What happened was that Arizona experienced a fiscal tsunami that reduced state revenue by about a third.
Not only is U.S. government debt spinning wildly toward a breaking point, but many U.S. states (such as California) are in such horrific financial condition that they are beginning to resemble banana republics.
We have said before, and pro forma for the Obama tax deal, we expect total debt issuance in 2011 to accelerate once again, and to hit just under $2 trillion, putting total US debt at the end of next year at around $16 trillion.
The best the Fed could then hope for to counteract the deflationary outcome is to generate hyperinflation through a collapse in the reserve currency. And since this is far more palatable to the Fed, we believe that one way or another...
California Budget Is "Much Worse Than I Thought -- We've Been Living In Fantasy Land" Jerry Brown
Reasons for the Muni Selloff 1. Unwinding of the "sure-thing" Quantitative Easing trade 2. Selloff in bonds in general because of budget and inflation concerns
While the debt to tax collection metric is deplorable, what is far more scarier, and has very profound implications for future US debt, is that the cumulative debt over deficit differential not only continues to rise, but has hit an all time high.
Our analysis also confirms that it is the amount of federal spending, and not changes in federal tax rates, that is primarily responsible for the current unsustainable fiscal situation of the United States.
In other words, we are now at a point that every dollar in receipt is matched by 1.3 dollars in incremental debt.
One person in four worldwide paid a bribe during the past year, according to a study released Thursday to mark International Anti-Corruption Day.
Wasn't it just a few short months ago California balanced its budget, plugging a $19 billion hole? Indeed it was. Nonetheless, Jerry Brown now warns of a $28 billion hole for the next fiscal year and the state controller warns of more IOUs.
A fiscal flood that threatens to swamp local government budgets across the U.S. overflows from file cabinets in the office of Patty Halm, chair of the Michigan Tax Tribunal.
While next year could be even worse, there are bigger, longer-term risks, financial analysts say. Their fear is that even when the economy recovers, the shortfalls will not disappear, because many state and local governments have so much debt...
I have no expectation that our government will do the right thing voluntarily. Not now, not ever. Witness yesterday's deficit commission news conference in which the screaming and shouting over five percent budget cuts was witnessed
The people responsible for this know what they're doing is not only wrong, they know factually that it cannot work in the intermediate and long run. They don't care. They're only interested in their ability to loot.
In this Russia Today interview Karl Denninger talks about the austerity that is soon to be unleashed on an unsuspecting American public. An austerity that will crush them like Robert De Niro was in the classic Raging Bull...
'Getting this budget under control is going to require some broad sacrifice,' Obama says. The pay freeze, which does not apply to the military, is part of an effort to contain the $1.3-trillion federal deficit, the White House says.
It’s not just the Bush tax cuts that expire at the end of the year. The maximum lending limits at Fannie Mae, Freddie Mac and FHA were set to expire. The Build America Bond (“BAB”) program is another. They both have been “fixed”. We kicked the can..
In America, municipal debt collapsed by nearly 10% over the last two weeks. It became more and more obvious that state and local governments were headed for default too. California might get a bailout…but California, like Ireland, is a...
The co-chairman of President Barack Obama’s federal deficit commission is predicting a political “bloodbath” next spring, when the new Republican-dominated Congress must make tough fiscal decisions ahead of a vote on raising the federal debt limit...
David Rosenberg: The fiscal mess at the state and local level will very likely be the front page story in 2011 and the retrenchment in this sector poses the greatest headwind regarding the economic outlook.
The entire multi-trillion dollar sector is going down. You will not want to own any municipal bonds after watching this video. (Editor Note: What Meredith Whitney has to say about muni bonds and housing is terrifying.)
The first step in filling that gap involves a major bond auction today. But investors have started fleeing muni-bond ETFs in anticipation of a tepid auction.
Rubin, who issued a similar warning about the bond market at The FT's "Future of Finance" conference in October, said Congress' vote on raising the deficit ceiling next spring could be the "trigger" for a rout in the Treasury market.
In fact, Whalen thinks that California will default on its debt--hammering all the pension funds and other investors who have loaded up on apparently safe state bonds.
The nut is that the state has a $25 billion imminent budget problem.
First, there was the threat of martial law if the $700 Billion Tarp bailout wasn’t passed. Specifically, Treasury Secretary Hank Paulson warned Congress that there would be martial law unless the Tarp bailouts were approved.
Ever since President Obama took office, his proposed public policies have been defended doggedly by all those who favor an increasing large scope for the federal government.
Meredith Whitney stated that 2 million jobs would be lost at the state and local level and that unemployment may rise and hit banking. On the Foreclosure-Gate front she thought banks maybe hit with massive losses from MBS fraud...
The chairmen of Obama's debt commission have outlined a plan designed to show that progress is possible in reducing the national debt – if Americans agree to make tough compromises.