Taxpayers, rejoice! Oregon is going broke more slowly. (Jack Bog's Blog)

The State of Oregon had its credit rating upgraded by Standard & Poor's today. It's now at AA+ -- just one notch below the top -- compared to AA, two notches below, previously.

This is good news -- it beats a downgrade -- but only mildly good. It means that as the state goes further into hock, the interest rates it pays will be a little lower. But as Treasurer Ted Wheeler's smiley-face press release indirectly acknowledges, there's a whole lot of new interest about to be paid: "The higher rating from Standard & Poor’s comes as Oregon is preparing to sell a number on bonds that were authorized by the 2009 Legislature, totaling more than $1 billion."

Getting an excellent credit score is nice, but that doesn't mean you should be clicking your heels as you sign away your life in IOUs.

Nor is a high bond rating much assurance that things won't go sour. Before the big crash of '08, outfits like S&P, who are paid for their work by the very borrowers they rate, had nothing but good grades to hand out to all sorts of securities that turned out to be junk. Don't believe everything that Wall Street tells you about the paper that it's trying to sell you.

The real irony of the day, though, is how quick the bureaucrats can tally up all the interest savings over the life of a long-term debt, and present the public with the full total in a lump sum. For example, Wheeler's press release says, "The estimated saving due to the S&P credit rating increase is $4.3 million for every $100 million in debt over the length of the bonds."

Try to get the politicians to give you that number -- interest over the length of the bonds -- when they're borrowing money for streetcars, aerial trams, soccer stadiums, and other frills. The interest on the crushing debt that they rack up for their pet projects is never mentioned in any budget for the project, ever. But when they knock a little off the interest rates, boy, are they quick with the calculator.

Comments (9)

Woo hoo! Let's go shopping!

Posted by Snards | March 9, 2011 4:11 PM

I am more than a little surprised that you didn't give us that number.

Posted by Anon | March 9, 2011 4:35 PM

Maybe S&P upgraded Oregon state gov't debt because the likes of Representative Dave Hunt is no longer Speaker of the Oregon House. And Kitzhaber is doing it to the children by cutting education budgets. It would be AAA except Kitzhaber is allowing his bloated DHS and OHA bureaucracies to coninue their ever expanding spending obesities.

Posted by Bob Clark | March 9, 2011 4:59 PM

I must be missing something. Isn't this good news, that the bond rating has improved? Doesn't that mean that independent assessments of Oregon's fiscal condition believe the situation is turning around? And doesn't that mean that the interest rate Oregon will have to pay on bonds has decreased, lowering all of our costs?

Posted by William Thompson | March 9, 2011 5:29 PM

William, you might want to read the first sentence of the second paragraph of the post you are commenting on. It says that it is mildly good news.

the situation is turning around?

William, no one said that except you.

lowering all of our costs?

William, borrowings are about to increase substantially, and so costs will be increasing, not decreasing.

Posted by Jack Bog | March 9, 2011 5:34 PM

oh, come on. Our grandchildren can pay for more streetcars! You can ride for free!

I gave up clowning years ago.

In Portland, you don't have to.

Posted by Max | March 9, 2011 5:43 PM

"State of Oregon had its credit rating upgraded by Standard & Poor's today"

I don't get it - All the states are in a hole and S&P bumps their ratings. Of course, remember how much warning Moddy's gave us about banks in 2007.

Posted by Steve | March 9, 2011 6:59 PM

that number -- interest over the length of the bonds -- when they're borrowing money for streetcars

Who cares? There's always a bus line to cut to pay for it!

Posted by Erik H. | March 9, 2011 10:32 PM

Under Scam Adams accounting standards, those "savings" can be used only for bikelanes and bioswales.

Posted by Garage Wine | March 10, 2011 5:58 AM

Search this site

About

Clippings

Archives

Links

E-mail, Feeds, 'n' Stuff

Wednesday, March 9, 2011

Taxpayers, rejoice! Oregon is going broke more slowly.

Comments (9)

Sponsors

In Vino Veritas

The Occasional Book

Road Work