DC Tom Posted March 9, 2007 Share Posted March 9, 2007 Sorry 'bout that. I was reading more into your original post than was actually there. (Note to self, stop posting well past midnight after consuming a few pops.) It's okay. I kind of suspected my original post on the matter wasn't clear, anyway. Link to comment Share on other sites More sharing options...
Orton's Arm Posted March 9, 2007 Share Posted March 9, 2007 Actually, that's not what I was trying to say. Capital projects of course require funding...but since they're funded through debt offerings linked directly to the project, talking about a projected funding shortfall is ludicrous. You plan on floating enough bonds to fund the project...if you're projecting a funding shortfall, you're basically saying "We don't plan on floating enough of a bond offering to cover what we're building." Who the hell, outside the DC government when they're building a baseball staduim, plans on not completely funding a project? That was my point: "funding" covers capital projects. "Funding shortfall" does not. Unless you're an idiot. Like Holcomb's Arm. Wrong. It's a 20 year study. So let's say Mainstreetville, USA needs to float a bond in year 5 of the study, in order to pay for a capital project. Typically, Mainstreetville would at least pay interest on those bonds within the first year, even if principal repayment was delayed until later. Whatever interest and principal payments Mainstreetville makes during years 6 - 20 of the study contribute to a potential funding shortfall. Link to comment Share on other sites More sharing options...
Orton's Arm Posted March 9, 2007 Share Posted March 9, 2007 Capital projects, especially those with long expected service lives, are one of the few things government SHOULD borrow money to pay for. If a new treatment plant, or an upgrade to an existing plant, has an expected service life of, say, 20 years, that is the correct time period over which to pay for it. I'm not certain where you were trying to go with this post. It appears that you are implying that the principal that is borrowed doesn't require repayment but the interest does. I am certain that isn't what you meant, but that is how it reads. I don't quite agree with CTM about capital projects not requiring "funding" as most government infrastructure projects will not generate sufficient revenues to offset the full cost of the project, so they will require "funding" to some extent to pay off the bonds, and it does appear that the shortfall discussed in the article does include capital projects in the total. But to state that interest is what needs to be funded, especially on municipal projects such as these where the interest rate will equal the discount rate, is silly. And, getting back to the original point of this portion of the discussion, the Yahoo article and the ASCE paper both very clearly state that they are not factoring in any costs for system expansions. Apparently the EPA paper (which I did not read) also clearly states that. Picking out one sentence in the middle of a news article, where the initial sentence states that the legislation addresses "deteriorating sewer systems" and further down in the article it mentions that 850 gigagallons of overflow are due to combined sewer systems (read stormwater runoff) and 3-10 gigagallons of overflow are due to sanitary systems (i.e. at most 1% of the problem is due to insufficient treatment capacity for toilet flushing), to claim that immigrants are responsible for "a lot" of that spending is not intellectually rigorous, to say the least. What I had in mind when I wrote my earlier post is that a bond offering could be structured in a number of ways, but typically there'd at least be interest payments over the short term. If every year a community has to write out a check for interest payments, that expense contributes to the total funding shortfall. But you could issue a 40 year bond, with principal repayment to begin after year 20 or 25. So the funding shortfall caused by principal repayment may fall outside the time period covered by the study, unless they made the specific assumption that principal repayment would begin in a timely fashion. Link to comment Share on other sites More sharing options...
GG Posted March 9, 2007 Share Posted March 9, 2007 Moron. Municipal (and virtually all) bonds have a fixed maturity (ie no amortization). Link to comment Share on other sites More sharing options...
DC Tom Posted March 9, 2007 Share Posted March 9, 2007 Wrong. It's a 20 year study. So let's say Mainstreetville, USA needs to float a bond in year 5 of the study, in order to pay for a capital project. Typically, Mainstreetville would at least pay interest on those bonds within the first year, even if principal repayment was delayed until later. Whatever interest and principal payments Mainstreetville makes during years 6 - 20 of the study contribute to a potential funding shortfall. What? Bond payments after the first year of issue contribute to funding shortfalls? Is this because municipalites expect to not pay back the bonds? And that's not even how bonds work. You buy a bond, you get interest payments for the life of the bond. When the bond's term is up, you get the original principal back. As GG said, there's no amortization. Principal repayment is delayed until later BY DEFINITION, you retard. You have GOT to learn to stop trying to discuss things you have no understanding of. Stick to...I don't know. Something you understand. There's got to be at least one subject. Link to comment Share on other sites More sharing options...
