Municipalities dealt with the separation between taxes and expenses by borrowing. In the mid-1990s, states and cities were retiring as much debt as they were incurring. During the 2000s, though, they borrowed about $150 billion per year in aggregate, peaking at $215 billion in 2007 by which time $2.7 trillion in debt was outstanding, more than two years’ worth of tax receipts.
Barring some sort of miraculous boom in the economy and pension fund investment returns, state and local governments are headed for insolvency and default.
Philip Greenspun’s Weblog » The Coming Collapse of the Municipal Bond Market (via quotingthecrisis)
concur. again, if i was a superhero who needed to get angry in order to activate my super powers, the municipal bond market and municipal finances would be one of the easiest ways to get me going.
i’ve ranted about this many times in this space before, so i will spare everyone and simply list the posts below. what’s interesting is that finally there seems to be coverage on this issue - in MSM and blogs and the like. i don’t know if any of the chatter will translate into action (the cynic in me says it won’t), but i’d like to hope that maybe the constant headlines will at least get people to acknowledge that this situation we have of continually promising gold from an alchemy machine that doesn’t actually work is simply ludicrous.
link: “Is Auburn Hills on the brink?”, The Oakland Press (October 31, 2009).
link: “Climbing PERS expense face Oregon pension board”, Oregon Live (October 24, 2009)
link to previous rants: here, here, here, here, here, and here.
