Posted on 03/16/2011 8:05:57 PM PDT by george76
"Fundamentals are horrifying: unfunded pension liability [is] growing from $7 trillion this year to $11 trillion next year to $15 trillion in two years. Health care costs going up at 9 percent a year, inability to raise taxes ... headline risk is predominant," Albrycht said.
"You need to have aggressive reform, like we are seeing in New Jersey. You need to have governments dealing with the situation, like we're seeing in Wisconsin and Illinois," he added.
If over the next 24 months there is not pension reform, the munis are in trouble, Albrycht went on to say. "13 states right now ... are insolvent, they’re taking in less than they’re paying out.
(Excerpt) Read more at cnbc.com ...
Don’t worry. Obama will nationalize muni bonds...and nationalize local government employees too. all will be well
Illinois?! Raising taxes is only going to make the mess worse.
We are toast....
Didn’t Meredith Whitney just say this 2 months ago about the coming flood of Muni defaults - not states but cities and counties.
We can call this confirmation.
Ping
TLR, are you doing ok?
All of us here need to get rid of our man servants. Get your own peanut butter and grape jelly samwiches.
The Winner of This Year’s Daily Reckoning Dodo Derby
States only wish they could print money like the feds do. Thankfully, they can't
Bump
That was 2004. We're still battling for pension reform.
What should've acted as a bell weather warning to other municipalities fell on deaf ears. Those lessons were not learned.
Don’t expect any meaningful action anywhere until a major governmental unit goes belly up.
Illinois has the wrong solution, but at least it acknowledges that it has to deal with the problem. That’s more creditworthy than the Republicans who passed Medicare Part D with no clue how to fund it.
Munis are “safe” in the near term because very few general obligation bonds are at risk of near-term payment default, because of inability to make interest payments, or to refinance maturities.
A few years out, it gets worse: as the “hump” of retirees approaches, the munipal bond market will start to demand higher interest rates for new long-dated municipals, and might eventually refuse to buy them at any price. This will drive interest expenses higher and weighted average maturities shorter, and eventually some municipalities will hae payment defaults, and many others will face terrible choices in terms of budget cuts and tax increases.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.