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Bernanke Rules Out State Bailouts

Bernanke Rules Out State Bailouts

Fed Chairman Bernanke ruled out a central bank bailout of state and local governments strapped with municipal debt burdens, saying the Fed had limited legal authority to help.

http://online.wsj.com/article/SB1000142405274870473950457606...

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NOW he wants to talk about "limited legal authority"?

Why start now? Things are going so well, Ben, why now?

"Meredith Whitney, a banking

"Meredith Whitney, a banking analyst who recently turned to analyzing state and local finances, said the U.S. could see '50 to 100 sizable defaults,' in 2011 amounting to 'hundreds of billions of dollars.'"

Bailout is new debt for someone. Local and state governments better get serious.

There should be a State Law, no pensions for government employees. You get a gold watch after 30 years service. When you work you get paid. Budget accordingly.

Free includes debt-free!

Ben, part of the

Ben, part of the monied-aristocracy, will of course help his paper friends.

malo periculosam libertatem quam quietum servitium

I am an aristocrat. I love liberty; I hate equality. - John Randolph of Roanoke

Why believe him?

He also said he wouldn't monetize the Federal debt, but he's doing it anyway.
He's an in-your-face liar.

SteveMT's picture

To Deny reality is idiotic, but Benanke is. The States are bust!

"Mr." (soon to be "Prisoner") Bernanke: Check the Debt Clock

http://www.usdebtclock.org/

Current state debt: $1.153T

In Obama's home state of Illinois, the debt is critical.

January 8, 2011
Potential for Municipal Bond Defaults Rattles the Muni-Bond Market as Illinois Ponders Tax Increase
Potential for Municipal Bond Defaults Rattles the Muni-Bond Market as Illinois Ponders Tax Increase
By Don Miller, Associate Editor, Money Morning

Illinois lawmakers are considering a huge income tax increase to plug the state's massive $13 billion deficit as wary municipal-bond investors weigh the hazards of betting on the state's debt.

Meeting behind closed doors, Governor Pat Quinn and key Democratic leaders reached an agreement Thursday to raise the personal income tax that could give skeptical investors enough confidence to hold onto their Illinois bonds.

If approved, the proposal would raise the rate to 5.25% from 3%, a person familiar with the matter told The Wall Street Journal. The person said negotiations on the state's first income tax increase in roughly two decades were "still fluid" and the deal was not final. [Lies!]

http://moneymorning.com/2011/01/08/municipal-bond-defaults-m...

Good, something I agree with.

The Federal government has taken bailouts for, uh, ever.

We must stop. Hold the debt ceiling, spent only revenues.

Free includes debt-free!

Bernanke saying that...

...is like a drug dealer telling his customers that addiction will kill them and continuing to sell them the drugs that he produces by stealing money from their parents.

What a class act!

The thing is if benny boy

The thing is if benny boy bails the states that will make the inflation he is causing by bailing out the big banks worse and impossible to hide. The US hides inflation by exporting it to China with the currency peg.

As long as he can convince the talking heads inflation is in check he won't have much resistance to stop the money flow to the banks by monetizing debt.

This may be why they made sure the Dodd-Frank bill included a provision making it illegal for the Fed to bail the states out. There would be pressure for the Fed to bailout the states since they are bailing out the banks.

If the Fed wants congress to bail out the states, it will happen. If it doesn't, it more than likely won't.

wow

Ben doesn't want to give more money out. Yeah Right!
This year is going to be intense.

Humility is the cornerstone of a Warriors Strength.

The "chosen banks" will get all they want.

such as Goldman Sachs, JP Morgan Chase, etc.
Because they are the main Rothschild centers in NY.

Bernanke's job is to transfer as much American taxpayer wealth directly to the Rothschild banks, by any means necessary.

Nobody else will ever get anything.
This is a bankers' "coup" that is currently underway. And when they are done, America will be finished, and every citizen in debt forever, and all of their progeny in debt-slavery for thousands of years. To the bankers, of course.
It's highway robbery in broad daylight, and nobody has the guts to shoot the robbers in self-defense.

