Please note that the article below quotes Meredith Whitney who is mentioned in my The Grand Deception series ( and will be again ). It is she who, as an accountant for Citigroup, was the first to state publicly that the sub-prime mortgage bonds were worthless, thus causing the race to the exits which precipitated the collapse. Now here she is sounding the alarm on the municipal bond market. ( "Municipal" is a misnomer in this case as all non-Federal government bonds are traded in this market. )
It's important to keep in mind two things:
1, Making such predictions can hasten, exacerbate, or even cause the market to collapse. If investors believe the city, county, or state cannot pay the debt, they wont buy the bond. As FDR said, fear is the problem.
2, Our Federal government's cutting off of support for local governments is an expression of its subversion by capital as it will spend about thirty trillion dollars bailing out Wall Street, but denies three trillion to the states. Bank of America is too big to fail but California isn't.
Can the argument that the bailout was to avert systemic failure any longer be made when the far greater hazard of large numbers of states and cities going under is ignored? Is this draconian action a matter of a cash-strapped Federal government reluctantly doing what it must to survive, as they would have us believe, or is it simply following the orders of its Wall Street masters? Which would have the worst systemic consequences for the residents of L.A.: BoA going into bankruptcy with all depositors insured up to $100,000, or the inability of their city, county and state governments to function? Which would adversely affect the greater number?
http://inteldaily.com/2010/12/municipal-bond-market-crash-2011-are-dozens-of-state-and-local-governments-about-to-default-on-their-debts/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+inteldaily%2Ffeeds+%28Inteldaily.com%29&utm_content=Yahoo!+Mail
