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The Babe Theory Of Political Movements.
Mar. 21, 2005 11:50 AM
Iran's Sham Election In Houston.
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Yes, Kanye, Bush Does Care.
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Health Care vs. Wealth Care.
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Americans Voting With Their Feet.
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Idea Majorities Matter.
May 12, 2006 6:15 PM
Twilight Zone Economics.
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The "Shrinking" Middle Class.
Dec. 13, 2006 1:01 PM
From Ashes, GOP Opportunities.
Dec. 18, 2006 6:37 PM
Battle Between Entitlements & Pork.
Dec. 21, 2006 12:31 PM
Let Economic Freedom Reign.
Dec. 22, 2006 10:22 PM
Biggest Health Care Moment In Decades.
July 25, 2007 4:32 PM
Unions Antithetical to Liberty.
May 28, 2008 11:12 PM
Right To Work States Rock.
June 9, 2008 12:25 PM
Social Security Reform Thursday.
January 29, 2008
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The Carnival Of Classiness.
Mar. 14, 2006
Quotational Therapy: Obama.
Apr. 4, 2008
Mainstream Melee: Wolfowitz.
May 19, 2007
Pundit Roundtable: Leaks.
July 9, 2006
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Trivia Tidbit of the Day: Part 565 -- Government Debt Not Just Federal Problem.
Some States Are Borrowing Way Too Much-
The national debt held by the public is staggeringly large these days. Its growth has been robust and persistent. It is also projected to nearly double over the next decade, according to many forecasts.
State and local government debt is also on the rise in some places and on average (.pdf):
From the perspective of average taxpayers, debt financing should be minimized. It is more costly that payas- you-go financing because of the interest payments incurred. It also comes with an overhead cost in the form of the large municipal bond industry, which employs tens of thousands of lawyers and finance experts in underwriting, trading, advising, bond insurance, and related Wall Street activities.
The existence of some debt is not a bad thing at all. Zero debt would signal a dysfunctional and unhealthy economy, but we've passed the point of healthy debt in most states and locales, as well as the federal government:
Who do you think is more reliable—the full faith and credit of the United States backing up Treasury bonds, or the McDonald’s Corporation, backed only by “billions and billions served”? By some market measures it is the latter, and for good reason. The price of credit defaults swaps guaranteeing payment on 10-year Treasury bonds has risen by 1000 percent since December 2007, with an implied 12 percent probability of default on government debt over the next decade. In the view of the markets, this makes U.S. government bonds a more risky proposition than debt issued by McDonald’s.
Issuing bonds, much like earmarking money for pork projects, may seem somewhat innocuous, but in the same way that earmarking goes hand-in-hand with corruption, lots of municipal bonds can do the same thing. Often the two-- earmarks and bonds-- go hand-in-hand.
Imagine if a United States Senator slipped earmarks into a bill, and that Senator's husband issued the bonds associated with the earmarked projects. Imagine if this happened time and time again, over the period of many years.
In Texas, notwithstanding the hypothetical example above, our state and local debt per capita is 49th in the country. Only Tennessee has a lower rate of outstanding debt per capita. Number one: Massachusetts.
Previous Trivia Tidbit: Punitive Coke Taxes.
Posted by Will Franklin · 31 March 2009 08:55 AM