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April 18, 2014 / 18 Nisan, 5774
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Posts Tagged ‘Moody’s’

Yeshiva University May Run Out of Money in 2015

Wednesday, March 26th, 2014

Yeshiva University is at risk of running out of unrestricted cash in the near-term future, Moody’s Investors Service is warning.

Moody’s has downgraded  the university’s credit rating several times over the last three years, including a March 5 downgrade to B3 rating, indicating a high credit risk.

A new report released March 21 warns that deep and growing operating deficits are likely to continue due to “poor financial oversight and high expenses;” much of YU’s cash and investments are tied up in restricted funds the university cannot use for operating expenses; and banks may not extend credit to the troubled university.

“The negative outlook reflects the risk that Yeshiva will deplete its available unrestricted liquidity before management is able to execute a successful financial turnaround,” Moody’s new report says.

Only 14 percent of the $1.2 billion the university had on hand in 2013 is free from donor restriction and could be used for operating expenses, according to the report. Unless there is a change in operations, the report warned, the university will run out of money by the end of 2015.

YU was a victim of Bernard Madoff’s Ponzi scheme, which cost it $1900 million, but its financial problems can be traced to roots a lot deeper.

The Moody’s report, which was first publicized by the Forward on Tuesday, calls YU’s business model “untenable.” Last year marked the sixth consecutive year of operating deficits, and YU’s operating margin excluding gifts dropped in 2013 to -42 percent. Seven years ago, the operating margin was at -6 percent.

“The severity and long duration of Yeshiva’s operating deficits are primarily due to weak financial management and the board’s unwillingness or inability to act,” the report says. “Historically ineffective internal controls and limited transparency contributed to an inability to identify and correct problems.”

The report faults the board for failing to hold leadership accountable. Through a spokesman, YU President Richard Joel declined to comment.

The university has taken several steps in recent months to improve the university’s finances. Last month, YU confirmed that it is selling 10 apartment buildings in the vicinity of its campus in the Washington Heights section of Manhattan, which could net the school $250 million. The board also has approved exploration of a voluntary retirement program, the Moody’s report said.

“The university’s near-term financial viability depends on substantial and swift actions,” Moody’s said.

The report cites several reasons for high costs at the university: maintaining separate men and women’s campuses, upgrading equipment at the Albert Einstein College of Medicine in the Bronx and the university’s high-cost educational model. Meanwhile, tuition revenue has stagnated as YU’s competitors eat into the school’s core market for students.

Tale of 2 Debts: Moody’s OKs Israel’s A1 Rating; US Sinks in Red

Thursday, August 15th, 2013

Moody’s Investors Service affirmed the Israeli government’s A1 debt rating Thursday and credited Israel’s stable economy, while in the United States, an economist claims that the national debt is a staggering $70 trillion, 3.5 times the admitted amount.

Moody’s said it is upholding Israel’s current rating because of the resilience of the economy, expectation of a lower debt and favorable diplomacy with, particularly with the United States.

“Growth in the small, open economy has been sustained even with shrinking demand from Europe, a key trading partner,” according to Moody’s. It cited Israel as being a haven for entrepreneurs and a leader in the high-tech industry.

Another strong factor in Israel’s favor is the export of natural gas, which will help reduce the national debt, reduce taxes and create jobs.

On the negative side is “Iran’s nuclear program being the largest threat to Israeli territorial security,” Moody’s added. “However, a certain status quo has been achieved by maintaining a strong military deterrent, close ties with the US and friendly relations between the Israeli, Egyptian and Jordanian armies, It also credited the resumed talks with “helping to reduce Israel’s international diplomatic isolation.”

Coincidentally, IBM announced on Thursday it is buying up the Israeli Trusteer data security company for an estimated $750 million. Previously this year, foreign companies have purchased several Israeli firms for a total of more than $3 billion.

Israel not only has been the eye in the center of the Middle East hurricane that has swept through Arab countries but also has one of the strongest and most stable economies in the Western world.

In the United States, a poll released Thursday by Gallup shows that President Barack Obama’s economy rating is at an all-time low of 35 percent, reflecting large scale unemployment that is not reported because so many Americans have given up looking for work.

In addition, Fox News reported that University of California at San Diego Prof. James Hamilton estimates that the U.S. national debt is $70 trillion, 3.5 times the official debt of $16.9

That works out to approximately $175,000, plus change, for every man, woman and child. And that does not include a tip for the president.

“Hamilton believes the government is miscalculating what it owes by leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds,” Fox reported. “Factoring in those figures brings the total amount the government owes to a staggering $70 trillion.”

Hamilton is not the first economist to estimate the debt to be so high, but the government prefers its own figures, for obvious reasons.

Eventually, say economists, the Treasury’s printing presses will be working overtime, leading to high inflation and interest rates, a double-whammy that can cause “stag-flation,” a recession with inflation.

The conclusion is that it would be wise to book early for a one-way ticket to Israel.

Printed from: http://www.jewishpress.com/news/tale-of-2-debts-moodys-oks-israels-a1-rating-us-sinks-in-red/2013/08/15/

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