MBTA head hired for his turnaround expertise left company that is on verge of bankruptcy

WBUR reports. Charlie Baker has gone into This Is Fine mode, the Globe reports.

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    Yikes

    By on

    Hope he channels his inner GE and not his more recent GP!

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    Inner GE

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    If by channeling GE you mean: "get hundreds of millions of taxpayer dollars for their building projects" than yes, I hope he does. Maybe he'll also use that same inner GE math that allows them to pay zero tax dollars to make that big dig debt disappear.

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    Can't blame those on the biz peeps

    By on

    Blame the pols.

    As someone who has roundly criticized these deals in the past, the GE deal was actually pretty good. Time will tell, but we may get a few more HQs as a resulr of that once Illinois and NJ implode.

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    Expect A Magical GLX Estimate

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    The GLX estimate will magically go from 2.3 to 1.4 billion. After it's construction, we'll find out it cost 7 billion. Ramirez is here to cook the GLX books for Pollack, plain and simple

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    Teflon Charlie stikes again

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    Why is this guy so popular? He's a fraud. He "turned around" Havard Health by firing people and giving himself a huge raise. He shuffled the Big Dig debt and dealt it to the MBTA. He pretends to be a "moderate" but selected right wing extremist Tea Party Polito as his running mate. His budgets cut spending for poor, sick, young and elderly. His goal is privitization of everything he can before he leaves office. Just because he's one of the very few Republicans who isnt a raving manic doesnt make him a good man or a good governor. This alleged leader's solution to the last presidential election was to vote for nobody!

    Chucking Farlie is a fraud. His new hire to run the MBTA is a fraud. And sadly Stephanie Pollock has turned into a fraud.

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    You answered your own question

    There were two very low bars he had to clear:

    1) Be not Barack Obama or a Democrat

    2) Be not an embarrassing pig

    He satisfied both and is now our governor.

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    MA would have elected Obama

    By on

    No problem!

    What got Charlie in:
    1. Not an embarrassing pig
    2. (most important) NOT MARTHA

    Any well-like Democrat could have picked him off. Probably why he's super friendly with Warren.

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    Ah, Martha

    I started calling Hillary "national Martha Coakley" in 2015. DNC shoulda listened to me.

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    Ok, your turn

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    1) how do you turn around a drownng services company without cutting labor which probably represents at least 70% of costs?

    2) how was passing on the debt to the MBTA bad? Since then the MBTA has doubled its revenue and dropped debt payments from 33 cents of every dollar to 22 cents? On what financial planet can this be bad?

    3) 75 cents of every dollar in the budget is already spent on health/human services directly. Even more indirectly. What do you cut to fund more? Or in the alternstive, what do you tax to offer more services (and in consideration of the fact that over half the population has a college degree, why are we spending so much on these services to begin with?)

    He's popular because he's been successful. We'll see about this pick.

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    It has been explained to you dozens of times

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    The Big Dig was supposed to pay for transit enhancements.

    They spent the money on contractor pork overruns and then dumped the debt on the T.

    It.Really.Is.That.Simple.

    Pull your head out of your rand and you can function like an adult.

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    Umm - last I checked...

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    The "Big Dig" is the state (with a lot of federal money to spend).

    See below (wo)manchild - this was at most an accounting shift and has been a boon for the T and everyone working there. Just not for the riders.

    It. Really. Is. That. Simple.

    Just not for you. And just because you and few other simpletons keep repeating it does not make it true.

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    This again?

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    Really, I thought we settled this after I even linked the T's budget for you. BTW, $2 billion in principal payments doesn't mean the big dig debt is paid off - in fact, if the remediation work costs were not shifted to the MBTA, that $2 Billion in principal payments (not even going to fact check that as I don't care), as that is going to the overall debt - which is 33% bigger due to the big dig. Thus, without it, that money would have paid down a significantly larger portion of the MBTA's debt, and would have resulted in significantly less debt service/interest paid. But, like I said, we have already been over this, so I really see no point in rehashing it again.

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    Yes we settled it

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    YOUR analysis proved I was right. At least the parts where you got the assumptions correct.

    You said yourself that the T basicaally balances its books on the back of funny money the state gives them. The additional sales tax under forward funding plus all the funny money pays for virtually all of the T's debt service.

    Under your analysis, if mom and dad give you the money to pay all your student loans, your mortgage and your car loan, somehow your parents are screwing you because the loans are in your name and you have to write the checks? Boo hoo!

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    No.

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    Again, before forward funding they would have had all of that money and been able to use it for SGR or expansion instead of paying for the remediation work and its interest. After forward funding, if the state still gave that money, it would have paid off more of their other debt/reduced interest, and the MBTA would have been in the "black" even without fair hike, and certainly not the last and most controversial of them. That debt is not paid off, as I have already linked to you in other stories, it still makes up 1/3 of the principal balance of the MBTA's current debt.

    Let me try one more time: Without the big dig debt, the books would have been balanced even with the shortfalls of the projected sales tax. The money then could have went to state of good repair and other needed things instead of paying down that debt. Like the Ride, the remediation work should never have ended up on the MBTA's books. It is commendable how you can continue to stick to your guns (or rather your fingers in your ears) with everyone telling you that you are wrong and then claim that they prove you are right - you should probably run for president in the future.

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    Yes

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    Is fantasyland a nice place to live? Do you get to print your own money there?

    So what you are saying is that the state should have kept the debt on their books - but still given the roughly $400 million to the T to pay off their debt?

