by Laura Conaway

I'm on the road today, in San Francisco, where I opened the newspaper to find a very, very active economy. Foreclosures in the Bay Area have fallen off, but defaults just hit a record.

"People are hoping that Obama's house saver plan will kick in and abort the new wave of foreclosures," one real estate tracker told the Chronicle. "There is just no way. There is a pig the size of Godzilla in the foreclosure python."

But hey, rents are falling.

 

Lately, I've been thinking that economics can't just live in technical thickets like bond yield spreads, though certainly bond yield spreads matter. Cities and states have had a dickens of a time these past months financing projects because the market has been wary of municipal bonds. With good reason, investors have worried that public entities will have trouble paying them back.

The federal Build America Bonds program has begun changing that. The program picks up part of the tab for states that use the Build America bonds, giving the states another affordable way to borrow money. It also appears to have the side effect of pushing investors back toward the old-fashioned muni bonds, which offer tax-free returns. After suffering through the credit crunch, California has been able to raise more than $13 billion in the bond market over the past four weeks.

So, back out of the thicket: All of this means that California can now finance projects like rehabbing its roads and its natural parks, and people here can start to find work carrying those projects out. With unemployment at 11.2 percent, this place needs every job it can get.