Friday, December 12, 2008

transit/bailout nexus

Last month I mentioned the news elsewhere about how even large transit agencies were caught up in the AIG collapse and general mania over exotic investments.

Not sure folks have noticed that the whole issue is now caught up in the arguments over the Detroit bailout. I really have not have a thought for or against the bailouts, it's just too big a topic. But one quote from the Washington Times version of that article is some politician all but blaming the transit issue for the lack of a Detroit bailout:

"It's wrong for this auto bailout legislation to reward or bail out transit agencies for participating in these tax shelters."

That's fine, but at this point has not everyone and their brother been rewarded for investing in unknown and exotic investments that in the end never had a chance of paying off? Transit agencies are going to be the place where politicians hold the line on this and invoke moral hazard? Transit agencies? Not investment banks who are the ones supposedly knowledgable about risk hedging and financial markets?

But locally it might matter. In my earlier post I gave the links for the sources that listed the Port Authority here as one of the transit agencies at risk financially in this one little corner of the financial markets meltdown. I have to believe someone has looked into it and found the Port Authority's exposure to be de minimis since there has been no reporting on it specifically. But whether it is an issue here or not I sense some scapegoating going on. I bet someone will soon blame transit agencies for the problems in the financial markets.


Anonymous Anonymous said...

Bernanke now says it's none of our business where 2 trillion in fed money backing went to what banks for what assets. In that kind of environment getting to the bottom of anything will be impossible.

Lets just ban all financial statements print out a quadrillion in monopoly money and declare everyone rich.

Friday, December 12, 2008 4:00:00 PM  

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