The housing crisis that was created by the federal government encouraging banks to make risky loans may have been the immediate trigger to the economic problems we have, but the roots of the issue go much deeper. The fact of the matter is that we’ve spent much more money than we have in this country, we’ve done it across every level of our society, and we’ve done it for so long that we’ve completely lost perspective.
Most of us have focused on the mess that the federal government has been making of the budget in D.C. Unfortunately, many of our city and state governments have been every bit as irresponsible as the Feds:
More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned.
Meredith Whitney, the US research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the US economy, and one that could derail its recovery.
“Next to housing this is the single most important issue in the US and certainly the biggest threat to the US economy,” Whitney told the CBS 60 Minutes programme on Sunday night.
“There’s not a doubt on my mind that you will see a spate of municipal bond defaults. You can see fifty to a hundred sizeable defaults more. This will amount to hundreds of billions of dollars’ worth of defaults.”
New Jersey governor Chris Christie summarised the problem succinctly: