States Fast Approaching Financial Abyss

“…but the day of reckoning is at hand. The debt crisis is already making Wall Street nervous, and some believe that it could derail the recovery, cost a million public employees their jobs, and require another big bailout package that no one in Washington wants to talk about.” – 60 Minutes

60 Minutes has done a thirteen minute report on the approaching day of reckoning for the states who are drowning in the deep end of the fiscal pool. According to Gov. Chris Christie, it’s not a income problem, it is a government employee benefit problem, and according to Meredith Whitney (highly respected Wall St. financial analyst) who has done research on the financial health of states and cities, this spring will see an influx of municipalities defaulting on their bonds because $160 Billion of federal stimulus cash will run out (just about the time the next round of residential and commercial mortgage resets occurs). She was calling out the big banks about the problems ahead for them long before they wanted to admit their liability, and those very same municipal bonds that will be defaulted on are owned, in the majority, by those very same big banks. Let’s all get ready for T.A.R.P. 2.0.

Welcome to a ‘Round Robin’ of fiscal insanity; who will default first?

(H/T TheRightScoop)

Rep. Devin Nunes (R-CA) is trying to set up a pre-emptive strike against bailouts for public pension funds (from 12.7.2010).

2 thoughts on “States Fast Approaching Financial Abyss

  1. I’d have to get up early to tell you folks anything new that you didn’t already know. But I did find the Guardian piece a bit startling.

    “$2tn debt crisis threatens to bring down 100 US cities” can be fetched from:

    http://www.guardian.co.uk/business/2010/dec/20/debt-crisis-threatens-us-cities

    So much for my theory that it is safer to buy government bonds than to invest in bonds floated by private companies and corporations. Looks like
    from this article a lot of governments aren’t going to be
    able to honour their debts. Maybe it is time to start using worthless fiat money as a soft mattress stuffing. Gold is too lumpy to sleep on; keep it under the bed.

    As Maggie Thatcher said, and Maggie was never wrong: The problem with socialism is you eventually run out of somebody else’s money to spend.”

    I’ll go one further. Any country that relies on Keynesian economics as its financial policy is just digging the government and the people deeper into the hole from which they will never be able to emerge.

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