Last year, Republicans Chris Christie and Meredith Whitney predicted that the world was going to end in 2011 with municipal defaults.
Whitney told investors to expect 100 and probably more municipal defaults in 2011, a domino fall that would bring the $2.9 trillion muni-bond market down with “hundreds of millions” in losses.
She said towns and cities across the U.S. were going to fire government workers en mass and that garbage was going to pile up on lawns, and entire city blocks would burn because fire stations would sit empty.
This dooms day prediction sent the market that finances local government into a downtrend. About $50 billion has been cashed out of municipal-bond funds since last year. Investors haven’t finished selling, with $3.69 billion being pulled out from municipal bonds in April of 2011.
Republicans are engaged in cutting off the purse strings of Congress for this President in the name of blocking any policies he attempts to pass in his less than 2 years left in office.
Obviously it’s hypocritical that the Republicans, who took a budget surplus left to them by Clinton and the Democrats, and turned it into a multi-trillion dollar deficit, are now suppose to be champions of cutting spending. When they were in office they were the biggest spenders ever. But minus the glaring hypocrisy, look at how disingenuous these doomsayers are.
Chris Christie used tax dollars to take a free helicopter ride to his son’s baseball game. Obviously the whole we need to cut spending is a bunch of baloney and is nothing more than a play from the Republican’s play book to block any Obama policies for the next 2 years in the name of ‘saving money’ while secretly, they take helicopter rides for personal enjoyment at tax payers expense.
And what about Meredith Whitney and her dire predictions of 100 municipal defaults in 2011? A report issued this week by Deutsche Bank says that defaults by local governments are actually declining. The firm figures a total of 39 defaults for all of 2011. As of last month there have been 14 defaults totaling $605 million. Furthermore, the report argues that 2011 is shaping up to have the lowest number of defaults since the recession began three years ago. Deutsche also says that to reach even $200 billion in defaults — out of the “hundreds of billions” that Whitney predicted — more than $800 million in defaults will need to occur “every single day (including weekends) from May until the end of the year.”
Whitney has been hitting Fox news and MSNBC hard lately, arguing that her prediction of billions of defaults this year was really, well, more of an estimate. Focusing on the timing of the defaults “misses the point,” she says; rest assured, a flood of defaults will happen.
The one who focused on the timing of the defaults was Whitney who said in 2010, that within 12 months, 100 municipal defaults would occur.