California’s risky business

James P. Howard II, “Letter to the editor,” Los Angeles Times, March 13, 2008.

Following up on yesterday’s post, the Los Angeles Times runs this letter:

Re “Hot and pricey,” editorial, March 11

The reality of state and municipal bond issues includes an unquantifiable element of political risk that private issues do not have. A general obligation bond is difficult to repudiate, but a political entity is subject to the whims of voters with regard to prioritizing financial concerns.

This is especially true in California. If voters and their representatives were not likely to chase down every fad issue and project, a government with otherwise sound financials would possess a rating that reflects it. Private issues usually are not so flippant in their priorities.

James P. Howard II
Columbia, Md.