With Wall Street reeling from the dangers of new megabank failures … and with Washington lurching toward its worst fiscal crisis of all time, recent warnings of the NEXT big shock are barely being heard.
I’ll tell you what it is in a moment. But first, an urgent notice:
If you had difficulty accessing our one-hour emergency briefing this week, the recording is now available for your immediate viewing. To watch it right now, turn up your computer speakers and click here.
Our topic: 7 Startling Forecasts for 2009; the devastating impact they could have on your income, your savings and your investments; plus what you can do about it right now.
The urgency: As the economy collapses all around us … and as the new Obama team steps in 48 hours from now … our seven forecasts are already coming true right now — and will have a major impact on every financial decision you make this year.
Plus, here’s our urgent eighth forecast that you must not ignore:
The Next Big Shock:
City and State Deficits Will Torpedo
Your Income and Wealth in 2009
According to the Center on Budget and Policy Priorities (CBPP) …
- The number of states facing urgent fiscal difficulties has suddenlty surged to AT LEAST 45.
- Just for the coming fiscal year alone, initial estimates from the states add up to $80 billion in deficits. But as the full extent of their troubles are revealed, CBPP projects that their combined deficits will surge to $145 billion.
- And here’s the clincher: The states face staggering budget deficits through fiscal 2011 totaling at LEAST $350 billion — the worst in history by far.
Nearly every major state budget in the Union is a ticking fiscal time bomb. And since nearly all have laws forbidding deficits, they are scrambling to cut in every possible way — laying off state workers by the thousands, slashing spending on education, canceling construction projects, or worse.
The political resistance to cuts is huge. And yet, many states, like California, will run out of money even IF they can pass their most ambitious deficit-busting proposals.
Never before since the bankruptcy of the Confederacy after the Civil War have so many states faced the intensity of the financial doomsday now looming in fiscal 2009 and 2010!
City Governments in Even Worse Shape
Cities are typically unencumbered by the legal requirement to balance their budgets. So they are not under the same immediate pressure to resort to massive layoffs as the states.
But that only makes things far worse, encouraging them to borrow … postponing the day of reckoning … and sinking them deeper into the quagmire of unpayable debt and interest.
In New York City, for example, the deficit picture is far worse than Mayor Bloomberg estimated just weeks ago: The New York Independent Budget Office is now pegging it at $11.3 billion. But that didn’t seem to stop the mayor from announcing an ambitious effort to create 400,000 new jobs in his State of the City address yesterday.
This scene, repeated across the nation, could create a whopping $100 billion in new municipal deficits on top of the $350 billion in deficits at the state level.
Grand total: $450 billion in red ink flowing from state and local governments … in addition to the $2 trillion deficit at the federal level … compounding the latest woes of the nation’s megabanks … and all in the midst of a collapsing economy!
Here’s what to expect as the next shock waves hit:
1. Massive job losses — not only for employees of local and state governments, but also for those employed by private contractors, construction companies and thousands of corporations relying on state and local governments to maintain a semblance of economic and social stability in their area;
2. Giant new borrowing by local governments temporarily strapped for cash or trying to plug long-term gaping holes in their budgets;
3. Huge new supplies of municipal bonds hitting the market precisely when some of the biggest buyers of muni bonds — financial institutions like Citigroup, Bank of America and AIG — are being forced to dump munis to bolster their shattered portfolios;
4. New, major municipal bond defaults on the near horizon; and overall …
5. The biggest threats to your income and wealth in your lifetime!
You must do everything you can to gain (1) a clearer vision of what’s in store for you in 2009, (2) protection for everything you own and (3) an alternate source of profit and income that is truly depression-proof.
Fortunately, my latest video event online, “7 Startling Forecasts for 2009” gives you all THREE. To view it now, click here.
Good luck and God bless!
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Michelle Johncke, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
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