March 16, 2008

Do the states and cities of America know how screwed they are now that their sales tax and property tax party is over?

Schools will close

Firehouses will close

Roads won't be repaired

Workers will be laid off

Crime will soar

Cities will go into decline

Tax rates will go up

This will not be pretty. Especially in LA, Phoenix, Vegas, Miami, Tampa and San Diego.

You'll also start hearing soon about cities defaulting on their debt, and going bankrupt. We're just days away from that.

You would have thought after the dot-com bubble that local and state governments would have learned their lesson and prepared for a rainy day. But this bubble bust will hurt them so much worse as they lose their sales tax revenue (so long HELOC buying binges) as well as their real estate taxes which will plummet along with the price of the taxed properties.

We're still just getting started. We know the cause, now it's time to see the effects.

60 comments: said...

Scottsdale announced the closing of two public schools earlier this month, making their already overcrowded schools even worse.

There will be more. This is just the beginning.

Anonymous said...

Time to go long Smith & Wesson.

Anonymous said...

OH NO, this cant be!

Are they going to fire the firemen?
But they're our heroes!
They keep their fire engines so clean and they use their time so wisely when they pump weights, shoot baskets and earn double overtime (some firefighters in LA bank over $200,000 a year). They do this because they have in their contract stipulations that they get paid "combat pay" when they do what their supposed to be doing (aka fighting fires).




Tom said...

There goes the other side of Amback's business. The Municipal Bond business.

Anonymous said...

As long as the maggots on Wall Street are rich everyone should be happy with the way things are.

Anonymous said...

Good! Great! Big deal, so ill have to weave around a couple of potholes and the kids will get less brain washing at school because they will have to cut a few 'programs'. Everyone is getting exactly what they wanted. Ive spent years feeling like the outsider because i talk 'silly', saying things like 'housing bubble', 'derivatives', deficit' and other such silly talk. Well now im sitting pretty. Lots of food, ammo, land and other then when they put the crowd-contol cops on the street corners, my life will change very little. Let the giant spanking begin.

Anonymous said...

Hey, google 'Vallejo, CA'. They said when Mare Island closed, only blokes like myself would be affected. HA, Vallejo !

Anonymous said...

Yes, this potential is the real reason why investing into muni bonds will be higher risk than in the past. Defaults which are historically low will likely rise even though they can and will rate tax rates to cover the shortfall in addition to spending cuts in discretionary spending. WHY? If people just do not have the money and/or the properties are vacant and the bank is also going under do you think the tax bill in going to be paid at all? This is going to be bad, very bad. Good luck!

Paul E. Math said...

"He also expressed optimism that when the affluent residents of Thousand Oaks face tough times, they'll go shopping."

That's right, that's really what the 'tough' people do when the going gets tough: they go shopping. It's not just a not-funny bastardism of an old cliche - it's actually the truth. /sarcasm

Anonymous said...

Most cities can easily cut 10-20% without any reduction in services if they wanted to. I work for a city that is big, bloated, inefficient and lazy.

Anonymous said...

State-guaranteed Pension Funds are having their asses handed to them by Wall Street.

Guess who's gonna get stuck with their bad gambling debts?

It ain't gonna be well-CONnected, Dubai-based GLOBAL corporations....

christiangustafson said...

One word.

One word. Just one.


As Neil says over at Ben's blog, "Got popcorn?"

Anonymous said...

anon 9:35 you are one dumb fuck.

Anonymous said...

I would welcome seeing the fat, lazy overpaid fireman put to the curb.

At leat they have trained for their next profession, fry cook and car washer.

They can take the place of the messycans next.

Privatize the Fire Function Nationally said...

Fireman have the same respect and are as guilty of stealing as Realtors. -NO RESPECT.

Overpaid boobs generally. The ones in my city are all so fat there is no way they could climb a ladder if there (or anyone elses) life depended on it.

The fire function should be privatized nationally. Let those heroes compete for their truck washing and fry cook jobs.

Fireman, you STINK.

Anonymous said...

Yes agreed Anon 9:35 is a dumb fuck. I am no fan of big government but All the firemen that I have met do not meet hos description. I am sorry one of them nailed your girlfriend/wife. But unlike any other profession these guys do what they do out of an overwhelming need to help folks. And I have never met any that made your rate. Maybe LA is different, but all the ff I have net in NYC have 2nd jobs to make up for the lack of income from being a firefighter.

SeattleMoose said...

All able bodied adults will be drafted for "free" public service. You will have to work weekends if you still have a job and 7 days a week if you do not.

