By Michael McDonald
May 26 (Bloomberg) — Florida won’t sell more Build America Bonds, the fastest-growing part of the $2.8 trillion municipal market, until the federal government guarantees the subsidy on the program, said Ben Watkins, who oversees the state’s debt sales.
Florida officials decided to permanently suspend sales of the securities because the U.S. Treasury can withhold all or part of the 35 percent interest subsidy if the issuer owes money to the federal government through programs such as Medicaid, Watkins said today in a telephone interview. The state is due $600 million in subsidies on $1.4 billion of bonds it already sold, he said.
“This is a consensus that we’ve reached after discussing it with policy makers,†said Watkins, who reports to the state’s bond finance division board, which is chaired by Governor Charlie Crist. “I want to use the program but I can’t as it’s currently configured.â€
The suspension comes as Congress considers extending the program, under which states and municipalities sell taxable instead of tax-exempt securities for new capital projects. The Build America program was created last year as part of the economic stimulus and is set to expire at year-end. About $107 billion of the debt has been sold, according to data compiled by Bloomberg.
Seeking ‘Clarity’
Florida, the fourth-largest U.S. state by population, stopped issuing the bonds temporarily in March while it sought “clarity†on the risks associated with the subsidy, Watkins said at the time.
The Internal Revenue Service in February told Austin, Texas, it was withholding a subsidy payment of $617,284 on $78.5 million of Build America Bonds in a dispute over payroll taxes, according to Art Alfaro, city treasurer. Los Angeles had $28 garnished from a subsidy payment on $307.4 million of airport bonds sold in November, to offset an unspecified liability, said Ryan Yakubik, director of capital development and budget at Los Angeles World Airports.
Congress needs to guarantee that the subsidy payment won’t be reduced by offsets for Florida to rejoin the program, said Watkins, who is based in Tallahassee, the capital. The state gets $27.8 billion a year from the federal government through 30 programs other than Build America Bond subsidies, he said. Watkins said he has spoken with Florida Senators Bill Nelson, a Democrat, and George LeMieux, a Republican, about the issue.
‘Real Risk’
“It is a very real risk†that a subsidy payment may be garnished at some point over the life of the bonds, which is often about 30 years, Watkins said. “It’s my job to worry about it.â€
Bruce Friedland, an IRS spokesman, declined to comment.
John Cross, associate tax legislative counsel for the Treasury, said the publicity about the possibility that Build America Bond payments may be withheld has been “extremely overblown and exaggerated.â€
“It’s just part of the federal government’s system of payments,†Cross said at a Securities Industry and Financial Markets Association conference in Washington last month.
Local Florida borrowers such as Cape Coral are still issuing Build America debt, selling about $236 million of the securities since the state’s March suspension, according to data compiled by Bloomberg.
Wednesday, May 26, 2010
O’NEIL Edwards, a member of the singing group Voicemail, has died in hospital.
Edwards was critically wounded after he was shot several times as he attempted to enter his home at Belloc Avenue in the middle class community of Duhaney Park early on the morning of Monday May 10.
The main suspect in the shooting was found dead in the Chancery Hall community this two days later. Police had attempted to arrest the man earlier that day but he escaped.
Edwards’ cellular phone was found in the dead man’s possession. The body was clad in green short pants, white t-shirt and blue slippers and was found on Lady Hamilton Close with several gunshot wounds.
By Blake Ellis, staff reporter May 26, 2010: 4:45 PM ET
NEW YORK (CNNMoney.com) — Microsoft’s dominance as the tech industry’s most valuable player has ended.
In Tuesday trading, Apple’s market capitalization edged past its longtime rival’s as investors made official what consumers have long suggested: Microsoft isn’t the industry’s alpha dog any longer.
While just last month, Microsoft’s market cap exceeded that of Apple by about $25 billion, the companies are now neck and neck, with Apple in the lead by a mere $2.9 billion.
Microsoft’s consumer products business is struggling to compete as Apple’s hot new items like iPad and iPhone capture the attention of customers.
Microsoft (MSFT, Fortune 500) fell 4% to close at $25.01 on Wednesday, while Apple (AAPL, Fortune 500) lost 0.45%, closing at $244.11.
Shares of Microsoft have dipped more than 11% in the past couple weeks, while Apple’s stock is down just under 5%, despite recent market volatility.
“What this really means is that Wall Street has more confidence in Apple’s growth prospects than it does in Microsoft’s growth prospects,” said Matt Rosoff, lead analyst at Directions on Microsoft, an independent firm.
“Apple is showing high growth, with the launch of its iPad and its new iPhone coming out, and while Windows is a great competitor versus the Mac, Microsoft just hasn’t come up with new areas of growth.”
Microsoft’s reputation as a market leader took another hit Tuesday when the company announced that it plans to shake up its management structure.
Amid the shuffle, Robbie Bach, who was in charge of years-long effort to turn Microsoft into more of a threat to Apple by heading the entertainment and devices group and overseeing innovative consumer products like Xbox and Zune, will retire from Microsoft in the fall.
“This just means those efforts didn’t work out,” said Roger Kay, president of analyst firm Endpoint Technologies. “It’s sort of like Japanese samurai ethic, which says you need to fall on your sword to maintain your honor.”
Tow the line or keep up with the Joneses?
Part of Microsoft’s problem is that, instead of finding its own audience, it has fallen into a game of catch-up and is focusing too much energy on finding products to directly rival Apple’s, said Kay.
“I don’t know if they have to compete,” he said. “What seems to be working for Microsoft is its serious applications for businesses, education institutions and other enterprises, and if they stay focused on their commercial business that gives them a lot.”
While Microsoft’s first quarter earnings were boosted by the success of its new operating system, Windows 7, Apple’s record profit and revenue in the first quarter was driven by iPhone sales.
