Posted on 12/26/2010 8:20:59 AM PST by SeekAndFind
Meredith Whitney continues to get thumped by everyone under the sun for predicting on 60 Minutes that 50-100 American cities will go bust next year, triggering the next leg down in the financial crisis.
Whitney's competitors, for example, are outraged (in part, no doubt, because she was on 60 Minutes, not them).
Journalists and research firms are scrambling to refute her.
Towns and cities are furious.
Muni bond holders want blood.
And so on.
Which means that Meredith Whitney has done it again.
Great Wall Street analysts make big, bold calls that make people think. And, right now, Meredith Whitney is the best in the business at that.
Regardless of whether Whitney's latest default-doomsday prediction comes true, the whole country is now aware that hundreds of towns, cities, and states face massive budget shortfalls that have to be addressed. Dozens of analysts are now frantically gathering data to figure out whether Meredith Whitney is right or wrong. And we've all gotten a lot better informed about our slow-motion municipal trainwreck.
(Excerpt) Read more at businessinsider.com ...
Thank you, Meredith. While I hope you are wrong, I think you are right!
Truth tellers are always attacked.
A prophet is without honor in his own country...
Why would a governmental entity choose to default on its bonds, especially if they make up a relatively small proportion of its costs?
“Debt levels for U.S. local and state governments are relatively low, with annual debt service representing a relatively small part of budgets,” Fitch Ratings said in a special report in November.
Entitled “U.S. State and Local Government Bond Credit Quality: More Sparks Than Fire,” the report said, “The tax- supported debt of an average state is equal to just 3 percent - 4 percent of personal income, and local debt roughly 3 percent - 5 percent of property value. Debt service is generally less than 10 percent of a state or local government’s budget, and in many cases much less.”
The lead analyst on the report was Richard Raphael, who has been covering municipal finance for 31 years. He is not one of the analysts “who got everything wrong in the housing collapse,” in the words of correspondent Kroft. In his report, Raphael said, “debt service is a relatively small part of most budgets, so not paying it does not do much to solve fiscal problems (particularly as compared to the costs of such an action).”
You can download the full report here (.pdf).
Unless they are liberal democrats.....
Steps 1-4. Ignored, ridiculed, attacked, praised.
Look who she’s shacked up with/married to: World Wrestling Entertainment champion, competing under the stage name John Bradshaw Layfield. He is also known as JBL, a character patterned after the wealthy oilman J. R. Ewing on the television show “Dallas.”
No way is this happening next year 2011 but I see this happening to US cities, municipalities and counties within 2-4 years and even worse
Because said government wants the USA to collapse in order to have a new world order
Some additional data is needed here. Henry Blodget ain’t the best when it comes to predictions.
http://www.slate.com/id/2104468/sidebar/2104467/
I also own a few other stocks and, sadly, the remnants of several Internet and technology funds that I greedily shoveled $700,000 into in February and March of 2000, minutes before the bubble burst. Most of these funds have essentially gone to zero. I would love to say I lost this money because I was swindled. Alas, I lost it because, in hindsight, I was a moron.
We’re about to find out that the “government that governs best,” ie local government is just as goofed up as Washington. That can only be attributed to the fact “we the people” have been asleep at the switch.
Pogo had it right: “I have seen the enemy and he is us!”
You know that you are over the target when you catch the most flack ?
Big surprise. No one that speaks the truth about the US financial house of cards is going get anything but trashed.
More proof of the inevitability of disaster.
After the munies come the States followed by the U.S. Treasury debt. I wonder who’s going to make those ‘brilliant’ calls?
This is already obvious to all those ‘analysts frantically gathering data to figure out whether Meredith Whitney is right or wrong’.
RE: local government is just as goofed up as Washington.
What do you expect when even local governments expect handouts from Washington (who can print money ) ?
What incentive is there for budget discipline when you can always push the envelope to your state capital and eventually Uncle Sam?
Truth hurts...
What’s wrong with a local government going bankrupt? If anything such governments would finally be forced to live within their means, and hopefully dump toxic pension obligations which are are siphoning away tax money from the things these governments are supposed to provide.
Many levels of government are borrowing to fund day to day operations (a disastrous policy to begin with). A default would make it impossible to borrow more money. Very ugly.
OTOH, maybe some cities are betting the DC will bail them out and they can continue to spend at current levels. Knocking 5-10% off the expense side of the ledger can put off hard choices for a few more years. And no DIMWIT city councilman can see any farther ahead than that.
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