In the meantime CEOs will continue to get record pay and change the rules regarding their bonus to eliminate anything (e.g. poor performance) that would reduce it.

Anonymous said...

Keith, you are one hell of an alarmist. Oh yeah, more doom and gloom from you. The dollar is still the world's reserve currency and America is still the number one economy in the world. During times of crisis, investors from around the world will flock to dollars and America. Everything will be fine. Also, I love it when you HP'ers root for doom and gloom and you guys never think all of this doom and gloom won't affect you?

Mark in San Diego said...

I have been a voice in the wilderness on this issue. . .the state of California is 15 billion in the red, and growing every day. . .the proposed cuts are peanuts compared with what is needed. . .the last time, they papered over the budget with "bailout bonds". . .considering the state of muni-bonds these days, it won't be possible. . .wait until they release criminals on the streets because there is no money for the jails. . .Arnold will be swept away, then the Democrast will take over once and for all, raise taxes on rich and corporations - the result?? We (I am just small time rich) all move to Nevada, and Chevron moves to Houston (they are already considering it). . .then Calif has no rich people and corporations to tax! BTW - another reason to RENT in Calif. . .and buy in Nevada (no state income tax).

dirt merchant said...

From the Washington Post:
"Prince William County Executive Craig S. Gerhart proposed yesterday a budget for the coming fiscal year that calls for a 28 percent increase in the property tax rate to cover a shortfall and to pay for public safety programs, including a crackdown on illegal immigration"
This far out DC suburb is a total sh*thole and the epicenter of HP in the DC area. And its just what the already stretched too thin homedebters need is a bigger tax bill. Maybe the county can seize the houses for not paying taxes and sell them to finance the government.

NITZI said...

I'm with you on the firemen "heroes" myth...they're one of the largest group of leeches on the public treasury, providing very liitle in return.
Same applies to a lot of these first responder moochers portrayed as "heroes" as if the country was under a Nazi type bliztkrieg or bombed as London/German cities were in WWII.
What exactly are these overpaid over-equipped public welfare loafers doing all day?

Anonymous said...

Schools will close

Firehouses will close

Roads won't be repaired

Workers will be laid off

Crime will soar

Cities will go into decline

Tax rates will go up

Already happening in Chicago, all but the firehouses. But some nimwits want to elect a dirty Chicago pol to the W.H. tisk tisk.

Anonymous said...

Yes agreed Anon 9:35 is a dumb fuck. I am no fan of big government but All the firemen that I have met do not meet hos description. I am sorry one of them nailed your girlfriend/wife.

Firemen are overpaid stormtroopers. I said hi to one going into a bank. His fire engine was sitting there. He demanded to know what my fucking problem was. (why I would dare speak to him, he thought I was giving him shit about banking on the clock.) I then told him to fuck off, he promptly pulled his radio and threatned to call the cops. I promtly told him to fuck off again spit on the sidewalk and walked away. Another Minnesota employee. I hope all those overpaid gestopo asholes starve when the budget cuts hit.

reality can suck said...

Hey anonymous, nobody is lining up to buy into this US mess. Our currency is worthless and is only being honored for 2 simple reasons: China and Saudi Arabia have so many warehouses full of useless paper, they have no choice but to play along for now, and our nuclear arsenal. Look for an all out war in the near future-the US is doomed and you my friend are fooling yourself.

NITZI said...

anon said:
all the ff I have net in NYC have 2nd jobs to make up for the lack of income from being a firefighter.
What of bunch of BULLSHIT!
NYC firemen can have second jobs because they sit around resting all day cooking,watching TV and spanking the monkey on the publics money. The scam is to assign the shifts so they have the time flexibility for other employment and other creative fraud to allow them to clock out early and make even more money. Bunch of greedy moochers.
I know NYC firefighters and they're not "heroes" but just a bunch of moochers on the dole. Matter of fact, I have more respect for the trash collectors of the Sanitation Dept. and the clerks in the Motor License/Vehicles Dept. in providing public service.

Anonymous said...

This blog is starting to make DailyKook look sane.

Anonymous said...

Public employees live in a fantasy land. Time for some of the reality the rest of us have been living with. Hey, if they don't like it they can always quit and join the ranks of us "little people", right?

Anonymous said...


so much for 70% of the population living in large urban areas by 2050. people will live where the food can be grown.

frmrmarine said...

anon said:
OH NO, this cant be!

