Shenandoah

by John Galt

January 18, 2010

A long time ago on this blog almost two years ago, I wrote the following piece:

Municide

By John Galt

February 21, 2008

How the Suicidal Fiscal Behavior of Government at every level, Federal, State and Local will Crash the US Financial Markets

Sadly the warnings were ignored, the governments continued basing spending and taxation policies based on housing existing in a 2005-2007 price bubble asset valuation era, and now the pain is going to accelerate. In today’s Crain’s Chicago Business the following story hit the news to once again validate my original concerns which caused me to write that piece in 2008:

Illinois enters a state of insolvency

By: Paul Merrion, Greg Hinz and Steven R. Strahler January 18, 2010

The article is a must read but the chart from that article speaks volumes about the disaster which will require the Federal Government to intervene and monetize the state’s debts or face a death spiral of defaults that cripples the nation’s economy and quite possibly cause another bout of asset deflation and a crashing of pension funds and retirement accounts which are heavily invested in municipal bond issues. The charts says just about everything I warned about in the article:

Look at that chart and tell me once again how the residential and commercial real estate market crash is manageable and will not have a major impact for the next decade to come, should the United States find some sort of solution like a Flying Unicorn that poops gold nuggets as its gaseous expulsions creates beautiful rainbows and purple skies.

An additional story from the same edition of Crain’s caught my eye also:

Industrial vacancy highest in at least 19 years

By: Thomas A. Corfman Jan. 18, 2010

Once again, another chart they posted is an eye opener and ties directly to the funding problems the state is encountering at this time:

Much to the chagrin of Illinois lawmakers, even though dead people can vote four times, empty buildings can not pay taxes once and therein lies the rub. The policies of states like California, Illinois, Florida, Georgia, New York, etc. which are now being encumbered by further unfunded mandates from the Congress are forcing a submission to the Feds for help and in the long run, a dependency which will strip the states of their ability to operate independently and force them to impose tax measures at the direction of Washington, D.C. instead of locally. While we are not quite at that point yet, once the health care bill and the “climate change” legislation pass in whatever form they determine, all bets are off and the 10th Amendment can be placed into the waste bin of history.

You see, Municide has some rather nasty side effects.

Losing freedom is the worst of them all.