The Fitch-uation: New Jersey Downgraded

WSJ ^ | August 17, 2011 | Mark Gongloff

[markomalley]

Oh, man, what a bad day for New Jersey.

First, Abercrombie & Fitch pays “Jersey Shore” “star” The Situation not to wear its clothing, and now Fitch — no relation — has gone and downgraded the entire state.

What is it with these Fitches? Is anybody investigating the connection here? Full disclosure: I live in New Jersey.

Fitch, the rater, not the retailer, writes:

Fitch Ratings downgrades the State of New Jersey’s outstanding general obligation (GO) bonds to ‘AA-’ from ‘AA’.

Fitch also downgrades to ‘AA-’ from ‘AA’ the rating on the Garden State Preservation Trust’s open space revenue bonds. Additionally, Fitch downgrades to ‘A+’ from ‘AA-’ the ratings on the state’sappropriation-backed debt and other related debt, which is detailed at the endof this release.

[Presbyterian Reporter]

California and Illinois should be downgraded next.

New Jersey has had a bloated bureaucracy for decades mostly under Democrat or RINO leadership. Christie is a breath of fresh air, but the big guy is not big enough to clean the stench from the NJ government house.

[Opinionated Blowhard]

So why did Fitch do it?

The downgrade of the state’s GO rating to ‘AA-’ from ‘AA’ reflects the mounting budgetary pressure presented by significant and growing funding needs for the state’s unfunded pension and employee benefit liabilities, particularly in the context of a weak economic recovery, a high debt burden, limited financial flexibility, and persistent structural imbalance.

This is the problem with these agencies. All of these issues were present when Corzine was governor. Why didn't Fitch downgrade then? Now that Christie is governor and trying to do something, all the sudden Fitch sees the issues. If anything, New Jersey is in better shape now with Christie's reforms than it was when Corzine was opening up the spending spigot full blast and expanding government worker benes. These ratings agencies really are useless and in some cases hinder productive action.

[PieterCasparzen]

So, Fitch thinks the Federal government situation would not apply in this sense:

The downgrade of the state’s GO rating to ‘AA-’ from ‘AA’ reflects the mounting budgetary pressure presented by significant and growing funding needs for the state’s unfunded pension and employee benefit liabilities, particularly in the context of a weak economic recovery, a high debt burden, limited financial flexibility, and persistent structural imbalance.

Oh, right, the Feral government can print money.

Other than that, NJ and the Feral government seem like they’re in the same boat.

[jessduntno]

“Fitch Ratings downgrades the State of New Jersey’s outstanding general obligation (GO) bonds to ‘AA-’ from ‘AA’

Sounds like someone was getting nervous about the renewed calls for the Gov running in 2012...he’s gonna have to fight this if he does.

[GonzoGOP]

This is the problem with these agencies. All of these issues were present when Corzine was governor. Why didn't Fitch downgrade then?

Because there was the general belief that Obama and Pelosi would use the federal government to bail out the big blue states. Now that Obama is neutered, the fed can no longer borrow at will and the GOP controls the house there is no chance of a Federal bailout of the states. Watch for Illinois, California and a couple more of the big blue blunders to join the downgrade ranks. Oh did you notice that Wisconsin got its AAA rating back?

[Presbyterian Reporter]

‘’This is the problem with these agencies. All of these issues were present when Corzine was governor. Why didn’t Fitch downgrade then? ‘’’

—

The municipal bond insurance companies were a bit stronger when Corzine was governor. An AA- is still a very strong rating.

I want to see how they rate California or Illinois.

[GraceG]

Is Fitch in the bag for Obama and against Christie?

[radioone]

The Fitch rating of AA-

An obligor has VERY STRONG capacity to meet its financial commitments. It differs from the highest rated obligors only in small degree.

Reading this analysis it appears NJ taxes will have to go up. To help the budget, NJ did not make a 3.1 billion pension contribution.

http://finance.sfgate.com/hearst.sfgate/news/read?GUID=19259625

[Melchior]

Pension are the problems, and higher payments will have to be demanded of employees. Trying to meet this problem with increased taxes, in a state that already ranks about the worst in taxing its citizens, is madness.

[newzjunkey]

Run Christie, Run! /s

(Heck of a pick, Ann)

[newzjunkey]

Expectedly, CA & IL are the worst rated states.

CA: bond rating Fitch A-, Moodys A1, S&P A-

IL bond rating: Fitch A, Moodys A1, S&P A+

CA bonds are popular, just completing a $1B sale a day early.

[newzjunkey]

Far gone are the days of AAA in the Golden State (1986). CA’s worst S&P rating has been BBB, when Arnold won the recall. He got it up to A+ in his first term but it’s been headed back down since.