Market Currents
Meredith Whitney defends her 60 Minutes claim that a wave of municipal defaults will spark a...
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Tuesday, December 21, 2010, 5:50 PM ETMeredith Whitney defends her 60 Minutes claim that a wave of municipal defaults will spark a selloff in muni bonds, hurting economic growth and causing "a lot of social unrest." And there won't be any bailouts, she says: "Who in Nebraska's going to want to bail out someone in Florida?" These 16 cities face bankruptcy without big cuts.
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Sales tax receipts in Dallas in November are up 8% YOY. Howm many other major metros aer experiencing the same? Hint. Dallas is no orphan
Nationwide.
Old Navy ran out of pyjamas last weekend. They ran out.
Coach has run out of many styles of bag.
What does this tell you? Think. Don't just parrot each other's nonsense
Some cities may default or restructure. But this will be limited and it is the tail end of the problem.
E
Here in Phoenix there's $100 MILLION per month in unpaid mortgage payments. Now multiply times all the big cities. Recipe for higher-than-anticpated retail sales in the works people. But of course, it will come out as positive news for the economy.
Myself, I wouldn't really enjoy Christmas / presents / etc. when I knew a foreclosure was hanging over my families head.
They probably bought that new flat screen TV with unemployment compensation, too.
I agree, the crowds at the stores have been good....but not stunning. We have a long way to go if this is truly a recovery....but with Fed and US govt pumping huge amounts of $$ into the fray to keep things looking spiffy makes me very nervous. The Fed holding over $2 Trillion in debt (with more to go) and the US govt running a $2 Tril deficit for FY2010...makes me very leery.
Is that you Mr. Bernanke? Green shoots = Old navy pajamas
love it...
"What does that tell you?"
When many are foreclosed and the utilities are shut off, pajamas keep you warm. Makes sense...good catch there doc!
Yes, I'm very worried that this will end badly. Maybe it won't and you and econodoc can pop a bottle of Louis Roederer's Cristal, but until I see the market stand all by itself without trllions being injected..I'll keep my pitchfork.
Wal-Mart had overflowing amounts of toys still left. Same for Toys-R-Us.
I think Christmas sales will disappoint. With all the hype we've been hearing, it would be hard NOT to disappoint.
so what does it mean?
the Old Navy, the Coach and the Kindle shopper are diffferent people.
this is broad. these are not machines buying this stuff
when was the last time any of you heard of inventory problems and shortages? what does that mean for 2011?
how is it possible given the narrative of gloom?
read the signs and not yout biases
a lot of you have been wrong for the last 600 points. that's an eternity. you still have an opportunity the market is going much higher over the next 18 months. after which it will fall. my guess is you have another 400 points of being wrong ahead of you by which stage a lot of you will be on the band wagon just as some of us are getting back into bonds and cash.
Macallan 25 Marketgoy. That's what you need to send me. I hope you can cover. I doubt you have the wherewithal. If you can't it won't be a surprise.
We are spending Christmas and New Year in San Francisco and Tahoe. 8 feet of snow!
Good Luck to all and do not let the Top 50 Commenters fool you.
"Negative Thumbs from the SA Crowd are the best contra indicator you can find. Period"
Bernanke For President.
E
a crazy monetary policy so we can have 25% unemployment....
Would it not be better to try to rebalance this BLOATED economy from finance and real estate to more productive sectors of export like high end mfg, alt energy, mass transportation and environmental conservation? This would make our economy more globally competitive not the continuation of the current economic mirage fiannced by ponzi loans.
Household debt service payments 1.358 trillion
Government Interest payments .402 trillion
minus Annual Personal Savings .666 trillion
1.094 trillion
divided by GDP 14.750 trillion equals
7.42% for 3rd qtr 2010
20 year high was 3q 2007 at 11.92%
20 year low was 4q 1992 at 7.33%
20 year average 9.7%
American made I would recommend Buffalo Trace Whiskey..it is smooth.
Presently Scotch wise I've got a 1988 Glenrothes...amazingly fine.
If Bloomberg started cutting some pork out of the system NYC would be making cash hand over fist.
Most recent: $80m in embezzled funds in a project meant to automate city payrolls and cut the lard. It's probably more than that in reality, that's just how much they found.
