The states and local governments are going to see horrific shortfalls thanks to the housing crash. Tax revenues are going to plummet even as spending rises, causing massive budget deficits, and eventually tax increases and slashed spending.
The housing crash will bankrupt the builders, the banks and the REIC-related industries. But it may also bankrupt your state and your city, who enjoyed the free housing bubble loot when it was pouring in, but stupidly spent it like it would never end. And then it did.
Get ready. No surprises for HP'ers.
Schwarzenegger Will 'Declare Fiscal Emergency' In Weeks
Gov. Arnold Schwarzenegger said Friday he will declare a "fiscal emergency" in January to give him and the Legislature more power to deal with the state's growing deficit.
Schwarzenegger made the announcement Friday after meeting with lawmakers and interest groups this week to tell them California's budget deficit is worse -- far worse -- than economists predicted just a few weeks ago.
The shortfall is not $10 billion, but more than $14 billion -- a 40 percent jump that would put it in orbit with some of the state's worst fiscal crisis, those who have met with him said.
California is struggling with shrinking state tax revenue from the meltdown of the subprime housing market and the credit crunch on Wall Street.
State spending also has increased by more than 40 percent since Schwarzenegger took office after the 2003 recall of then-Gov. Gray Davis.
December 15, 2007
And then, right on schedule thanks to the housing crash, the states started blowing up. First up: California
October 07, 2007
The view from the UK: We went to war based on bad intelligence, now the US cut interest rates based on bad jobs data. Can't say I disagree...
The credibility of the United States of America continues to plummet.
When, oh when, will we no longer be run by corrupt and incompetent monkeys, justifying decisions on suspect or sexed-up data?
The big question now is will Bernanke and the US Fed fix their bad-data mistake (and raise rates at the end of the month), or will they be like Bush, who insists on compounding his bad-intelligence f*ck-ups?
UK Telegraph: Fed based rate cut on false jobs data
The 12 members of the Federal Reserve may be rethinking their 0.5pc interest rate cut last month after key jobs data that their decision was partly based on was revised.
August's non-farm payroll numbers were changed by the US Labor Department to show 89,000 jobs were created, rather than 4,000 lost as it first predicted.
The predicted fall, the first decline in four years, forced global markets sharply lower and was seen as one of the major reasons why the Fed, led by chairman Ben Bernanke, cut rates, in order to stimulate economic growth.
June 02, 2007
The housing crash checklist
- Access to mortgages severely crimped by Subprime and Liar's Loan meltdown - check
- Rising interest rates - possibly 7% interest rates by end of year - check
- Housing P/E historically out of whack - check
- Affordability out the window - check
- Massive (and unrecorded) REIC job losses - check
- Millions of unwanted homes on the market - check
- Plummeting housing demand (why buy when it'll be cheaper tomorrow) - check
- Realtors and mortgage brokers no longer trusted - check
- No more lines at new home developments - check
- Flippers and speculators out (or desperately trying to get out) of the market - check
- Ponzi Scheme over - check
That's just for staters.... what did I miss?