    So what magical money was the state supposed to use to pay off the debt on their books? Pull it from their left pocket instead of the right?

    Before forward funding - you mean when 33 cents of every dollar went to debt service instead of the 22 cents in 2015 (most recent available figures)? So they have more money now than before forward funding - both relatively and absolutely - but somehow they are worse off? Sure - if you live in a world where 2<1.

    With OR without the Big Dig debt - the books balance - if there's a shortfall - the state backstops them. Lots of money could have gone to good repair - there was tons of it. It went to wages and bennies - not the maintenance and capital necessary (this is not 100% the T's fault because they are the victim of some onerous arbitration agreements as well).

    Yes I am sticking to my guns - because I don't make unrealistic assumptions about revenue and expense categories. Your posts and links prove that you have absolutely no idea what you are talking about unless you live in a world where you get to spend your money at least twice.

    Let them eat cake (and have it too)!

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    I'd love to see some

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    I'd love to see some references to back up both of your claims, but I think your second point comes off as especially confusing.

    Just because the revenue growth happened after the passing of debt doesn't mean gaining the debt was a good thing, and I'm at a loss as to how it could be seen as such. Obviously being less in the hole would be a plus, despite whether they're paying 33 or 22 cents of every dollar towards it. They could (and should) be paying ZERO CENTS towards it, because it's the %#$^$^% big dig!

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    The state paid for it anyway

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    In the first year of "forward funding" debt payments went up by about $50 million - but the state gave them additional sales tax money to pay for it to the tune of about $75 million in year one - that money has continued to increase - albeit slower than original projections. Thus some argue - perhaps with some merit but it's impossible to tell from the numbers the T puts out - that the incremental sales tax revenue was insufficient. However, the state has NEVER left the T high and dry. Since giving them extra money for the debt transferred to them the state has also provided two additional revenue streams to the tune of hundreds of millions annually (all of which is effectively, if not actually, paid off given that we have made $2 billion in principal payments since this was done). At the end of the day - this was simply an accounting shift - and had no material financial impact on the T. The T's woes come from the fact that they do need to be spending 25-30 cents on debt because they need to buy very expensive capital equipment. They didn't. Instead, virtually every incremental dollar spent went to collective bargaining agreements - directly with their own employees or indirectly to contracted employees. The deferred maintenance and capital shortfalls are of management and labor's own making

    You can look up health insurers cost structures - what I've typically heard is for every dollar of revenue, 90 cents paid in claims, about 1 cent in profits - the rest to labor and overhead - and in a service org like that - 60-80% of costs is typically labor, benefits etc. Plant property and equipment is computers and offices - relatively inexpensive.

    Of the state's operating budget is about $40 billion. $23 billion is health care, $7 billion in education (that's the 75% I alluded to) and the balance is for courts, state cops, DMV and everything else they do.

    http://www.mass.gov/bb/gaa/fy2018/

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    The Big Dig debt should have been left on the Turnpike Authority

    and then the Turnpike Authority should have defaulted and declared bankruptcy on the way to dissolution. This would have extinguished a significant fraction of the debt, at no cost to taxpayers. The banks and hedge funds could afford to take the loss more than the state can.

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    Public bankruptcy is a thing

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    Public bankruptcy is a thing of the past. Not even sovereign entities like Greece and Spain can declare bankruptcy anymore. The banks have too much clout. Instead of bankruptcy and debt reduction, you get 'austerity' so that the bondholders can be made whole.

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    Bankruptcy results in interest rate increases and more cost

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    Declaring bankruptcy would be disastrous. State bond ratings would suffer and greatly increase the cost of every borrowing of money. Government relies on a great deal of rotating debt to run and it would all end up costing taxpayers more than you think they would get away with.

    That's why you are not in finance or investment. Stick to bicycles.

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    If they picked him

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    Who the hell did they turn down?Did they automatically disqualify anyone with transit experience?

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    Best quote

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    Here's the bit I love in the BG:

    One of Global Power’s longtime shareholders, Nelson Obus of Wynnefield Capital, remembered meeting with Ramirez after he was named chief executive in June 2012, and said he wasn’t impressed. Fresh off a dozen years at GE, Ramirez used too many buzzwords for Obus’s liking.

    “We met Luis in our conference room and my impression of him was that he was very promotional and superficial,” Obus said in an interview Tuesday. After meeting Ramirez, Obus said he sold his company’s remaining shares in Global Power “on the basis that I didn’t have confidence in him.”

    Given the history of hiring these sorts by TPTB - I eagerly look forward to the monorail!

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    Hair Brained?

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    IMAGE(http://www.reimaginerpe.org/files/images/Braley_20110112_1963.jpg)

    Luis is the right person at the right time to move the MBTA further down the path to being one of the best transit systems in the country.

    Why, Stephanie? With the astronomical salary you're handing him, the public is owed more of an explanation about the extraordinary qualities you found in him, and which other candidates did not possess.

    At the very least, Mr. Ramirez should hold a press conference where he can present his vision for fixing the system. Certainly such a superior candidate should be able to do this immediately, and not require a lengthy time to "get up to speed". Isn't that right, Stephanie?

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    Hair

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    Now let's not talk about Steph's hair.......

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    Is that why I haven't gotten

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    Is that why I haven't gotten further in my career - I haven't screwed up enough????

    My sister worked her whole career in hospital finance. She HATED working with Charlie.

    Howie Carr calls him 'Tall Deval' for being a Rhino.

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