New Jersey Is Downgraded by S&P

I hope NJ doesn't think it will get any $$ from the Fed, that's only for Wall Street, new AP story:

Lawmakers oppose federal bailout for states

WASHINGTON (AP) -- The new Republican-led House is showing no appetite for making federal taxpayers help state and local governments cope with widespread budget problems. Even some Democrats are wary, underscoring the impact of Washington's crushing budget deficits.

"The era of the bailout is over," Rep. Patrick McHenry, R-N.C., told a House hearing on the debt problems facing scores of states and municipalities around the country.

At the same hearing, Rep. Mike Quigley, D-Ill., said states need to erase their deficits and face up to their long-term obligations such as pensions for government workers on their own. He also criticized a proposal from some conservatives that Congress pass a law allowing states to reorganize their debts by declaring bankruptcy, an idea that opponents say would send state borrowing costs soaring.

so if the pension burden is unaffordable but they cannot declare bankruptcy, what option is left? printing their own currency for pension payments to be used only within the state?

More fiscal irresponsibility from Chris Christie. One of Christie's first acts as governor was to veto a tax increase for high income earners, which only increased the deficit.

Jason, is there a reason you are on the east coast? All you do is complain about here. If you'd be happier if you go away, we'll be happy for you.

They cannot declare bankruptcy, but they CAN default on their debts, just like say Argentina. They can simply not pay.

"They cannot declare bankruptcy, but they CAN default on their debts, just like say Argentina. They can simply not pay."

Sure they can. And then NOBODY will lend money to NJ ever again unless they get 20% interest. And those higher interest rates will result in painful tax increases for NJ.

TRENTON — New Jersey’s bond rating was downgraded Wednesday by Standard & Poor’s, a move that could add significantly to the state’s borrowing costs and focuses even more attention on public-employee pension and health care payments.

The agency dropped New Jersey to a rating that is among the lowest in the country. According to S&P, the only states with worse credit ratings are California and Illinois, widely considered to be in the steepest financial trouble.

http://www.nj.com/news/index.ssf/2011/02/drop_in_nj_bond_rating_could_a.html

TRANSLATION: Taxes are going up.

"Sure they can. And then NOBODY will lend money to NJ ever again unless they get 20% interest. And those higher interest rates will result in painful tax increases for NJ. "

Argentina recovered much faster than you think and don't pay 20% interest. The interest payments would go up, yes, but it would not be "never." Argentina bonds are at 9.5% or so.

I was not recommending they do it, I was simply making a factual assessment. State bonds are treated like soveriegn debt under US law.

> They cannot declare bankruptcy, but they CAN default on their debts, just like say Argentina. They can simply not pay.

lmao for practical purposes, for pensioners and retirees that's even worse! just like say Argentina :-)