They win if we have to borrow more. That is where we are at.

That is the bottom line.

Free includes debt-free!

Thank goodness....

He also said that no foreign banks had or were going to receive bailouts too, right? I do not trust anything that comes out of his mouth, nor has one single prediction he has made been correct in my memory. I would take this with a grain of salt, and while he may not bail out the states, he can bail out the banks that will loan to the states...

Always remember:
"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." ~ Samuel Adams
If they hate us for our freedom, they must LOVE us now....

Stay IRATE, remain TIRELESS, an

if what he says is true

And that is a big if, being the lying bastard he is, then I would say time for us to prepare is almost over.

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This is code for:

"We are already bailing them out, but I'm not supposed to tell you this for fear of the effect it will have on the markets. We still are trying to swindle more productive wealth out of the turnip, and my bosses aren't quite yet ready to implement martial law, so I not only have to say we aren't doing it, but that we won't be. Of course, in the matter of a few weeks or months, it will become headline news when we announce these bailouts, and you will later discover we were already in the process."

If the PTB wanted

to further centralize power why would you bailout the States? Forcing the States to become even more dependent on the Federal Gov. for funding. As "services" normally provided the State disappear the Federal Gov. can step in and be the savior to the masses.

Just my cynical .02? Or is it a vision of the forest beyond the trees?

Because bailouts come with

Because bailouts come with strings attached.

Also, not bailing out a state means letting the political class in that state fail to greater than zero degree. Services will be asymmetrically cut, souring voters on government solutions in general. Or, taxes will be raised, shifting productive capacity to less profligate states. In both cases weakening the alure of government in the abstract.

Once services start getting cut, if we do our job, people will also be more acutely aware that much of state spending is not discretionary, but rather imposed by federal mandate. When things are no longer so hunky dory, we should be in a better position to use this to turn the populace against the feds.

And finally, municipal defaults, even sporadic ones, will increase the perceived risk of muni bonds, making government growth more expensive to finance. That's always good. At the same time, some of the funds no longer going to municipal borrowers, will be made available to private enterprise. In the long run, this rebalancing of capital flows is good for economic growth. In addition, there is a prestige stigma attached to bankruptcy. People have way to much reverence for government at all levels as some sort of positive entity. The more the entire institution is dragged into the gutter, with all their sleaze, lies and incompetence on proud display, the better.

I agree TenaciousE

From what I've seen in many states, the corrupt politicians used the state pension funds to bail out the banks before the fed did and they put the public pensions into hedge funds and other risky investments. My guess is that they knew they'd end up in worse shape, not better. They use the divide and conquer routine to hide this, making it the taxpayers against the public workers. They hide the fact that a lot of the problems stem from the politicians' investments of these funds. NJ invested in Lehman Brothers, Citibank and others before the crisis and lost big. Then, these bad investments become the taxpayer's problem. I don't think they'll be bailing anyone out.
http://www.northjersey.com/news/112144474_Taxpayers_are_left...

http://www.reuters.com/article/idUSN1729731420090317
http://www.tampabay.com/news/business/article805295.ece
http://www.tampabay.com/news/politics/article1007445.ece
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alwTE...

They also feed the military industrial complex with these funds by investing in politically connected companies like the Carlyle Group. California's CALPERS (public employee's retirement system) is invested there. http://www.reuters.com/article/idUSN2221521020100222

The Fed is interested in

The Fed is only interested in bailing out the big banks by monetizing the debt.

He's feeling the heat...

Don't be surprised, if he's not lying (yeah, right), to see state attorneys general going after more bank. They will be directed by the governors to do so, as retaliation.
We may even see something as outrageous as states refusing to allow IRS agents within their borders, as they have no jurisdiction in the 50 states.

bump

Thanks for posting Bobby.

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