And many of Microsoft’s efforts to branch out have been met with little success. For example, the company’s Zune music player, meant to rival the iPod, has failed to create the same buzz as Apple’s device, with sales dropping significantly in 2009.
Microsoft even looked into creating a tablet computer that would have competed directly with the iPad, which Apple introduced at the beginning of April, selling more than 1 million in the first 28 days of release. But Microsoft CEO Steve Ballmer ended up pulling the plug on the project before the tablet ever made it to market.
“Zune hasn’t gone anywhere, their tablet is dead, their phones are having trouble establishing a market position — but consumers still use Office and Windows,” said Kay.
Other experts say that Microsoft shouldn’t stop at its core business, and that it simply needs to innovate more — and faster — in order to stay competitive.
“They have to continue to try to find other businesses, otherwise growth is always going to be bound by the PC market,” said Rosoff.
Until Microsoft develops a clear direction and finds new ways to innovate, Apple will continue to push ahead, he said.
“Wall Street believes in Apple because Apple continues to put out new products that capture the imaginations of the press and tech pundits,” said Rosoff. “Microsoft just hasn’t been able to come up with a new multi billion dollar business like Apple.” To top of page
Rhonda Krystal Rambally
The new Cabinet, led by this country’s first female Prime Minister Kamla Persad-Bissessar will be sworn into office today. The swearing-in ceremony will take place at the Knowsley Building, Queen’s Park Savannah, Port-of-Spain at 4 pm. The Knowsley Building which was recently refurbished by the Urban Development Corporation of T&T (Udecott) houses the Ministry of Foreign Affairs. The issue of corruption in Udecott, under its former executive chairman Calder Hart, was on the front-burner during the election campaign. The move to the Knowsley Building has broken tradition since the swearing-in ceremony of the Prime Minister has been held at President’s House. However, over a week ago a large section of the top floor of the west wing of the building collapsed.
President’s House is used to host special functions such as the Independence Day Awards. The People’s Partnership (PP), led by 58-year old Persad-Bissessar, won by a landslide, copping 29 of the 41 seats. She has been the Member of Parliament for Siparia since 1995. The PP comprises the United National Congress (UNC), the Congress of the People (COP), the Movement for Social Justice (MSJ), the National Joint Action Committee and the Tobago Organisation of the People (TOP). The swearing-in was made official after president Max Richards received the final list of results from the Elections and Boundaries Commission. Earlier, however, attorneys representing the UNC and the PP sent a letter to the EBC’s chairman Dr Norbert Masson calling for the declaration of the results to prevent “our client to be deprived of having its constitutionally elected representative sworn into office.â€
The letter which was sent by Om Lalla stated: “We are instructed that our client’s political leader and Prime Minister designate, the honourable Kamla Persad-Bissessar, is due to be sworn in today (Tuesday) as Prime Minister of Trinidad and Tobago upon confirmation of the election results by the Elections and Boundaries Commission in accordance with Section 104 of the Representation of the People Act Chapter 2:01.†Masson could not be reached for comment. According to the law: “The Returning Officer shall, as soon as he shall have ascertained the result of the poll, forthwith publicly declare the same and announce the candidate for whom the most votes have been given to be elected as the member for the electoral district.â€
Also Section 76 (1) of the Constitution states it is the duty of the EBC, upon determining the the poll results of each constituency and upon confirmation of a majority, to inform the President forthwith which shall enable the President to appoint the Prime Minister. Although chief elections officer Howard Cayenne in a telephone interview said the preliminary results would be released today, they were released yesterday evening. He also said because there were requests for recounts in three constituencies the official results will be made available “maybe next week.†The three requests were made for Arima, Point Fortin and Diego Martin North East.
Butterfield Bank climbed 3.7 percent in heavy trading yesterday to get the Bermuda Stock Exchange trading week off to a positive start.
Butterfield gained five cents to close on $1.40, as 143,754 shares changed hands.
Ascendant Group Ltd. also climbed, gaining five cents, or 0.4 percent, to close on $13.05, as 200 shares traded.
Bermuda Aviation Services Ltd. descended, however, losing 20 cents, of four percent, to close on $4.80, as 1,000 shares were exchanged.
The Royal Gazette / BSX Index rose 15.31 points, or 1.2 percent, to close on 1,301.86.
Volume was just over 145,000 shares, while turnover totalled around $201,000.
THE number of civilians confirmed killed in the security force operation in West Kingston has reached 44.
Political Ombudsman Herro Blair, speaking on RJR 94 FM, said that he had counted 35 at the morgue with another nine bodies awaiting collection.
Meantime Public Defender Earl Witter is questioning the disparity between numbers killed and the number of firearms seized. Security forces have so far accounted for four firearms seized.
Witter added that he saw no sign of bodies being burned as alleged by persons claiming to be residents who called media houses during the assault on Tivoli Gardens and Denham Town which began Sunday.
One soldier and seven members of the security forces were injured after security forces entered the West Kingston communities to execute a search warrant for reputed local area don Christopher ‘Dudus’ Coke.
Coke is wanted for extradition to the United States on gun and drug trafficking charges. He is still at large.
This time last year, most South Floridians wouldn't have known the difference between the Loop Current and Froot Loops.<p/> They do now — with dubious thanks to the Gulf oil disaster.
The days of enjoying a piña colada beneath an umbrella on the shores of Miami Beach may be over.<p/> The city's attorney has advised officials that beachfront hotels are not allowed to sell or serve alcoholic drinks to customers on the beach.
The brown pelicans that once populated this small sliver of a barrier island were long gone by Tuesday, scared away more than a week ago by slightly bigger birds — Blackhawk helicopters.
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