So says Michael Lombardi (www.ProfitConfidential.com) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Lombardi goes on to say, in part:

Higher Unemployment

In 2009, the U.S. government provided a stimulus fund to offset lost tax revenue for state and local governments. That money has been used up and, with pension budget deficits too large and deteriorating, states are telling municipalities that they have no money to help them with their budget deficits. [Also read:

•  Campbell’s Critique of Meredith Whitney’s Municipal Default Claims 
• The Day of Gold-Plated Public Sector Pensions are Numbered and
• Why Government Employee Unions Are To Blame for Impending State Bankruptcies]

As most homeowners are aware, municipalities get a large portion of their tax revenues from property taxes. With more homes empty since the credit crisis, and with property values significantly lower since 2007, municipalities are taking in less tax revenue, making their budget deficits even worse. With no help from the state, the only way to meet the budget deficits is to lay people off, and that trend has not stopped. [Also read: 

• U.S. House Prices Have MUCH Further To Fall! Here’s Why and
• Ever Increasing Foreclosures Mean Low House Prices for Many More Years]

According to Reuters, the last three years of job losses at the state and local government level has been the worst since the Labor Department first began keeping records in 1955. In a recent report, the Economic Policy Institute noted that, in the three previous recoveries from recession, public-sector employment jobs growth was significant. The Institute estimates that, if this recovery were like the previous three, we would have experienced jobs growth of 1.2 million in the public sector by now. Instead, since the beginning of 2009, 482,000 municipal jobs have disappeared, while 150,000 state jobs have been eliminated.

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Moody’s estimates that States could cut a further 15,000 jobs in the remainder of 2012, while municipalities may lose between 150,000 and 175,000 jobs in 2012, providing significant headwinds to jobs growth. These jobs cuts are all a consequence of trying to close those enormous budget deficits. Moody’s may be proven right, as the State of Florida just announced that it will have to cut 4,000 state jobs in order to meet its budget deficit. As I’ve been suggesting, and as these numbers now prove, dear reader, public-sector job losses are going to make strong jobs growth very difficult in 2012 in this country.

Higher Taxes

The other avenue municipalities have for meeting their budget deficits is raising taxes which, in this economic environment, will not sit well with people… [Read:

• Financial Repression: How Sneaky Governments Steal Your Money
• Stealth Taxation in the Form of Financial Repression is Coming! Here’s Why – and How
• Get Ready to be Financially Conscripted – and Face a Lower Standard of Living!]

*http://www.profitconfidential.com/debt-crisis/a-crisis-gone-worse-many-municipalitiesconsider-bankruptcy/ (To access the article please copy the URL and paste it into your browser.)

 Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Related Articles:

1. Campbell’s Critique of Meredith Whitney’s Municipal Default Claims

Meredith Whitney has resurfaced on the subject of U.S. Municipal defaults stating that a “tidal wave” of defaults in the municipal bond market is still building and will eventually hit the United States [although her views are at odds with those of] Moody’s Investors Service [who only see] a small but growing number of defaults. [Here is a critique of her latest views.] Words: 385

2. The Day of Gold-Plated Public Sector Pensions are Numbered

The ‘workforce elite’ in America today are public sector employees and they, led by state and municipal unionized workers, are now in open revolt to preserve their special status, and the status quo. Wisconsin is the current case study in what happens when the government, a monopoly service provider, confronts the fact that the taxpayer is tapped out and can’t take it anymore – and there simply isn’t enough money anymore. Those realities are going to result in major adjustments in worker incomes, future pensions and benefits and their overall standard of living. Let me explain. Words: 2137

3. Why Government Employee Unions Are To Blame for Impending State Bankruptcies

The charade is over. American taxpayers finally seem to be aware that they are the servants, not the masters, of government at all levels. Government-employee unions have played a key role in causing bankruptcy in most American states, and their pleas for more bailouts financed by endless tax increases are finally ringing hollow. Words: 1192

4. “Financial Repression” May Soon Become Our Worst Nightmare! Here’s Why

A new financial policy initiative known by the label “Financial Repression” may soon become our worst nightmare. ‘Repression’ rhymes with ‘depression’ which could be what we have to look forward to as rampant price inflation and permanently lower living standards take hold. Get ready to be conscripted into a citizen army assembled for the greater cause of saving the nation from being swamped by a tsunami of debt. Let me explain. Words: 1585

