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State Budgets: Day of Reckoning

Posted by Larry Doyle on December 19, 2010 9:09 PM |

For those who may have missed CBS News 60 Minutes this evening, there was a fabulous segment on the impending disasters within our municipal finance sector. This piece entitled State Budgets: Day of Reckoning runs for approximately 14 minutes and is a MUST SEE.

The problems embedded within a number of states and across hundreds–if not thousands–of local municipalities are not going away. Will Uncle Sam need to provide another trillion dollar bailout? Will ‘red states’ be asked to bail out ‘blue states’, perhaps starting with Illinois? Let’s navigate.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own and not those of Greenwich Investment Management. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • divvytrader

    i will have ZERO sympathy for the bagholders in muni bond land screaming for a bailout when this wave hits . This disaster has been well orchestrated and only a moron ignores the math .

  • Trevor

    It was, indeed, a good piece last night. Boiling it down a q uip like *Will ‘red states’ be asked to bail out ‘blue states’?* is unfair, though. Economically literate folks should already know that blue states typically send more of their tax dollars to the Federal government than they get in return, just as red states typically receive more in subsidies and largesse than they send out in taxes. Oklahoma, for instance has been recieving $1.48 in federal funds for every $1.00 it send to the Federal government.

    A bailout of any state would be an unfortunate event, but let’s be frank. Blue states have been paying the largest share of the bills for years and decades. Meanwhile, red state conservatives feel free to belly-ache about government spending and all the while, they’ve been the net beneficiaries of it.

  • coe

    Here’s my take on this topic as well as on the last two comments. First, the latter – of course everybody has a view and it is readily apparent that these views are not always aligned…I have seen plenty of contrarian opinions on this site, so I believe there is “freedom” to comment – chances are, though, that more conservatives gravitate to things they like than would liberals and vice versa on other sites- it’s the same with the demographics of the talk shows on radio and tv – not a shocker…secondly, I don’t think it really is about red states vs blue states – it is about profligate spending, bloated beurocracies, entrenched entitlement costs, and un-/underfunded pension benefits – among other challenges faced by states and municipalities – regardless of political leanings…it is about the greed of the unions, the lack of leadership by corporate and civic management, it is about apathy and a sense of fatalism, and it is about the “extend and pretend” non-solutions…for all the troubles in the banking system, there is nonetheless a harsh reality lesson that is playing out – for hundreds of banks, if they do not perform, they are either put out of their misery by the Feds – or – they are consolidated by the survivors…can anyone possibly believe that we need a zillion independent school systems with their own administrations across virtually every state in the union – sheer madness I say! And, for that matter, do we need villages with taxing authority with their own paid leadership , that bubbles up to townships, to counties, to states – talk about bloated budgets – it’s patently absurd – there is no way that there is any benefit that accrues to the citizenry…the lists go on and on…let’s not miss the main message because we are arguing about red vs blue, or liberal vs conservative commentary…tough issues demand thoughtful dialogue and firm and honest leadership – there is no place to hide as our society becomes more and more accessible 24/7 and legions of official and unofficial watchdogs bore in on the affairs of the day …let’s stop pretending the problems will simply go away, and it will be back to the good old days …LD, for my two cents you are on the right track – keep punchin’…just one man’s opinion

  • fred

    What a way to run a country!

    Politicians reward campaign workers and contributors with jobs to ensure loyalty and relelection; unionization cinches up the stranglehold by enforcing seniority standards.

    An imbalance in political power develops, public employees, supported by unionization become entrenched.

    Overtime cost of living increases in wages and benefits provide compounding magic that investors would die for.

    As long as tax receipts continue a long term upward tragectory, the game goes on without as much as a whisper in opposition.

  • ROB

    Chris Christie for President in 2012….thanks for posting this video.

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