Are they going to fire the firemen?
But they're our heroes!
same applies to the other heroes, fooling the masses of taxpayers.
The bloated US military officer corps, a massive collection of mediocrities sucking up pay,promotions,benefits and training as they plan their careers on lucrative private sector employment once they've milked the system.
After thousands of lives and trillions of dollars these clowns are still getting their asses handed to them by barefoot peasants in Afghanistan and Arab teenagers in Iraq.
The only way the US military can win a war is to bomb people from 30,000 feet, return to the carrier or base, have steaks at the commisary and call up little daughter Suzie back home in Kansas and discuss her school day and his work dropping American style democracy and values on the world.

Anonymous said...

This is the real tragedy of this whole mess. It destroyed the tax base of the level of government that actually matters to the lives of real people.

Time to go long Smith & Wesson.

I'm going with a 9mm Glock.

Anonymous said...

Its not just Phoenix. The state of Arizona faces a 1.4 billion deficit on a 10 billion dollar budget, and the number is growing larger each month.

Anonymous said...

anon 3:07 PM
I fear it is you that have it all wrong. Keith may be an alarmist but you are an ostrich.

The dollar is being systematically destroyed, losing ground to almost every currency in the world even the Swiss Franc and Canadian dollar. Banking/lending institutions are teetering on the brink. We are just getting started on this downturn. The Fed can only cut so far - oops brick wall, 90mph - shit this is going to hurt... Then our glorious Decider makes some comment to the effect that the $600 dollar check people are getting - should offset their lack of equity - or some such crap. (I can't listen to his dumb ass it is physically painful.)

Our economy is 70% consumer driven, hmmm if the consumers are 70% of our economy and they have no money to spend, then that means - that some celebrity just got out of car with no underwear on, do you believe it!!!

Then to top it off stories are abounding about people and places that used to take dollars no longer doing so, they are taking whatever else they feel has more value. Just because the dollar might be the reserve currency of the world right now doesn't mean it always will. Humans the world around are a capricious lot, whatever they perceive to be the bigger better deal is what they go for in droves. Mob Mentality - whether it is good for them or not.

To 'doom and gloom' maybe, but like I tell others, I bet the Greeks and Romans thought they were to big to fall either. No I don't wish for gloom and doom the coming downturn scares the hell out of me. I wonder just how I am going to survive it all, certainly not with 'popcorn'.

Voting or for the lesser of two evils is still voting for evil.

All it takes for evil to win is for good men to do nothing.

Keep your head in the sand - all is well.

Lady Di said...

300 teachers were laid off in my kids' school district last week. Two of my kids' teachers are out a job.

It's getting ugly.

Damn those real estate fraudsters.

The innocent are paying the price.

AZwatch said...

Arizona leading the nation, again.

From today's AZ Republic:
"State may be out of cash in late April"

Paul Davenport
Associated Press
Mar. 16, 2008 12:00 AM
The state's worsening revenue shortfall means the general fund will run out of cash it can legally spend earlier than the previous estimate of late May, State Treasurer Dean Martin said Thursday.

Paul E. Math said...

Anon 3:07 is a dumber fuck.

Yes, the USD is still the world's reserve currency. But what if it wasn't? What if its rate of exchange with other currencies was based purely on its merits, on the strength of our economy and the growth of our money supply? Because that is a change that is currently taking place and the decline in the dollar proves it.

The US is the 'number one economy in the world'? Huh? Just this morning Wolf Blitzer on CNN referred to a poll of 80 US economists in which 71% of them believe we are currently experiencing negative economic growth - how 'number one' is that?

You think investors will flock to dollars and America in a time of crisis? Guess what, we're in a time of crisis and everyone, investors included, are getting out of dollars. Or had you not noticed how much the US dollar has declined relative to almost every other currency?

Seriously dude, get a clue.

Anonymous said...

Cake, compaer to whats coming in Europe.

michael said...

don't fireman in CA get to retire at like age 35 or something?

Stuck in So Pa said...

Anonymous said...
Most cities can easily cut 10-20% without any reduction in services if they wanted to. I work for a city that is big, bloated, inefficient and lazy.

In other words, you work for ANYCITY, USA.

General rule of thumb for hard times.

1.Governments don't cut positions where they already exist; they just don't hire new bodies when an opening comes up, and move everybody up the ladder one notch, or just leave the position vacant. No body gets laid off! Part-timers can even wind up going to full time in a "cut back."

2.Wages are NEVER cut (unions, ya know) but wage increases are usually mutually scaled way back or eliminated in the new ONE-Year contracts they put through to weather the bad times, but still give the unions the opportunity to go for the moon as soon as possible when the economy gets back on its feet.

