Christian Debt Recovery

State Debt Per Capita 2011

April 19th, 2011 |

Author: Gavin

Why 2011 Will Not Be the Easy Year Most Investors Expect

Yesterday came news that Standard & Poor’s had lowered Japan’s credit rating, as the country failed to cut government spending or raise taxes. But the real news for me Thursday was a report from Moody’s Investors Service saying that it may place a negative outlook on the U.S.’s credit rating unless the U.S. budget deficit narrows. Could you imagine the havoc a downgrading of the U.S.’s credit rating will have on U.S. Treasuries and interest rates?

I’ve been writing for months about a homemade bond crisis brewing in the U.S. amid out-of-control government spending. (I don’t know why anyone would own U.S. Treasuries right now—I don’t.) Recently I have also been warning about the municipal bond market and how defaults on debt obligations by U.S. cities, municipalities and states are a serious problem this year.

And reality is starting to hit…

New York State took control of Nassau County’s finances yesterday, as the county failed to balance its $2.6-billion budget. For those of you not familiar with Nassau County, the county is in Long Island, New York, and has a population of 1.3 million people. Forbes Magazine (2008 survey of richest counties) ranked Nassau County as the second richest county per capita in New York State.

New York, one of the financially strongest states, can take over one of its county’s finances, as it obviously has been able to deal properly with its own books at the state level. But how does a state like California proceed to take over a county that can’t balance its books, while California itself sits on a $25.0-billion-plus annual deficit? It simply won’t take the same action New York has.

On the other side of the economic picture, moving from large budget deficits to consumers, the U.S. Labor Department said yesterday that applications for jobless benefits jumped 51,000 to 454,000 claims for the week ended January 22, 2011. The spike in jobless claims surprised employment analysts, who expected claims to come in at about 400,000.

What does all this tell us?

The U.S. economy is far from out of the woods. Natural disasters such as storms and tornados leave a path of debris in their aftermath. The 2008-2009 recession has left many countries (not just the U.S.) with a plague of debt. And I don’t think most politicians realize how serious the problem has become…nor do they know how to deal with it.

The year 2011…it will not be the easy year that most investors and analysts expect.

Michael’s Personal Notes:

It finally happened. General Motors Company (NYSE/GM) sold more cars and trucks in China in 2010 than it did in the U.S.—the first time in the company’s 100-year history…

About the Author

Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors.