Dave Davies last week expressed his doubts about Mayor Nutter's plan to not only save the pensions by issuing a bond, but to also give the City a cool 50 million dollars per week.

I really don't entirely get how issuing the bond even works, but I would think this is not good news:

Feb. 22 (Bloomberg) -- California, Florida schools and the owner of John F. Kennedy International Airport joined a growing list of municipal borrowers exiting the U.S. auction-rate bond market as record failures push taxpayer costs higher.

Thousands of auctions run by banks to set rates on the debt failed this month as investors shunned the securities and bankers refused to submit bids, sending interest costs to 10 percent or higher on some bonds. Auctions covering as much as $26 billion of bonds a day failed to attract enough buyers since Feb. 13, according to Bank of America Corp.

Florida's Palm Beach County Schools converted $116 million of the securities into fixed-rate debt this week, while the
Rates in the more than $300 billion auction market, where local governments, hospitals, museums, student-loan agencies and closed-end mutual funds borrow, are determined through a bidding process every seven, 28 or 35 days. Auctions fail when there aren't enough buyers. That's left bondholders who wanted to sell stuck with the securities and taxpayers or other backers of the debt such as fund holders with higher interest costs.

And, there is this nugget:

Today, 386 auctions of publicly offered bonds resulted in 258 failures, or 67 percent, according to data compiled by Bloomberg from four auction agents, Deutsche Bank AG, Bank of New York Mellon Corp., Wilmington Trust Corp. and Wells Fargo & Co. The firms are responsible for receiving orders from broker- dealers and determining the winning rate. They also perform some administrative services for the borrower.

About two-thirds of auctions have failed per day since Feb. 15, according to data compiled by Bank of America and Bloomberg.

I don't entirely get it. I do know that our bond rating generally sucks. And cities and institutions (like Children's Hospital, for example) are trying to get themselves out of the bond market.

So, if so many places are having trouble actually issuing bonds, and the costs are becoming out of hand, it seems a little crazy that we are relying on a bond issue not only to fix the pension problem, but to flood our coffers, as well.

What am I missing here?

Update: First, as I mentioned in the comments, I don't know that the Bloomberg article necessarily matters, because it is talking about a specific type of bond that the City will not likely use.
S&P Gains 2001-2007: S&P Gains, or losses, from 2001-2007.However, courtesy of DailyKos, the chart below displays the danger of assuming that borrowing money, and then putting it into the stock market, will provide us with a yearly bounty that we can simply expect.

What the chart shows is that if you invested 10k in the S&P in 2001, as of 2007, not even accounting for inflation, you will still have less money than what you started with. Long term, stocks are still likely a good bet. But, can we really expect to not only have this to fix the pension problem, but provide us with money every single year? Seems crazy to me.

Or, to put it another way, if this is so magical, why wouldn't we just issue bond after bond?