3. Taxes will go up on those left standing. And those left standing will number less and less as this drags on.

4.Only services and benefits that affect Joe SxPk will be cut. So when times are tough, the first thing school boards cut are buses and extra curricular activities, never administrators’ positions and perks, or teachers (remember......unions.)

State roadwork is scaled back (materials cost,) but there is no reduction in DOT executives or rank and file
(that’s union) workers. Again, only new hires.

Police protection is curtailed to insure that Joe SxPk comes around on those sooooo needed tax increases. After all, you WANT good police protection, DON'T YOU?

And it goes on and on.

(OH, rural fire departments are all voluntary here; they do a helluva great job.)

Tax revenues from reality transfer taxes are already down 50% in my township, and this is not a bubble area. The tax accessor informs me that average home assessed tax value will drop about 9% next year if things don't change.

Big Deal! I understand from our one responsible decent school board member that she heard that the 25mil limit was very quietly removed in an amendment to an unrelated bill in the state legislature to allow counties and school board's to tax to the moon. Don't know if that's true, but I wouldn't doubt it.

The PTB always know when to protect their wallets, if they know nothing else.

Anonymous said...

Except for the rising crime, all that happened in Pittsburgh in the middle of the boom. The tax hikes suck, but the rest isn't that bad. (Crime didn't jump because the we lack young people.)

Anonymous said...


I always found it funny that every fireman no matter how long his service, 1 day or 20 yrs., was given the Title of 'Hero' after 9/11

The true Hero's go above and beyond the coarse of the normal job description.

Many gave their lives trying to help others....That's a Hero!

When an airline pilot (or crew) lands a crippled plane....are 'All' pilots given Hero status?
Or is he/she just doing the job they was trained to do?

So, you rushed into a burning collapsing building and took the chance of giving your life for another.....That the job definition of a fireman!

Some are Hero's. So lets not water down the title of 'Hero' by handing it out to every person who put out a trash can fire!

When I was in my teens(48 now). I pulled two women out of two different burning cars!

Does that make me a Hero?

I'm not a trained firefighter.

But I know fire when I see it, when it's where it's not suppose to be!


Anonymous said...

I've got some Ugly stories about Lazy firefighters here in San Diego during the October wildfires of '07.

No effort was made to put out burning trees and bushes around a house!

The answer was, "the structure isn't burning yet"!

They waited until the house was actually burning to do anything!

Anonymous said...

Not to worry. I'm told that the Invisible Hand (tm) will provide.

Anonymous said...

anon 9:35, I agree, the "heroes" will sooner or latet go down in flames. Overpaid, overhyped, crybabies. Just look what has happened in the courts in LA, millions paid because the "heroes" feelings were hurt.

Anonymous said...

I am celebrating this as a Houstonian. The city govt. here is 100% criminal. Bill White is the most hated mayor ever because he opened the gates to hell with Katrina refugees and hired a lunatic chief of police that militarized the cops.

I pray the city goes bankrupt and all of the cushy collect pay do no real work jobs in city govt. just vanish. They have also been buying new cars and trucks like crazy for city employees. That should also stop. If they truely are civil "servants" they can drive around in a 1990s vehicle with no air conditioning to save on fuel; NOT a 2008 diesel ford F250 a/c blasting.

Anonymous said...

> You'll also start hearing soon about cities defaulting on their debt, and going bankrupt. We're just days away from that.

You are late. Vallejo, CA already went bankrupt a few weeks ago.

Anonymous said...

Response to person who saved two people from fire .

You are a hero ,I can tell you that .I don't even think a hero knows it when they are being a hero ,and its some kind of natural act of courage to save others . It's some kind of love for ones fellow man ,women ,or child .

I knew someone who stopped a fire one time at the risk of his own life ,and just walked away afterwards . That same person saves people on the roads all the time if he happens to be driving by .Same person never thinks of himself as a hero and never asks for money or fame . Same person just drives away .
When you look at how many people didn't care if they harmed their fellow man during the boom times of this housing mania ,its not a story of the hero in people .

Anonymous said...

When a Nation becomes more criminal than law abiding,and everyone gets the attitude that their actions are justified because their pursuit of happiness should be at the expense of others ,than we are doomed .

That goes for anyone who doesn't put in a good days work for what they are paid,just because they can get away with it .

That goes for welfare moms that have children to collect money ,while the fathers are living with them .

That goes for loan agents and real estate sales people who processed sheep into the ponzi scheme ,who now say its the borrowers sole fault .

