The Boston Globe Covers Up for Wall Street, Ignores Swaps Losses in Coverage of MBTA Turmoil

[jakeXT]

A new Boston Globe story, The T's long, winding, infuriating road to failure, purports to be "the true story of the breakdown," a "a decades-long tale of grand ambitions and runaway costs."

Funny how this 2500 word article makes nary a mention of the huge losses that the Massachusetts Bay Transportation Authority made, along with many other easily duped transit authorities, on swap transactions that went massively against them in an environment of seemingly permanent low interest rates.

A March 2012 article in Alternet by Tom Ferguson provided an overview. Key sections:

The Refund Transit Coalition, a coalition of unions and public interest groups, put out a study that documented in stunning detail how Wall Street banks have for years been hustling American cities, states, and regional authorities out of billions of dollars. But save for Gretchen Morgenson's "Fair Game" column for the New York Times, the study drew almost no attention...

Its starting point will be familiar to anyone who recalls the debate over financial "reform" of the last few years. In the bad old days of pre-2008 deregulated finance, bankers started pedaling hot new "structured finance" products that they claimed were perfect for the needs of clients who had thrived for decades using cheaper, plain vanilla bonds and loans. The new marvels – swaps and other forms of so-called "derivatives" whose values changed as other securities they referenced fluctuated in value – were often complex and frequently not priced in any actual market. Their buyers thus had difficulty understanding how they really worked or how they might be hurt by purchasing them.

http://truth-out.org/news/item/29167-the-boston-globe-covers-up-for-wall-street-ignores-swaps-losses-in-coverage-of-mbta-turmoil

[Agschmid]

1. And Big Dig debt which wasn't really theirs to begin with...

Try digging out of that $3bn. hole.

[Mopar151]

2. I got no answers - but a couple observations

Boston - and by extension, Massachusetts - politics are the very definition of "quagmire". There is a lunatic spiderweb of comissions, authourities, regulating boards and the like that seemingly exist to provide patronage jobs and stymie any chance of anything getting done.
Doing a good job is for chumps and losers - at least that's the impression I get coming from frugal New Hampshire.

[unhappycamper]

3. The MBTA has been having problems for a long time now.

http://www.masslive.com/news/index.ssf/2014/10/chinese_rail_company_wins_out.html

Chinese rail company won MBTA contract over objections of other bidders
By MATT MURPHY
on October 23, 2014 at 5:54 PM

BOSTON — Over the objections of rival bidders and human rights advocates, a Chinese rail car manufacturer on Wednesday won a lucrative state contract to supply the MBTA with 284 new Red Line and Orange Line cars to be assembled in Springfield.

~snip~

The MBTA in January turned to another international company, the France-based Keolis, to take over operations of the state's commuter rail network with an eight-year, $2.69 billion contract.

~snip~

The competitors questioned CNR's lack of experience building and delivering rail coaches in the United States, and an attorney with Hyundai Rotem also raised a question about "impropriety" in the process after Gov. Deval Patrick volunteered this week that he met in Hong Kong with CNR officials in December 2013 in the middle of the bidding process.

~snip~

The MBTA will purchase 152 new Orange Line cars to replace the 32-year old fleet and 132 new Red Line cars that haven't been upgraded for over four decades. The design process is expected to take three years for the Orange Line and an additional 15 months for Red Line cars, with pilot cars expected to be delivered on the Orange Line in early 2018 and Red Line cars a year later.

[jakeXT]

4. I think they are running on 60 % of cars needed right now /nt