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Title: The Time When 8 States Defaulted: Could it Happen Again?
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URL Source: http://="https://mail.google.com/ma ... =c&th=141ace5665514a56</A
Published: Oct 13, 2013
Author: Bob Stokes
Post Date: 2013-10-13 04:35:20 by Tatarewicz
Keywords: None
Views: 110
Comments: 5
The United States has never defaulted on its debt, but, with the political gridlock in Washington D.C., it seems that the unthinkable might happen as the United States approaches its limit to borrow. "Treasury Secretary Jack Lew told Congress [October 1] that the U.S. government has started to use the last of its 'extraordinary measures' to ensure it stays below the debt ceiling," according to CNNMoney, but the secretary believes that the government "will run out of extraordinary measures no later than Oct. 17." Even the most hard-headed politicians probably recognize that it’s best not to allow the federal government to default on its obligations. But the clock is ticking. Many people also believe that it would be unlikely for a state to default on its debt. But did you know that it has happened before? States splurged on new programs. Then it all went bust, bringing down banks and state governments with them. This wasn't [recent] America, it was America in 1841, when a now-forgotten depression pushed eight states and a desolate territory called Florida into the unthinkable: They defaulted on debts. -- Wall Street Journal, Jan. 4, 2011 The 1835-1842 depression was the country's first major economic downturn. The next major depression was the one between 1929 and 1932. Is the next one due? If you believe the next deflationary depression is set to occur sooner than later, beware that bonds -- even issues that are perceived to be the safest -- can sink in value, as Robert Prechter describes in his business best seller, Conquer the Crash. In the United States, defaults on municipal bonds could occur at any moment after times get difficult. Politicians in many jurisdictions have borrowed and spent way more money than is likely ever to be paid back. Merely paying the interest on that debt in tough economic times will become an acute problem for many issuers. In such cases, default for many cities and counties will be inevitable. Even the debt of some higher-level government agencies is at serious risk of default in a worst-case scenario. -- Conquer the Crash, second edition, p. 149 As you probably know, in recent years, several major U.S. cities, including Detroit, have defaulted on their debt. And these defaults occurred during an economic recovery. Imagine the scenario during the next economic downturn. Who's to say that even a state, or several states, will be spared from default? Some states are already having a hard time paying their bills. And, remember, even the fear of default will cause bond investors to lose money. Prepare for what Elliott Wave International sees ahead by reading the just-published October Elliott Wave Financial Forecast and the latest Elliott Wave Theorist risk-free for 30 days. Follow this link to learn more>>>
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#1. To: Tatarewicz (#0)
Promises to pay are a far cry from payment ! Political jackals manipulate the morons that vote for them and laugh all of the way to the bank.
Personally, I think Americans love hypocrites and hypocrisy ... Obama and the Nobel Peace Prize has to be the supreme example. Doug
But what's the alternative to defaulting? Raising taxes higher and higher? Jerry Brown has tried that route and California had an exodus of high income earners. Now it's on middle income earners to shoulder the tax burden. And meanwhile Brown and Bammy are adding more Pedro's and Bubba's to Medicaid as we speak. This is a ridiculous situation. What's going to happen next for big spending states - imo - is that there is going to be a "re-distribution of wealth" - and the other well managed states are going to pick up the tab for the blue states that are teetering on default. Thank you, non-Californians!
Having financially secure states bailout reckless spenders could lead to secession talk. More politically-acceptable would be the Cypress formula: raid the bank accounts of the wealthy. Next stage would commercial-industrial stagnation when capital is no longer available for wealth-creating enterprises.
I guarantee that your definition of "wealthy" and government definition of "wealthy" would hit too close to home for most people with a checking and savings account. I could see a 'shave' for anybody with over 5G in a bank account, don't underestimate the greed of government.
#2. To: Tatarewicz (#0)
#3. To: scrapper2 (#2)
#4. To: Tatarewicz (#3)
More politically-acceptable would be the Cypress formula: raid the bank accounts of the wealthy.
-Alex Kurtagic
#5. To: Tatarewicz (#3)
3 worst spender states are California, Illinois, New York 2 largest economies that have sent lots of tax $ to DC for years and years for re-distribution to other states are California and New York For every dollar California sends to DC, California gets a pittance back in federal funding as compared to most other states What I'm saying is that California could survive as an autonomous unit ( if it had political leaders whose brain matter did not consist of borscht). The other states, without California, would not do too well. I'm not saying that irresponsible state spending is okay. Far from it. All I'm saying is that California is too important to most other states to be allowed to fail. And California has floated other states for years. Having financially secure states bailout reckless spenders could lead to secession talk.
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