Ramius Posted March 9, 2007 Share Posted March 9, 2007 You have GOT to learn to stop trying to discuss things you have no understanding of. Stick to...I don't know. Something you understand. There's got to be at least one subject. I believe HA's major at Hamburger U was "Sodium chloride distribution director of Solanum tuberosum", so he should know something about that. Link to comment Share on other sites More sharing options...
DC Tom Posted March 9, 2007 Share Posted March 9, 2007 I believe HA's major at Hamburger U was "Sodium chloride distribution director of Solanum tuberosum", so he should know something about that. No, that was his thesis: "The Function of Error in the Redistribution of Subsets Particulate Sodium Chloride in the Presence Of Solanum Tuberosum." I'll bet the thesis defense was tough...Hamburgler's supposed to be a B word at the orals... "Robble, robble, robble" "In my research, I've found that the sodium chloride distribution, when reapplied, causes the size of the s. tuberosum pieces to regress toward the mean." "Robble, robble, robble!" "No, when you salt the fries, the error in the salt causes the fries to regress toward the mean!" "Robble robble robble!!!" "You just don't understand, because you've been listening to Tom and Ramius!" Link to comment Share on other sites More sharing options...
Ramius Posted March 9, 2007 Share Posted March 9, 2007 No, that was his thesis: "The Function of Error in the Redistribution of Subsets Particulate Sodium Chloride in the Presence Of Solanum Tuberosum." I'll bet the thesis defense was tough...Hamburgler's supposed to be a B word at the orals... "Robble, robble, robble" "In my research, I've found that the sodium chloride distribution, when reapplied, causes the size of the s. tuberosum pieces to regress toward the mean." "Robble, robble, robble!" "No, when you salt the fries, the error in the salt causes the fries to regress toward the mean!" "Robble robble robble!!!" "You just don't understand, because you've been listening to Tom and Ramius!" Damn you i need a new keyboard after reading that...water went everywhere! Link to comment Share on other sites More sharing options...
DC Tom Posted March 9, 2007 Share Posted March 9, 2007 Damn you i need a new keyboard after reading that...water went everywhere! Yeah, that Perfesser Hamburglar...bit of an eccentric, and not much of a lecturer, but he's a good researcher and tough on orals. Link to comment Share on other sites More sharing options...
EC-Bills Posted March 9, 2007 Share Posted March 9, 2007 Oh my abs are hurting from laughing so hard Link to comment Share on other sites More sharing options...
Orton's Arm Posted March 9, 2007 Share Posted March 9, 2007 What? Bond payments after the first year of issue contribute to funding shortfalls? Is this because municipalites expect to not pay back the bonds? And that's not even how bonds work. You buy a bond, you get interest payments for the life of the bond. When the bond's term is up, you get the original principal back. As GG said, there's no amortization. Principal repayment is delayed until later BY DEFINITION, you retard. You have GOT to learn to stop trying to discuss things you have no understanding of. Stick to...I don't know. Something you understand. There's got to be at least one subject. I suggest you follow your own advice, and stop trying to discuss anything that has to do with statistics, genetics, or other fields you don't understand. As for the principal repayment of bonds, a fiscally responsible community might decide to begin buying back its own bonds early, so there wouldn't be a giant lump sum waiting at the end. As far as the funding shortfall goes, you have your expenses, and your revenues. If you're making interest payments on bonds, and if those bonds are for a brand-spanking-new wastewater infrastructure, then those bond payments contribute to the expense side of the ledger. And that contributes to any given funding shortfall. See? Real simple. Link to comment Share on other sites More sharing options...
DC Tom Posted March 9, 2007 Share Posted March 9, 2007 I suggest you follow your own advice, and stop trying to discuss anything that has to do with statistics, genetics, or other fields you don't understand. As for the principal repayment of bonds, a fiscally responsible community might decide to begin buying back its own bonds early, so there wouldn't be a giant lump sum waiting at the end. Again...changing your story when you're caught being stupid. First you said principal payment is amortized over part or all of the life of the bond. Now you're saying it's not, but it can be if they decide to buy back the bonds early...which not only does NOT cause a projected funding shortfall, it's only possible if there's a funding surplus. As far as the funding shortfall goes, you have your expenses, and your revenues. If you're making interest payments on bonds, and if those bonds are for a brand-spanking-new wastewater infrastructure, then those bond payments contribute to the expense side of the ledger. And that contributes to any given funding shortfall. See? Real simple. PROJECTED funding shortfall, you loon. "PROJECTED". No one projects the future expense of future debt service for a future bond issue used on a future capital project, because you can't project the interest expense of unknown interest at an unknown rate on an unknown borrowed amount for an unplanned capital project. I know this is hard for you, because it bears a striking resemblance to math and a striking lack of resemblance to a drive-through window. But please, for your own sake, TRY to admit you're wrong and shut the hell up for once. You'll find that, when you actually admit you're wrong and don't keep proving your ignorance, these stupid threads tend to end relatively quickly. Link to comment Share on other sites More sharing options...
