From Steve Malanga:
Illinois was at greater risk of default than Iraq.
This Week’s Sign of the Economic Apocalypse
Nov 22nd, 2010 by wintercow20
Homines libenter quod volunt credunt
Nov 22nd, 2010 by wintercow20
From Steve Malanga:
Illinois was at greater risk of default than Iraq.
The people holding the bag are the bondholders first and the states that have borrowed beyond their means and now face bankruptcy and the scars of default. Because the stakes are high, expect an effort to get someone else to hold the bag.
This situation is not unlike the GM bailout, where certain classes of bondholders won (coincidentally GM pension fund creditors) and other creditors were pushed to the back of the line in favor of stockholders and preferred stockholders, a complete violation of contract. I am sure that if the UAW had not been owners of GMAC bonds, the rest of the GMAC bondholders would have been screwed along with the GM Corporate bondholders.
But not even the US Government has the power to force someone to lend GM or Illinois money cheaply from now on, unless government apprpriates or prints the money. That’s the catch.
The only way to get out of this hole is through growth, not digging the hole deeper.
It would help if the utopian socialists who control the bureaucracy at all levels of government took time off for a few trips around the world on slow sailboats. There would be a project worth subsidizing.
I reread Steve Malanga’s piece in my paper version of the Journal, and saw Robert Novy-Marx of the U of R quoted.
The U of R sure is a hotbed of inconvenient numbers, like $3 trillion plus 2.8 trillion plus $500 billion. Given that only the top one percent of US taxpayers can afford the spare change to pick up this tab, how many of those creatures do we have? We do not have nearly that many billion people on the planet.
I hope Mr. (Doctor?) Novy-Marx is more closely related to Harpo than he is to Karl. Harpo knew his limitations.
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