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Author Topic: Which Cities/States Will Be the First to Default When the Economy Rolls Over?  (Read 977 times)

MamaLiberty

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Some interesting things. I suspect most folks at TMM understand all this very well, but might - like me - not give much thought to the way city/state governments will react to economic disaster - or the roll they will play in creating that disaster. It's easy to concentrate on the feds, and blame them for most or all the problems, but the little and big groups in city halls, county commissioner's offices and state capitals across the country are where most of the real trouble is brewing, I think.  One thing NONE of them are the least willing to do is stop spending the stolen money. What lengths will they go to in order to keep stealing? Heaven only knows.

Which Cities/States Will Be the First to Default When the Economy Rolls Over?   (November 12, 2014)
http://www.oftwominds.com/blognov14/defaults11-14.html

What happens to local governments when the economy rolls over?

Though we're constantly reassured the "recovery" that's stumbled for five years has years of strong growth ahead, history suggests the "recovery" is due to roll over. Few recoveries last longer than 5 or 6 years, and the business cycle is graying fast: subprime auto loans are not exactly the foundation of "strong growth."

So what might push the economy over the cliff? The strong U.S. dollar is crimping overseas sales and profits, the global economy is already recessionary, mortgage applications have dried up, auto sales are being driven by subprime loans, and the valuation bubbles in stocks and real estate are due for a breather, if not an outright reversal. Retail sales are flat, and with all these headwinds, growing profits by 10% to 20% a year becomes impossible for the vast majority of enterprises.

So what happens to local governments when the economy rolls over? Tax revenues decline.
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« Last Edit: December 07, 2014, 03:39:08 am by Destin Faruda »
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