Orton's Arm Posted March 9, 2007 Share Posted March 9, 2007 Again...changing your story when you're caught being stupid. First you said principal payment is amortized over part or all of the life of the bond. Now you're saying it's not, but it can be if they decide to buy back the bonds early...which not only does NOT cause a projected funding shortfall, it's only possible if there's a funding surplus. PROJECTED funding shortfall, you loon. "PROJECTED". No one projects the future expense of future debt service for a future bond issue used on a future capital project, because you can't project the interest expense of unknown interest at an unknown rate on an unknown borrowed amount for an unplanned capital project. I know this is hard for you, because it bears a striking resemblance to math and a striking lack of resemblance to a drive-through window. But please, for your own sake, TRY to admit you're wrong and shut the hell up for once. You'll find that, when you actually admit you're wrong and don't keep proving your ignorance, these stupid threads tend to end relatively quickly. Just because you can't estimate interest expense with any precision does not mean the best guess is zero. You make reasonable estimates of the capital expenditures needed, and the likely interest rates. Then you make a best-case scenario (with somewhat lower rates) and a worst-case scenario (with somewhat higher rates, and possibly larger expenditures). The difference between best-case and worst-case scenarios is why they ultimately ended up with a figure of $300 billion - $400 billion shortfall. That $100 billion in uncertainty implies the use of multiple scenarios, and certainly future long-term interest rates are a legitimate area where you could calculate such. Link to comment Share on other sites More sharing options...
GG Posted March 9, 2007 Share Posted March 9, 2007 As for the principal repayment of bonds, a fiscally responsible community might decide to begin buying back its own bonds early, so there wouldn't be a giant lump sum waiting at the end. Link to comment Share on other sites More sharing options...
Orton's Arm Posted March 9, 2007 Share Posted March 9, 2007 Ah, silly me to suppose any community might want to begin buying back its own bonds early. Link to comment Share on other sites More sharing options...
Alaska Darin Posted March 9, 2007 Share Posted March 9, 2007 You are truly a piece of work. Link to comment Share on other sites More sharing options...
DC Tom Posted March 9, 2007 Share Posted March 9, 2007 Just because you can't estimate interest expense with any precision does not mean the best guess is zero. You make reasonable estimates of the capital expenditures needed, and the likely interest rates. Then you make a best-case scenario (with somewhat lower rates) and a worst-case scenario (with somewhat higher rates, and possibly larger expenditures). The difference between best-case and worst-case scenarios is why they ultimately ended up with a figure of $300 billion - $400 billion shortfall. That $100 billion in uncertainty implies the use of multiple scenarios, and certainly future long-term interest rates are a legitimate area where you could calculate such. No, they ultimately ended up with a $300-400 billion shortfall by estimating O&M costs exclusive of capital improvements. Does someone give you a cash reward for every time you're wrong? Seriously...what is your motivation for being so ungodly stupid? Link to comment Share on other sites More sharing options...
Orton's Arm Posted March 9, 2007 Share Posted March 9, 2007 No, they ultimately ended up with a $300-400 billion shortfall by estimating O&M costs exclusive of capital improvements. Does someone give you a cash reward for every time you're wrong? Seriously...what is your motivation for being so ungodly stupid? Fine. My point is there's nothing in the article that says the study is exclusive of new capacity, or that the study doesn't consider the costs of capital improvement. If you're dragging the board through two pages of this to make some point about my reading comprehension, you've failed. If on the other hand you're unexpectedly more interested in the study than in your vendetta against me, then I'm willing to let this go. Link to comment Share on other sites More sharing options...
Alaska Darin Posted March 9, 2007 Share Posted March 9, 2007 Fine. My point is there's nothing in the article that says the study is exclusive of new capacity, or that the study doesn't consider the costs of capital improvement. If you're dragging the board through two pages of this to make some point about my reading comprehension, you've failed. If on the other hand you're unexpectedly more interested in the study than in your vendetta against me, then I'm willing to let this go. Translation: This public ass raping is starting to hurt. Would you mind stopping? Link to comment Share on other sites More sharing options...
erynthered Posted March 9, 2007 Share Posted March 9, 2007 Could someone pin a thread for HA, Tom and Ramius? !@#$ing please!!!!!!!!!!!!!!!!!!!!!!!!! So that they can continue to beat each other to death, for !@#$ing Christ sakes. Darin? Link to comment Share on other sites More sharing options...
Recommended Posts