5. Attention America! Your Surging Debt Will Eventually Suffocate You

Our empirical research ( Growth in a Time of Debt) on the history of financial crises and the relationship between growth and public liabilities shows that burdens above 90% are associated with 1% lower median growth – and the United States’ debt level is currently hovering around 90% on a gross basis and 60% netting out assets. Politicians like to argue that their country will expand its way out of debt but our historical research suggests that growth alone is rarely enough to achieve that…[given] the debt levels we are experiencing today…[As such,] we need to be cautious about surrendering to the “this-time-is-different” syndrome and decreeing that surging government debt isn’t as significant a problem in the present as it was in the past. [Let us explain why.] Words: 1175

6. Financial Repression: How Sneaky Governments Steal Your Money

One of the things that’s being lost in the welter of rhetoric around the debt crises of sovereign nations is that these are not normal debtors, and government debt is not the same as personal debt. If you or I are in debt we are obliged to fulfil the terms of our repayment obligations or to go bankrupt or to pretend to die and go off and live on the life insurance. A country in the same situation has a range of other measures available to it…[Let’s explore their options and what their implications would be for the country and its citizens.] Words: 1145

7. Stealth Taxation in the Form of Financial Repression is Coming! Here’s Why – and How

Financial Repression is a form of wealth confiscation and redistribution that is in some ways as effective as taxation – but the government never directly calls it that. It never appears in the budget (directly), and while it is dependent on a comprehensive network of laws and regulations – none of those go through the legislature with a stated intention of creating Financial Repression. So while the economic net effects are similar to a huge and comprehensive set of investor taxes being used to pay down the national debt, the “taxes” are never a campaign issue because voters and investors don’t understand what is happening – they only feel the results. [In this article I lay out for you what is slowly developing and expected to escalate dramatically in the next few years.] Words: 5800

8. Get Ready to be Financially Conscripted – and Face a Lower Standard of Living!

Get ready to be financially conscripted into a citizen army assembled for the greater cause of saving America from being swamped by a tsunami of debt as a new policy initiative known as “financial repression” takes hold. ‘Repression’ rhymes with ‘depression’ and that is what we may have to look forward to as rampant price inflation and permanently lower living standards take hold as a result. Let me explain. Words: 1797

9. U.S. House Prices Have MUCH Further To Fall! Here’s Why

There has been a deluge of articles recently about the upticks in the housing data…[yet, while] I do not dispute the improvement in the data regarding home starts, permits, pending sales, etc.,… [see graph below] these data points are still mired at very depressed levels so the assumption is that if home building is stabilizing then it is only a function of time until home prices began to rise as well. Right? Not so fast.. [Let me explain.] Words: 1100

10. Forecast for House Prices is Horrific! Here’s Why

As bad as the housing crisis has been over the past three years, it has only been a warm up to what we have headed our way… [In fact,] the forecast is horrific, to say the least! 28% of US homeowners already owe more on their mortgage than their home is worth [and]… 27% of American homeowners are considering walking away from their mortgage…This is going to significantly drive home prices further down. [Let’s look at the details.] Words: 657

11. Housing Crash Continues: Why Now Is NOT The Time To Buy!

The housing crash is still in process and here are 10 reasons why it is still a terrible time to buy. Words: 1670

12. House Prices to Decline Further With Forthcoming Dramatic Increase in Foreclosures

If you think home prices have hit bottom and are now headed back up for good, think again! Round two is about to begin. Words: 552

13. Ever Increasing Foreclosures Mean Low House Prices for Many More Years

Anyone who sees a rising pool of millions of delinquent mortgages as the foundation of a recovery in housing valuations isn’t considering the feedback loop which is now firmly in place. The foreclosure pipeline will be full for years to come precluding any “recovery” in housing valuations as supply will swamp demand. Words: 385

14. U.S. Real Estate? Fuhgeddaboudit for Another 5 Years!

Real estate has definitely not bottomed in the U.S., and probably not anywhere else either. You have to take a long-term view of this. At this point in time I am completely uninterested in speculating in U.S. real estate – and I don’t foresee being interested for at least five years. I reserve the right to change my mind, but I think it’ll be at least five years. Words: 1340