The New Normal….Let’s Call It The Real World Of Economics! Time To Get Used To It!

Posted By on December 21, 2010

Sounds like something Ross Perot might have said with his pointer in hand……Let’s call it Economics 101.  Governments will be forced to lay off workers and cut back on services, causing social unrest as the Muni issues are addressed.  “States clearly have been funding municipal governments—for now up to 40 percent of their total expenditures,” Meredith Whitney explained. “As the states become more compromised from a fiscal standpoint, that funding is going to end.”  “People are complacent about these defaults. The news about all this isn’t out there yet.”  Thanks Meredith.

Meredith Whitney:  Wave of Muni Defaults to Spur Layoffs, Social Unrest

Published: Tuesday, 21 Dec 2010

Meredith Whitney Told CNBC Tuesday:

Responding to the uproar over her “60 Minutes” interview broadcast on CBS Sunday night, Whitney defended her prediction that at least 50 to 100 cities and towns could default on their debt as states and the federal government cut back on financial support.

“I appreciate that the reaction is so violent,” she said in a live interview with CNBC. “I didn’t put the debt on these states. We’re looking at the numbers. This is how it plays out.”

The big problem is that cash-strapped states will no longer be able to provide the financial support to municipalities as they have in the past, said Whitney.

The federal government is unlikely to bail out the states, added Whitney, because the cost—which she put at $1 trillion—would cause a political backlash. “Who in Nebraska’s going to want to bail out someone in Florida?” she said.

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