America's Economic Conundrum

Many States cannot support the current standard of living (labor, benefits, services, maintenance, etc) without additional deficit spending and debt issuance. Deteriorating credit ratings for many municipalities, more importantly, new low in trend energy within the national muni bond market reflects not only the severity of problem but also recognition by capital. The later is more important than the former. Capital is neither blind nor stupid. The path of least resistance is down because the fundamentals are deteriorating.

Policy makers, despite the sundry of rhetoric, really have only two choices:
(1) Keep spending, or figuratively kick the can down the road to live another day. The consequence of spending, however, is gradual (hopefully) reduction in the general standard of living, or (2) balance the budget and face the economic music here and now. A common element between the two choices is a lower standard of living for most; an outcome not likely to be embraced by either protesting group.

This protest/discourse will spread across the country. Call it public education about America's economic conundrum.

Muni Bond Market:


Headline: Thousands of protesters surround Wisconsin Capitol

A state Capitol thrown into chaos swelled for a fifth day with thousands of protesters, as supporters of Republican efforts to scrap the union rights of state workers added their voices to the debate for the first time and GOP leaders insisted again Saturday there was no room for compromise.

Supporters of Gov. Scott Walker and his effort to ease Wisconsin's budget woes gathered on the east side of the Capitol, surrounded by a much larger group of pro-labor demonstrators who since Tuesday have filled the Capitol with chanting, drum-beats and anti-Walker slogans. Walker has proposed requiring government workers to contribute more to their health care and pension costs and largely eliminating their collective bargaining rights.

Source: news.yahoo.com