Pensions and gov't employment are good places to look at to cut spending, but if it doesn't go deeper we'll be right back here tomorrow.
First, bankruptcy isn't about income and expense. It is about existing debt and the ability to refinance it. You can have a budget surplus, and be unable to refinance your existing debt. So if you run a 1.7% deficit long enough, it will catch-up with you.
Second, you are looking backwards. These municipalities have growing expenses and declining revenue, ie the property tax base is fading.
Whether she is right at this time or a year from now. She is pointing to real problems.
"Second, you are looking backwards. These municipalities have growing expenses and declining revenue, ie the property tax base is fading."
You are assuming facts not in the article. I'm not saying your facts aren't correct. I'm saying we don't know. The only evidence the article gives for bankruptcy is a 1.7% deficit. That's not a very strong case.
And BTW those comments were from the Business Insider, not Whitney.
It can be. But it doesn't have to be. Bankruptcy can also be about cash flow - which can be an income and expense matter. Or for a municipality, it can be when you get your income versus when you pay your expenses. If property tax is collected once a year but expenses are paid every day, the expense money going out may be needed before the income money comes in. So your budget can be in surplus and you still can run out of cash.
All of which goes to my basic point - citing a 1.7% deficit by itself does not paint a very strong case for bankruptcy.
It now appears likely that the US, more through inadvertence than intention, is preparing to see whether its political culture and federal system together are better placed to deal with fiscal crises of its constituent States and local governments then are the EU and Euro Zone prepared (faced as they are with the added challenges of inadequate central fiscal institutions) to deal with the fiscal crises of its constituent States such as Ireland. Obviously in addressing this issue, opinions within the US will differ fundamentally over what would represent an appropriate way to deal with such crises. This very deadlock of opinion, buttresses by embittered political stalemates at the local, State and Federal Levels of Government, may place the US at a disadvantage in comparison to the EU and Euro Zone despite the more fully formed institutional framework (particularly institutions dealing with fiscal matters) of the US federal union.
My real concern is simply that there will be bloody-minded deadlock all around and, should a real crisis materialize the political process will not be able to respond coherently (leaving aside whether that response should be conservative, progressive or whatever).
The Fed is now holding over $1 Trillion in US Treasuries and over $1 Trillion in MBS and agency debt.
www .zerohedge .com/artic le/fed-tre asury-hold ings-10003 41000000
Additional ly, the US Govt actually ran a $2 Trillion deficit for FY2010.
www .reuters.c om/article /idUSTRE6B K6WC201012 21
That to me is dishonest business. I know the market is a game...but I don't like dishonesty, and there is too much of that going on. I play with Silver and undeveloped properties, 2 areas where zero hedge really doesn't go (they prefer gold and only talk about housing)...but they also don't like dishonesty...that would be my attraction. As to my heirs...so far all three are doing quite well. But you and I should both be worried about a government that has absolutely no control over their spending...because that is something our heirs will have to deal with.
Have a Merry Christmas Sir!
Effective immediately, all cabinet agencies are under a hiring freeze for all non-critical positions. Specific guidance on implementing the hiring freeze will be forthcoming from the Office of State Budget and Management.
of NC will not go out of business...it will make budget which will be very painful (and maybe not all that bad in the long run)...
It's that "very painful" part of your comment that I think will throw a monkey wrench into all the economic euphoria we've had lately. I'm guessing things start turning sour late Jan. to March.
I hope like hell I'm wrong.
Nothing else matters when your country is about to collapse from hyperinflation.
Food, water, ammo. That is all you need to worry about at the moment.
along streets in our neighborhood stating that the landscaping will be removed because the city doesn't have the budget to maintain it. If enough residents volunteer to maintain it, the city (San Jose) will let it stay.
Penny wise - Million dollar foolish when you consider all the other wasteful spending (union pensions, etc...)
Side note: I volunteered to maintain the landscaping and the city will at least provide workmans comp coverage in case I get hurt trimming trees or pruning other scrubs.
Side note: I volunteered to maintain the landscaping and the city will at least provide workmans comp coverage in case I get hurt trimming trees or pruning other scrubs.
Are you serious???
Don't most of you all think that one day, maybe not next year but one day, the party must end badly?
By the way, all these thoughts are just as applicable at the federal level only with a huge multiplier.