When will the Blue Wall Start their Bankruptcies?

[william the wie]

The rush to the exits from the high SALT states began in the 1920s. From 1790 to 1920 The center of US population kept heading west with very little variance north or south. In the 1930 census and all censuses since the dominant move of the center of population is to head south. This transition has been so slow that some of the low SALT states of that pre-1920 era are, in some cases like CA, the high SALT states of today. Now with the tax bill reducing sharply the deductibility of SALT expenses this compound interest rate trend is going into afterburner.

So, when will the high SALT states start going into bankruptcy?

 

[ChesBayJJ]

The rush to the exits from the high SALT states began in the 1920s. From 1790 to 1920 The center of US population kept heading west with very little variance north or south. In the 1930 census and all censuses since the dominant move of the center of population is to head south. This transition has been so slow that some of the low SALT states of that pre-1920 era are, in some cases like CA, the high SALT states of today. Now with the tax bill reducing sharply the deductibility of SALT expenses this compound interest rate trend is going into afterburner.

So, when will the high SALT states start going into bankruptcy?

You bring this issue up frequently. You are an alarmist. It isn't going to happen.

 

[william the wie]

It's going to happen the question is whether I can figure out the best way to reduce my downside risk.

 

[ChesBayJJ]

It's going to happen the question is whether I can figure out the best way to reduce my downside risk.

I guess that depends on where you live. I don't deny there are states that have issues, and I think Illinois is probably the worst and a likely first candidate for bankruptcy. But their problems have been evident for a long time, long before Trump came into office and we got the tax bill.

Only things I can think of for reducing downside risk is not owning muni bonds or real estate in a high SALT state.

 

[william the wie]

It's going to happen the question is whether I can figure out the best way to reduce my downside risk.

I guess that depends on where you live. I don't deny there are states that have issues, and I think Illinois is probably the worst and a likely first candidate for bankruptcy. But their problems have been evident for a long time, long before Trump came into office and we got the tax bill.

Only things I can think of for reducing downside risk is not owning muni bonds or real estate in a high SALT state.

You also have to avoid companies like CAT that has its assembly plant in IL and Commodities dependent companies that might experience logistical problems when IL hits the skids.

And there are very few cases like NE, which is a no-brainer exit strategy for insurance companies.

 

[DGS49]

Ironically, the financial solutions for the HIGH - SALT states are quite simple, but politically suicidal. ALL of such government entities are saddled with astronomical government employee costs, including retirement benefits. Bring salaries in line with, say, the Fed's G'S scale, implement rational retirement ages, stop the practice of inflating pensions through massive OT during last year's of service, and force sub-65 retirees to pay reasonably for their healthcare, and, POOF, the crisis goes away. And that doesn't even contemplate eliminating fraud, waste, and abuse.

Bankruptcy; appoint a manager to run the states or localities for a couple years. Simple.

 

[Tax Man]

California will be fine. it is the red southern states that ARE in trouble.

 

[miketx]

California will be fine. it is the red southern states that ARE in trouble.

California? The state that violates the law and pardons violent illegal criminal aliens? That state? Yeah they doing fiiiiiine.
Your denial of simple reality is noted.

 

[Tax Man]

Anyone who lives in tezass is in fantasy land to begin with so your post is trashed.

 

[miketx]

Anyone who lives in tezass is in fantasy land to begin with so your post is trashed.

If you say so liar.

 

[william the wie]

Ironically, the financial solutions for the HIGH - SALT states are quite simple, but politically suicidal. ALL of such government entities are saddled with astronomical government employee costs, including retirement benefits. Bring salaries in line with, say, the Fed's G'S scale, implement rational retirement ages, stop the practice of inflating pensions through massive OT during last year's of service, and force sub-65 retirees to pay reasonably for their healthcare, and, POOF, the crisis goes away. And that doesn't even contemplate eliminating fraud, waste, and abuse.

Bankruptcy; appoint a manager to run the states or localities for a couple years. Simple.

agreed that works for the state but not for me trying to figure out what companies to write puts on.

 

[william the wie]

California will be fine. it is the red southern states that ARE in trouble.

Go to a mental health professional immediately, you need the help.

 

[task0778]

First of all, as it stands now US states cannot declare bankruptcy. Each state has it's own sovereignty and can write it's own laws to govern itself except where federal law overrides it. So, in theory any state that gets itself into dire fiscal straits can also get themselves out of it. The problem is that it is politically suicide to tell the voters how bad you fucked up, and so lies and exaggerations are told and the voters seemingly buy it. At least they aren't kicking people out of office. And BTW it ain't only the blue states, there are some red states in fiscal trouble too.

The elephant in the room at the state level for most of those in fiscal trouble is public pensions. The cost of benefits is eating up state and local budgets to the point where public safety and other services are increasingly impacted. Many states have these benefits explicitly written into their state constitutions, and until that changes or is overridden either by a state supreme court or legislature changes the law/constitution, these states are committed to the same policies that lead to the current fiscal crisis in the 1st place. What good will it do to restructure debt if you don't change those laws and policies?

Which leads us to a federal bailout of some kind. Ain't going to happen folks, there's no way the states who are not fiscally strapped are going to agree to bailout the states that are. In 2016 Obama and the Congress passed the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) specifically to create a process that allows the island's numerous debt-saddled governmental entities to achieve debt relief. But Puerto Rico is not a sovereign US state, and the bill creates an oversight board and a federal judge to arbitrate the process; will US states allow a federal judge and a federal oversight board to tell them what to do? I'm not even sure our US Constitution allows that.

 

[Billy_Kinetta]

California will be fine. it is the red southern states that ARE in trouble.

California will be under federal occupation in two years.

 

[saveliberty]

Depends on how long they can rob the state pension funds.