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Wyandotte County Star-Bonds Foreclosure Soon -- Taxpayers Stuck Holding the Debt

The Real Story is that the next looming financial collapse is coming in the form of municipal bond defaults. Most major banks have safe harbored cash in the Muni bond market for years. 30 years ago the muni bond market was immune from junk bond deals that only existed in Vegas and the penny stock market.

During the last 30 years after the Reagan tax reform act of 1986 there has been a colossal amount of debt issued in the muni market. California has over 3 trillion dollars in state and municipal debt. When the taxes dry up (that is happening right now by the way) everywhere will look like Orange County California. Who takes the hit? The public of course.

If you look at most public debt reporting agencies the amount of State, Municipal and County debt has grown some 5000% over the last 10 years. As the money was drying up and becoming more cautious in the market, bird brained governments became unwilling mortgage holders on projects that politicians wanted to get their picture in the paper and get re-elected. There were no right-brained critics in the boardrooms of governing bodies and the amount of debt issued was insane.

So what is the bottom line? As States, Muni's and Counties seek to pay off the debts they have incurred, they must cut somewhere else. Where? Senior healthcare, cops, firemen, parks and recreation, youth programs, schools, everything the government is spending on. What will happen when the public becomes enraged and demands that the government take care of Grandma and Grandpa? Maybe this is why the NRA memberships have gone through the roof.

The only solvent states are North Dakota, South Dakota, Wyoming, Montana and almost Nebraska. The republic of Texas is in fairly good shape but has enormous debt to pay off. Small states like Kansas that tried every debt leveraged deal they could get their hands on are going to be the worst off. The black market economies will expand further cutting government revenue until the bondholders are notified that they can pick up the bond paper and wipe their collective butts with the nice fiber paper.

Don't believe it can happen? Read the Full Story --- or Google; Greece, Spain, Portugal etc.

The Rotten Word..
4-28-2010