Posted on 12/21/2010 7:07:34 AM PST by SeekAndFind
Meredith Whitney, the US research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the US economy, and one that could derail its recovery."Next to housing this is the single most important issue in the US and certainly the biggest threat to the US economy," Whitney told the CBS 60 Minutes programme on Sunday night.
"There's not a doubt on my mind that you will see a spate of municipal bond defaults. You can see fifty to a hundred sizeable defaults - more. This will amount to hundreds of billions of dollars' worth of defaults."
New Jersey governor Chris Christie summarised the problem succinctly: "We spent too much on everything. We spent money we didn't have. We borrowed money just crazily. The credit card's maxed out, and it's over. We now have to get to the business of climbing out of the hole. We've been digging it for a decade or more. We've got to climb now, and a climb is harder."
Cities are already having trouble paying for basic services like trash collection. Just how bad is the hole Governor Christie is talking about?
US states have spent nearly half a trillion dollars more than they have collected in taxes, and face a $1tn hole in their pension funds, said the CBS programme, apocalyptically titled The Day of Reckoning.Detroit is cutting police, lighting, road repairs and cleaning services affecting as much as 20% of the population. The city, which has been on the skids for almost two decades with the decline of the US auto industry, does not generate enough wealth to maintain services for its 900,000 inhabitants.
You can watch and read the "60 Minutes" report here.
Gee, I wonder what percentage of the budget is for "education"?
HA, I wonder how many of their “inhabitants” actaully contribute to the tax base.
I remarked to my wife the other day how we take certain service for granted like snow clearing. Just imagine if budget cutbacks became so severe that roads could not be cleared for weeks. We might soon find out what that’s like...
1 - It's a lot worse than they said.
2 - They'll find a way to blame it on the Republican takeover of the House.
We need hard-nosed conservative politicians to force them to cut the fat first.
;-)
10% across the board would be a good start.
Most businesses have cut at least that in the past 18 months.
Good point. The always cut police and fire first but NEVER cut the school “administrators” and similar types.
Some more bad news...the BP oil spill has switched off the Gulf Loop.
Film at 11 here....http://www.youtube.com/watch?v=vXUifNpnpfQ
every city (mu;tiple numbers of them) is in a county of every state...so who needs city government overhead layer anyway...to heck with them...get rid of them and place all services at the county and state level.
RE: I seem to recall some financial pundits recommending buying municipal bonds when the economy went into the tank. They said that muni bonds were a safe investment.
I believe there still are some out there. But you have to be VERY careful what municipalities you plan to invest in. Be sure they are the well managed ones with debt and spending under control.
My home town of San Diego has been flirting with bankruptcy for years due largely to a huge shortfall in funding of over-generous employee pensions.
I wonder why that would be?
LOL
RE: My home town of San Diego has been flirting with bankruptcy for years due largely to a huge shortfall in funding of over-generous employee pensions.
San Diego too ? I thought it was in a more conservative part of California ? I guess I have to say I was wrong on that...
San Diego is still fairly conservative, but much less so than in the past (ditto Orange County), as is the case with the state (as everyone knows).
Always a crisis 'soon', 'next year', 'next month'. Dammit! This is America! Short attention span and all that. I want the crisis NOW!
Impending doom was the talk during the Carter years. But, as said somewhere by another freeper, we came out of that because we had a manufacturing base.
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