Our Newswires colleague Brad Davis sent this snippet along from a conference in Dallas:
Euro zone might struggle with its own sovereign debt crisis, but cash-strapped US municipalities are waiting in the wings with a debt crisis of their own, Thomas Glaessner, Citigroup global policy strategist, says at a forum hosted by Dallas Fed. “You can’t imagine how many clients come to us” looking for a way to bet against the debt of US states and municipalities, Glaessner says. It’s not just the euro zone, where Greece is implementing a belt-tightening program, that must “sacrifice” to meet austerity budgets, Glaessner says. Sacrifice also is going to be needed in US localities, he says.
We’ve been banging the drum on this topic for a while, that the states are getting ready to stage their own Greek drama. It’s very telling to me that Glaessner says “you can’t imagine” how many investors are coming to Citi that want to essentially short the states.
As Han Solo once said, I can imagine quite a bit (hey, I know this is a serious topic, but sometimes you just gotta let your geek flag fly, know what I mean?)
Look at my own beloved (and just as often reviled) Garden State: the new governor, Chris Christie, unveiled a harsh budget that’s already got some folks howling, and relies almost completely on spending cuts. As the Times explains:
To close a deficit that he asserted was approaching $11 billion, Governor Christie called for the layoffs of 1,300 state workers, closings of state psychiatric institutions, an $820 million cut in aid to public schools, and nearly a half-billion dollars less in aid to towns and cities. He also suspended until May 2011 a popular property-tax rebate program, breaking one of his own campaign promises.
Town councils, school boards, home owners and families are all going to feel this ax fall. And while Jersey in a tight spot, it’s far from the only state facing a crunch. Welcome to Sparta, kids. Don’t mind the implements of destruction.