thus far convinced Wall Street to continue to underwrite his pipe dreams when it comes to personal transportation.

Now, facing the end of federal subsidies intended to give companies a way to "jump start" when they are just initially producing vehicles (at which time a hell of a lot of capital investment is going into building out plant with no knowledge of whether they'll succeed) what California proposes to do is to permanently subsidize a company that has exceeded the lifetime of said temporary "seed funds" from the federal government.

The problem you have folks is that even if you don't live in California you're going to pay for this because goods and services produced there will wind up absorbing this tax in their production.

One wonders how "conservative" people really are -- you see, the response to this should be an all-on boycott of everything made in California, or produced by any company headquartered there.  We have 50 state laboratories in such things precisely so you can express your disgust -- and if moving away won't stop the impact upon you (as it won't in this case) then refusing to engage in commerce with firms that have material exposure there -- and thus cost they attempt to impose on you -- is next.

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2017-06-29 11:19 by Karl Denninger
in States , 5365 references
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Listen up bitch:

Yes, you, and all the other rat bastards in Illinois government.

You cannot get blood out of a stone.

You built a government system that promised the impossible.  You promised "state employees" they could retire with fully-paid, lifetime medical and pension benefits at 50.  You allowed them to game their pension payouts with outrageous practices such as "best earnings years" and then let them run up overtime to boost those figures, resulting in ridiculously pumped pension obligations.

In addition you sat back and watched the medical system, top to bottom, implement policies including differential billing, cost escalations of 10%+ annually, refusing to quote prices, screwing people blind left and right, restraining trade and more -- which you knew was going to continue happening and that it would continue to ramp cost at ridiculous rates well beyond the expansion of the economy because those practices have been going on for 30+ years.  I saw that crap when I ran MCSNet in Chicago and its impact on our health insurance premiums; there was not one year that the increases were not in double-digit percentages for poorer coverage.

Where this was leading was obvious and you not only didn't give a **** then you still don't.

Instead of enforcing 100+ year old anti-trust law against every one of those providers and breaking the back of escalating medical costs you tried to cheat.  You admit that when you had no budget you intentionally screwed providers of services to the state by not paying them and you would have continued to do that had the courts not told you to cut it out -- that what you were doing was illegal.

Now you're whining.

What you could be doing is instead going to the law enforcement side of your government (you do have one) and tell them to enforce the damned law.  Break the medical monopolies.  Drop costs by doing so by 80% or more for medical care in Illinois.  End the provision of care on the taxpayer's dime to illegal immigrants.

In short you thought you could keep pretending that there is a Unicorn that ****s out skittles and your fantasy-land bull**** has blown up in your face.

Instead of facing that fact and admitting the truth, including that you have violated the law and the courts have forced you to pay people for services already provided you now whine to the public.

I left your corrupt state in 2000 because I can do elementary arithmetic.  I can use a calculator.  I understand exponents as do you and I saw the first pieces of this lie factory in both Chicago and Springfield running this same crap 17 years ago.  When I got a parking ticket if I didn't pay it within days the cost went up at outrageous rates and yet when the very same city owed my company money it thought it could pay whenever it wanted and it was only my cutting off the library's service that resulted in prompt payment of my invoices as originally agreed.

I left your state because I knew the state government would not stop lying, would keep screwing people and eventually it would blow up in your faces.  I did not know exactly when it would, but I knew that it would.  And it sure as hell has; my former home's property tax levy has roughly doubled since I lived there and yet you still refuse to stop the scams.

Eat the grenade, Illinois.  You pulled the pin, you kept lying to everyone for nearly 20 years since I left your putrid state, you have refused to stomp on the medical monopolists and financial rapists in your state and you deserve what is happening.

The people of Illinois will flee.  They should flee.  They should all let you sit and soak in your own **** -- because you deserve to do exactly that until and unless every one of the medical facilities that are at the root of this mess are forced to post prices, charge everyone the same price and stop the monopolist games, all of which certainly appear to be illegal under both consumer protection and 100+ year old Anti-trust law and which you COULD choose to enforce, along with an end to practices such as double-dipping and salary-stuffing in the last years of employment with those who did so having their payouts reset to claw back their previous abuse of same.

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From my back yard -- literally..... the bridge is visible out my back door.

Vest says it is a cold hard fact that tolls on the Mid-Bay Bridge will not increase to $7.50 next year. It is likewise written in stone, he said, that there will be no bridge toll hike of any amount before Oct. 1, 2015, the beginning of the 2016 fiscal year.

....

In fact, the Mid-Bay Bridge, built with $81 million in bonds in the early 1990s, these days carries a debt load of $260 million.

That’s why it is possible, Vest concedes, that if the Bridge Authority does find it needs to raise tolls for the third time in its existence, the cost of the trip across could go from $3 to $4 for two-axle vehicles and $2 to $3 for SunPass holders.

Nobody is talking about how the bridge went from $81 million in bonds to $260 million outstanding.

Nor are they talking about the "fact" that the terms of the bonds dictate that tolls must (if necessary) rise.

Even if doing so cuts use, and thus the total revenue falls, producing a death spiral.

Which, incidentally, has happened already not so far away (Garcon Point anyone?)

The problem with these projects is that they invariably obtain their "go ahead" from the local residents predicated on two promises -- first, that they will be built and operated on time and on budget, and second that the bonds will be retired and once they have been the tolls will be lifted or reduced to that which is necessary only for ongoing maintenance.

The latter never happens and the former almost-never does.

The people responsible for that gross dereliction of duty, resulting in the tripling of the bridge's debt, from the County Commissions on to these "authorities", never, ever face prosecution or even debarment from public office for the outrageous deception they run on local residents in the promises they make and never keep when it comes to these "projects."  Never mind that if I screwed someone in the private sector to this degree I would, and the Commissioners and Authority "trustees" should, find themselves on the wrong end of a felony conviction.

But see, political promises carry no weight and are utterly unenforceable even when they screw the taxpayer blind.  As a politician you can make claims that you have absolutely no rational backing for or even lie outright and when your "projections" and "expectations" turn out to be crap nothing happens to you for buying votes with what proves up to be a pipe dream or worse.

Instead of being accountable these very same public officials now make excuses and tell us how "wonderful" the cut of 20 minutes will be on our mythical trip that they dream will fill the coffers and pay the coupon on said unsustainable and outrageous debt -- debt that their outrageously unrealistic expectations and projections caused to triple from what was originally proposed and agreed to by the people in the first place.

The "add-on" extension now being constructed is responsible for $143 million of this debt.  But there is no evidence -- absolutely zero in fact, even based on the rosiest of projections -- that the bond issues outstanding will be retired on or before the roadway requires resurfacing.

Indeed, had there been any record of the Authority being able to pay down debt predicated on operating revenue the problem, and debt, wouldn't exist -- right?

The inevitable resurfacing and upkeep in coming years will be yet another expensive act that will in turn requiring issuing even more debt.

This is a "tiny" little ponzi scheme in the grand litany of lies and scams promulgated by County Commissions and "local authorities" of all sorts, from these feifdoms to school boards, all over the land, backed up by bond issuers at banks who "help float" debt that mathematically cannot be retired on or before additional capital expense in maintenance and repair becomes necessary.

The banks, for their part, don't give a damn provided they get their fee.  The accuracy of their projections for sustainability and paydown of the debt issued, just like everyone else's, are never coupled to accountability.

Indeed I'm willing to bet that under any reasonable estimate of actual historical use and toll collection, less operating expense (salaries of the toll collectors, routine maintenance and inspections, etc) the bond issues can never be retired when the imputed operating costs, including resurfacing and other work on the expected intervals, is taken into account.

Those in the "authority" and County Commission who think that traffic will rise to meet the required revenue are flat out of their minds.

The fact of the matter is that ramping toll costs over the last years have already prompted WalMart and Publix to build stores on this side of the bridge.  WalMart is open now and Publix will be soon; the earth-moving equipment is in daily operation on that project right now.

That has and will continue to reduce, dramatically so, the "need" for local residents to cross said bridge and thus reduce the number of trips -- and the tolls collected.

The market has and will continue to spit in the face of the Okaloosa County Commission and MidBay Bridge Authority, reducing their pipe dreams of "efficiency in transportation" (not to mention their delusions of grandeur) to ash.

The market, of course, has a long history of doing exactly this quite efficiently; as price rises the utility value ex-cost to the local residents decreases.  That increased net cost in turn causes businesses to find a reason to make it easier, faster and cheaper for residents to avoid paying said price.

Oh sure, the theory goes, the county can******the tourists, right after they spend $5 million in advertising to herd them in on their vacation so they can get bent over the fish-cleaning table while their wallet is vacuumed out.  And let's not kid ourselves -- for those tourists who don't have a SunPass (that would be nearly all of them) when they get surprised by the all-automatic plaza on the extension and are forced to pay $11.50 (which will show up in the mail when they get home) that is likely to have a rather serious impact on their view of this area -- and not in a good way either.

But heh, the MidBay Bridge Authority will cackle at their playing of the proverbial troll.

The question is whether said tourists will come back to be screwed again, and if not, what happens to those precious "bonds" and their demanded coupon.

PS: The rolling of that debt, historically thus far, has been made possible only due to the secular decline in interest rates over the last 30 years.  That secular decline is now over which means that all such projects that cannot retire their debt from operating revenue before it comes due are inevitably going to blow up in the coming years and decades.  This is a mathematical certainty Mr. Vest.

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