That goes for people who cheat on their taxes ,yet want all the services that those taxes provide .

That goes for Corporations that are cheating their employees out of a living wages for the purpose of higher profits .

The Fed Chairman is cheating the public to save the lenders .

That goes for any Corporation or party that cheated by lying to gain money . There are so many examples .

The horrible part is that all these cheats don't realize that they are cheating their children out of a good future .Just because the rich are the biggest cheats doesn't mean cheating is justified or that it isn't destructive .

happy homeowner in the stix said...

If it's so damn easy to be a firefighter, or other guvmint employee, and they make so much easy money.....why the hell aren't you whiners and bitchers joining the force?

Hell, you are all so much smarter, why aren't you doing these "cake jobs"?

(Yeah, yeah....can't get on unless you know someone, blah, blah, blah.....the fact that you couldn't move something heavier than 20 lbs, or have those pesky unresolved warrants is just a technicality, right?)

Stick to blathering about your huge gold positions, ok?

Anonymous said...

And get his, all those illegals are now moving to Canada, which's receiving them with work permit and citizenships. Coyotes are now charging illegals in America $4k to cross into Canada.

Big mistake, Canadian brothers! Huge mistake!

Those parasites will destroy your country and breed like flies for you to support all their babies, who eventually will become criminals.

Anonymous said...

Buy lots of guns and ammo with Bush/China's stimulus check to get ready when the time comes to fight Blackwater in the streets of America. When the New World Order freaks come with that Fascist bull$$hit on us, playing Rambo in our streets, we'll put a cap on their a$$es.

Anonymous said...

This blog is starting to make DailyKook look sane.

Yeah, that's what a lot of trolls were saying years ago when we're exposing the housing bubble. Those trolls are bankrupt now.

Anonymous said...


from 9:22 above;


and for more info,

once I pulled the elderly lady out,

I made sure the fire was out and stood by until the fire department showed up (about 15 min)

Once they arrived I left.....I was on my way to lunch, and only had so much time to do so!

No fanfare, No congrats!

Just doing what was necessary at that moment in time.

Thanx again

Anonymous said...

Yea right. Government never shrinks. What will happen is taxes will increase. Income tax,sales tax, gas tax, booze tax, you name it, it's going up. If you think 1 govt employee is gonna be fired, you're all nuts.

Anonymous said...

Arnold will be swept away, then the Democrast will take over once and for all, raise taxes on rich and corporations - the result?? We (I am just small time rich) all move to Nevada, and Chevron moves to Houston (they are already considering it). . .then Calif has no rich people and corporations to tax! BTW - another reason to RENT in Calif. . .and buy in Nevada (no state income tax).

Sad but true, the CA legislature attempting to raise taxes in this economic environment will finalize the exodus of the middle class and large businesses from CA. But it will be interesting watch from afar how the state will function when its remaining residents are wealthy Marxists in Marin county and illegal immigrants. But sometimes a junkie needs to hit rock bottom because they can change their lives. A more cynical part of me just wants to grab a bag of popcorn and watch CA collapse under its own weight.

Anonymous said...

The mayor of phoneix, AZ was here in Dubai last week, begging for money. He couldn't even pay his own air fare to Dubai. Pathetic

Anonymous said...

We don't buy the fireman hero BS. Another sensationalism invented to take advantage of the sheeple and profit from it. No wonder the chimp in charge was posing with a fireman hat and a bullhorn to fool all the sheep with a low IQ. You should see the obscene amount some of these high school dropout firemen charge cities for BS consulting work.

Anonymous said...

I water my garden with a hose every week. Should be earning $150k / year like the superhero firemen, since apparently I have all the qualifications required.

Isn't this country f-ed up or what?

Anonymous said...

During the past wildfires of Oct '07 in So Cal,

I called the local fire department and asked, if it was 'O.K.' if I cleared some 'dead brush' away from our property line,

their response was "NO, your not a qualified, trained firefighter"!

No S**T!

thebaglady said...

Not sure if you saw this but Vallejo, a city in Northern California, was considering bankruptcy, too. They had firefighters being paid 200k+ and not enough real estate revenues to cover it now that the housing prices have dived.

Anonymous said...

This thread outlining the myth of the "firefighter as hero" foolishness is refreshing and much needed.
Here in L.A. the Cops are "working" 3 12-hour shifts with 4 days off. It is absurd to think that productivity increases with such a schedule. It just means that cops are more tired coming in from their other job.
Never hear a word of criticism from the L.A. Times about tired cops since this schedule change was negotiated several years ago.