Sunday , 20 August 2017


Municipal Bankruptcy Crisis in U.S. to Have Dire National Consequences! Here's Why – and How

 The plight of municipalities in the U.S., and their struggles under the weight of enormous pension budget deficits, are reaching the critical phase [with] many municipalities [now]contemplating bankruptcy. [That, in turn, is causing]… municipalities [to eliminate jobs (150,000 – 175,000 in 2012) providing significant headwinds to jobs growth nationally [which, in turn, will adversely affect] economic growth…[causing even] more municipalities to declare bankruptcy and [their] states, in turn, run to the Federal government for help. Words: 567

So says Michael Lombardi (www.ProfitConfidential.com) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Lombardi goes on to say, in part:

Higher Unemployment

In 2009, the U.S. government provided a stimulus fund to offset lost tax revenue for state and local governments. That money has been used up and, with pension budget deficits too large and deteriorating, states are telling municipalities that they have no money to help them with their budget deficits. [Also read:

As most homeowners are aware, municipalities get a large portion of their tax revenues from property taxes. With more homes empty since the credit crisis, and with property values significantly lower since 2007, municipalities are taking in less tax revenue, making their budget deficits even worse. With no help from the state, the only way to meet the budget deficits is to lay people off, and that trend has not stopped. [Also read: 

According to Reuters, the last three years of job losses at the state and local government level has been the worst since the Labor Department first began keeping records in 1955. In a recent report, the Economic Policy Institute noted that, in the three previous recoveries from recession, public-sector employment jobs growth was significant. The Institute estimates that, if this recovery were like the previous three, we would have experienced jobs growth of 1.2 million in the public sector by now. Instead, since the beginning of 2009, 482,000 municipal jobs have disappeared, while 150,000 state jobs have been eliminated.

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Moody’s estimates that States could cut a further 15,000 jobs in the remainder of 2012, while municipalities may lose between 150,000 and 175,000 jobs in 2012, providing significant headwinds to jobs growth. These jobs cuts are all a consequence of trying to close those enormous budget deficits. Moody’s may be proven right, as the State of Florida just announced that it will have to cut 4,000 state jobs in order to meet its budget deficit. As I’ve been suggesting, and as these numbers now prove, dear reader, public-sector job losses are going to make strong jobs growth very difficult in 2012 in this country.

Higher Taxes

The other avenue municipalities have for meeting their budget deficits is raising taxes which, in this economic environment, will not sit well with people… [Read:

*http://www.profitconfidential.com/debt-crisis/a-crisis-gone-worse-many-municipalitiesconsider-bankruptcy/ (To access the article please copy the URL and paste it into your browser.)

 Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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Meredith Whitney has resurfaced on the subject of U.S. Municipal defaults stating that a “tidal wave” of defaults in the municipal bond market is still building and will eventually hit the United States [although her views are at odds with those of] Moody’s Investors Service [who only see] a small but growing number of defaults. [Here is a critique of her latest views.] Words: 385

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