Bonds have been the traditional instrument for government to spread the cost of installing a fossil fuel intensive infrastructure. The fight over road building and reconstruction on many of the nation's inventoried but undeveloped areas is an example.
In San Jose the RDA (with projects in light rail, 87, etc.) offices are across the hall from Merrill Lynch. Its ironic that the AB32 governor pushed bonds; and then gas prices raised family expenses 25%, stretched by debt to benefit Vehicle Miles Traveled, on the outer suburbs of the job intensive cities, and threatens his legacy. Bonds were necessary because the governor got his job by bankrupting government so commuters could own a planet toasting car with reduced vehicle license fees.
Banks Albach in the Palo Alto Daily News notes that, only from Lehman, Belmont Redwood Shores school district will lose about $3M in construction monies. The San Mateo Community College district lost $25M.
In another write up on the melting planet of bond financing Mark Olbert, a trustee on the San Carlos School Board of Trustees, observes:
I found it interesting that Lehman was almost the only investment discussed. The fund invests in many other names that have been in the news lately. As of Sept. 24, more than 80 percent of the investments are in what I think of as the financial services sector, a fascinating concentration given what’s been unfolding over the last year or so. I hope the Treasurer’s Office knows what it’s doing... and I personally hope it diversifies the portfolio as soon as it can.
In other words business as usual at least as long as gas stays under $4/- a gallon.