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  • ilap2004 ilap2004 Jul 15, 2012 5:27 PM Flag

    Meredith Whitney's Prediction

     

    of hundreds of billions in muni bond defaults is looking better. San Bernardino is now the third CA city in the last month to file for bankruptcy.

    http://latimesblogs.latimes.com/lanow/2012/07/san-bernardino-bankruptcy-could-other-california-cities-be-next.html

    "Rising public pension costs are one of the catalysts pushing cities into fiscal peril. In San Bernardino, the city's obligation to its employee retirement system rose from $1 million in the 2006-07 fiscal year to nearly double that in the current budget year. In three years, those costs are expected to swallow 15% of the budget."

    "Pension spending grew an average of 11.4% a year in the state's biggest cities and counties from 1999 to 2010, roughly twice as fast as spending on public safety, social services, recreation, health and sanitation, according to a February report by the Stanford Institute for Economic Policy Research."

    Whitney took a lot of heat for her prediction a couple of years ago:

    http://articles.latimes.com/2010/dec/24/business/la-fi-muni-defaults-20101224

    Of course California's policies are literally a case of the lunatics running the asylum. Some large states are reining in spending. Wisconsin under Scott Walker is one of several adopting sane policies. The Prez's home state of Illinois may be giving CA a run for their money.

    OTOH Obama (probably illegally) just eliminated the 1996 welfare reform by executive order so that's a blow to states trying to have sane fiscal policies.

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