And now for a fairy tale about tobacco bonds: once upon a time, it seemed like the clouds had opened up and rained money on many states when the great tobacco company settlement of 1998 was struck.
But like many a lottery jackpot, the $206 billion promised would only get paid out slowly, over time. Impatient and cash-strapped states then figured out ways to get the money quicker by authorizing special bonds. Investors would lend the states their money, knowing they’d get paid back later when the tobacco settlement money trickled in, plus interest.
Yet in some places — New Jersey, for example — some of those bonds ran into trouble and the investors who bought them weren’t so happy. Although state officials are under no obligation to fix the problem, they are proud of their solution.
But Fortune magazine senior editor-at-large Allan Sloan is not proud of his home state’s solution.
Click the audio player above to hear Allan Sloan in conversation with Marketplace Morning Report host David Brancaccio