09
03/10
A Small Story with an Important Sentence
by John Galt
March 9, 2010
While there are literally hundreds of news stories that I scan each day, every now and then the most innocent appearing of stories where you say “huh, that’s logical” or “wow, that’s important” which causes me to take pause. As I was reading this story from Bloomberg:
Eaton Vance Dumps Dirt Bonds as Florida Land Districts Default
a very important sentence jumped off of the page and made me reflect on to the depths of the economic crisis we are in. The fact that Eaton Vance was intelligent enough to liquidate a loser was important and their admission of an error in judgment says it all. It was this key sentence though which was extracted from the article:
Dumping the so-called dirt bonds at a discount was a better bet, the Boston-based Metzold said, than taking over 218 empty acres (88 hectares) from the project’s builder and waiting for a real-estate rebound that may not come until the early 2030s, according to a Moody’s Economy.com forecast.
This is the key sentence. If the “dirt” bonds are pretty much that, then what does that make the underlying municipal bonds in these communities where housing is still in decline and the future of economic development is totally dependent on an impossible demographic situation:
An aging, non-technically oriented baby-boomer group with poorly educated lower class citizens and lackluster educational and industrial development.
Municide was something I wrote about two years ago, where the declining revenues due to the housing and commercial real estate collapse finally forces cities and counties to either downsize or seek out bankruptcy. I fear that these communities will do so in return for guarantees and management by Federal overseers rather than make the hard choices themselves. It would appear that this issue, if not resolved by a rapid collapse of our currency and economic system, will be a festering wound that we will be forced to endure for decades to come if the Moody’s forecasters are correct with one city after another collapsing into less than viable ghost towns, dependent completely on a Federally based system of support and recovery.
Perspective
10.03.10
00:36
Hey JG, don’t leave us hanging. What good news do you see where a currency and economic collapse don’t happen soon?
.
But seriously, I take your point. The counties don’t have the resources to aid the cities. Ditto for the states providing aid. Which, ironically, only leaves a bankrupt Federal to bail out bankrupt states, counties and towns.
.
Only in America.
old dude
10.03.10
03:14
With a sentence like that I feel like Delmar in Oh brother where art thou. ” Well I’ll only be 82!”
7.62mmFMJ
10.03.10
04:08
2030? 20friggin30?
Sheesh!!!!!!!!!!!!!!!!!!
wheedle
10.03.10
05:07
Would states like Florida give up their 10th Amendment sovereignty in exchange for federal funds to maintain state, county, and local services ?
Lets look at it from the state government employee perspective:
Government retirement and pension funds number in the Trillions of Dollars.That would be enough incentive for many of these government employees to welcome a “federalized” status instead of a bankrupted state.They would believe, or at least hope, that their savings are protected and still pull some kind of paycheck in the process.
Many will retain their positions of authority and perhaps excel during a national crisis provided they stick to the ‘Federal Agenda’ that they are given.
Many have families that depend on them,and would consider themselves lucky to be on the right side of the fence if/when civil unrest, looting, and outright chaos were to occur from an economic collapse, creating lawless ‘Red Zones’ where average citizens are fighting day to day just to survive.
While many government employees will refuse to take part in a Federal takeover, there will be many who will view this as their only option to keep from becoming unemployed, homeless panhandlers in a jobless society.
IMHO,if the real estate crisis continues to get even worse,lack of tax funding will crush many municipalities.You will see many elected officials, especially those with military bases in their city limits and/or counties, jump at the opportunity to do the federal governments bidding in exchange for their survival.The United States is a big country, and during an economic crisis the Federal Government will do whatever it takes to stay in power as long as it can.They will take on as many government employees from every and any level that they can to keep things going during a crisis, and view average working class citizens as S*** Outta Luck.
Economist Marc Faber insist the U.S. economy has 5 to 10 years before the whole system collapses.Being one of many unemployed average working class citizens looking for a job, I hope we have that much time or more left to prepare or move somewhere safer. From where I’m sitting, Marc Faber sounds optimistic.
( Search,,,,marc faber lateline business interview august 26 2009 on youtube,,,,the mortgage meltdown 60 minutes,,,,the geography of a recession by latoya egwuekwe,,,imf chief warns of riots in response to economic crisis,,,,military prepares for civil unrest,,,)