Inflation & Muni Debt Risks
From the latest JPMorgan In’s & Out’s…
On the one hand, they (The Fed) will be keen to remove the excess banking sector reserves that they have created...
with their special lending facilities and asset purchase measures...
as deflation risks subside and higher inflation becomes a risk…
But on the other hand, they will not want to withdraw their support too quickly...
for fear of undermining what promises to be only a weak economic recovery.
From the LA Times…
The last time Indiana missed its deadline for passing a budget and had to shut down the government was during the Civil War.
State agencies began preparing 31,000 workers to be temporarily out of a job.
Gov. Mitch Daniels has warned residents that most of the state's services including its parks...
the Bureau of Motor Vehicles and state-regulated casinos; would be shuttered unless a budget is passed today.
Indiana is one of five states -- along with Arizona, California, Mississippi and Pennsylvania -- bracing for possible shutdowns this week.
If lawmakers and the Guvenator cannot agree on a way to close a $24-billion shortfall…
IOUs would go to local governments, vendors, taxpayers and college students receiving state financial aid.
California has issued such IOUs only one other time -- in 1992 -- since the Great Depression.
The Nattering One muses… we warned as to when the “other” shoe would drop.
Expect it soon, with any or all of these states shuttering and defaulting on their debt.
The shockwaves throughout the debt markets from a California default (the 8th largest global economic entity) would be immense.
Expect the market for governmental refinancing to dry up with any remaining lenders charging outrageous premiums.
Said expense will be borne by the taxpayer, in full.
On the one hand, they (The Fed) will be keen to remove the excess banking sector reserves that they have created...
with their special lending facilities and asset purchase measures...
as deflation risks subside and higher inflation becomes a risk…
But on the other hand, they will not want to withdraw their support too quickly...
for fear of undermining what promises to be only a weak economic recovery.
From the LA Times…
The last time Indiana missed its deadline for passing a budget and had to shut down the government was during the Civil War.
State agencies began preparing 31,000 workers to be temporarily out of a job.
Gov. Mitch Daniels has warned residents that most of the state's services including its parks...
the Bureau of Motor Vehicles and state-regulated casinos; would be shuttered unless a budget is passed today.
Indiana is one of five states -- along with Arizona, California, Mississippi and Pennsylvania -- bracing for possible shutdowns this week.
If lawmakers and the Guvenator cannot agree on a way to close a $24-billion shortfall…
IOUs would go to local governments, vendors, taxpayers and college students receiving state financial aid.
California has issued such IOUs only one other time -- in 1992 -- since the Great Depression.
The Nattering One muses… we warned as to when the “other” shoe would drop.
Expect it soon, with any or all of these states shuttering and defaulting on their debt.
The shockwaves throughout the debt markets from a California default (the 8th largest global economic entity) would be immense.
Expect the market for governmental refinancing to dry up with any remaining lenders charging outrageous premiums.
Said expense will be borne by the taxpayer, in full.
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