Meredith Whitney continues to take it from all sides! The latest attacker is Charlie Gasparino, who accuses her of causing a muni market panic, thus costing taxpayers millions
US public pensions face a shortfall of $2,500 billion that will force state and local governments to sell assets and make deep cuts to services, according to the former chairman of New Jersey’s pension fund.
For years, Illinois, like so many states, pretended that it had not fallen off a budgetary cliff. It was spending too much and taking in too little revenue, but every year it would kick its problems into the next. Unable to pay its bills, it finally accepted reality last week and raised taxes on incomes and businesses — a first step toward getting its house in order.
By Deric O. Cadora
Despite the stock market's seemingly inexorable rise, clues to a coming crisis continue to build, promising not only to bring down equity prices sooner than later, but also to make the correction much more severe than most expect. As readers of my Member Letter know, I have been anticipating a dollar crisis to visit markets sometime in the first half of 2011, spurred by an exodus from bonds as the Federal Reserve continues its malfeasant policies. In now seems the dollar crisis will be paired with a panic in the municipal bond market.
As cities across the nation face increasing budget strains, the vocal group of experts warning about municipal defaults has gained a powerful member: Jamie Dimon.
Analyst Meredith Whitney, who has faced enormous criticism over her dire warnings about the likelihood of up to 100 U.S. municipalities defaulting this year, reiterated her call. She further warned that when the defaults commence, the muni bond market will witness a massive exodus.
Some analysts have likened the debt problems of individual euro-zone members to the red ink faced by most U.S. states. Certainly, state and local budget problems is one of the potential obstacles facing the 2011 U.S. economy. But another unknown is how Washington will respond when governors come, hat in hand, to ask for help.
The recession blew a huge hole in the already shaky finances of state governments, causing them to lose nearly one-third of their revenue in 2009, according to a Census Bureau report released Wednesday.
You know the story and you know the names: states like Illinois, New Jersey, New York, and California are supposed to be in huge financial trouble thanks to bloated governments, business-unfriendly regulations, and strong public sector unions. After a crisis-free 2010, investors are expected to punish these hotbeds of bad governance in a muni bond market rout, at least if pundits like Meredith Whitney are correct. But there's one state, which is fairly high up on the list of troubled states that nobody is talking about, and there's a reason for it.
Leaders of this city met for more than seven hours on a Saturday not long ago, searching for something to cut from a budget that has already been cut, over and over.
